written by Neil Sheehan
It was in the middle of the last decade that John Giannopoulus had a brainstorm. The family-owned and operated brewing business he helped found, Sly Fox, was just about 10 years old and thriving, riding the wave of craft beer enthusiasm that had built up by then.
Thanks to an earlier background as a manufacturer’s representative, Giannopoulus knew that there was a tight supply of stainless-steel kegs in the United States. He decided to explore whether he could strike a deal with a Chinese firm to make kegs for export to America.
It helped that he knew his way around certain parts of China. “I just thought to myself that I should apply what I know about manufacturing in China and see what I can do about starting up a keg manufacturer over there. Quite simply, that’s how it all got started,” he said. “I decided to go over and try to kick around the idea and see if I could find someone.’ “
Giannopoulus did just that, securing a deal with a Chinese corporation and began to fulfill his idea. “I was able to find a very good manufacturing firm in China. I had a very good run with them,” he said.”
“The market responded,” Giannopoulus said. It was a very good, solid business, with millions of dollars-worth of kegs being sold in the U.S. by Geemacher LLC of Pottstown, Pa., the name given to the business. (It was derived from a combination of Giannopoulus’ name and that of a former partner who was bought out when he moved to Wisconsin.)
Giannopoulus’ vision didn’t end there. Always in the back of his mind was the idea of making kegs in the U.S. More specifically, he wanted to convert Geemacher’s operation in Pottstown into a plant capable of churning out a steady supply of kegs for American customers. It would be the only such U.S. operation.
That decision was eventually solidified around 2011-12. At the beginning of 2015, the first kegs began rolling off the assembly line.
Unfortunately for Geemacher, the business demanded more cash flow than Giannopoulus could muster.
“It’s been a rocky, amazingly tough, brutal road for me. It’s (the manufacturing infrastructure) all custom. There’s not like a place you can tap into and get all this knowledge. You kind of have to learn it on your own,” Giannopoulus said during an interview at the company’s Pottstown facility.
“I was not amazingly well funded. I was doing it on the cash flow of the (Sly Fox) business. And that was probably the biggest mistake I made. I just didn’t have enough money to do it, to really complete it.”
When asked why there aren’t any other U.S. keg manufacturers, Giannopoulus responds with a knowing laugh. “Well, maybe now we know why. It’s pretty capital intensive.”
This story has a happy ending – or at the very least another chapter. Another area entrepreneur, Scott Bentley, recently reached a deal to acquire Geemacher.
Bentley, who owns a successful Pottstown firm named VideoRay that manufactures aquatic robotics for customers around the globe, has renamed Geemacher as the American Keg Co. He able to provide the kind of financial backing to propel the firm forward. What’s more, Bentley is a firm believer in the concept of selling domestically made kegs to brewers who, like him, want to see manufacturing return to the U.S. and, in turn, strengthen the nation’s economy.
His pitch to craft brewers will be straightforward. “There’s only one keg made in America,” Bentley said. “When you buy those made by the American Keg Co., you’re supporting American jobs and the American economy. When you buy a Chinese keg, you’re supporting Chinese jobs and the Chinese economy. Which one would you rather do?”
He continued, “Our competition is German and Chinese manufacturers. If we can’t compete with the Germans on a manufactured product that uses a raw material we can buy in the U.S. very competitively, then shame on America.”
Bentley got his start in business when he and his brothers formed a software firm called Bentley Systems. He was second employee, coming on board in 1985. “We grew that from nothing to its current size of around $650 million, with about 3,300 employees around the world,” he said.
The thrill of starting and growing the company was what Bentley enjoyed the most. About 15 years ago, he decided to start his own underwater robotics company. That business is up to about $15-20 million in annual sales, but Bentley reasonably knows that competition in that specialty field is increasing.
VideoRay’s customers include the U.S. Army Corps of Engineers, the Italian Navy, power plants, water tank inspection firms and aquaculture companies. In the U.S., a predominant use for the underwater remotely-operated vehicles is to locate and recover drowning victims.
“What attracts me to a business is being a big fish in the pond, even if the pond is pretty small. The size of the underwater robotics business is currently pretty small, though my segment of it is getting larger rapidly,” he said.
When the possibility of purchasing the keg manufacturing company and getting it on track presented itself, Bentley found the challenge appealing. Besides being able to brag about owning two unique manufacturing firms, he really liked the idea of preserving a Pottstown manufacturing operation.
“I didn’t want Pottstown to lose that. I didn’t want America to lose our only keg manufacturer over the lack of funds,” he said. “I got involved because I saw the picture going in the right direction. I thought it was a great elevator line to say I own the only new keg manufacturer in America.”
With this infusion of cash, American Keg Co. will be ramping up production in the near future, adding second and eventually third shifts at the 30,000-square-foot facility. The company recently ordered nearly a half-million dollars in steel to support that work, which primarily involves making half-kegs and sixtels, or 1/6th kegs, representing the vast majority of the type of kegs used by U.S. craft breweries.
Bentley expects to put most of the responsibility for righting the ship in the hands of Chief Executive Officer Paul Czachor, an experienced manufacturing executive who previously was a consultant to Geemacher. “Running a high-volume, low-tech, low-margin business is a completely different skillset than selling kegs and running a brewery,” he said.
Czachor acknowledges that a U.S.-made keg will cost a little more than one manufactured in China. “But craft brewers are proud to have a keg made in the U.S., and they are willing to pay a small premium. It is really just a small premium,” he said.
Bentley envisions the American Keg Co. focusing on craft brewers’ needs in the near term, before seeking orders from mid-size brewers and, hopefully, the big boys, at some point. “We can’t sell to them now because we cannot do the volume to fill their orders,” he explained. Longer-term, the company hopes to produce 50,000 to 10,000 kegs each year.
As for Giannopoulus, Czachor said he would remain with the company on the sales side and as a consultant. Of course, he continues his work on behalf of Sly Fox, which has a brewpub in Phoenixville and a brewery in Pottstown, both of which are going strong.
“He’s certainly an icon in the (brewing) industry,” Czachor said. “He has a huge network of connections. John had a great vision for the company and we’re going to take that into the future.” Said Bentley, ”We have a huge advantage with John, since he seems to know just about everybody in the beer business.”
Looking back on the way things have played out, Giannopoulus admits that working to get the keg manufacturing operation off the ground has, financially speaking, “been pretty rough for me personally. The only thing I regret is I didn’t have enough capital when I started.”
Still, when done right – and he is convinced that will happen now – the firm can be very profitable.
“There were some false starts on my part. You’re learning, because there is no one else doing it. It was two steps forward, one step back over several years. And it used up a lot of cash,” Giannopoulus said. “Also, I didn’t have enough engineering talent early enough. We’ve hired a lot of engineering talent in the last 12 months … to improve on quality, to improve on through-put. I wanted to do the American thing. I still believe in it.”
Luckily, so do Bentley and the American Keg Co.