Critical Drinking

The GBH 2014 New Year's Resolutions for Craft Beer

The end of the year is flooded with Gift Guides, Top 10 lists, and Year in Review articles. Fun stuff. But it’s time we look ahead to 2014 with some serious New Year's Resolutions for craft beer. 

CRAFT BEER RESOLUTIONS HEADER copy.jpg

Throughout the year, many GBH readers, brewers, and journalists reached out to start conversations on topics that concern them in the craft beer industry. There’s no shortage of opinions on things like contract brewing, major sales of breweries like Goose Island and Boulevard to larger corporations, and the fear of reaching “the saturation point.” With a market as dynamic and fast-growing as craft beer, it’s easy to see the sky as perpetually falling. But I don’t like to dismiss things in concept — there will always be political and spiritual issues to wrestle with — rather, I focus on the execution and how we can shape things for the better in the long run. There’s so much more to learn, and so much more to do. 

It’s time to do some house-cleaning and make room for new thinking. These are the topics most widely debated in 2013 that have big implications for the year ahead. 


1.jpg

Embrace low abv, high flavor beers. Stop shopping for alcohol content. 

After decades of differentiating ourselves from the yellow, fizzy stuff with giant imperial stouts and double IPAs, we’re finally starting to explore the other end of the spectrum with low alcohol, flavorful beers. To nail these beers, you need serious production talent and quality control because there’s less to hide behind in the recipe. But it comes with some issues — long-standing craft consumers tend to associate higher abv with a higher price point. 

What’s the debate about?
In the beginning, it was difficult to get consumers to pay more for craft beer. One of the ways you could create a larger sense of value was with a higher abv and additives like fruit, coffee, and chocolate. This shows up in retail bomber sales most often. Spending $10 or more for a 9% imperial coffee stout is a no-brainer for most, but a 5.5% local pale ale faces scrutiny. That’s a pretty utilitarian, and low-brow way to think about the role of beer in our lives. In the end, if the beer has the flavor you’re looking for, completes your meal perfectly, or fits the occasion, why should abv play such an important role in your decision? Likewise, associating higher abv with higher quality is counter-intuitive. Typically, a higher abv beer is easier to bury mistakes in, especially behind additives like coffee, chocolate, and star anise. A beer’s abv is an important component, but in context, it shouldn’t be the most important. 

What’s ahead?
These beers are critical to the casual drinker and beer geeks alike, and will help craft reach tap handles on the periphery of the movement in restaurants and sports bars where people tend to drink for refreshment and over a longer period of time. In the past, the big guys have claimed that only they could nail beer recipes on the lighter side. But with mid-sized and larger craft brewers building and maintaining quality labs, better packaging technologies, and exchanging data and process knowledge through chemists’ professional groups, we’re in for a quiet revolution with easy-to-drink craft lagers and ales with a ton of great flavor and well worth the higher price point. 


2.jpg

The contract brewing debate is a red herring. Focus on intent. 

Contract brewing won't be the end of craft beer. In fact, it's usually the beginning.

Success in a brewery often looks a lot like liquid Tetris. Brewers are constantly battling with the success of a few recipes over their desire to constantly explore new and unique offerings. 

Contract brewing is an industry term for beer that’s brewed “under contract” at another brewery. There’s plenty of variations, but for all intents and purposes for the consumer, there’s four main set-ups that “contract brewing” is a verbal shortcut for. 

1. Private label contracting — A brand, whether a brewing company, retail chain, or private group that has no actual brewing facilities hires someone to make their beer. This has been a common practice since beer production in America began, and it's long been a part of the wine and spirits trade. The contractor is responsible for the entire process, from recipe development to packing. All the hiring company gets in the end is a beer with their name on it. 

2. Alternating proprietorship — A company can take over ownership of another brewery for a day to make their beer on someone else’s equipment. They make their own recipes, brew the beer themselves or with some help from dedicated staff. 

3. Outsourcing — year-round beers take up a lot of room in a brewery. And once a recipe is dialed in after hundreds of batches and the public is consuming it like water, it’s often advantageous to brew these beers at another, larger facility to free up room for more innovative beers in-house. This can happen through a variety of means, with external partners or even internal outsourcing like Goose did within the Anheuser-Busch network for 312 and Honkers Ale. 

4. Gypsy brewing — some companies craft recipes, build brands and brew beer all around the world with collaborators and partners they love working with. It's as much of a lifestyle choice as it is a business decision. Some people just don't like to be tied down to any one place and want to be able to experiment with different brewery setups and processes. Mikkeller makes even beer geeks uncomfortable with their success in this realm. 

What’s the debate about?
When people criticize contract brewing as a blight on craft beer, they’re often being critical of someone for “not having any skin in the game.” When people make this argument, it’s often because they want to support brewers with a passion for the craft, with a real tie to the community and local economy rather than line the pockets of some vague marketing team or a business that’s just playing around. But here’s the thing — many of our greatest craft brewers used contracting as a tool to enter the market, expand, and serve their growing audiences when more concrete and steel just won’t do. 

Sam Adams contracted out to macro brewers to become the nation’s largest craft brewer, forever changing consumer expectations in America. Chicago's Half Acre and 5 Rabbit breweries, like so many start-ups, contracted out of Wisconsin while they established a footprint in the city, where they took the brand in new and exciting directions. Nano brewers often contract with other nano brewers in Chicago whenever they’re swapping out brewhouses or installing new tanks as they grow. And successful craft brewers like Cigar City are using newly established contract-only houses in Florida to offload some of their year-round recipes to make room for more innovative beers at home. All of this means we get more brewers, and more beers into the market for a growing craft audience. 

I’ve also seen this tool exploited in unfortunate ways — adding credence to the criticism. I’ve seen “alternating proprietorship” brew days where the contracting brewery never shows up to work — a bit like the mob on a construction site —  leaving the entirety of the execution to a production staff that has little stake in the end product or brand. Instead, they focus on their website, hiring marketing staff and PR companies, and throwing events to "raise funds" for a brewery that never seems to get built. This will always happen. But you know what? I’ve also seen plenty of “real” breweries with a real footprint, with serious investment in concrete and steel, that care even less and make terrible beer. Owning equipment does not make a quality brewer. I don’t trust someone with a brewery unequivocally any more than I disregard someone who’s contracting based on that fact alone. If you care about craft beer enough to even have a stance on this issue, you need to go deeper. The vision and the people behind the product will always matter more than some dismissive, lazy buzzword. 

And let's not forget how much easier it was to grab used brewhouses and fermentation tanks just a few short years ago. Gone are the days when you could be up an running in a few months based on a Craigslist search and $10,000. These days, getting equipment, which is all newly manufactured and perpetually behind schedule, requires some major planning, fund raising, and consideration for how you're going to launch and grow your brand even as you build a brewery underneath it. 

What’s ahead?
In the coming year, we’re going to see this practice used even more, and in more obscure and interesting ways than the average consumer will ever be able to follow. Contract brewery specialists like the Brew Hubs that are popping up all over the country, devoting themselves to helping start-ups get out of the gate, and established brewers expand their reach into nearby states. These are new players in beer, and they’re critical to maintaining momentum. It’s not just capacity issues driving breweries to look for outsourced help — quality control is also keeping them up at night. When you’re producing 3,000 barrels for a 50 mile radius, you can handle most quality issues that arise. But you start shipping an IPA three states away through distributors with lackluster practices and retail accounts that care about velocity, you can’t afford to have quality mistakes. Many of these contracting specialists are founded by former macro brewers, and employ chemists you otherwise can’t afford unless you’re a national brand. Labs, superior packaging lines, and a focus you can’t always get when you’re managing taprooms, events, and sales mean these contractors are providing an unbelievable service to the craft beer community as important as new hop farms. 

Rather dismissing brands because they were contract brewed, most consumers will be enjoying beers with unprecedented quality and consistency from their favorite breweries in 2014, regardless of where they were put into production. For craft geeks that want more of a direct line to their brewers, they will continue to enjoy the plethora of small brewers where they can satisfy this itch, but I'm wagering that their curiosity will grow toward the contract specialists they so often dismiss right now, as they become the next entryway for talent and new brands in America. 

And “contracting" as a tool will continue to be redefined. Blending houses, where the brewed wort is brought in, mixed, and aged into barrels, will show up more in 2014. This is a european tradition, producing highly sought after Gueze and Lambic beers, that the US definition of a craft brewer simply wouldn’t accommodate for. We’ll need to make room in our hearts for some creative alternatives to the traditional brewery set-up and support people who are putting plenty of skin in the game, just not with the cookie-cutter approach of the 90s.  


3.jpg

Stop trying to define “craft.” It’s a huge waste of time and resources.

When someone downs a few Blue Moons over a round of Golden Tee, and walks away thinking "I like craft beer,” that’s not a loss, that’s a huge, huge win for craft brewers. 

Craft brewers like to blame macro brewers such as Blue Moon and Shock Top for using the term “craft beer” as a marketing term meant to confuse and deceive craft consumers into drinking their beer. For established craft brewers like Dogfish Head and Stone, it’s difficult to watch brands like these soak up marketshare. But really, they're mostly replacing the losses we love to point to in brands like Budweiser and Bud Light with Blue Moon and Third Shift. These beers create new craft consumers, significantly raise the bar for the average craft beer in America (the bar used to be quite low), and generate velocity in accounts that enables other producers to explore more unique offerings that sell more slowly. 

What’s the debate about?
The Brewer’s Association defines a craft brewery as having an annual production of less that 6 million barrels (it used to be smaller but was expanded to accommodate Sam Adams), less that 25% ownership from a non-craft brewery (like Anheuser-Bush), and uses predominantly traditional malt ingredients in their flagship beers. 

But here’s the thing, “craft” is marketing term no matter which side is using it and Blue Moon has been around much longer than the majority of small brewers in operation today. If we’re arbitrarily using the barrel count, ownership structure and “traditional ingredients" as a definition of craft, then I could never define myself as a craft beer drinker alone. This definition limits innovation in beer recipes, demonizes larger breweries, and expands to protect the most powerful craft breweries whenever necessary. It’s a definition formed out of protectionist, anti-big-beer agendas rather than defending the consumer or progressing the craft message in any meaningful way.

Still need convincing? Here’s a few scenarios that would screw over a craft brewer:

1. Sam Adams is the nation’s 5th largest brewer overall, craft or otherwise. The only quantitative metric separating them from Anheuser-Bush, MillerCoors, Pabst and Yuengling is their production levels. That positions the definition of “craft” against Sam Adams being even more successful, and that’s shameful. They make damn good beer. And corporate-owned breweries as small as the Sandlot at Coors Field in Denver, run by a small team making one-off beers for baseball fans, are cleaning up medals at GABF every year. But because they're owned by MillerCoors, they're not craft. And when they do win medals, it's "Best Large Brewing Company of the Year." Now who's confusing consumers?

2. Limiting ownership stake from a macro brewer is wrongly assuming a detrimental influence to the product and culture. It’s happened — breweries have been bought, gutted, and buried in the past. But so have uncountable small breweries run by unprepared, incapable, unethical brewery owners at every level of the industry. If the 90s taught us anything, it’s that macro brewers will point to craft brewer’s weaknesses as a way to eliminate the competition. But it was craft brewers that tried to defend those weaknesses instead of fixing the problem and hiding behind a jingoistic consumer base that could never save them. And where do we draw the line? Sam Adams went on a buying spree this year, purchasing Coney Island and Angel City Breweries, and launching Traveller Shandies and the Just Beer Project. If the size of ownership has an undesirable influence over the quality and authenticity of a brewery, then how do we deal with the sliding scale?

And if the quality of ownership is your criteria for defining something as craft, well, I can introduce you to a number of Grade-A assholes that make some of your favorite beers. Most craft breweries are owned by a group of small investors. You might know some of them, but most likely you have no idea who the majority of them are. So for people who say they like to know whose pockets they're lining with their beer purchase, they better get good at investigative journalism, because tracking down every owner, their politics, and what other pies they have their fingers in is a full-time job. 

3. Adjuncts are quickly becoming America’s stamp on brewing innovation. It won’t be long before some of these beers, whether made with fruit, chocolate, corn or rice, will become a flagship beer for a small brewery. And many will never have a “flagship beer” at all. Forcing our breweries to adhere to outdated purity laws and portfolio structures in order to maintain a craft designation will only limit innovation and force brewers to choose between the BA’s definition and their own passion and consumer demand. Let's be honest, this rule was only meant to eliminate American light adjunct lagers like Budweiser and Miller Lite from ever being able to use the term "craft." Do we really need to defend this ground?

What’s ahead?
“Craft” as a definition just won’t matter anymore. Most consumers just use it as a shortcut for “beer that tastes good” anyways. And if the definition continues to limit brewers’ ambitions, even if only in implication, then the independent, innovate spirit of brewers will likely leave the term behind and focus on the challenge of growing, competing, and attracting consumers instead. For consumers, we run the risk of alienating oncoming customers with industry infighting, asking consumers to carry the burden of defining and differentiating our businesses for us.

The most important thing a small craft brewer can do is make a real, lasting connection with their consumer — not hide behind industry definitions and force industry politics into the drinking occasion. And the most important thing a large craft brewer can do is act small — which is as true for Lagunitas as it is for Blue Moon.


4.jpg

The mainstream will take it from here, but the sub culture can't disappear.

Your father-in-law just told you about a great new beer he found and suddenly it doesn’t taste as good to you anymore. A classic counter-culture dilemma that’s consumed everything from punk rock to skateboarding. 

What’s the debate about?
There’s a trend in the US that anything big must be bad. And while craft beer might feel like the new indie music, breweries aren’t indie bands. Growing up isn't selling out.

It’s because of people like you that the mainstream is dabbling in craft beer at all. You can’t pull back on that now. Breweries should never be beholden to an entrenched, protectionist sub culture anymore than the Brewers Association thinks they should be beholden to more than 25% of big beer’s influence. Both of these have the potential to ruin it for all of us. Instead, we should recognize that most breweries are carefully planned, economic devices that produce a quality product to meet a consumer demand. A very small percentage of them have artistic ambitions ahead of economic ones.  

What’s ahead?
Some beer geeks will continue to be great ambassadors for the craft, while others will become even more insular to separate themselves from the mainstream — most have already stopped going to large festivals. You’re going to see a lot more intimate events for aficionados that want a more unique experience and access to more innovative beers, but this will come at a price. To counter the economic exclusion of this shift in the market, beer geeks will continue drinking at home with friends even more — creating their own experiences and sharing rare beers amongst friends who can truly appreciate them. 

Meanwhile, more causal drinkers should expect to be drinking quality craft beers at airports, sporting events, hotels, and chain restaurants. The rate of private labeling happening in craft beer right now — where a restaurant or hotel contracts a brewery to make a beer with their brand on it — is increasing rapidly, which means that offering quality craft beers is table stakes for attracting foodie audiences. 

But my hope is that we can continue to create venues where the mainstream and beer geek audiences can interact and shape each other. Brewery taprooms are quickly becoming the new craft bars in the US, and that’s an attraction to every facet of the market. We’re going to see more bars and restaurants taking risks to contract their own beer, produce their own blends and barrel-aged brews, and increasingly collaborate to lure beer geeks out again, and keep mainstream audiences exploring further. 
 


5.jpg

Help us re-define “Big Beer." 

2013 was a year that saw the sale of the beloved Boulevard Brewing in Kansas City to Duvel Moortgat, one of the largest producers of Belgian beers in the world. The predictable backlash of craft defenders crying “sellout” flooded the airwaves for a moment. But unlike in years past with the sale of Goose Island, Terrapin, Leinenkugels, and the likes, that backlash was immediately followed with a smarter, big-picture response from industry folks and consumers that were tired of the big-beer-hate, and the groundless attacks on breweries that change ownership. 

What’s the debate about?
Even with continuous ownership, craft brewers start venturing into large corporation territory. You don’t build a 1.2 million barrel Lagunitas brewery in Chicago to meet the demand of some East Coast beer geeks. You do it to supply every sports bar in the region with a great IPA at a scale that enables it to compete for tap handles on economics alone. The way breweries like Lagunitas, New Belgium, Deschutes, and Bells operate in a newly competitive market will set the tone for the rest of the industry. Any company’s values are at least partially defined by the conditions of their market and who they need on their side. As these breweries and others grow up and start occupying a market at a national scale, not everyone will play fair. Some already aren’t. And for the little guys, it’s easy to fight against our traditional corporate brewers with a hero/villain story — but having the emotional and psychological tools to compete against breweries we grew up respecting will be a serious challenge. 

What’s ahead?
We’re going to see the market split in two this year. 

First, we’ll see brewers of traditional craft beers (IPAs, Pale Ales, Stouts and Porters) start aggressively looking for consumers outside their home markets. A brand like Deschutes can’t sell everything they make in Oregon anymore — they need markets like Chicago to soak it up — and they’re not alone. That means we’re going to start seeing prices for some of the larger craft producer’s mainstays drop. The $3.50 pint of a quality IPA is upon us. 

As larger producers penetrate big markets, small producers will be forced to distribute further as well. Chicago’s Off Color Brewing, like many new small producers, signed a deal with an importer this year, making it possible to distribute Off Color far and wide in the US and abroad. That’s a huge relief for a fledgling brewery still working hard to get their gose beer, a somewhat obscure German style, onto taps in Chicago. A deal like this will help them find the smaller pockets of in-the-know consumers around the world that will happily track it down — but it’ll be difficult to support their brand from afar like Deschutes can. And breweries like Woodfour in Sebastopol, California included exportation in their original business plan, looking to create an American craft consumer in Germany from day-one. When the dust settles, a new kind of distribution network will have been established that gets America’s best beers in the hands of consumers who appreciate them, similar to the way the Belgian beer trade has worked for the last 30 years. That means you’ll still be able to travel for beer as new breweries continue to pop up all over the country, but more than ever before, you’ll also be able to travel through beer.

Secondly, the high-end of the market will go even higher. Beer geeks will have to pay for their obsession more than ever. As the price on traditional craft beers drops, brewers will have to make up for it with their limited, seasonal, and speciality recipes. It’s no surprise that a bottle of Goose Island's newest sister, Gillian, sold for upwards of $30 this year, putting a bomber of beer on par with a wine purchase. This excludes a major part of the beer geek market on economics alone, but it taps into another part of the market where beer simply wasn’t able to draw the dollars necessary to be a player. A beverage manager at one of Las Vegas’ premier casino resorts told me this year that “I’d never offer a bomber of craft beer for $15 when I can sell a bottle of wine for $100.” The more economic positions that beer can occupy in the market, the better. While I think beer should always favor a highly accessible price point overall, a small percentage of the market going high-end like this keeps beer from being trapped as a “known value product” where consumers won’t pay more than $6 a pint. Creating some wiggle room in consumers' expectations of what beer costs makes it possible to produce some beers with more costly ingredients — it’s that simple.


6.jpg

Look outside of beer for direction and inspiration.

As big of a year as we had in craft beer, cider grew even faster. We tend to think of industries like cider as following on craft beer's coat tails, but there's so much more happening than some spillover success. We're also not the first craft revolution in the US — wine and coffee have come before us with plenty of lessons that can help guide our culture in the years to come. 

What's the debate about?
We tend to think we've never had a movement like craft beer in the US, but that's far from the truth. Coffee is well into it's third wave at this point, led by companies like Intelligentsia, who create a premium consumer where there previously wasn't one, and helped pave the way for micro roasters of all shapes and sizes across the US. The market now caters to a consumer who can describe acids, vegetal and fruit qualities, extraction methods, varietals and origins of their favorite coffees. 

Likewise, cider makers are working hard to create a sophisticated consumer as well. Most beer drinkers, and even beer professionals, still think of cider as just "hard cider," but cider makers like Virtue in Michigan are expanding the American palate by exploring barrel aging, European styles, and natural fermentation to arrive at some unbelievable flavors that go far beyond the American tradition of hard apple cider. 

What's ahead?
More collaborations between craft brewers and coffee roasters will surface this year as the intersection of coffee beers takes off. GBH and Intelligentsia explored this trend in depth at our Uppers & Downers event this year, and we plan to do even more. 

Cider makers have learned from craft breweries, but this year, I think we're going to see makers like Virtue run ahead with some new market tactics and a new point of view on American cider. Just like in the tech world, the next generation works at an accelerated pace, and before the end of the year, I think we'll be learning a few new things from our apple-growing brothers, including vertical integration, land management, wild fermentation, native yeast propagation, and blending techniques.


glass.jpg

It’s all about diversity in the year ahead. 


We now have at least three generations of craft brewing operating side-by-side in the US, each with its own experience and opinions on what true craft brewing is all about. I love the diversity of perspectives available to start-ups, and the many stripes represented by new and veteran consumers across the country. This should all serve to keep the market more diverse than ever. Those brewers that are having trouble adapting, or feel like the industry is losing its way with contract brewing, too much competition, or a shifting definition of “craft,” are only going to get more frustrated with change. 


A range of business models is just as important to diversity in craft beer as the recipes and the artistry. I feel sorry for breweries that feel obligated to keep craft beer a certain way in order to protect their hard-earned interests. Adapting isn’t easy for anyone, especially brewers who defined themselves through a hatred of anything big in beer. The market is going to move and grow, with or without them. And if they try to hold things back, then they run the risk of becoming the very problem they fought against only a couple decades ago — a lack of choice, a lack of inventiveness, and a lack of customers.   


Here’s to 2014. And here’s to craft beer continuing to defy expectations. Even its own. 

 

Want to share your own resolutions? Hit me up on Twitter.

Michael Kiser