[caption id="attachment_196278" align="aligncenter" width="1024"] A few examples of the bewery's innovation efforts. | Photo by Maria DeForrest[/caption] MILTON – The first time that Sam Calagione sipped the low-calorie India pale ale that would become Slightly Mighty, he likened the taste to licking a hockey stick. But he’d ultimately find the replacement for the wood-smoked barley that created that off-putting taste in a grocery store in Maine, which would lead him to decide to distribute Slightly Mighty nationwide to wide acclaim. Dogfish Head opened its original restaurant brewery in Rehoboth Beach in 1995. Sam and Mariah Calagione hoped to find white space in the beer industry, and to be the first brewery in America commercially focused on bringing culinary ingredients and techniques into the brewing process, instead of following modern beer style guidelines and ingredient expectations. “I wrote the original recipes for the wood-grilled food in my business plan, but I knew I wanted to spend more time in the brewery than the kitchen,” Sam said. “It was easier when you just had one location to innovate, because you were talking to every coworker in person in one facility, every day. We had to formalize our innovation process to a larger degree once we opened a separate production brewery in Lewes in 1997.” Sam said he goes into some projects with the expectation that there will be products that they’ll commercialize and sell coast to coast and some where they say, "Let's just try it locally. We're not going to put pressure on ourselves to make sure it's a national release someday." In the case of Slightly Mighty, concept to market took about five months; the process for products that will be confined to the local area takes much less time. Sam starts the interview by pointing at a wall with Dogfish Head’s “raison d’etre,” its version of a brand mission statement that says, “We are off-centered goodness for off-centered people.” “The orders of the words are very intentional, meaning our people come before our products,” he said. “The first thing that comes with developing a great innovative company is hiring and inspiring and training innovative people, because the products change as consumers' whimsies, trends, and fads come and go. But strong innovative people have to stay at the core of your capabilities if you want to be recognized as an innovative company.” Here’s the story of the journey of a new Dogfish Head brand.

The process

[caption id="attachment_196274" align="alignright" width="401"] Sam Calagione in Dogfish Head's tasting room. | Photo by Maria DeForrest[/caption] Sam reads voraciously, maybe one to two books a week. “We get magazines in our house that are in the food industry, the art industry, the music industry. But where I don't look for inspiration is in the beer industry. We might advertise in beer publications, but I never actually open them up and read them, nor do I go on social media websites about beer,” he says. Sam believes that to be a successful innovator you need to roam, to find connections from other industries to yours that you can then bring your own unique spin to your industry. "You can pursue a ‘Fast Follower’ model, where companies watch what someone else innovates and then quickly replicate it and use their resources to beat them in the marketplace,” he explains. Sam says that business model is viable for lots of companies, particularly larger ones that have the resources to hammer through distribution that smaller entrepreneurial companies don't. But then there's the “pioneer” business model where you take more risks with innovation, knowing that they're not going to all pay out, and sometimes you're going to go down a fruitless road. "That's always been Dogfish Head's model, to not copy what other breweries do, but to pioneer new concepts,” he says. “And through the early life of our company, we were frankly made fun of more for how we were doing these culinary-inspired beers, then we were celebrated for it. Any culinary ingredient in the world is fair game for us to consider for a beer recipe. Now today, thousands of the 8,000 breweries in America are taking a similar approach, and that makes it harder for us to find white space. But we're really proud that we pioneered that approach for a commercial brewery in America.” Examples abound. Sam recently watched a documentary on the immunity capabilities of mushrooms. Dogfish Head also created a beer at its pub last summer called Smoothie Fixins, which broke down the most recognized ingredients in people's morning smoothies and reconstructed it as a beer.

The germ of an idea

Slightly Mighty started with a simple idea: Brew a beer that has all the flavor and aroma of a world-class IPA but has the exact same calories as Michelob Ultra. “Michelob Ultra is a great success story by Anheuser Busch InBev,” Sam says. “It’s the first beer recognized as an active lifestyle beer, wellness-oriented beer. They did a great job of marketing, distributing, and selling that beer, but it's not a beer that has a great amount of taste or flavor. It's very light, watery, innocuous. So, we challenged ourselves to try and come up with a way to brew a beer that's really flavorful and hoppy and aromatic, but with the same calories.”

Who’s the customer?

Sam says Dogfish Head doesn’t chase niches of demographic groups for its products. “We ask if this concept is on brand for Dogfish,” he says. “Is it off-centered? Has it not been done in the beer industry before? Is there an angle on it where we can say, with pride and confidence, we're not stepping on someone else's intellectual property or concept?” Sam says Dogfish Head tries to stay clear of that, explaining that the company tries to check all those boxes by trialing it in its own properties and getting feedback from customers by making small batches – “low-risk R&D,” he calls it – before it commits to big batches for national distribution. Once Dogfish makes the decision for national distribution, it starts talking in terms of demographics, audience, and where it will spend marketing dollars. “That stuff comes at the phase when we're thinking about coast-to-coast distribution, not in the innovation funnel,” he says. [caption id="attachment_196275" align="aligncenter" width="1024"] At Dogfish Head the principles on this wall drives everything they do. | Photo by Maria DeForrest[/caption]

Test. Test some more. Keep what works.

When asked whether Dogfish Head’s merger with The Boston Beer Company in 2019 has impacted the innovation process, Sam quickly says no and that he continues to work closely with its Brewmaster Mark Safarik and R&D Brewer Dan Weber on the test batches. “We now have the innovation resources of Boston Beer. But Dogfish is unique within the family of Boston Beer brands because their innovation all happens centrally out of our Boston mothership. When we merged, Jim Koch, the founder, said, ‘Hey, we love your guys' off-centered approach to innovation, to marketing, to branding, to PR. We want you guys to own that locally, autonomously in Delaware.’ So, we run all of that ourselves, but we have Boston Beer's awesome resources to send samples to, to do focus groups with.”  Sam says Slightly Mighty is a concept he knew from day one would go beyond the tasting room to become one of Dogfish Head core beers, a top four selling beer. So, he stayed really close to the process as a marketing guy, a brand guy, and as a brewer. It was his idea to get wood-smoked barley out of Canada to create phantom body in the light beer. He and Safarik started emailing each other with ideas before brewing a test batch of 14 kegs that would be served in Dogfish Head’s Milton tasting room. “I was wrong that the wood-smoked barley from Canada would add sweetness and body,” he says with a smile. “It ended up having some body, but we agreed it tasted like licking hockey sticks the first time we brewed it. But that didn’t mean we were going to give up on the project.” “We kind of went back to the drawing board,” Sam adds. “Two months after we brewed the first batch, I was up with our sales co-workers in Maine and walking through a grocery store when I saw on the shelf sugar in the raw, Stevia in the raw, and monk fruit in the raw. That reminded me that a year earlier, I had done a lot of research on monk fruit because I was going to add it to an extremely nutrient-rich beer. But as it turned out, it was a recipe that ever made it out of this building.” For Sam, that was the epiphany.  “Let's think of monk fruit as the skeleton in this beer,” he told his team.  They were only switching out one variable: The hockey stick smoked barley goes away, the monk fruit goes in. By the time they tried the one with monk fruit, they knew they were on to something.

What’s in a name?

Once Sam knew the monk fruit worked, he switched from recipe mode to marketing mode – including naming it and packaging it. “I’m always keeping track of different names that might be appropriate. And oftentimes it becomes difficult to have your singular brand voice be heard through the cacophony of 8,000 different breweries, each making 20 or 30 beers and there’s two new breweries opening every week in America,” he says. “It’s getting really hard to find names that haven’t been taken. You want to find a name that speaks to the innovation in the liquid. It has to be recognized as a commercial name but helps to tell the story.” He wanted to call out the innovation in Slightly Mighty within its name.  “What is that innovation? It's a beer that's slight in calories but has mighty hop character like a full-flavored IPA. And then subliminally within the first word is the word ‘light’ because it's a light beer,” he says. Despite the off-centered nature of the brand, Sam says they’re often disappointed to find a name (or close variation) is taken. Ten years ago, he says there weren't a lot of breweries doing really whimsical names of beers when Dogfish Head was doing Raison D'etre and Midas Touch. Now, he says, the craziest ideas are often already taken. There are “beer-geek websites” out there that essentially celebrate breweries that are ripping off existing commercial product intellectual property, but Calagione says that's part of the beer culture.“At Dogfish, because we are a top 10 scale brand, we have to defend our IP often. We'd be hypocrites if we thumbed our nose at the importance of respecting intellectual property by choosing a fun name that is really referencing someone else's intellectual property,” he says. Getting everyone to agree on a name can be difficult “because we try to run a very flat hierarchy company and we ask for a lot of input, but at a certain point it's up to leaders to make decisions after getting that input ... and I felt strongly about the name.” And although she hasn’t been a big part of this story – she was in New York on the day of the interview – Sam says his wife plays a big role. “Mariah and I have been flirting with each other, not beer related, since when we were in high school,” he says. “Now, a big part of our daily interaction is flirting about if this is a good idea for the company. She's usually my first sounding board on everything, and honestly probably only a third of the ideas that I have make it forward, she's like, ‘That's a stupid idea. That's a stupid idea. That one's pretty good. You should work on that one.’" Sam noted that even how Dogfish Head refers to its beer, as a “lo-cal” IPA, was purposeful. “We spell it that way because phonetically again that's a hard-working word, it means both it's a local IPA and it's a low-calorie IPA,” ,” he says. “And the local part of it is all the crystal malt that used to brew Slightly Mighty was grown and malted on the Delmarva Peninsula within 45 minutes of here.”

Getting it ready for store shelves

Next up is packaging design. And that's one where Sam gave the reins to Creative Director Paul Thens and Associate Art Director Ryan Telle. “We wanted to convey frenetic energy activity, but also the one directive I did give was let's make the base volume color white because white connotes lightness in consumer-packaged goods,” Sam says. “It's really just white and green with a little blue in it.”

Ready to roll?

Dogfish Head has been doing this for 25 years and Sam says they have “an awesome sensory department and laboratory here and that's frankly becoming a big differentiator. Our industry is quickly kind of bifurcating to two business models for beer. There are all the tiny little tasting room breweries where the consumer comes to their building and drinks the beer and you don't have to worry about packaging design there. To some degree you don't have to worry about consistency because the consumer forgives you if they come to your doors and you say, oh I changed this hop for this other hop today on my IPA.” Dogfish Head doesn’t do a lot of traditional advertising. With most brews, 20 to 30 employees and 400 to 500 visitors to the tasting room try it before it goes to full production. It invests more in social media events and marketing. And a big investment in marketing is getting samples out and having conversations with the media so that they cover our innovations.”

Promoting the new brew

Calagione says he worked really hard at proactively engaging with journalists he knew that might be interested in the target audience for this particular niche, people at places like Esquire, Men's Health, and Sports Illustrated. “We're very methodical and proactive about media outreach if we think it's an innovation that isn't just unique to our brand but unique to the industry and therefore worth a broader story," he says. “We knew this was a year-round beer that that would appeal to active lifestyle leading people and people starting off the new year more wellness-oriented.” Dogfish Head found Shalane Flanagan, an “IPA loving woman who happens to be an Olympic medalist long-distance runner and New York Times best-selling cookbook author on wellness-focused recipes. We partnered with her as sort of a spokesperson for Slightly Mighty, to help bring that brand to life outside the beer niche community into the broader athlete world community.”

One last hurdle

As we sit in a conference room with Sam’s dog under the table, a wall of coworker photos, and a display of dozens of brews that Dogfish Head has created over the past 25 years, Calagione is reluctant to identify a “favorite.” "Every one of those tells a story to me,” he says. “Slightly Mighty is a great example, we registered it with the feds and they're like you can't brew a beer with monk fruit. We asked why not; it's a natural fruit extract from China. They said, no one's ever brewed with it in America, so you can't.” So Dogfish Head started working through the process of getting the federal government to recognize monk fruit as a culinary ingredient that can be used in commercial beer. It took form after form, lawyers, and a lot of money they had no intention of spending just to make monk fruit a legal ingredient to put in beer. But Calagione is philosophical about it, looking at it as a positive. “Instead of getting pissed, I got excited because I was like, wow, if we spend $10,000 or $20,000, we will definitively be the first brewery to brew with monk fruit in America,” he recalls. “And that will only enhance our story about how innovative our process was if it had never been done before to such a recognizable extent that the federal government wouldn't acknowledge it.” 

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Contact Peter Osborne at posborne@delawarebusinesstimes.com