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December 19, 2014

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‘Keurig machine for beer’ gets outpouring of interest

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Lisa Brown / St. Louis Post-Dispatch/ / MCT

Synek’s co-founder Steve Young, left, and Strategic Director Michael Werner show their “Keurig machine for beer,” for which a successful Kickstarter campaign has seen them raise more than $648,000 for development, manufacturing and marketing expenses.

At the end of a 30-minute interview with Steve Young this month, a colleague of the beer entrepreneur checked his smartphone, leaned over and told him, “We just made another $5,000.”

By then, Young was checking his phone many, many times a day. Since the 28-year-old launched a crowdfunding campaign on Kickstarter on June 24 for what has been dubbed the “Keurig machine for beer,” the St. Louis resident said he’s getting a thousand messages daily from people around the world inquiring about the product, eight months before it’s available for sale.

Interested consumers and investors aren’t the only ones reaching out. Since the campaign began, media outlets from Time magazine to “Good Morning America” have taken notice of the south St. Louis County-based startup.

Per Kickstarter rules, Synek had a month to reach its goal of $250,000 or it wouldn’t get the funding. Over the Fourth of July holiday weekend, it surpassed its goal. As of July 28, Synek had raised more than $648,000.

The money will be used for development, manufacturing and marketing expenses. In return, those who made pledges get first edition versions of the product when it hits the market next March, T-shirts and other perks, based on their level of investment. More than 1,000 investors made pledges ranging from a few dollars to more than $5,000.

Synek, which has been in development for two years, has a patent pending for its titanium and nylon bags that can be filled from brewers’ taps with a gallon of beer, or the equivalent of 11 beers. The bags are pressurized, allowing the beer to maintain freshness for at least 30 days, much longer than a growlers’ shelf life of a mere few days, according to Young.

Before he co-founded Synek with Jeff Macler, Young was an equity research analyst with Cleveland Research Co. in Ohio, focusing on retailers including Wal-Mart, Costco and Macy’s. Last year, he returned to his hometown and now devotes his attention to Synek full time. Based in the STLVentureWorks business incubator on Lemay Ferry Road, Synek has six employees.

Young said his timing for bringing Synek to market is aligned perfectly with changing consumer habits as craft beer sales rise and the number of craft breweries keeps expanding.

“It’s the best time to be a part of the beer industry,” Young said. “Two years ago, this couldn’t have happened.”

How did you come up with the idea for a beer dispenser?

As a stock analyst, I was turned on by the industry’s growth and diversity of brands. As I started talking to brewers across the nation, they all complained about the same problem, which was: They make great beer, but it’s hard for them to get it into people’s homes and actually make money.

When you look at the industry, they have two options. They have cans and bottles, which are extremely expensive, and even the bigger craft brewers like Schlafly can only afford to put out their flagship brands. So, bottom line, selection is limited.

Growlers have become a new trend because they give you variety, but the quality lasts about two days. What we’ve designed is a new packaging system that gives people pretty much unlimited variety at the highest quality they can get.

Did the business stem from you being a beer fan?

No, actually. I’ve never home-brewed a beer. I was just traveling to a lot of cities meeting with hedge fund and mutual fund guys, and they’d all take me to their local craft breweries. I was there anyways, so I just started talking with the brewers. The first time I heard them talking about their struggles, I thought, "This is interesting." Once I heard everybody saying it, I realized it’s kind of an epidemic.

Ten days into the Kickstarter campaign, more than 700 people pledged funds. Were you surprised by the response?

It’s been a roller coaster. We anticipated the first couple of days would be huge. Then we opened up our Kickstarter and nobody showed up. We launched it with home-brewers first, people who trade beer with friends. We were at the home-brewers’ conference two weeks prior and everybody loved it, but they didn’t come out. We had a “What are we doing wrong? Aha” moment, and we pivoted toward craft beer, and then it blew open. We had already established relationships with craft brewers, but that was going to be Phase 2 of our efforts. We leapfrogged to craft brewers and called all of our brew partners and said, “This is what we’re doing.” It took about two or three days, but after that, it went crazy.

That’s changed everything. If we launched with home-brewers, we would’ve had a year to start to establish relationships with craft brewers, and now it’s rapid fire. We’re calling craft brewers every single day asking them their thoughts. We need to get breweries on board for people to really see the value. Right now, internationally, we have 600-plus established partners, including many local craft breweries. This morning while I was getting out of the shower, a distributor for 200 breweries called. It’s happening, and it’s snowballing.

Do you agree with the comparison some have made between Synek and Keurig?

Coffee was made the same way for centuries, and Keurig came in and changed the game. Synek is a product that has the potential to do that. The difference is Synek doesn’t brew beer. It doesn’t fabricate beer on the spot. It just dispenses already premium, fresh beer that brewers create.

The feedback I’ve received from brewers is that this can be a game-changer. Every beer that leaves a brewery (for sale at retailers), brewers make maybe a 10 percent margin, not a lot of money at all. Beer that they sell right out of their brewhouse, they make 15 to 20 times that. Not only is this a way they can get beer into people’s homes, it can help save a lot of these struggling breweries that can’t afford $30,000 bottling equipment. This can blow things open for them from a profitability standpoint.

Where are you in the manufacturing process?

We already have a design team and a manufacturing team, and we have a patent pending for the first flexible packaging that can hold carbonated beverages. We’re lining up distributors. We have distributors in Europe, the U.K. and Brazil reaching out to us.

It’s not finalized yet, but we’re working with a fabricator.

The dispensers, we’ve tried everything to try to get them produced in the United States, but unless we can get some type of subsidy, they’ll have to be made in China.

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