A Winning Pessimism

A former army man's boutique brewery may change the face of Israeli beer.

Michal Palti
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Michal Palti

"After being discharged from the army, I knew I wanted to become an entrepreneur, and not necessarily in the field of technology," says Ori Sagi as he walks among shiny silver-plated containers, his voice clearly filled with pride. Over the past year he has been coming every day to the sparkling factory that he built practically with his own hands: the Alexander Brewery in the Emek Hefer industrial zone. In his eyes this was a necessary career change, but it is one that has raised several eyebrows, especially among his former army buddies.

Ori Sagi and his Alexander beer, at his boutique brewery in Emek Hefer’s industrial zone.Credit: Moti Milrod

Sagi, 46, who is married and a father of three, was discharged from the air force three years ago. As a former commander of an Apache squadron with a degree in business administration, certain career moves were expected of him. No one believed him when he he said the only thing he wanted to do was brew a boutique beer from dried malt kernels, hops, flowers and yeast.

You can already find Alexander beer in wine shops and restaurants, thanks in no small part to Sagi's prominent partner in the project, restaurateur Yoram Yerezin. With a group of investors who for all intents and purposes consider the plant a start-up, the two men are hoping their joint endeavor will change the beer market in Israel, if only slightly.

Sagi is a beer lover, a hobby that gradually became more sophisticated - from tasting, to reading up on the subject, to participating in relevant forums. He brewed beers at home in Moshav Herev Le'et, visited breweries abroad and finally got up the courage to participate in boutique brewery competitions in Israel. His experimental beer won prizes and his circle of tasters expanded, but only when he retired from the Israel Defense Forces at the age of 42 was he able to think about his hobby seriously.

During the year he was discharged, which he devoted to his family and to his home brewery, he was approached by Aviam Sela, who had retired from the air force with the rank of colonel and had been the handler of agent Jonathan Pollard. Sela wanted to recruit Sagi to an information systems firm he had founded. Sagi prepared for their meeting, but also prepared a detailed business plan for a boutique beer brewery.

"I knew Sela was a whiskey lover - he has a collection of 200 types of single malt whiskey. I brought him beer that I had prepared, he tasted it and his eyes lit up," recalls Sagi. "He listened to my business plan and said 'If you go for it, I'm with you.'"

Soon 11 friends were recruited, including advertisers Shoni Rivnay and Yoram Bauman, and together they invested NIS 3 million in the brewery.

Sagi, sitting in an improvised office in the brewery, says that although he understands beer, he doesn't know anything about selling and marketing food, which is why he turned to brothers Yoram and Ari Yerezin. The two, who own 12 restaurants - such as the Moses, Ad Haetzem and Zozobra chains in Herzliya and Cafe Italia in Tel Aviv - agreed to invest.

Yerezin began his restaurant career 30 years ago, when he studied hotel management in Las Vegas. When he returned to Israel in 1988, he wanted "to open an American-style restaurant, which would serve meat and potatoes and last for 30 years," as he puts it. He and his brother, chef Ari Yerezin, began to raise initial capital from family members.

"We were the first to open a restaurant in Herzliya Pituah, Ad Haetzem. Everyone thought opening a restaurant among all the garages was crazy," recalls Yerezin. "Fortunately for us, it succeeded from day one. After a year we bought out the partner and returned the investment. Our next restaurant, Pastalina, opened in a large loft in south Tel Aviv, but was short-lived. In one day everything died. We went from 700 orders a day, to the telephone going dead. We didn't understand what had happened, but we learned a lesson: the restaurant manager has to be a permanent partner."

Since then, Yerezin has managed the business using the partnership system: In every restaurant the manager is a hired employee who at a certain point is asked to invest and become a partner. The Yerezin group is composed of the brothers and a relatively stable group of friends: Dov Fogel, Yuval Sela, Effi Shemesh, Steven Lobel, Yael Arenstein-Uri, Anat Ben Tovim-Laufer and Avi Conforti, with whom Yerezin has been at odds for several years.

How do you open a restaurant with someone you aren't talking to?

Yerezin: "Both parties want what's best for the business and that's what's important. You go to a lawyer, sign and go ahead."

"I liked Sagi's pessimistic business plan," says Yerezin, explaining his connection to the brewery. "I see a lot of business plans: People come to me and say '300 people will come every evening.' At that point I ask: 'Do you know how hard it is to bring a single person to a restaurant in the evening? How are you basing a plan on 300 people?' When you examine the map of restaurants in the past year and in the coming years you see a clear picture: olive oil has replaced butter, French cuisine is dead. The market sectors now growing are Italian and Asian cuisine. People want to eat simply and not pay a lot."

"I liked the fact that Sagi is not afraid to buy the finest ingredients," he says, returning to the subject of beer. "It's the same with coffee. The ingredients for a cup of good espresso cost 28 agorot, the ingredients for a somewhat less good cup of espresso cost 20 agorot. Wouldn't you use the best ingredients? In any case you'll turn an excellent profit. In order for a customer to pay 30 percent to 40 percent more for a boutique beer than for a commercial beer, it has to be outstanding, and it will be."

In the stores, incidentally, a bottle of Alexander beer costs NIS 15. Yerezin says that in the long run they plan to produce a million bottles a year.

What about your competitors, namely Beerat Bazelet from the Golan Brewery?

Yerezin: "Competition is a good thing for the field and for the competitors. There is interest in Israeli beer outside of Israel, too."

Sagi: "Of the beers sold in Israel, 95 percent are commercial. In the United States and Europe, boutique products are growing. The clientele understands that that's where the quality is. In Israel, boutique products are still rare. The day you can enter a bar and choose from five boutique beers will be a good one."



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