The question comes up all the time, typically at festivals, sometimes at sampling events. It’s a natural reaction when a customer gets excited about a beer that’s new to them. It tastes good, so surely there’s more. The customer, of course, wants to know where they can visit the brewery.
“That’s an awkward conversation,” laughs Gregg Berman, founder and general manager of Clown Shoes Beer, a contract brewery that sold about 13,000 barrels across two dozen states last year. Until 2017, when the business was bought by Harpoon's parent company Mass Bay Brewing and production brought in-house, Clown Shoes made its beer at Mercury Brewing in Ipswich, Massachusetts.
“We were allowed to have people visit Mercury, but it was a production facility with not a lot to see. We’d try to direct people to visit bars and restaurants that were supporting us, and if someone was super enthusiastic to meet the team, maybe we’d have them come out to our warehouse in Burlington, Massachusetts.”
Clown Shoes has proven that having a physical space isn’t necessary for success, though it certainly doesn’t hurt. There are plenty of reasons that distributing beer through a wholesaler can benefit a brewery, but it’s also impossible to ignore the power of own-premise sales through a taproom. So while drinkers are undoubtedly attracted to what tastes good and has a fair price, there can still be a lingering fear of missing out for contract brewers, who leave something on the table via their chosen business model.
Companies as large as Pabst and Narragansett and as small as Grimm Artisanal Ales have embraced a return to the own-premise idea. Chris Lohring, who started Notch Brewing within the niche of session beers, has even grown to the point of opening his own space. It’s good economics to use enhanced margins from selling your own beer where it’s made, but it also offers something contract breweries lose by definition: a place to directly engage with their fans.
“People like to interact with their products more than they did in the past,” says Brian Strumke, founder of Stillwater Artisanal Ales and the soon-to-be-opened PRODUCTION, his first true on-site brewing facility. “People like to feel a part of the products they involve themselves with and like that connection. Disney World exists because you liked their movies and you want to go live it in an amusement park. If you like the beer, you go to the brewery.”
With PRODUCTION, Strumke brings a global brand into a smaller world for fans, but the brewing space will mean something special for him, too. It represents years of work toward having a dedicated location for wild/sour/mixed-fermentation beers.
Like Berman, he laughs thinking back on his early days pouring at beer festivals, where the first question he was often asked is where people could find his brewery. “It was a pain in the ass to explain,” he says, so he made a one-page flyer to post at his table stating he didn’t have an actual location to visit.
“I won’t have that problem anymore,” he adds.
Neither will Brian Barry, who launched Entitled Beer Co. in 2014 with co-founder Jim Hodgdon. The pair creates its own recipes and has made almost all its beer at Boston's Dorchester Brewing Co. since the start, with a small amount also made at the same facility where Clown Shoes made its beer.
Shipping their Entitled IPA, Therapy Session IPA, and two other brands to accounts in Massachusetts, Rhode Island, and Connecticut, Barry and Hodgdon hadn’t considered opening their own space until just over a year ago. With success via just four SKUs, an actual spot to host customers is going to offer R&D capabilities for taproom-only brews and an opportunity to get back some money divvied up through distribution.
“I can’t envision a situation where I’m not brewing for the masses somewhere else and having those perfect, dialed-in recipes, but on the other side of the coin, experimenting can be very essential to what we want to do,” Barry says. “Everything we make right now is on such a large scale that having a little investment so we can create and perfect recipes that we could then do on a large scale doesn’t mean we gouge ourselves financially.”
That’s the key part for Entitled: take the best of both worlds to move forward. Like so many others who have brewed large-scale batches at facilities at some point in their growth (Toppling Goliath, Half Acre, and even Cigar City before being bought by Fireman Capital/CANarchy) shifting capacity to contract partners offers more opportunity for fresher or more innovative beers made specifically for a taproom. This is also the key thinking behind New Realm’s recent expansion.
It's also not cheap to quickly recoup investment on tanks for most brewers. According to estimates by Chris Farmand, CEO of consulting company Small Batch Standard, a $32,000, 30-bbl tank could take eight to nine months to pay off under average sales via wholesale revenue. For brewers, taking away ownership of that steel is one less thing to worry about when running a small business.
Barry says Entitled grew by 45% last year, which he expects to repeat in 2018 as he expands further into Connecticut. He couldn’t do that on his own without what he estimates would be millions of dollars of investment for the kind of equipment his beers are made on right now. He expects Entitled to sell about 4,000 BBLs in 2018 and is eyeing a 2019 opening for a one-barrel brewery and taproom in Hingham, Massachusetts, about 20 miles south of Boston.
“The best reason to do this is to take back some of our retail and help legitimize our brand,” Barry says. “There are still people confused by what I do, thinking that we go to Dorchester Brewing, they present us a menu of beers, and we just ask, ‘How much for this one?’”
Even if it’s just one barrel at a time, he sees a new location as a pivotal part of growing what Entitled Beer can mean to people.
“I get the question all the time,” he says. “‘Can I come to the brewery?’ I tell them ‘I can take you there, but you’re going to be unimpressed.’”
That may not be the case for long.
In the third part of this series, we’ll look beyond contract breweries looking to set up their own space and hear from those running some of the largest contract brewing facilities helping already established breweries grow even more.
—Bryan Roth
On the Dotted Line, Pt. 1 — Contract Brewing Sheds its Negative Reputation
On the Dotted Line, Pt. 2 — Contract Brewers Find Their Own Home
On the Dotted Line, Pt. 3 — Big Contract Breweries Grow as Industry Slows
On the Dotted Line, Pt. 4 — Details and Fine Print with a Former Contract Brewer