Craft Beer's Revolving Door

For quite some time, I've been perplexed about a theme I've seen playing out in my local pub. When I first started showing up 10 or so years ago, I saw the same faces for years at a time. There was very little turnover in the bar or the attached bottleshop.

That scenario has flipped in recent times. Faces come and go with increased frequency. Why have things changed so dramatically? Why have we gone from a situation where people stuck around for years to one in which they often come and go in a year or less?

The answer, of course, is opportunity. Craft beer was a modest growth industry until about 10 years ago. Nationwide, we had 1,521 craft breweries and brewpubs in 2008. By late 2017, that number had ballooned to 6,266. And that's not counting the many craft beer-focused taprooms and bars.

The consequence of the exponential growth is a corresponding increase in opportunity. These businesses don't run themselves. Many of the best opportunities are skilled positions in breweries, equipment manufacturing, etc. But the list extends to all corners of the industry.

That essentially means there's a lot of horizontal and upward mobility in craft beer. We regularly see brewers jumping from place to place...or starting their own gig. We see keg washers moving on to become assistant brewers and, sometimes, head brewers. Wild times.

In the case of my local, most of the folks who come and go stay within the craft beer space. Some have gone on to work for distributors or become brand reps or even assistant brewers. They use their acquired knowledge and experience to leverage a better role.

There's great incentive to move on if you work in retail. It isn't like being a bartender, where tips can make up for a crappy hourly wage. That's not the case with the folks who work in bottleships or craft-centric retail stores. The hourly wage in those place is low.

How low? Starting pay at my bottleshop is $12/hour. Not close to a living wage. Keep in mind that doing the job well requires significant beer knowledge and expertise. Customers constantly ask for advice and bottleshop folks need to be able to make informed suggestions.

What these folks soon find out is that their knowledge is worth more somewhere else. Prior to the craft explosion, there wasn't much opportunity in craft beer. People were stuck. Today, folks who work in retail can and do make the jump to better situations. Thus, the revolving door.

On a related note, Jeff Alworth is currently researching a piece that will explore brewer pay. Brewers are some of the best-paid people in craft beer, but I won't be surprised to learn that, as a group, they are underpaid in relation to their value. That's why so many open their own breweries.

Look for Jeff's piece in the next week or so. Should be solid stuff.

Craft Beer's Illinois Problem

In its infancy, craft beer was a virtual blip. A nothing. Without passage of the Brewpub Bill in 1985, Oregon's craft beer industry would have certainly remained small and insignificant. It simply could not have flourished in a scenario where breweries could not sell directly to customers.

One of the reasons the Brewpub Bill passed is that beer distributors and retailers, who weren't interested in craft beer at the time, decided to not oppose it. They figured it wouldn't hurt to let these cowboys chase their dreams and that craft beer might someday make them money. Little did they know.

The ability to sell directly to customers was crucial to the industry establishing a strong identity here. It led to the emergence of taprooms and pubs where a brewery's beer could be featured. That formula, more or less, has been used to boost the fortunes of craft beer across the country.

Fast forward to last week, when Illinois Gov. Bruce Rauner signed a bill allowing licensed breweries producing up to 120,000 barrels of beer annually to purchase beer or cider from wholesalers or other breweries to sell in their taprooms. Great news, right?

The signing drew quick criticism from several restaurant and bar owners in Chicago. They view the law as a blurring of the lines between taprooms and bars. The effect of the law, they say, is that the only difference between taprooms and bars will be a bar's ability to sell wine and liquor. They aren't pleased.

“Taprooms are going from a place to grab a pint after a tour to enticing a customer to spend the whole evening there,” one owner told Brewbound. “To me, that’s why we have brewpub licenses. If you want to be a full service, one-stop shop to the consumer, then you should be subject to the same laws and zoning rules as the rest of us.”

Owners essentially object to the different zoning rules that breweries, which are considered manufacturing outlets, are subject to. As well, beer brewed on site carries a much higher profit margin than anything bars and restaurants sell. Remember, bars and restaurants buy almost everything they sell through distributors at a much higher price point. It's the law.

“We don’t think it’s cool that breweries with taprooms act as bars,” an owner told Brewbound.

From the craft beer side, I've seen several condescending comments in various places. The consensus seems to be that adding guest beers and ciders to taproom lists is fine and something that needs to happen due to the overwhelming popularity and girth of craft beer.

Part of the argument is that brewpubs and taprooms typically want to sell their own beer first and guest beer or cider second. True enough. One brewery owner told Brewbound that the new law was necessary so he could bring in and sell collaboration beers brewed at other breweries.

That's all well and good. But it seems to me that the bar owners have a legitimate beef. We seem to have lost sight of why taprooms and brewpubs were set up in the first place, which was to allow brewers to display and sell their own products directly to consumers.

If the original taproom/brewpub concept had included the right to sell a variety of beers to consumers like a bar or tavern does, the restaurant and bar industry may well have opposed changes in the law and derailed legislation everywhere. That didn't happen.

Now that craft beer has attained star status, it has the power to push for changes that may put other businesses at a disadvantage. The situation in Illinois is one example of that. It's really not okay. No one likes a bully, especially one that ought to know better.

De Garde and Oregon's Coolship Fetish

It's not much of a secret that increased competition has brewers looking for ways to produce unique beers that distinguish and differentiate their portfolios. One result of that reality is a growing interest in spontaneous fermentation and coolships.

Trevor Rogers and his coolships

Breweries currently immersed in spontaneous fermentation include
Allegory, de Garde, Logsdon. Block 15, Ale Apothecary, Flat Tail, McMenamin’s Edgefield and Wolf Tree. The list of those planning to install coolships soon include pFriem, Von Ebert East and Little Beast.

“The concept of spontaneous fermentation is exciting for brewers because it brings ‘local’ into the brewery on a whole new level,” local writer and author Jeff Alworth told me. "There's something incredibly seductive about the local-ness of spontaneous fermentation."

That's because microflora can vary widely from place to place, even in a small area. Jeff related a story in which buckets of cooling wort were left out overnight in Forest Park., all within reasonably close proximity. The buckets were then pitched into larger batches and left to ferment.

“The amazing thing is they all tasted different,” he said. “Even a couple hundred feet is enough to get a different mix of microbes. It’s crazy. I think yeast is on the frontier of experimentation, and spontaneous fermentation is basically yeast-foraging. It has a lot of appeal.”

Part of that appeal may be the risky nature of the approach. Spontaneous fermentation can be done almost anywhere, but the results can be wildly unpredictable. Some places have characters floating around in the air that aren’t conducive to producing good beer. Success is a roll of the dice.

The entire concept caused my friend and occasional co-conspirator to pitch the idea of exploring what's happening with coolships. An article to be published in the September issue of the Oregon Beer Growler details our findings.

What we found, generally, is that approaches vary. You might think breweries using coolships have done meticulous research on what's floating around in the air where they live. You might think there's some standard in terms of what a coolship looks like or the material it's made of. Not exactly so. Read the OBG story for more on all that.

My own corner of the story involves de Garde. I wrote about them for BeerAdvocate in 2015. Their operation was small, but growing rapidly at the time. They moved from their original location (on Blimp Blvd.) to a space in downtown Tillamook in late 2017. Time to revisit.

How de Garde wound up in Tillamook is a story that's been documented many times in many places. Co-founder and brewer Trevor Rogers collected and evaluated wild yeast cultures from several areas on the Oregon coast before making a decision.                          .

“I liked the yeast and bacterial combinations in several areas,” Rogers says. “One place I liked had a lower concentration of bugs in the air, which produced sluggish fermentation and occasional bad batches. I eventually decided the microflora around Tillamook was ideal.”

Anyway, I drove down there last week to take a look at the new space. It's quite impressive, with a vast tasting room and a compact brewery behind and above it. There's significantly less brewing and barrel storage space here than at the old place, but improved efficiencies mean they produce just as much beer. They have two operational coolships of more or less standard shape and depth.

Rogers had wanted a larger coolship to take full advantage of the new brewing space. But it wound up being cheaper and easier to simply build a second coolship that's essentially identical to the original one. They sit side-by-side in the brewery.

Beer nerds will recall that the original de Garde brewery had a garage door that opened to expose cooling wort to outside air. It worked fine most of the time, but Rogers felt they needed to improve the consistency of microbe flow.

"We found outside wind patterns had a big effect on what was coming in," he said. "Sometimes we got a lot of bugs, sometimes not. The new space was designed to fix that. It has a high capacity fan with air ducting that allows a regular flow of outside air into the coolship area."

The result is they don’t have days where there’s a high or low flow of bugs. It's more even now. Rogers knows a lot inoculants come from inside the brewery, the reason a lot of old wood was kept when the building was renovated. But he believes it's important to replenish the inside area.

I don't know that de Garde's approach is the best one out there. They've built a solid niche in the spontaneous fermentation space and they sell a ton of beer directly to patrons from their tasting room. Others want a piece of that action and either are or soon will be navigating that space.

"I think it’s great that people are experimenting," Rogers said. "We don’t yet know the full potential of our area. We targeted the coast, but that’s not to say that great beer can’t be made in other areas. A lot of exploration remains to be done."

The coolship fetish is a real thing. And catching.

The King of Crap

Anheuser-Busch isn't a craft beer company. It's famous mostly for brewing up swill that's barely fit for consumption and conjuring up brands that have shelf lives of roughly a nanosecond. Ironically, now comes news that AB is on the verge of becoming the king of craft beer.

That news was reported most prominently by Josh Noel in the Chicago Tribune. Noel, you may recall, is the author of "Barrel-Aged Stout and Selling Out," released earlier this summer. The book explores the transformation of Goose Island Brewing to Gooseweiser. It's great reading and recommended.

The heart of the king of craft story is that industry newsletter Beer Marketer’s Insights just reported that AB surpassed Boston Beer and Sierra Nevada in 2018 to become the nation’s top craft beer company in dollar sales. It's a fairly shocking development because AB had no presence in the craft beer space as recently as 10 years ago. Now this.

There's a catch, though. AB's standing is based on IRI data, which tracks sales in grocery, big box, drug and convenience stores. If you factor in draft and liquor store sales, Boston Beer is still ahead of Anheuser-Busch in volume and dollar sales. But the changing of the guard is inevitable and will happen in the next year or so, evidently.

Anheuser-Busch obviously didn't put itself in the position it's in via organic growth. These dunces made countless attempts to enter the craft space over the years and the best they could come up with was the dreadful Shock Top. Culturally, AB's mantra has always been to brew tepid sludge and shove it down consumer throats by way of its massive distribution network and hard core advertising.

Instead of continuing to pursue a failed strategy, AB changed course and started buying up craft breweries, the first of which was Goose Island in 2011. Today, they have 10 former craft breweries more or less scattered around the country, including Wicked Weed, 10 Barrel, Devil's Backbone, Elysian, Golden Road, Four Peaks, Breckenridge, Karbach and Blue Point.

As documented in Noel's book, the acquisition of Goose Island did not get off to a promising start. Anheuser-Busch had been absorbed by InBev prior to the buyout and the Brazilians running the show had no idea how to manage a craft brewery. They bungled marketing efforts, bullied employees and made a mess of things.

But Goose Island provided a nice learning platform. As Anheuser-Busch bought more craft breweries, its experience at Goose was significant. Lo and behold, it turned out the Brazilians were pretty good learners. They've modified and refined their approach with the acquired brands. To a significant extent, they actually know what they're doing now.

Many were skeptical of what would happen with the acquisitions. But the strategy has been a huge success. The acquired brands continue to act like local and regional players close to home, while some of their most marketable brands are brewed in giant factory breweries and peddled via the AB network in remote markets, helping make up for disastrous declines of Bud and Bud Light.

One of the reasons the strategy has been such a big success is a lack of transparency on the part of Anheuser-Busch and a lack of knowledge on the part of consumers. People who buy their beer in grocery and convenience stores typically don't have as much brand knowledge as folks who frequent beer bars and related craft beer outlets. AB does nothing to help with honest labeling.

Hoping to make it easier for consumers to identify independent beer, the Brewers Association, a trade group representing independent brewers, last summer unveiled a logo that signifies independent status. Adopted by more than 3,600 breweries, the logo isn't available to the Baby Buds or breweries that have been acquired by Constellation, MillerCoors or Heineken.

There are differing opinions on the threat posed by AB's impending dominance of the craft segment. Some highly knowledgeable people in and around the industry have no problem with the Anheuser-Busch game plan, which includes brewing some of the former craft beers in giant factory breweries and using mafia-like distribution tactics to bully retailers and independent brewers.

Needless to say, I do have a problem with AB's strategy. Don't get caught up in the local strategy, in which a brewery, such as Portland's 10 Barrel, makes great beer. That's a diversion. The larger plan is to attain a position of dominance nationally with factory-made beer and strong-armed distribution tactics. Once that's accomplished, the former craft beers will be dumbed down further.

The fact is, the people at AB have never given a shit about good beer. They care only about money. And they'd like to get back to collecting that money with the tasteless swill they're so famous for. Anheuser-Busch truly is the King of Crap, not craft.