Brewery Industry Roundup for August

A brief examination of several industry topics from TTB violations, aluminum shortages, industry stats and new breweries in Maryland .

Welcome friends, it has been a while and there is much to catch up on.

Ab-Inbev- at it again

Starting with the elephant that is always in the room, Ab-InBev (AB) has committed yet another TTB violation of tied-house regulations. The breakdown of offenses establishes a pretty clear pattern. In exchange for the regular purchase of a determined quantity of Ab-InBev products by a sports venue, to the exclusion of competitor’s products, lucrative sponsorship agreements would remain in place for the participating venue. In case you wondered- yes this is illegal.

Additionally, they violated tied-house regulations when AB employees enforced a verbal agreement for Concessionaires to grant favorable placement to AB products, to the exclusion of competitor’s products in exchange for fixtures, equipment, service, etc. Yet again this is illegal.

They were in violation for paying retailers for samplings that never took place- yes this was in effect a bribe for favorable product placement. You guessed it- this is illegal. This list does go on, but for the sake of brevity that is probably enough to understand the process.

Conveniently these things were not written down, but these verbal agreements were clearly understood and provided TTB with enough evidence to force their hand.

Marc Sorini of the Brewer’s Association of America offered a nice write up of the resulting Offer in Compromise (OIC) and its potential impact. The $5 million settlement is small potatoes for AB, but historic for the TTB.  This did not come as a shock to most craft brewers however, as they knew this game was afoot for quite some time, the trouble was proving it. The OIC did not require AB to admit fault, just pay the fine.

There is still possible redress for states and craft breweries impacted by the alleged violations. We will have to wait and see what, if anything transpires from this. AB did promise to work diligently on training employees not to engage in these sorts of practices in the future… Echoes of past promises continue to hang in the air.

The Can Can

There is another front that leaves American craft breweries in a bit of a pickle in 2020- aluminum. Most may remember the debate in the not-too-distant past as to whether bottles or cans were better. Well if you didn’t know- cans won! No surprise, but alas it has created another issue- demand. According to S&P Global Platt, aluminum demand was on the decline before COVID. Since the pandemic, we have seen a marked increase in aluminum demand specifically for beverages. Craft beer can demand has risen 6.7 % this year, most likely a result of required off-premise consumption. Coupled with a lack of recycling due to COVID concerns, the problem has been compounded as 74% of aluminum cans are made from recycled aluminum cans.[i]   Fortunately, we are witnessing a return to recycling, but perhaps not quickly enough.

Earlier this month, Kate Bernot wrote an article in Good Beer Hunting noting the rise in canned wines, and the much maligned and ubiquitous “seltzers” were major contributory factors in the can shortage for breweries.[ii] Whether recycling or seltzer, the issue remains the same- there is a shortage. The law of supply and demand has been pretty clear on this, a shortage equates to a rise in the price of the material. This places breweries squarely between Scylla and Charybdis while in the midst of a pandemic.

One response is it to absorb the increased cost of aluminum in the short term, as production has increased with the easing of COVID restrictions. This is not entirely viable given the difficult financial circumstances most breweries face during this tenuous economic time. Another solution is to pass along the increased cost to the consumer. This is equally troublesome as it may become a test of loyalty for some consumers while pricing out others, resulting in a loss of business. Blaming AB for flooding the market with seltzer still remains an option however, but offers no true plan for overcoming this challenge.  For some breweries it is no longer a matter of passing on cost, but a question of actually receiving cans in the first place- regardless of cost. Time will provide greater insight into this most vexing debacle.

Collaborations

Collaborations are king (or Queen depending on your preference) and 2020 has been a banner year for them despite social distancing. The annual Pink Boots collaboration in March fell on International Women’s Day. Myriad breweries with either female owners or employees hosted the collaborations. This year’s theme was an homage to the suffragettes that valiantly and successfully championed women’s right to vote. The 100th anniversary of the passage of the 19th amendment requires a centennial celebration of great magnitude, and the end result of this year’s Pink Boots collaboration (with a proprietary Pink Boots bend of hops) was definitely worthy of the occasion.

Brew for BAM was the most recent Maryland wide collaboration. Proceeds from the malty creations will help fund the Association that supports the legislative priorities and hosts events for the breweries. Due to the pandemic they have lost a primary source of revenue generated through the (several) annual events BAM hosts. Each brewery that participated let inspiration take flight, resulting in a wide and wonderful variety of brews, with a few true surprises!

Another nationwide collaboration began at Weathered Souls Brewing in San Antonio, the Black is Beautiful stout. 17 Maryland breweries partook of this unifying collaboration, each adding their own signature flair to the stout. If you haven’t had a chance to yet sample one of these delights- make it a priority!

Look for more historical collaborations coming from yours truly and Judy Neff at Checkerspot Brewing. Next up- an appropriately historic porter!

Judy Neff and Maureen O’Prey

New Breweries

Maryland breweries are growing and navigating their own course in these uncharted waters. This summer we welcomed the opening of a few new Maryland breweries.

Hopkins Farm Brewery in Harford County opened in July. If you are not familiar, Aaron Hopkins is also the genius behind (the on-site) Chesapeake Malting at Hopkins Farm. They are one of three local malting operations in the Free State and responsible for contributing to many fantastic local brews. A self sufficient farm brew with some quite tasty offerings and plenty of outdoor seating to safely enjoy your brew.

Additionally, the much heralded Ten Eyck Brewery in Queenstown has finally opened its doors! Ten Eyck continued to build its brand while building its brewery through beautifully crafted collaborations with a handful of breweries in the state, including a lovely rye with Checkerspot Brewing. I personally cannot wait to walk through those doors for a Taildragger IPA.

The ladies of Ten Eyck breaking ground

Gateway Brewing in Salisbury, another Eastern Shore creation, is a nanobrewery that opened for tastings last month. Licensing for pint service is pending and anticipated soon.

Last but not least, Richard Carter has made progress on a zoning amendment to Build Rock Hall’s first microbrewery, Delmarva Craft. Updates will be forthcoming.

Statistics and more statistics

Growth is great and the market will shake out those that cannot create products of consistent quality. As I have always said there literally is a beer for every palate and Maryland breweries certainly meet the threshold for diversity of styles, flavors, and preferences.  So what is all the hullabaloo about the latest Brewer’s Association of America stats?

The 2019 figures came out by state and Maryland was in the middle- sort of:

33rd for number of breweries per capita (2.5 per 100,000 drinking age adults)

22nd for number of breweries

25nd for economic impact

49th for economic impact per capita

22nd for barrels produced per year

So, how do we unpack this? Well the number of breweries is pretty straight forward- we are a state with 112 breweries. Hard stop.

The number of breweries per capita means that 32 other states have more breweries per 100,000 legal drinking age adults than we do. Can we do better? Absolutely, but let’s keep in mind a little thing called size. Maryland is petite compared to the land mass of some of other our great United States. There are areas of the Free State that are extremely dense in population and some quite sparse. I am not adverse to a brewery on every corner, but is it feasible that a business model like this can survive? Probably not, just as having too many breweries in very rural areas would need to rely mainly upon distribution and tourist traffic to survive, which is difficult during COVID.

This brings us to the number of barrels produced per year- coming in solidly at 22nd. Factor this in with the last number and perhaps it will make a little more sense. Our breweries in Maryland are cranking! We may not have the per capita breweries, but the 112 breweries we do have are really out-producing many other states. Obviously this is fabulously encouraging.

Moving along to the sticky widget that is economic impact. We are smack dab in the middle of the country for economic impact at 25th. What does this mean? In a nutshell our breweries have a nearly $1 billion economic impact (954 million to be precise) on Maryland’s economy. The figure is derived from the total impact of beer brewed by craft brewers as it moves through the three-tier system.[iii] This includes jobs in breweries, jobs created at affiliated industries because of the breweries (distributors, bottle makers, can manufacturers, retail sales people, etc.), and sales of beer, food and merchandise sold in breweries and taprooms.  This number is quite impressive and a definitive and substantial increase from just a few years prior.

So how does this jibe with the economic impact per capita? Simple. This correlates directly to our placement in breweries per capita. We are almost dead last in this category. How can that be when our economic impact is clearly more substantial? If we have more breweries per capita, most likely we will have a greater economic impact per capita. For the number of drinking age adults, we could probably do better, but we already out-produce many states with the breweries that we do have.

Another correlation I think is relevant is the change to Maryland’s antiquated franchise and craft brewing laws that only went into effect last July, 2019. Give this number a chance to come up. It probably will based on increased taprooms sales and opportunities for our craft breweries one the pandemic is in our rearview mirror.

Do not forget where we are as far as economic impact on our state- we are faring much better than many of the states that lead us in per capita economic impact. This is not doom and gloom by any means, but a light shining brightly, strengthening in illumination with each passing year.

Here is a quick takeaway direct from the BA statisticians on how US craft breweries are situated:

Overall U.S. beer volume sales were down 2% in 2019, whereas craft brewer sales continued to grow at a rate of 4% by volume, reaching 13.6% of the U.S. beer market by volume. Craft production grew the most for taprooms. Retail dollar sales of craft increased 6%, up to $29.3 billion, and now account for more than 25% of the $116.0 billion U.S. beer market. The industry also provided more than 580,000 total jobs, with more than 160,000 jobs directly at breweries and brewpubs, including serving staff at brewpubs.[iv]

The bottom line is our craft breweries are consistently eating away at big beer’s market share (translation- AB-InBev). Perhaps that is what keeps AB execs up at night, and why they continue to see so many tied-house violations.

Just a thought!

Sláinte!


[i] Sara Baltic, “Of cars and cans: US aluminum and the pandemic” S&P Global Platt Insights (July 2, 2020) https://blogs.platts.com/2020/07/02/us-aluminum-demand-coronavirus-pandemic/

[ii] Kate Bernot, “Summer Crush — Aluminum Can Shortage Costs Stack Up as Breweries Likely to Suffer for Months” Good Beer Hunting Sightings, (Aug 4 2020)  https://www.goodbeerhunting.com/sightlines/8/4/aluminum-can-shortage-costs-stack-up-as-breweries-likely-to-suffer-for-months?fbclid=IwAR0QvABaNyxb349Ud3CkjuxO5x7rVz1q-6MN79J9tQaJ7_IM3GdNpwlXE28

[iii] Bart Watson, “National Economic Impact and Data” Brewers Association of America (2019) https://www.brewersassociation.org/statistics-and-data/economic-impact-data/

[iv]Bart Watson, “National Beer Sales & Production Data” Brewers Association of America, (2019) https://www.brewersassociation.org/statistics-and-data/national-beer-stats/

Ode to 2019 and welcome to a new decade of brewing in Maryland

A reflection on 2019, and a look forward to what is coming in 2020 for the brewing industry in Maryland.

2019 came in with a rush for the craft brewing scene in Maryland. Amid the plethora of new breweries, we welcomed favorable changes in legislation for craft alcohol manufacturers in Maryland and the nation. Sadly, we also witnessed the closure of local breweries and other beloved institutions that helped bring attention to industry in its nascent stage of revitalization.

2018 left us a bit shell shocked legislatively as the muckraking revealed the lopsided, antediluvian alcohol laws and the lengths the entrenched beneficiaries were willing to go to in order to hang on to their empires built upon the backs of craft alcohol manufacturers in Maryland. It was instructive and served as a platform for change in 2019. The close of the 2019 Maryland legislative session witnessed the passage of the Brewery Modernization Act and Beer Franchise Law reform. All in all this was a resounding victory and most craft breweries could breathe a sigh of relief, as profitability would not be nearly as restricted for most with an increase in taproom sales;  the elimination of the buy-back proviso; an increase in taproom hours;  and increases in both production and self-distribution limits among other favorable changes. Barriers to profitability had been lifted for most, and many brewers that were operating on thin margins could finally rejoice.

For others the joy was somewhat muted, particularly for older breweries stuck with a dunce of a distributor. Although franchise law reform enables breweries to terminate a relationship with a distributor in 45 days without cause for fair market value, the cost of extricating from those franchise contracts is often cost prohibitive, thus they remain in a bad “marriage” indefinitely. For those breweries a bad distributor is already hemorrhaging profits due to the lack of consistent and reliable deliveries, making a payout of “fair market value” a nonstarter. Overall however there was far more to celebrate than decry.

Patuxent Brewing Label

We witnessed the opening of long awaited breweries like Patuxent Brewing- Charles County’s 1st brewery, which opened this June. They are a welcome addition to a community that was incredibly thirsty for quality, locally produced brews.  This minority owned Southern Maryland brewery has certainly created a buzz and should be a planned stop for any beer traveler.

In Carroll County Brewery Fire opened to much acclaim from craft beer lovers and an extremely supportive chamber of commerce excited for the increase in beer and agro tourism. 1623 also settled on a location in Eldersburg at the Liberty Exchange, which will contribute to this swell of good beer in Carroll County.  

Montgomery County saw its share of new breweries with Elder Pine in Gaithersburg and Silver Branch in Silver Spring. These are two can’t miss breweries that could not be more different: Silver Branch for the truly authentic German beers they produce and Elder Pine for the locally-farmed ingredients in lesser known styles. Another Montgomery County staple- Denizens- expanded into Prince George’s County with their new Riverdale Park production brewery and taproom.

Pooles Island opened in Baltimore County, keeping it local and interesting. In addition to the standard fare one would expect they have host of surprises, including  Le Blanc Fort- a hybrid beer with Sauvignon Blanc resulting in a crisp, dry, delightful drink.

These were just a handful of the new members joining the 100+ Maryland breweries. 23 more are slated to open in 2020.

Unfortunately, 2019 observed upheaval in the industry as well. Rubber Soul, House Cat Brewing, and Barley and Hops all shuttered their doors this year. For some like House Cat- experimental yeasts led to their undoing, while others suffered from financial woes.  Smoketown Brewing in Brunswick was ripe for expansion into Frederick and took advantage of House Cat’s closure by moving into the facility next door to Attaboy and a stone’s throw from Idiom- an ideal location for beer tourists.

For those of us that have been around for a bit, we were left feeling bereft at the loss of Baltimore Beer Week. This annual institution started by Joe Gold, formerly of Heavy Seas Brewery, and Dominic Cantalupo together craft beer lovers to Baltimore for a decade, with engaging events that introduced novices and aficionados alike to the best Maryland had to offer in craft beer. It bolstered the industry at a time it when it was just starting to take off, when folks really weren’t envisioning Maryland as a craft beer destination. In fact, although hard to believe now, in 2008 many were still hesitant to embrace craft beer at all. My how times have changed, and oh how I will miss the beer history walks (and breakfast beers), the passports, and the awesome shirts among the numerous other things that made is so special. The impact of Baltimore Beer Week forever remains. Some of the traditions- including the homebrew extravaganza, the race at Max’s, and a host of other events have been resurrected. The legacy of BBW, and of Dom and Joe and what they created will live on.

The industry has also learned to be incredibly adaptable. Jailbreak in Laurel for example, changed their classification to better serve patrons by opening a kitchen, and serving wine and spirits. Many breweries have included other craft alcohol options in house to reach a wider audience, including Elk River in Cecil Waverly in Baltimore, and Silver Branch in Silver Spring.

Full Tilt opened their new facility in Govans, serving other local craft beers in addition to wine while transitioning production over from Peabody Heights. In recent weeks, they transitioned to both a brand new general manager; Marshall Lilly, and head brewer- Jordan McGraw, formerly of Hysteria in Columbia. They still serve wine, but with the new brewmaster upping their game, they will see quite a bit more demand.

The devastating floods in Ellicott City have taken their toll on the town, and upended plans for many businesses. One creative solution has emerged from the devastation- Ellicott Mills Brewing Company has been purchased by the Phoenix Emporium, providing a secure future for both in what have certainly been trying times for success.

2019 Heavy Seas Logo

Heavy Seas has rebranded to usher in the new decade and appeal to a larger demographic of craft beer drinkers. They have also introduced a host of new offerings to tempt and tantalize, including a hazy IPA that launches January 10th – Hydra’s Haze.

Ministry of Brewing

There is much  to look forward to look forward to in 2020. A slew of new brewery openings including Ten Eyck in Queenstown- a woman owned brewery and taproom ( made up of Veterans and First Responders); and Ministry of Brewing- a brewery in the historic St. Michael’s German Catholic Church in Fells Point… and that is just January!

Burnish Beer is slated to open in Salisbury with Randy Mills, former partner and brewmaster of RaR Brewing, at the helm.  Sapwood Cellars in Columbia is expanding with three new 20 bbl tanks in 2020 just to meet demand. The Wine Co-op at Union Collective will also open in 2020 leading to a trifecta of craft alcohol manufacturers in one location. More historical recipe recreations are on tap from yours truly in combination with the fabulous Judy Neff and team at Checkerspot.

There is of course much more to say, and a plethora of breweries to cover.

It was a great decade for brewing in Maryland and I can’t wait to see what happens in 2020!

Under the Oak

What is in store for craft beer lovers at the new brewery breaking ground in Queen Anne’s County?

Sunday marked the official groundbreaking of a new brewery in Queen Anne’s County- Ten Eyck. The name is familial, drawn from founder and brewmaster Nicki Sener and her father, affectionately known as “Gangster Ten Eyck”. The Ten Eyck family emigrated from the Netherlands during the Colonial era and planted roots throughout what eventually became the United States of America.  Etymologically, it is derived from the Dutch and translated as ‘under the oak’ or ‘lives at the oak’. Charming most certainly, but not the most interesting aspect of this new brewery.

It is the women behind the brewery that provide the most intriguing story behind this venture- veterans and first responders. Nicki Sener is not only the founder but both a veteran and a first responder (law enforcement). Sharon Horgan and Shayne Sewell both served in the Air Force along with Michelle (Mo) and Jennifer Barrett. Jessica Hammond Graf coached women’s rugby at the Naval Academy, while she and her wife Yancy Hammond Graf both played for USA Women’s Rugby. What brought them together? Rugby and craft beer, and a common set of experiences.  It was actually Yancy that first delved into mash tun of homebrewing while playing rugby, and from that point forward it became an integral part of the group dynamic.  Although quite talented, Yancy has since passed the mash paddle off to Nicki, and for good reason,

 “It was easy to believe in the vision of Ten Eyck, because we enjoy the creativity that emanates from this woman.” Yancy Hammond Graf, speaking of founder Nicki Sener.

Nicki’s mash paddle.

If you hadn’t guessed by now, these women are close- they not only support one another, but perhaps more importantly build and invest in each other. They champion strengths while helping buttress the gaps. They are a united front, one that not only understands the magic of teamwork, but the essential role of allowing individual character to shine.

The brewery is situated on a patch of land ideally suited for local patrons and travelers. Ten Eyck is just off of Grange Hall Road and Rte. 213, within spitting distance of Route 50 (Blue Star Memorial Highway or Ocean Gateway- you choose.) The location also happens to be directly across from Chesapeake College and the nearest gas station. Between beach goers and the college crowd, foot traffic should not be a problem for Ten Eyck no matter the time of year.  The 4,244 sf facility will house a 10 bbl system from Oregon, with three 10 bbl bright tanks and a 20 bbl fermenter. Foeders are also in route. For those of you unfamiliar, they were created predominantly for wine although other craft creations from spirits to beer have incorporated these enormous wooden vats in the maturation process. The high liquid to wood ratio provides a perfect environment for the beer to develop, while imparting oak, vanilla, and other mellow characteristics into the alcohol without threat of acidification that is often a product of smaller barrel ageing. The vast height of the vessel allows for greater capacity with a smaller footprint than standard barrels. Lagers and stouts are ideal for Foeders, and if dedicated- can make a particularly sublime sour.

The taproom will have 12 taps of myriad styles. The goal is to offer a little bit of everything to the consumer from lagers, to IPA’s to sours. For the non-beer drinkers they are also crafting both soda and cider. There will not be a full kitchen, so food options include a picnic lunch, or available food trucks. Ten Eyck will have a full bier garden, complete with dog pools for your waggy-tailed quadruped, and perhaps a hitching post for your thoroughbred. They have literally thought of everything!

I have sampled Ten Eyck’s offerings before, but on a 94 degree day filled with bright sun I was curious how my opinion and my palate might be informed. I will begin with the one thing I rarely drink- cider. It was quite perfect for such a warm afternoon. The blueberries and blackberries were all locally grown and handpicked, lending themselves to a lingering and immensely refreshing mouthful of bright, full flavors that would have been lost in mass harvested berries, but were not overpowering.

The Blackberry Rye IPA offered a similar profile in that it was fully flavored, yet impressively balanced between the hop profile and the expected bite of the rye.  My favorite however was the Tail Dragger IPA. This little beauty was named after Hanna, who not surprisingly is a pilot who was gracious enough to actually wear a t-shirt with her plane imprinted upon it. This cunning craft was a merger of Galaxy and Citra hops, producing an IPA that brought forth every nuance of malt underneath the hop profile that was not at all overpowering, but brilliantly complex.

The brewery is slated to open no later than January 2020, although they are hoping for an October debut. This remarkable group of women are building something incredible together…..stay tuned and don’t forget to thank them for their service!

Prost!