The idea had been brewing for a while, but the day Dan McDonald quit his position as vice president of an industrial packaging company, he surprised everyone. “I got tired of the aircraft industry, and I always had that pull to do my own business. I was there for 22 years, and I just quit. Surprised the heck out of my wife,” McDonald laughed. Not long after his decision, he realized he wanted to start a coffee business, called Nitro Joe’s Coffee. “Once we figured out how to make the coffee shelf-stable and registered with the FDA, that’s when our phone started ringing with all these people asking, can we help them? That’s when I started the Bev-Hub entity.” He added, “It’s been a lot of learning and growing since then.”
BevHub is rapidly scaling for a three year old company, powered by an infusion of capital from private equity investors, Jim Klausman and Butch Eaton. Klausman recalled the recent story of Bev-Hub’s small beginnings and rapid growth. “Our first investment was in Wichita, Kansas, for Nitro Joe’s Coffee, and we got a lot of calls from people who asked us to can for them. We knew this facility that had formerly been run by Tallgrass was here, and we said, ‘Let’s look at this to expand our company.” We looked at it and went ahead and bought the building, and we came in and were able to reconfigure the plant to help us grow our business.”
The three year old company has grown quickly, and the move to Manhattan is a massive opportunity to scale production for their clients. “In 2018, which was our first year, our goal was packing 100,000 bottles to be able to sell,” McDonald said. Just two years later, they produced 3 million at the plant in Wichita during 2020. But the expansion into the Manhattan facility represents exponential growth. “This year, we have SKU to do about 125 million cans. To give a comparison, we had a goal for 100,000 cans our first year in Wichita. I did 96,000 cans yesterday.”
Bev-Hub purchased the facility formerly run by Tallgrass in the fall of 2019 and began construction immediately on the buildout for their operations, and production of sellable products began on June 17, 2021. Manager of Operations, Calley Hoffman, said, “We are well into the process,” she said. “We didn’t bring in a staff from the outside. We hired locally and are supporting our area here in the Flint Hills.”
Bev-Hub’s plans for growth depend not only on the production capacity but on the diversity of product and the ability to adapt to new opportunities, Hoffman said. “We did not pigeon hole ourselves into one specific product. We can diversify ourselves and add additional staff. We have potential to run 24/7 here at this plant, which would significantly increase the jobs here in Manhattan and the area. We started with 37 job openings, and when we get to 24/7 operations, we will bring additional staff, which will bring total employment at the Manhattan facility to 125 employees. That’s huge for our area.” Hoffman added that as Bev-Hub grows, it plans to become an established business as part of the backbone of the community. “We are bringing stability. We love Manhattan and we are here to stay and grow.”
McDonald remarked that continued growth is already built into the plans. “We are going to expand on this facility too, and we are working on a plan for an addition to the building and another product line.”
As Bev-Hub expands to the Manhattan area, operations will continue at their original Wichita plant with a focus on research and development. “Wichita is a very important plant to us,” McDonald emphasized. “Now that we have a much larger facility, we utilize Wichita as a pilot plant. This enables us to introduce upcoming brands, newer entrepreneurs that we help get into the canning business, but it also turns out that the large national and global companies are attracted to us for that reason because now they can introduce new SKUs on a very small scale, rather than doing truckloads of products they aren’t sure will take in the market.”
However, running an R&D facility for national and global companies was never part of the plan, McDonald said. His plan was always to help entrepreneurs with companies just starting out, similar to himself only a few years ago. “My goal was to set out to help entrepreneurs because the small guys will become the big guys, and they will have more cans to fill. When I started the coffee business in 2016, the Nitro Joe’s brand, I couldn’t find a co-packer who would let me go in and fill cans because I didn’t have enough volume. It was an impossible barrier to get into the industry unless you had incredibly deep pockets. So I set a goal for myself to have a facility where I can help newcomers get into the beverage industry. I am fortunate enough to be able to do that.”
McDonald told the story of two of their canning clients who increased production from their introductory facility to the larger scale production in Manhattan. “They started out doing five pallets at a time in the Wichita plant to moving up to this facility here, they are doing truckloads at a time.
“We’re able to help small companies and make products for them that are shelf-stable, and they can walk into a retail store and say, Hey, I’m a little guy but I have shelf-stable product, that’s huge steps for a lot of those companies. McDonald added, “The model has worked perfectly and that’s important.”
Bev-Hub’s position as a new venture themselves requires a commitment to learn, which is served by a commitment to transparency, McDonald added. “We are not afraid to go to our prospective clients and tell them, ‘We don’t know what we’re doing, but we’re here to help you.’ We’ve had clients help us learn the process of how to make products and how to make them better, and it’s been a great relationship back and forth with clients. They appreciate our honesty and transparency.”
McDonald recalled the support for their company expansion from all parts of the Manhattan community was a key part of what helped them achieve this growth. “We’ve had a tremendous amount of support from the city and the Chamber. Even Manhattan Brewing Company came in and volunteered to help us learn the equipment that belonged to Tallgrass. Certainly Central National Bank was a part of this success as well.” Klausman added, “As soon as we approached the city and Chamber, they were on board helping us however they could to make this a success. Kansas State University has been a great scientific partner because they are able to look at our products and tell us what the make up is.”
“It’s a lot of support in the area,” said McDonald. “I went to Kansas State for help with our shelf-stable product, and they were a tremendous help. And we’ve had interns join us from Kansas State as well. Even the community is amazing. I never thought I would get into Kansas a whole lot. But everyone here seems like they are on the up, patting you on the back and rooting for you.” McDonald added, “I love it here in Manhattan. I am not moving.”
