ENTREPRENEUR WATCH

When is a microbrewery no longer a microbrewery? In the case of Smuttynose Brewery the question isn’t academic because in December the brewery will pass the important annual benchmark of 15,000 barrels produced.

“It’s an abstract line, one that could have been drawn anywhere,” said Peter Egelston, the founder and president of Smuttynose, which was named after one of the Isles of Shoals.

Egleston, also a co-founder of sister company Portsmouth Brewery, said this admittedly arbitrary accomplishment reflects a larger tectonic shift for the company.

“We are at an interesting crossroads. We are one of the largest microbreweries in the country and will become one of the smallest regional specialty breweries,” he explained.

What it really means is that Smuttynose is entering a new phase in its history as its five full-time beers and four seasonal, limited edition beers continue to grow in popularity and market share. Smuttynose has 23 employees, 15 of whom are full time, and its distribution network is spreading throughout New England and the Mid-Atlantic states — and even, Egelston said, into Wisconsin where he was surprised to find that Smuttynose has developed a positive reputation in the Midwest.

Smuttynose has been recognized with numerous industry awards and with public acclaim, sometimes from interesting quarters. The Smuttynose Big IPA was recently named one of the top 25 beers in the country by Men’s Journal magazine. The Smuttynose Web site played up the recognition, sort of, by noting that the honor came with the faint praise of being an “actually drinkable” beer.

Seacoast Ventures: Are the workers at the brewery having as good a time as it looks?

Peter Egelston: We have a good time and love the work. It’s a good thing because nobody is getting rich here.

SV: What’s the best part of being an entrepreneur?

PE: I say this with all sincerity — the best part is also the worst part: things are always changing. I never know quite what is waiting for me when I come into work. I love that part of having a small business but it’s also a big challenge.

SV: Do you feel that Smuttynose isn’t as appreciated locally as it is nationally?

PE: It’s kind of frustrating because we are one of the top-ranked breweries in the country, but I’d like to see us more prominent in our own local market. We have a lot more traction nationally which is really gratifying but I think we are taken for granted locally. I think that part of the dilemma is a state like New Hampshire which doesn’t have a strong identity but has seven distinct regions. In 1998, we wanted to name one of our beers Portsmouth Lager which we thought would be fine but distributors told us that beer drinkers in places like, say, Manchester wouldn’t care for the name. We love being located here, but it’s a blessing and a curse.

SV: What does it mean to no longer be one of the largest microbreweries?

PE: I never liked that term microbrewery anyway because it made us sound like we were making beer in our kitchen. What it means is that we have reached a tipping point: we’ve gotten bigger and can afford more economies of scale. On a practical level, it means we can purchase new, more technologically sophisticated equipment. We’ve been operating with cobbled together used and improvised equipment.

SV: What’s it like being in this industry?

PE: It’s been rapidly evolving and it’s a very exacting time to be in business because of the vast shift in consumer preferences for “authentic” products like yogurt and cheeses and organic foods. The funny thing is that small craft breweries like ours have been on the leading edge of those changes — the rest of the world is catching up.

SV: What did you learn from your unsuccessful attempt to relocate Smuttynose to Newmarket?

PE: I regard it as tuition I paid. It was a process that lasted over two years and I took away a number of things that had real value. If I’m in the same situation, I want to make sure all the stakeholders are sitting around the same table, having the same conversation. I have to take some responsibility because I wasn’t insistent enough and didn’t know enough about the process. I learned you need to have a tremendous amount of creativity and blue-sky thinking. And you have to do the hard work of narrowing things, of separating the possible from the ideal. It’s a very delicate balance.

SV: Do you have an exit strategy?

PE: No. I’m still working on an exit strategy.