BY PERRY BROTHERS
The Cincinnati Enquirer
The stock market meets a deep-red, full-malt Scottish flavor in IPO Ale, a beer created by Over-the-Rhine brewpub BarrelHouse Brewing Co. to commemorate its initial public stock offering.
BarrelHouse, a 3-year-old member of the nation's more than $2.8 billion craft-brewing industry, this week received approval to offer its stock to the public. The company will start selling the $5 shares immediately, with the first public push this weekend at Oktoberfest.
The brewpub's founders -- Cincinnati natives David Rich and Mike Cromer -- hope to raise $2.5 million in the direct offering for expansion and to launch a bottled-beer product.
"We're trying to do this (expansion) as quickly as possible because we see the market as wide open," Mr. Cromer said Thursday, over the din of the beer boiling in brew kettles at the East 12th Street brewery and restaurant.
The goal, if the offering draws enough investors, is to expand production to 10,000 barrels annually. BarrelHouse's current yearly total is 2,000.
That beer -- 10 different varieties or brands -- would flow into bottles or from the taps of more Tristate area bars and restaurants. BarrelHouse is served at 75 venues in Cincinnati, Dayton, Ohio, Northern Kentucky and Southern Indiana. Some of the microbrewery's accounts include Trios in Kenwood, the Grand Victoria Casino in Rising Sun, Ind., Cinergy Field and the Cincinnati Convention Center.
Three years ago, Messrs. Cromer and Rich -- buddies from the Seven Hills High School class of 1977 -- left corporate jobs to create the brewpub. Over draughts on Friday nights, the two men dreamt aloud of one day selling "really good beer." They raised about $875,000 in a private placement and started delivering beer from the back of a station wagon.
Another Cincinnati brewer, Oldenberg Brewing Co., made a similar offering in February 1996. Oldenberg sold 800,000 shares at $2.45 a share to raise $1.98 million in about two months, according to David Heidrich, Oldenberg president.
Like BarrelHouse, Oldenberg's stock sale was a direct offering, meaning the company sold shares directly to the public without a broker or underwriter. Oldenberg investors largely were Greater Cincinnatians who liked the beer, Mr. Heidrich said.
BarrelHouse and Oldenberg are the only Cincinnati-based breweries that have gone public.
As of January 1998, there were 1,306 craft-brewing companies nationwide, according to the Institute for Brewing Studies in Boulder, Colo.
Like Oldenberg, BarrelHouse is counting on loyal Tristate customers who want to own more than a pint of the brewpub's lager. "We don't have grand designs to distribute our beer nationally. There's plenty of untapped market, if you'll excuse the pun, here in Cincinnati," Mr. Rich said.
That's a good thing, said K. Timothy Swanson, a beverage analyst for A.G. Edwards & Sons Inc. in St. Louis, because of the low survival rate of aspiring microbreweries at the national level.
"The market is quite, quite difficult these days," Mr. Swanson said. "The craft breweries ran into an abundance of brands that flooded the market and really has made the competition difficult. The two types that will be successful are the large (established) national and the small local or regional brands."
