Laughing Dog doubles production, payroll

Helping Businesses Thrive and Grow

By David Gunter

Posted at Hagadone News Network, November 3, 2011

PONDERAY – The truck Fred Colby drove to work on the day he started up Laughing Dog Brewery in 2005 was 10 years old at the time. Six years, tens of thousands of barrels of beer and a boatload of brewing awards later, he’s still behind the wheel of that same rig.

That’s because he and co-owner Michelle Douglass have eschewed expensive purchases and fancy vacations in order to plow every cent back into a business that has grown faster than either of them ever imagined. By the end of this year, the local brewery already will have maxed out the 10,500-square foot space it moved into barely a year ago. A location the owners originally thought would allow them to grow for the next several years.

“We’ve pretty much outgrown our brewing facility in the back,” Colby said as he leaned on the wooden bar of the Laughing Dog taproom. “By December, it will be completely full of equipment.”

Outgrowing The Space

Fred Colby in his tap room at Laughing Dog Brewery.

Fred Colby in his tap room at Laughing Dog Brewery.

When the business moved out of its former space it shuttled the brewhouse machinery and immense fermenters into a new home on Fontaine Drive. The idea was that it would fill up gradually over time. Now equipped with 15 fermenters that each brew a thousand gallons at a time, Laughing Dog plans to add four more fermenting tanks in the coming weeks, each one standing from floor to ceiling and carrying a 2,000-gallon brewing capacity.

With the expansion, the brewery will have invested about $200,000 in its growth this year – roughly the same amount of money Colby and Douglass have put back into the business on an annual basis for the past couple of years.

Perhaps the only thing growing more quickly than the facility itself is the positive response to Laughing Dog’s line of India Pale Ales, which, as of this week, are sold in 33 states and Canada.

What Started as A Home Brew Operation

What started as a home-brewing hobby for Colby turned professional when Laughing Dog produced 200 barrels of beer in 2005. Last year, the brewery produced 2,300 barrels with three employees on the payroll. In 2011, pretty much everything about the business has doubled.

“Our production is up 91 percent for the year,” Colby said, estimating that as many as 5,000 barrels will go out the door for the period. “We’ve got seven employees working two shifts and we’re looking for another person to add to our packaging line.

“Next year, based on the pre-orders we have coming in, we’re looking at doing about 12,000 barrels,” he added.

Laughing Dog’s biggest sellers have been the Alpha Dog IPA and Rocket Dog rye IPA, along with an extra-special bitter and a black IPA that Colby introduced in 2006 – making Laughing Dog one of the first breweries to produce a specialty beer that since has become a nationally recognized variety among beer aficionados.

Big Spenders

The primary customers have been high-end specialty draft beer stores, but, like everything else in this business story, both the client list and the size of the clients have grown.

“Probably one of the biggest accounts coming in for us was in New York City,” the brewer said. “Their second order was for 300 kegs of beer. That’s a semi-truck load.”

To keep pace with demand, Laughing Dog has had to rent back its previous location to use as a warehouse and shipping facility, allowing the new space to be dedicated solely to brewing. At this stage, all thoughts of controlling growth are out the window, replaced by the need to re-invest and stay in front of it.

“I’ve seen other breweries try to grow when they’re constantly running behind,” said Colby. “The challenge is to get the equipment in place and plan ahead so that you never have to tell your distributors ‘no.'”

Sandpoint On The Map

As the Sandpoint area becomes increasingly well known, Laughing Dog’s visibility has been on the rise, with industry experts and beer-drinkers starting a buzz about “that brewery from Sandpoint.” Much of that notoriety comes from the awards the label rakes in, putting Laughing Dog on the podium of events such as the Fresh Hop Ale Festival in Yakima for five years running.

By next year, the business could get extremely close to the 15,000-barrel-a-year production level that marks the tipping point for being considered a microbrewery. Still, Colby remains well aware of the attention to craft and detail that underlies the popularity of his beer.

“We’ll be a craft brewery forever, but we won’t always be a microbrewery,” he said. “Within the next five or six years, we’ll probably be doing 20,000-25,000 barrels a year. If we keep growing the way we are, we’ll be employing 30-35 people.”

Starting the Second Business

You’d think that Fred Colby has enough on his plate just staying abreast of the mainstay IPAs and seasonal offerings Laughing Dog produces, but his passion for crafting fine beers has carried him into a second business. By Christmas, he and his two partners in the Post Falls-based Selkirk Abbey Brewing Company will begin selling Belgian-style beers from a start-up business there.

“Laughing Dog now makes 16 different kinds of beer throughout the year and it’s getting hard to add to it,” Colby said. “This gives me a chance to play and try something new.”

The brewer admits that his experience in ramping up production will be an asset for Selkirk Abbey – as will his existing distribution network and the Laughing Dog reputation for high quality – but there is something deeper than a business that keeps him in this business.

“It’s still fun,” Colby said. “And that’s the most important thing of all.”