New England Cider Company co-founders Miguel Galarraga and Seth Hart turned their passion for making, drinking, and sharing cider into a lucrative business in Wallingford, CT. Innovation Destination Hartford Website Curator Nan Price talked to Miguel about the startup process and the importance of supporting local businesses.
NAN PRICE: A lot of food and drink entrepreneurs get their start by sharing their product with friends and family. At what point did you realize what you were making was genuinely good and marketable?
MIGUEL GALARRAGA: I guess just seeing the trends in the country itself—and the way the craft beer industry was growing in Connecticut. Five years ago there weren’t that many breweries. Since then, there’s been explosive growth with breweries. We wanted to do something different.
We did some research and found that the segment was growing about 40% every year. It was basically the only part of the liquor industry that was growing—and it’s the smallest segment. We wondered: Why is no one doing this?
NP: Tell us about the process of creating the business.
MG: We got everything together and made an LLC in 2013. Then it was just a matter of deciding what we wanted to do and how we were going to get the startup funding.
Seth and I have never done anything like this before, so writing a business plan and trying to figure out what to put in there was kind of a drawback for us—not having that experience or that knowledge and the patience to do it.
And then, in terms of funding, a lot of places wanted detailed information. They wanted to know what your projections were and what your income was supposedly going to be.
NP: And how do you know that if you haven’t done this before?
MG: Right. How are you supposed to put numbers on paper that aren’t really there?
We also needed to find a place to set up our shop that would allow us to have drainage and everything we needed. We looked at a bunch of different places and ended up choosing Wallingford. Some places didn’t have potable water, some places wouldn’t let us cut into the draining systems. And some places were just too far away. We like the convenience of this location; there’s a lot of access to major routes.
NP: Let’s go back to the business plan—do either of you have a business background?
MG: Seth and I have a background in mechanics. Neither of us went to college, so we didn’t have any business background. We took a couple business classes at the University of Hartford Entrepreneurial Center, which were helpful.
We learned how to make a business plan. Of course we encountered bumps along the way, but that’s part of your business plan anyway. You kind of expect for hiccups.
NP: With regard to those hiccups, did you experience any startup challenges?
MG: Not having the full business background was a drawback for us at first, but we’ve been learning along the way.
A little better planning would’ve been good on our part. We planned as well as we could, but we never really planned for expansion. We didn’t think we were going to grow as quickly as we did.
This is our second facility. We had a two-year lease down the road in what was essentially a garage space. We didn’t think we were going to need more space in two years. We thought we were going to be good there for a while.
And then it turned out we needed the tasting room, somewhere to sell growlers and glassware, and a bigger manufacturing area. We needed more juice and our machine is almost not big enough to produce everything. So the growth was a lot faster than what we expected, which is good.
NP: Did you encounter supply and demand issues?
MG: A little bit. At one point, we had a tough time keeping up with certain accounts that were very high volume. We just didn’t have the resources for it.
We also didn’t have a supply on hand to keep up. The fresh juice we use to make our sweet variety wasn’t available certain times of the year. And we didn’t have the contacts we have now.
NP: It’s good you’ve been able to make those connections.
MG: It’s been really good. The biggest helpers to us have been the beer industry. We’ve connected with a lot of local breweries—they’ve always been willing to lend us a hand. You can ask how they do things, how they operate, how they’re distributing. They’re happy to loan you equipment. They are also very helpful to bounce ideas off for procedures, policies, and learning about the way the state works. Most people are very friendly in the industry. It’s very inviting.
MG: Until recently, we were doing self-distribution. We just picked up distribution with Craft Beer Guild, which is handling Fairfield County and New Haven County for us. Right now, we handle the rest of the state. If everything goes well, we’ll use Craft Beer Guild for the entire state and then we won’t have to do any self-distribution.
NP: New England Cider is in a lot of establishments throughout Connecticut. Do you plan to keep it local or will you expand outside of the state?
MG: Right now we are on draft at about 15 different breweries in Connecticut and about 40 bars and restaurants. They see the market. They know we’re around and they prefer to go with us versus someone from out of state. They want to support local.
Maybe in a couple years we’ll go outside of the state. Our next step will probably be cans and bottles. Right now we don’t bottle or can anything. You buy bottles and growlers here and get them filled. So I think that would be the next step before we expand out of the state—really saturate all of the avenues we can before we head out.
NP: That kind of ties into marketing. How has that process been?
MG: We don’t do much marketing. We’ve been basically building the brand on word-of-mouth and social media. And it’s been working well so far. We’ve been featured in a couple of local news articles and on the local news, which was very helpful for business.
We did a little bit of advertising with What’s Up Connecticut and we use festivals and charity events to promote. But we really haven’t put a lot of budget into marketing.
MG: We’re putting a product out there that people can enjoy. We try to source all of our ingredients from Connecticut. Our apples come from local orchards, which helps support them. We work with the local farmers to plant the types of apples we need and then guarantee them that we are going to buy everything they grow.
And as we grow, we put more of a demand on the products we need. So making those kind of connections with local farms and working with the orchards is really helping support the local economy here in Connecticut.
NP: In terms of supporting the local economy, do you feel like people are drawn to the area because of your presence here?
MG: Yes. Absolutely. And there are quite a few things to do in town, which is good. People stop in the cidery and then they ask us what else there is to do around here. There are two vineyards. There’s going to be a brewery down the street pretty soon. We know a lot of local places to eat and go on adventures. We’re always promoting local business—you can make a day out of it.