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featured story: Don Cazentre, Syracuse.com

He’s the brewers’ voice (and has the governor’s ear): How David Katleski built a beer empire

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He worked on Wall Street for a week. He helped developer Bob Congel build the mall that would become Destiny USA. He went into the restaurant business because he loved to cook, then got hooked on craft beer.

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Photo: David Katleski, owner of Empire Brewing Co. in Syracuse, toasts the groundbreaking of the Empire Farm Brewery in Cazenovia in May 2015. 

Today, David Katleski runs two breweries: the 22-year-old Empire Brewing Co. brewpub in downtown Syracuse and the big new Empire Farm Brewery, which opened last month in Cazenovia. He also leads the state beer industry group whose lobbying efforts have created a surge so big it has more than doubled the number of New York’s breweries in four years.

He provides a voice for the brewers. He has the ear of the governor.

In Cazenovia, Katleski built one of the biggest breweries in the state. In Albany, his efforts helped pave the way for nearly 100 rivals.

In effect, he created his own competition.

THE GREEN LIGHT

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Photo: Taps behind the bar in the tasting room at the Empire Farmstead Brewery in Cazenovia. The tasting room opened June 25. 

In June 2012, Katleski was returning home to Cazenovia from a day of lobbying in Albany when a reporter called his cellphone. Katleski pulled over and answered questions about legal changes for the brewing industry that had just been agreed to by the governor and state Legislature leaders.

He talked that day about the new legislation’s fee and tax benefits for brewers, and about a key new proposal that would reward brewers who use New York-grown or produced ingredients in their beer.

He was asked if the new laws would clear the way for him to open a big new brewery in Cazenovia, a project he had been planning since 2010.

“It absolutely green lights Empire’s plans for Cazenovia,” Katleski said.

Green light or not, it took a while. The project — the Empire Farm Brewery — finally opened in June. It is one of New York’s largest craft breweries, and the state’s largest “farm brewery,” as defined and regulated by that 2012 law.

In the four years since Katleski helped engineer the legal changes that made his big brewery possible, something else happened.

The number of breweries in New York jumped from fewer than 90 to almost 250. The number of farm breweries — those who agreed to use New York ingredients for tax and regulatory benefits — started at zero and took an equally impressive leap.

“When the law was passed I thought we’d be the first farm brewery in New York state,” Katleski said in mid-June, when the Cazenovia brewery opened. “When we got the license (for Cazenovia) a few weeks ago, it was New York farm brewery No. 102.”

The phenomenal growth in New York’s brewing industry since 2012 has been fueled by the farm brewery law and other changes that Katleski helped bring about.

He did it while wearing two hats: One as a brewery owner with a personal interest in seeking changes that helped his own project. The other as the leader of a group of beer entrepreneurs from Long Island to Buffalo who had similar dreams.

“Sometimes I look at how hard I fought to give brewers in New York all these incredible rights to expand and compete in the way that America was founded on,” he said. “Then there’s other days when it’s like: Be careful what you wish for!”

The holders of New York’s Farm Brewery License No. 1 are Carrie Blackmore and Matt Whalen, owners of the Good Nature Brewing Co. in Hamilton, not far from Cazenovia.

They had opened as a standard small craft brewery for a year before switching over to the farm brewery license on the company’s first anniversary in January 2013.

“It (the farm brewery license) has really transformed our business,” said Blackmore, whose brewery was able to open a much-needed satellite tasting room in Hamilton because of the farm license and now is in the midst of a major expansion. “I can’t say enough about David and how he’s worked so hard on behalf of all the brewers in the state.”

FROM FINANCE TO BEER

Senator Schumer at the Empire Brewing Company, Armory Square
Photo: Owner and CEO by Empire Brewing Co. David Katleski, right, shows Sen. Charles Schumer around his restaurant’s brewhouse in a photo from 2011.

Katleski, 52, was born and raised in the Endicott-Johnson City area, near Binghamton. He studied business administration/accounting at Siena College in Albany, where he also played baseball. More important to his later career, he found a roommate and friend in classmate Michael Hodgdon.

Katleski worked briefly on Wall Street — “I got a job and lost it in one week in the 1987 crash” — and later for Syracuse-based mall developer, The Pyramid Cos., in Boston and in Syracuse. One of his last major projects was the development of Carousel Center (now Destiny USA).

But he was a self-described “fan of the culinary arts,” and had told Hodgson in college: “Later in life, if you ever want to open a restaurant, let me know.”

Sooner than Katleski expected, Hodgdon called. He had been following the then-new trend of brewpubs — restaurants that made their own beer in-house.

In 1994, Katleski and Hodgdon opened the Empire Brewing Co. brewpub, at 120 Walton St. in Armory Square. It was one of the state’s earliest brewpubs and a pioneer in the resurgence of Armory Square as a dining/entertainment destination.

They found quick success. They soon opened a second location in Rochester, and then embarked on a third Empire in Buffalo. They were building an Empire State empire of beer.

Then trouble hit: Financial hurdles grew from expanding too fast, the state passed a smoking ban for restaurants and bars, and terrorists attacked the U.S. on Sept. 11, 2001.

“People stopped going out for a while,” Katleski said. “And honestly we had the challenges of any young restaurant group — over-expansion and under-capitalization.”

The Buffalo Empire closed after one year, in 2000. Rochester and Syracuse closed in 2003.

Katleski returned to the business world, but brewing had gotten into his blood. He went to work in Syracuse for the insurance firm Haylor, Freyer & Coon, where he built a division that specialized in insuring startup craft breweries.

In that role, he travelled the country, meeting brewers and watching their business practices. He was struck by one model in particular: Dogfish Head in Rehoboth, Del.

“(Dogfish Head owner) Sam Caligione ran a really strong brewpub, then used it as a marketing tool to launch an equally strong packaging brewery and bottled products,” Katleski said. “That’s an idea I kept in my mind.”

WEARING TWO HATS

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Photo: David Katleski, owner of Empire Brewing Co. in Syracuse, speaks at the annual Craft Brewers Conference in Washington, DC in 2013 after receiving the group’s “Defender of the Industry” award. 

In 2007, Katleski reorganized. He bought out Hodgdon and reopened Empire Brewing Co. in its original Armory Square location. It had remained untouched since the closing in 2003.

“There was still beer in the tanks,” he said. “Tabasco sauce bottles were still on the tables. So was the silverware. It was surreal.”

With the reopening, Katleski had new goals. One was to transform Empire into an early pioneer in farm-to-table practices in food, and farm-to-glass in the brewery. His kitchen served burgers made from locally raised elk, for example, and the brewery made a fall beer using local pumpkins.

Meanwhile, he had also started the New York State Brewers Association, inspired by a similar national organization and state groups elsewhere that he had seen while helping insure breweries.

“I saw an opportunity to help brewers in New York state with increased market share and awareness and education to consumers,” he said. He also saw the need to protect brewers from laws and practices that threatened to quash the growing craft beer movement.

One early success in Katleski’s newfound role as a lobbyist for beer was reforming something called the franchise law. That law had allowed a beer distributor to dump a brewer from its portfolio at any time, but made it difficult if not impossible for a brewer to change distributors.

“It was a one-sided arrangement at the time,” Katleski said. “The New York State Brewers Association made it a two-way street.”

Then came such legislative efforts as the farm brewery law in 2012. Among other things, the law allowed brewers who use an ever-increasing amount of New York ingredients to open satellite branches and sell other New York-made beverages in their tasting rooms. It also allowed farm brewers to sell beer by the pint in their tasting rooms, a benefit extended to all craft brewers with the NYSBA’s help in 2013.

In May 2013, Katleski was honored by the national Brewers Association, based in Colorado, with its “Defender of the Industry” award.

He’s still at it. This summer, Katleski and the NYSBA were major forces inpersuading state lawmakers to allow restaurants and bars to sell alcohol before noon on Sundays. As with other legal changes he championed, it helped his business (the Empire brewpub hosts a Sunday brunch) as well as bar owners statewide.

“Aside from the individual legislation, the key thing is that the brewers now have a seat at the table in Albany whenever changes in the state alcohol law come up,” Katleski said.

Tim Herzog, president of Buffalo’s Flying Bison Brewing Co., has been watching Katleski in his dual role as a brewery owner and political lobbyist for the better part of two decades.

In part, Herzog said, that dual role reflects to the overall collaborative nature of the craft brewing industry. “I think we all know that generally what helps one helps us all,” he said. But with Katleski, he said, there’s more.

“To get things done in Albany, you need not only to get a proposal, but follow it through, keep communicating and applying pressure.” Herzog said. “David is perfect at doing that. He’s well connected politically and in business … He knows how to follow through.”

THE BIG BREWERY — AND COMPETITION

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Photo: Grain silos outside the Empire Farm Brewery in Cazenovia. Don Cazentre

As a former baseball player, Katleski knows the frustrations of being on the bench while others are performing on the field.

For years, he watched as others opened farm breweries, from Long Island, to the Adirondacks, to the Finger Lakes and even in cities. (A farm brewer doesn’t need to have a farm of its own, as long as it buys ingredients from New York farmers).

The Empire Farm Brewery is a little different. It sits on a working farm, on land Katleski purchased and started using to grow hops, barley and other ingredients for the brewpub back in 2012. He also needed to get water, sewer and other utilities extended to the site.

It opened as the sixth largest brewery in the state, the fourth largest craft brewery and the largest farm brewery, all as measured by the amount of beer it can make in one batch. It’s a 40,000-square foot building on 22 acres off Route 13, on Cazenovia’s southern edge.

“When you take on a project of this scale and size, it’s going to take longer,” he said.

To make it happen, Katleski also became expert in landing grants and loans through New York state, the same government he spent so many years lobbying for legal changes. The $6 million Empire Farm Brewery is getting tax breaks from the governor’s Start Up NY program, as well as aid through Empire State Development and other programs. Katleski says the brewery could not have been built without that aid.

Now, Katleski has to fight through an ever-growing amount of competition, from new and expanding craft and farm brewers as well as global beer companies that continue to merge to keep their share of the beer market intact.

There are still challenges ahead that the state brewers association must deal with. Among them: The growing number of farm brewers is putting a strain on their ability to find enough New York hops and barley to qualify for the farm license, whose benefits may be waning.

“David has been a great advocate and spokesman for the farm brewers and all the brewers,” said Randy Lacey, owner of the Hopshire Farm & Brewery in Dryden, Tompkins County. “We’re all anxious to see what he and the brewers association are going to do in the next phase.”

Chris Ericson, owner of Lake Placid Pub & Brewery and Big Slide Brewing Co., both in Lake Placid, is confident Katleski can handle it.

“I don’t think people have any idea how crucial David has been in getting our voices heard in Albany,” Ericson said. “The real question is” We’ve had so much success, can we keep it going?”

Katleski believes the traditional collaboration among brewers remains strong. He also believes, despite the rapid growth and fears of a saturated market, that there is sill an upside to the craft beer industry.

“We call it a brotherhood and that’s real,” he said. “But now we all have to learn to play nicer in the sandbox because there’s more kids in it.”

Don Cazentre writes about food, beverages, restaurants and bars for syracuse.com and The Post-Standard. Contact him by email, on Twitter, atGoogle+ or via Facebook.

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