Having an active taproom was an important component in Urban South Brewery’s business plan.
"When I first put the plan together, the law only allowed distributing breweries to sell 10 percent out of their taprooms," he said. "That's the route I wanted to go, but I saw the law as a barrier, so I started working on getting it changed. It got changed in 2015 so that you can sell 250 barrels or 10 percent of your production, whatever is higher."
The change meant a small brewery could lean on higher-margin tap sales to flow cash through the business. Landry says that while Urban South is predominantly focused on distribution, that 10 percent they sell through their taproom represents about 30 percent of their revenues. Selling out of the taproom offers higher margins, and it's an invaluable marketing opportunity.
"Customers can see us, we meet people, they see the beer being made and it's at the freshest possible," he said. "Over time it's grown into a central part of the business. The margins on distribution beer are so small that it's tough... the taproom allows us to live comfortably without being super stressed all the time."
It also happens to have worked. In 2.5 years, Urban South has grown into the largest brewery in New Orleans, and the third largest in the state by volume. Ironically, that growth is partly a result of his "think smaller" attitude, as Landry believes that movement right now is in smaller, neighborhood-focused breweries that are culturally relevant and community minded.
For Urban South, some of being relevant means brewing what makes sense for their customer and climate. It's usually hot in New Orleans, so that means sours and IPAs sell better than stouts or other heavy beers. And in order to build interest in craft beer from macro drinkers, Urban South brews their "budget" lager, Paradise Park, which, Landry says, has been a "home run."
That community focus also means they look for opportunities to give back to the community as part of their brand outreach. In their second year, Urban South donated $30,000 worth of cash and product; Landry expected to double that or more in their third year. He is looking at sponsoring an adult sports league, which is both demographically appropriate and, he feels, a better way to spend marketing dollars than "billboards or TV or something like that."
Good marketing is one reason he focused on the taproom. "We really wanted to make great beer and we wanted to create a 'third place' and build community," Landry said. "From day one this has been a space where people could come in and be comfortable. The best way for people to get to know our brand is to come to the brewery and experience it.