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Craft Beverages – The New Black? Part 2
May 2, 2017
In Part 1 of Craft Beverages, we explored the world of craft distilling, now we look at brewing, the billion-dollar industry that is revolutionising beer – the seventh most-consumed beverage in the world.
Have you ever wanted to start your own craft beer brand? Step one is attending a Craft Brewers Conference in the country that kicked off the craze. As one exhibitor put it: “Canada is a big market and there is a lot of growth in the UK, China and the Far East and Europe, South America and Mexico. It’s happening all over the world, but the US is the big market. It’s kind of the gold standard.”
America’s capital city: Washington DC, played host to the 2017 Craft Brewers Conference & BrewExpo America (CBC), and it was big – multiple-floors-of-a-convention-centre big, with a welcome reception at the Smithsonian, general sessions with keynote speakers, dozens of seminars and thousands of attendees.
What is a craft brewer? In America, a craft brewer is three things: small, independent and traditional (defined by the Brewers Association) with annual production equalling six million barrels or less.
Breweries have been tracked in the US since the late 1800s, but in the late 1990s, the industry started to get hot and began to steadily grow year-on-year. In 2016 there were 5,234 craft breweries – a whopping 16.2% increase from 2015. In 2014, the craft brewing industry contributed nearly $56 billion dollars to the US economy, providing over 420,000 jobs. The west coast leads the pack: California has over 500 craft breweries and generated $6.9 billion (2014) and on the east coast, New York has over 200 breweries, but it’s Pennsylvania generating the most revenue: $4.5 billion (2014).
Tackling an event as large as the CBC took extreme planning and organisation and our first stop was First Key, a company that consults people on how to start their own breweries.
Is ‘craft’ still the right term?
First Key’s Joel Hueston started off by saying, “Consumers have changed a lot. There’s now a couple of generations of beer drinkers that have been raised on craft. And that term ‘craft’, I don’t know how much longer it’s going to be around. It’s almost not relevant anymore.” For the upcoming generations, “they’re used to drinking ‘craft’ beer; it’s a part of their life and it’s a very different drinking occasion than it used to be. It’s not about sitting down and drinking ten beers; it’s about sitting down with friends, and the beer has become the focal point. People like to talk about it. It’s kind of like the ‘wine experience’.”
Getting down to business, Hueston says, “Only the strong survive. You’ve got to run a good operation. You’ve got to understand how to run a business. You need to know about cash flow. You need to know how to manage your budget, manage your spending, how to motivate your people, hire, recruit; you’ve got to do all that stuff. You have to make great products too. If you don’t make great products, good luck to you.” And when asked about a businessperson starting a brewery versus a brewer starting a business, he said: “I would say business people first because they can find good brewing people. Where if you haven’t got any business experience, that’s where you can get into trouble. It’s complex. If you have a good business head in your team, it helps a lot.”
These are Hueston’s six (surface level) tips for starting your own brewery:
Find a brewer
“Find an awesome brewer – not your buddy who has made a few good beers in his garage. Find someone who is skilled and if it takes a long time to find that person, it’s worth it. If you don’t have a good brewer, you’re not going to get there.”
“Understand the costs. And maybe you need to hire a consultant to help with that. You’re not going to be able to start up a brewery for $100,000. It’s very expensive, depending on the size of your vision.”
Know what you’re getting into
“Don’t try to figure it out as you go along.”
Location, location, location
“Be picky about the space you want to set up shop in. Don’t just get caught up in the cheapest place. Are you still going to be happy there in five years? Ten years?” It has to be somewhere interesting and fun.
Research your market
“Do your homework. Understand what kinds of beer styles people are making. Don’t get caught up in ‘oh, this is the kind of beer I like’. You should be focused on your customer.” For example, most people are not going to drink Scotch ale, so it shouldn’t be a portfolio focus. “Do some market research, even if it’s not sophisticated. Understand your market. Understand your area – who your customers are going to be, what kind of beer styles you should make.”
“Don’t go into it thinking you’re going to get rich. It will take three years until you’re making some money – in most cases.”
Ok, so you seriously giving this thing some thought, and now you need equipment. Denton Moffat, an engineer from DME (Diversified Metal Engineering) who provided the brew house for Meantime’s original system, and currently works with Stonehenge Ales in the UK and Franciscan Well in Ireland, walked us through the kit needed to make it happen:
If you’re ambitious, you should contemplate a four-vessel brew house for quality and efficiency: mash mixer, lauter tun (solids/ liquids separation), kettle (where the hop aromas come into play – sterilising and clarifying the wort) and a whirlpool. There are lots and lots of steps to take – cue your brewmaster.
Moffat, who personally likes to drink a good wheat beer, confirms that craft brewing has “been growing like crazy over the past few years. One and a half to two breweries is opening in America every day.” Sixty per cent of their business is in America, followed by Canada and Australia, which brings us to Brian Watson, the Antipodean inventor (and twenty-five year brewing veteran) of SmartBrew: an automated brewing technology that enables any venue in the world to make its own craft brew on-site. Watson explains that SmartBrew, “is the first in the world to use high-gravity wort (not easy-malt extract), and it’s totally automated, so you don’t need a brewmaster to be able to run it.”
“I back up all the recipes and then you need a beer ambassador on-site to be able drive the beer sales, and then be able to come back to me go, ‘hey let’s do a beer infused with coffee or turpentine.’ I don’t know, I mean there’s some weird, weird shit out there. I had a beer once that smelled like turpentine.”
Watson is also a beer judge and has judged the World Beer Cup since 2008. He likes to drink IPAs, “but not too hoppy; balanced. A lot of beers are not balanced because they’re just like: hops, hops, hops. Just ‘cause it’s got a lot of hops in it, doesn’t mean it’s a good beer. It’s got to have that malt body to carry it.” He concludes: “I like all beer as long as it’s good beer.”
You have your product, but how is it going to be presented to the beer-swigging public? Bottles are our next stop and specifically a company called O-I, a specialty glass company that has been in operation since 1903. Beth Peeney on the marketing team talked us through the importance of glass and why their motto is: ‘Great beer deserves glass’.
“Glass is the only packaging material that is completely 100% natural: sand, limestone, soda ash and recycled glass. I mean, it’s all simple, natural materials, and there’s no plastic liner. You know, a can has to have a polymer liner to protect between the can and the contents, to protect the taste.”
They have an artisan bottle collection that enables a craft brewer to differentiate their brand across multiple sizes. They have a bottle that is modelled after a champagne bottle, a ‘standard’ long neck and a design for a Belgian-style brew with a bulb in the neck “to catch the yeast.”
“Amber glass is great protection for UV rays. For a craft beer, it’s all the protection you need. You know another enemy of craft beer is oxygen and glass is impermeable and inert – great protection against oxygen.”
Great beer might deserve glass, but what about when glass is material non grata? We talked to James Magnano from the hundred-year-old, Union Street Tin Co. who flies to flag for bottle-shaped aluminium: “A lot of resorts, beach-front properties, cruise ships, things like that, they don’t allow glass because if it breaks in the pool or on the beach it causes damage and problems, so going with aluminium, obviously you avoid the breakage and you get to maintain the bottle shape.” And he adds, “You don’t have to go to plastic, which nobody wants to do.”
How important is the visual aspect of craft brewing? Magnano says: “I think the visual aspect of anything is important… the better your packaging looks, the more people will jump at it. Perception is very important. Of course, the quality of what’s inside the bottle is going to get you to have repeat business, but that initial: ‘which one do I buy?’ – that’s going to help push you over the top.”
Next stop: merchandise. How important are branded hoodies, hats, T-shirts, and socks? Merch maker, Michael Landefeld of Valve Industries says, “I feel it’s vital, primarily in marketing and retail and for it to be at the level as what the brand is. There is nothing worse than merchandise being below the level of quality that their brand is.”
What will be the most popular beers in five years?
First Key’s Joel Hueston says, “Right now IPAs are everything. Sour beers are really taking off: farmhouse ales, spontaneously fermented ales, and they’re starting to develop beers that are like hybrids – not lagers and not ales. I’ve seen a lot more porters and stouts – barrel-aged stouts with bourbon, milk stouts that are just incredibly flavourful. I think some of those styles that are still kind of small are going to get bigger. Belgian-style beers – Belgian beers are not new, but I’m seeing more of them popping up as part of portfolios. They’ve made them a little bit more drinkable in some cases. I don’t think IPAs are going away. It’s an awesome beer style. It’s not going anywhere; it just won’t be as dominant.”
And going back to that word: craft. Hueston thinks that, “maybe in ten years what is now considered ‘craft’ will be mainstream. What would the new descriptor be for small, independent and traditional brewers? “Artisanal? I don’t know. There may not even be a word. It may just be: ‘beer’.”