Independent Craft Breweries vs Macro: It has all been done before…

Today it’s time to take up the macro vs independent craft brewery conversation. Much has been made for quite some time about AB InBev buying up many of the craft breweries and now buying Miller Coors (without a peep from the government despite its likely violation of the anti-trust laws). For years I have heard from the old Anhauser Busch, Miller, Coors, and Heineken salesmen that the macro breweries will always reign supreme and the craft beer market will not see much in the way of growth (I also heard from those same men there was no place for women in the beer industry- but that is a tale for another day.) Let’s begin by noting how much market share craft beer (despite the most recent slip in numbers) has gained, while macro breweries like AB InBev have started to lose. As of March, 2017 there are 5,301 independent craft breweries in America that have seized 12.3% of the volume share (up from a mere 5.7% in 2011.) That is a major gain, while the macro breweries may look at 7 % and thinking that isn’t much, but it is certainly not what they anticipated and cuts into their profits. Craft retail dollar share is up to almost 22 % – a 10% increase in only a year and that is noticeable. Big beer is fighting back.

Now many people will look at the numbers and ask why bother caring because the macro breweries don’t care about what craft beer is doing since the percentages are so small. I will argue they do. If AB InBev didn’t care about the growth of craft breweries cutting into the market why try so vigorously to purchase the successful craft breweries? Why spend millions of advertising dollars on campaigns proclaiming AB InBev to be one and the same as craft? Why purchase a stake in Ratebeer where many go to seek reliable ratings on craft beers? And most recently why bother to spend time and money downplaying the Brewer’s Association of America’s latest move to signify ‘certified independent’ craft breweries with a special label? What does the label mean? More than 25% of a certified independent craft brewery cannot be owned by any other entity, and it must produce less than 6,000,000 (million) barrels per annum.

Much has been made lately of the new label and how “divisive” it is. Really? Technically that is the appropriate term as it divides the beer into separate classification from macro to independent craft. I however prefer to think of it as a line of demarcation for those of us that care whether or not or beer is locally produced, sourced, employed, and crafted. Some beer drinkers (yes even craft beer drinkers) will not care. I do, as do many that prefer to know where their (nourishment) beer is coming from. It foments economic growth within communities at every end of the spectrum from agriculture to community gardens, to increased retail and food sales in neighborhoods where breweries are located. Is the ‘certified independent’ label really that different from a terroir designation on a bottle of Pinot Noir? Or an ‘organic’ label on your produce? Well many have taken pen to paper (or keyboard to internet) to argue the needless futility of the designation, and just as many have hit back challenging that those that prefer to do away with the ‘divisive’ label are predominantly macro brewery stakeholders. Jacqeuline Dheere was just one in a long line of beer writers to point this out. The battle lingers on with no signs of abating.

Curiously, all of this has happened once before, a little over a century ago. Just before the turn of the 20th century a war raged between macro breweries and independent local craft brewers. It started with a British brewing consortium buying up the top breweries in each city as an attempt to recoup financial losses from the former colonies and their now thriving breweries. Next it was a local trust- the Maryland Brewing Company that purchased the top breweries in the beer capital of Maryland- Baltimore in 1899. That failed and was replaced by yet another monopoly (with better management) G.B.S. Locals were deeply concerned by this and lacked any understanding of why their favorite breweries would sell out. Well the answer then as today was a great payoff for all their hard work! That is the American dream isn’t it? The rise of the monopolies also created at times, a vitriolic and divisive atmosphere for both the consumers and the breweries. Many breweries added ‘independent’ to their names just to make it easier to identify that they were not sell outs, and could be relied upon to continue producing that same favorite regional beer. Among brewing families, a sort of dystopian nightmare ensued where family members that wanted to remain independent disowned those that sold out, some even engaged in legal battles over the sales and the family fortunes.

So how did it all shake out? Prohibition shut them all down in 1920. Today I have no inkling that America would ever attempt to recreate that failed experiment, although I have been wrong before. I honestly don’t know what will happen. What I do know is that people will act based upon what is important to them. Perhaps they will look beyond the tasty malted beverages on their lips, and see talented local craftspeople investing their own neighborhoods, bringing jobs, building trust and fomenting communities. Beer for thought.
Cheers!

The Revolutionary War

Today is the 4th of July. It has been 241 years since America declared its independence from the tyranny of the English monarch George III and his Parliament. The picture included is from the  Department of Veterans Affairs listing what rations soldiers from the Flying Camp were entitled to each day. The Flying Camp was formed in June of 1776 by General George Washington and was made up of soldiers from Maryland (3400), Delaware, New Jersey, and Pennsylvania (totaling 10,000). They were placed under the command of Brigadier General Hugh Mercer. The mission of the Flying Camp was to protect the Mid-Atlantic coastline from the British and the secure the supply chain of the Continental Army.

This was a critical mission indeed as many soldiers enlisted for the daily rations they were promised once enlisted. The most important ration to many was the quart of Spruce beer (made from actual shed spruce) that each soldier would receive every single day. Protecting the supply chain meant the beer rations would reach the soldiers, sustaining morale in the oft perilous conditions they faced on and off of the battlefield. America may have been prepared in spirit for the War but we were ill equipped to fight it; short on uniforms fit for combat, boots that gave out in a day’s march, lack of weapons and ammunition, and little to no formal training for most enlisted men. The beer ration motivated men on to continue the fight despite the grave circumstances. A little help from France and Germany (with both training and supplies) eventually helped push us over the top (along with a fierce and successful siege of Yorktown) to victory and the establishment of America as an independent Nation!

As you celebrate today with your BBQ and fireworks take a moment and raise a toast to those that had the foresight to fight for our what could be- the United States of America. Oh and if you get a chance- make it a Spruce Beer in honor of the Flying Camp soldiers that kept the rations flowing to those brave men that sacrificed themselves for our freedoms!

Hysteria Brewing/Lost Ark Distilling

Saturday I had the pleasure of attending Hysteria Brewing’s grand opening. It was well attended and quite well organized. The taproom exuded the industrial chic quality embracing many modern brewery taprooms, but with a more nuanced and individual character complete with small library, movie theatre-esque curtained big screen, and a photo-op bench. The bar was packed, along with the tables as the Hysteria staff poured as quickly as they could to meet the demand. The initial offerings were limited to three:

  1. Trash Panda, an American IPA,  7.2%
  2. Yellow Sudmarine, a Hefeweizen, 5.3%
  3. Mo’saic Mo’problems, a session IPA, 4.6%

As I have stated often, everyone’s palate is different, and many that were not mosaic hop fans gravitated to the citrusy, bold Trash Panda. Others, looking for lower alcohol IPA with strong mosaic notes and slight malt undertones enjoyed the session IPA. Other palate pleasing offerings are sure to come (including a much touted milk stout) as the brewery continues to negotiate the opening days. For those that cannot make the journey to Columbia- fear not as Hysteria will be distributing via delivery truck to your favorite watering hole and retail shop.

Regardless of the beer preference, the crowd enjoyed the artic air within the taproom and the array of outdoor tables and tents set up in the parking lot. As mentioned in my previous post, it was a marketing win for Hysteria and for Lost Ark. The Distillery benefited from Hysteria’s grand opening, sharing the cordoned off parking lot,  food truck, corn hole, and most importantly consumers. Many sampling at Hysteria were later discovered at Lost Ark taking advantage of the delightful cocktail samplers (made with Lost Ark Rums)  the taproom was (now) legally offering. The scene did not quite harken back to a pre-Prohibition biergarten, but it was reminiscent of the purpose- to offer enough enticements for consumers to bring the family and spend the day (and their money).  Some even brought picnic blankets (along with the wee ones and quadrupeds) for the shaded grassy areas- although scant. It appeared that even the jiu jitsu studio lost a few parents to the taproom offerings. Who knows, maybe the studio might end up with a few more families signing up for lessons due to the opportune proximity to hand crafted Maryland beverages! It is a win for everyone, and a modern business model to watch.

Cheers!

Collective Craft Industries

Inspired by the new Union Collective and the future…

Recent activity in Maryland craft brewing (legislatively and otherwise) has engendered new thoughts regarding the future of the industry in the state. As the Union Collective forms there is much to discuss, particularly now that the Baltimore Whiskey Company has chosen to relocate to the Union property. When complete (2018) the Union Collective in Hampden-Medfield will house Union Craft Brewing, Baltimore Whiskey Company, and the Charmery (ice creamery), among other retail operations. This is a potential winning combination of craft beer, craft spirits, and handcrafted ice cream in one location for shoppers- a portent to success. This is something we have seen before and it has a pretty good track record.
One look at St. Michaels on the Eastern Shore and any person interested in locally crafted beverages takes the drive. Why? A very short walk down S. Talbot Street will introduce a consumer to Eastern Shore Brewing, St. Michaels Winery, and Lyon Distilling (along with a bevy of shops filled with locally made items) all in the same block. This brilliant locational strategy aided in the success of all three craft libation companies in addition to the surrounding restaurants and retail shops. Perhaps St. Michaels provides a template for the future. It certainly draws a crowd that is potentially more diverse- as those that consider themselves wine drinkers or predominantly spirit specialists will be more willing to entertain an experience in locally crafted beer when it is a mere few feet away. It also invites a host of available possibilities from beer/spirits/wine bus tour stops, to detours for drivers on their way to/from other localities on the Eastern Shore. All businesses complement one another and reap the rewards from the marketing campaigns of each. It in essence becomes a shared responsibility to draw the crowd and sell a quality product, hopefully ensuring success for all. That is what building an industry in a local community is all about, growing both the business and community it resides in, deriving benefit for all.
In Howard County beginning on Saturday July 1, Hysteria Brewing opens its doors on Berger Road, right next door to Lost Ark Distilling. A shared parking lot, with food trucks, entertainment, and critically consumers that will reap the benefits of both craft manufacturers in one place. While many new breweries are slated to open in the next two years in Maryland, some have chosen their locations, while others are still seeking suitable space. Perhaps, when possible, and as the number of distilleries continues to climb. Maryland craft (alcohol) can continue building together in collective spaces to the enrichment and advantage of one another and the thirsty consumers in the region 9and beyond) eager for these locally crafted, quality beverages.
As for the Union Collective? Well let me just remind everyone of how Union started- a union of Kevin and Jon, and the community. Union has always focused on giving back to the neighborhood that welcomed them through jobs, revitalization, more business, and a shared sense of community responsibility. That is not something that will change with their relocation, in fact they have only gotten started. Craft breweries in Maryland like Union Craft have a huge impact on the local economies in which they operate. Make no mistake (regardless of what macro breweries and their representatives might tell you) local breweries in Maryland foment economic development. We need them as much as they need us, and together Maryland gets stronger, and a heck of a lot tastier!
Sláinte!

“Agriculture, Malting, and Breweries in Maryland, a Historical Perspective” Maureen O’Prey

When I first wrote this blog, it initially appeared on the website “Behind the Craft” in 2015. Since then, Dark Cloud Malthouse has opened in Howard County, and more are on the way. Several Hop Farms have also cropped up in recent years in Maryland to fill the void for locally grown hops.

Barley had a long history of harvest in Maryland. Prior to Prohibition Maryland had a fine six rowed bearded winter barley crop that was used for malting, and at one time considered the only barley profitable in the state.[1] It was sown in September and harvested in June and sent to local malting facilities. When enough barley was not harvested within Maryland to supply the maltsters demand, barley supplements came from the west, and local malt houses like H. Straus & Bros. malted the barley, for the breweries that did not malt their own.[2] Prior to Prohibition there was quite a bit more farmland in Maryland, in fact 80% of the state was farmland in 1900.[3]

 

By 2007 only 31% of Maryland was farmland, despite 30 years of preservation efforts by MAPLF (Maryland Agricultural Land Preservation Foundation) and substantial tax breaks geared toward the conservation of farmland.[4] In 2014 the Regional Economic Studies Institute report on the economy noted that the farming industry in Maryland has shown a loss of 3.4%, where all other industries in Maryland demonstrated stability or growth after the recession ended. Today barley grown in Maryland that is suitable for malting is limited. The small amount produced is not nearly enough to supply the demand by breweries, but attempts are being made to rectify that.  

 

Amber Fields, a local farm and malting facility in Frederick, Maryland partnered with Brewer’s Alley and Monocacy Brewing Company to supply local malted barley and rye to the brewery for production.  Tom Flores, brewmaster at Monocacy and Brewer’s Alley (and the newest member of the board of directors for the Brewers Association of America) worked hand in hand with Greg Clabaugh, the founder of Amber Fields to create a facility for the malting of his barley.  In 2001 Flores and Clabaugh produced the first Maryland beer since Prohibition brewed with local malts. After ten years of tweaking the process, Clabaugh and Flores have consistent production of malted grains for the breweries.[5] They recently began malting rye, and successfully used that to create Monocacy’s Riot Rye, a flavorful pale ale.  

 

Bryan Brushmiller founder of Burley Oak Brewing Company also partnered with a local farmer Brooks Clayville to begin a malting venture with local grains. As with Amber Fields, it took several attempts to get the barley and malting perfected.  The series of Burley Oak brews that contain locally grown and malted grains are known as ‘Home Grown Ales’. The first in the series was produced in 2013 and named Local, a pale ale embodying everything Brushmiller and Clayville were striving for. Both Clayville and Clabaugh worked in conjunction with the University Of Maryland and their Agricultural Sciences department to plan the best malting grains for the soil.[6]

 

Burley Oak and Monocacy engender the pervasive ‘buy local-use local’ mentality.  Other breweries would like to follow in the footsteps of Flores and Brushmiller, but are finding it difficult due to a lack of local grains suitable for malting.  This may be what swings the trend back toward growth for a struggling farming industry. The most significant aspect of the expansion of barley and rye farming for malting is the effect on the Chesapeake Bay. Barley and rye are both considered cover crops, and have the added benefit of storing nitrogen in their plant tissue, instead of allowing it to run off into the soil which eventually pollutes the Bay.[7]

 

A return to the soil for Maryland may be in order. If more farmers in Maryland can plant suitable grains for malting to supply the breweries, everyone benefits. An increase in farming specifically for Maryland breweries not only foments the growth of Maryland’s lagging agricultural industry, but allows for that development without compromising the health of the Bay.  An increase in regionally grown and malted grains is in high demand by other Maryland breweries that would love to produce a regular offering of brews made from local grains.

 

 


[1] American Brewer’s Review, 1913, vol. 27, 181-182.

[2] Baltimore American, May 2, 1870, 5.

[3] James DiLisio, Maryland Geography (Baltimore: Johns Hopkins Press, 2014), p?

[4] Ibid; Farmland Preservation Report 2014 accessed 2/7/15 via http://www.farmlandpreservationreport.com/  

[5] Caryl Velisek, “Amber Fields brewing beer with Maryland-grown barley, “ AmericanFarm.com, 2012. Accessed 2/7/15.

[6] Bryan Brushmiller, Interview by author, Berlin, Maryland, July 2013; “Burley Farming”, BurleyOak.com 2015. Accessed 2/7/15.

[7] Velisek, Amber Fields; Stephen Ausmus, “Chesapeake Bay Clean Up Revs Up”, Agricultural Research August 2010, 16-17.