Something’s brewing on Saint James Street in Kingston. Tommy Keegan, proprietor of Keegan Ales, has confirmed that he’ll be joining forces with Kenan Porter’s Middletown-based Clemson Bros. Brewery. This gives Keegan, now 49, a way to gradually exit the business he started 17 years ago. As with many business deals, this one has slowed to a crawl under the weight of the pandemic, but the deal could be sealed by fall.
Clemson Bros. Brewery is housed in an historic Middletown building that once housed the Clemson family hacksaw company. The company’s owner, Kenan Porter, is bullish on craft brewing and dining, and is expanding the company. Last year the Gilded Otter in New Paltz became “Clemson Bros. Brewery at the Gilded Otter.”
Porter and Keegan know each other well; Porter says he’s been casually asking Keegan to sell the Kingston ale house for seven years, while Keegan simply recalls it as “a long time.”
“I never had a for-sale sign on the place,” Keegan said. However, his life plan is calling for a change.
“I’ll be 50 in September,” he explained, “and I always told myself I would work my ass off until my 50s.” Now he’d like to slowly back off from managing day-to-day operations, and start transitioning into other ways he can use his skills.
Keegan isn’t calling this a sale at all. Rather, he’s bringing on Porter and Clemson as an investor-partner, allowing him to “take care of some of the original investors,” with the understanding that a deal will have to be made for his remaining stake at some point in the future. Clemson Bros. “would be a partner, but I would have managing control for the foreseeable future.”
Tommy Keegan comes to this crossroads with a varied background. After spending two years as head brewer at Blue Point Brewing Co. on Long Island, he was considering a pivot to the pharmaceutical industry. He’d earned his biochemistry degree in the master brewers’ program at UC Davis. Work in DNA sequencing would have been his liftoff point.
The right time for a brewery
Instead, Keegan happened upon a building in upstate Kingston (to a Long Islander, “upstate” is anything north of Scarsdale, more or less), a building that had been a brewery. There was a legal problem. The business owner, Keegan said, “had defaulted on municipal loans, and stuck the city with all this brewing equipment, and the landlord wanted to charge them rent.” Selling the building had proven impossible under those conditions, Keegan recalled. It had been vacant for at least three or four years.
Recognizing an opportunity, Keegan talked with his wife, then carrying their second child. They agreed to explore building a brewery “at the ninth hour.” He worked with all the stakeholders, negotiating a way to satisfy them enough that he could buy the building from a willing seller and secure the new brewing equipment he needed to make a go of it.
“We decided to take a chance, sold everything on Long Island, and came up here,” he said. Much to his surprise, “17 years later, the lights are still on.”
It was the right time to start a regional production brewery. There was no business like it between Brooklyn and Albany. A few small-batch operations like the Gilded Otter existed, but nothing designed to produce craft beer at real scale. Keegan has been riding and guiding that popularity in the region ever since.
But for the novel coronavirus, this may have been a done deal back in March, Porter said. Now, “we don’t have a time frame, we’re in contract but we’re not making any moves just yet.” To Porter’s mind there are two separate deals: one regarding the Keegan Ales operation, and the other to build a Clemson Bros. Brewery alongside it on the same property. Developing the site in that manner will require regulatory approval from the city planning board, county department of health, and the state liquor authority. With governmental operations at all levels impacted, this Clemson Bros. project and also plans for a new location in Warwick are on hold.
“They want to do some construction,” said Keegan. “There’s lots of hoops. We were prepared for hoops, but the hoops just got shut down. It’s moving slower than we anticipated, but if we do that in the next two to three months, that might be realistic.”
Anything in construction “is pushed back at least six to twelvemonths, across the board,” Porter said, due to disruptions in the global supply chain. He’s seen a 20% increase in the cost of materials, and even with the higher prices there are delays in delivery. Porter said that even simple decking is “weeks or months out.” He sees his company as on course toward a total of five locations, but “you can’t hit the gas on easy soil.” He’s had to accept that “We’re moving forward at a snail’s pace.”
The Middletown and New Paltz Clemson Bros. locations have a lot of outdoor seating space. “We’re at 85 percent revenue of where we should be” without a global pandemic, he said. “We have processes in place that allowed us to keep profitable while managing expenses.”
Brewmaster emeritus
He cautions that prices of all consumer goods will rise in the coming months as the economic effects of this coronavirus deepen, and that there will be “a lot of carnage, in business failure” as a result. Porter, thinks that Clemson Bros. Brewery is protected against that possibility, and he expects Keegan Ales to weather the coming economic storm as well.
Porter considers Keegan Ales “a solid pick” for an expanding business. The plan is to change nothing about the iconic Kingston brewery operation at first, except to “drop a Clemson on the property.” A site-plan application has not yet been filed.
Porter is well aware that Tommy Keegan is the Mid-Hudson region’s brewing pioneer, and he wants plenty of time to tap into his knowledge of the craft and business of brewing beer. Keegan’s role as brewmaster might be expanded to oversee all the Clemson Bros. brewing operations, including the ones at the Gilded Otter. “He’ll be the man for at least five years,” if Porter has his way.
Keegan might have other plans. “[Porter] wanted five years,” he recalled, but, “I said, How about three?’ That gives me 20 total.” On the other hand, “Maybe five will turn into six or seven if we’re having a good time, but we’ll work out exit strategy.”
Porter sees synergy in the ways the two businesses can complement each other. Under the two-brew model of adding a second brewery on the Keegan site, an “organized hub” for Clemson Bros. would be created. Customers might “spend half the day there, sampling the cuisine and the beer options.” Porter said Clemson Bros. boast 16 varieties, while eleven brews are available for delivery from Keegan Ales. Clemson Bros. also has a rotating menu that’s consistent across all locations, Porter said.
Keegan is looking at the capabilities of the different brewing locations. He thinks the high-volume “workhorse” brews might all be produced at his original Kingston location, leaving locations like the Gilded Otter for specialty batches. That might make it “more interesting for the consumer,” he believes.
Keegan and Porter both sound confident that they’ll be moving forward together. As he transitions out of the day-to-day operations, Keegan said he’d like to find the time to leverage his MBA into teaching a few courses at a local college, but his real goal is to carry a business card with the title of “brewmaster emeritus.”
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