This craft brewery is model of survival and success in a competitive craft beer market.
Note to readers: This Q&A is part of a series of peer interviews from The Equipped Brewer. Installments will share the key experiences, lessons learned, and advice of owners, operators, and other key contacts at young craft beverage companies as they’ve tackled the challenges of growth.
As one of the most popular breweries in Madison, Wisconsin, Ale Asylum is a model of survival and success in a competitive craft beer market. Launching in 2006 and located about 80 miles west of Milwaukee, Ale Asylum stepped onto the scene in a region boasting brewers like New Glarus (est. 1993), Lakefront Brewery (est. 1987), and Miller, whose birthplace of Milwaukee has granted it an everlasting presence there.
Yet, the edgy, indie brewery helmed by brewery partners Otto Dilba and Dean Coffey was able to set itself apart. In 2012, the brewery expanded from a 13-barrel, 11,000 bbl capacity brewery in a 8,000 square foot space to a 33-barrel, 50,000 bbl capacity brewery in a 45,000 square foot space, allowing more variety, more seasonal releases and a plethora of packaging formats (cans, bottles, bombers, you name it).
Now, Ale Asylum is the third largest craft brewery in Wisconsin and is distributed in three states, mostly recently expanding its distribution to Minnesota in November 2017. And perhaps most fascinating of all is that they’ve done it all according to a very strict indoctrination: the Reinheitsgebot, also known as the German purity law, which states that beer may only be made with the ingredients of malt, hops, yeast, and water.
Ale Asylum produces an impressively lengthy list of beers each year that challenges expectations of the typical German purity law lager 
lineup. A rebellious mix of German-, Belgian- and American-style ales and lagers includes their flagship American Pale Ale, Hopalicious; Ambergeddon, an aggressively hopped, ABV-amped amber ale; and Tears of My Enemies, a citrusy, sinister pale ale whose label design came from Dilba’s dreams. Most recently, in December 2017, Ale Asylum released B2D2, a “retro IPA” inspired by Star Wars’ R2D2 character and other late ‘80s–early ‘90s nostalgia.
Co-founder and vice president, Otto Dilba says Ale Asylum doesn’t see the Rheinheitsgebot as a limitation, but rather a part of their core values as brewers, as well as a unique and constant chance to be creative.
“When you have limitations from a young age, I think that forces you to be more creative with what you do have,” said Dilba, noting that both he and Dean grew up relatively poor. “Because that’s how we were raised and how we grew up, we don’t see [the Reinheitsgebot] as limitation, we see it more as opportunity to truly be creative with the ingredients or options in front of us. The kid that grew up a billionaire probably doesn’t appreciate that Ferrari he got when he was 16.”
Equipped Brewer talked with Dilba about starting up a brewery, staying true to values, succeeding through competition and expansion, and overall, following Ale Asylum’s mantra: “do what’s best for the beer.”
Interview With Otto Dilba, Ale Asylum Co-founder and Vice President
Q: How did Ale Asylum start?
Myself and my business partner, Dean Coffey, the brewmaster, have been in the industry for over 25 years. We met in Madison at the now defunct Angelic Brewing.
Q: Where did you get your funding from?
It was all private investment. Both Dean and myself, as well as a number of silent investors, took our life savings and started the brewery. Literally digging couch cushions, you name it. At that point in time 2006 in Madison, the concept of where craft beer has gone [today] was not even there yet. No banks wanted to touch us. They just didn’t see it as a wise investment.
Q: How much capital did you raise to start?
I want to say about 450K.
Q: What do you think it would take to start a brewery now?
You could probably do it as cheap or cheaper, because of the concept of nanobreweries popping up. If you wanted to do everything real small, you could do it contract for a couple of hundred thousand. [But] if you’re going to do it truly on the cheap, both in price in quality, then don’t do it. [The priority] should be making the best liquid you possibly can, day in and day out.
Q: What did you learn at Angelic that you took with you—or moved away from—when launching your own brewery?
One of the things we learned was, [better equipment] costs more, but you get what you pay for. You really do. When you talk about the costs of opening up a brewery today, the equipment should be biggest part of that cost.
Q: How did Ale Asylum grow so much and so quickly? Between 2006 and 2012, you expanded to a new location and became the third largest brewery in Wisconsin.
In 2006, there were certainly some popular [craft] beers, but I think it was so heavily dominated by being in the state Miller was born in that most consumers, then and to this day, are drinking macro beer.
When we came out with our flagship, Hopalicious American Pale Ale, that was something that just didn’t exist locally. The only similar option was Sierra Nevada Pale Ale. [Hopalicious] hit consumer palates at the right time, I think. [Hopalicious] is unique enough for the connoisseur, but also approachable enough for the novice.
Q: You came into Ale Asylum with more of a marketing background. What role did branding have in Ale Asylum’s growth?
One thing is, certainly at that time, it did help us stand out a little bit because nobody was paying much attention to branding. It was always, ‘Bob’s Brewery Pale Ale,’ or ‘Bob’s Brewery Stout.’ There wasn’t a lot—at least in the Midwest at that time—of branding beers specifically, let alone giving them a specific look.
Q: Has sticking to the Reinheitsgebot been challenging at all?
Yes and no. Being such a core part of our philosophy, for us to maintain it has been like the back of our hand. It’s just who we are. But when there are all of these unique additions to craft beer—some good, some bad—you do start getting a sense of some of these flavors that maybe you just can’t get with four ingredients. The challenges for us is, If we’re sticking to the four ingredients, how do [we] make a porter taste like a vanilla porter? How do [we] make a hoppy beer taste more like pineapple and mangos vs. pine trees?
Q: Do you think this has allowed you to get to know ingredients better than you would if you were able to use other adjuncts or other ingredients?
We would definitely agree with that. You can’t overpower anything with a ton of added bourbon flavor or a bunch of vanilla beans. We all know breweries out there that do that, and some of them are really successful with hiding off flavors. You can’t really do that with beer that’s as clean and as pure as it is with four ingredients.
Q: Do you still feel the same way about the Reinheitsgebot now as you did 10 years ago?
All of what ale Asylum is stems from the beer. If it comes from the beer, it comes from Dean. And if it comes from Dean, it comes from philosophies ingrained in him from the 1980s. It’s just who we are.
We agree that there are some great beers made beyond the four ingredients, so the biggest challenge is how incorporate those flavors [without additional ingredients]. The wonderful thing about it is that the ingredient purveyors within the industry have really expanded their offerings as craft beer has come forward. There are almost infinite amount of hop varietals out there, you just have to want to check them all out. So, that’s made it a little bit easier for us.
Q: How do you get a porter to taste like a vanilla porter without adding vanilla beans?
It’s really seeking out obscure ingredients. I think at least internally, we have to pay an increased level of attention to supplier industry trends—what are maltsters doing? What are hop farmers doing?—to try to find that unique flavor.
Q: Can you tell me more about how you came up with the name Ale Asylum?
When I looked at Dean back in the day, I saw someone who was like a Don Quixote. He’s just a little off, a little crazy to be thinking of [beer] in these terms [of the Reinheitsgebot]. Looking at him from the outside, I thought ‘this is insanity, why would you feel this way?’ But for him, it is his shelter for a beer weary soul. It has become ours as a collective sort of shelter in a crazy world, be it the world at large, or in the craft industry, back then and as it stands now. We always know what we’re going to get when we’re within the Asylum.
Q: How did you know when you were ready to distribute out of state?
The biggest point for us is always going back to what’s best for the beer. If we stretch ourselves too far too fast, [are] the quality and the consistency of the product going to suffer? Is the product going to maintain its quality of life, in reference to the shelf life, if it goes to Illinois or Minnesota, or Vermont, for that matter? For us, it’s all about trying to maintain that quality and consistency of the product while we’re making certain that we have the capacity to expand into additional territories. And we do now, [which is] why we’ve recently gone into Minnesota.
When you first start as a brewery, when you run out on the shelves, that’s actually not such a bad thing, because people are really digging what you’re doing. We did that for a year or two. After a certain point in time, when you get into a new market, you want to maintain that shelf space and maintain those tap lines. You don’t want to be running out.
Q: How do you maintain quality and consistency when you grow to the extent that you did?
There’s not a speck of the process that isn’t supremely important. I’ll give you an example: I’ve seen people yelled at before, by other brewers, not by the owners or managers, when they dropped a gasket on the floor and went to go use that gasket without cleaning it first. A fellow brewer will unleash unholy hell on that person, because something that small could make the beer have off flavors and aromas, and it’s just not acceptable. [They] don’t make that mistake again.
Q: How did you choose Minnesota for your next frontier?
We’ve been wanting to get into Minnesota for a while...we had planned aggressively for that launch for the better part of a year.
Q: How do you plan for distribution in a new market?
You’re simultaneously doing a lot of things. First and foremost, it’s making sure that the beer maintains its quality and consistency and that you think that you’ve got something different to offer the market. You’re also researching that market. What are the trends in that market? What’s working, what’s not? How will we fit into the market? Do we have beers that are unique?
And while doing that, a big part of it is interviewing and working through the logistics of which distributor you’re going to go with. That’s a partnership. It’s far more difficult to get out of a distribution agreement than it is a marriage. When people talk about sanctity, they should talk about the sanctity of a distribution agreement.
Q: It seems like overall there’s kind of a dark and spooky vibe to Ale Asylum’s branding.
The way I look at things, more often than not, comes from a dark point of view. If you look at Tears of my Enemies, that image is from a very specific dream that I had. I woke up out of breath in cold sweats. The juggling of skulls was friends and family, and this enormous, larger-than-life sort of shadowy demon was just ripping [the skulls] off of friends and family members’ bodies and blowing them [away] as if they turned to dust.
There is no beer in our portfolio that is not aggressive in its approach to that particular style. Ambergeddon, our amber ale [which is] a year-round beer, on the label is a skull and two guns. The reason for that is, it’s a West Coast-style amber ale, which means it’s aggressively hopped for an amber and it’s also 6.8% ABV. This isn’t a smooth sippin’, 4% amber that has a picture of some river or some mountain on its label. This is an aggressive, West Coast-style amber. A lot of the darker, more aggressive imagery is specific to that beer and what it’s meant to represent.
If you enjoyed this article, you may also like: 4 Tips to Operating a Successful Craft Brewery.
