Opportunity Drives Craft Expansion in Retail

I have to admit I've been perplexed in recent months. I look at the Oregon beer landscape and I see numerous breweries expanding their operations and planning to distribute in bottles and/or cans. I sometimes wonder if the market can support the kind of additional production involved.

Just in case you haven't heard what's happening, here are a few examples of what I'm talking about:

Amnesia Brewing, which has a home on N. Mississippi, is in the process of building a production facility in Washougal. The new place will triple their annual brewing capacity overnight (from 1,700 to 6,000 barrels), and will also house a pub and tasting room. They plan to bottle and can beer for distribution as soon as practical.

Coalition Brewing, located on SE Ankeny, will formally release its first bottled beers this week. The beers are Two Dogs IPA, King Kitty Red Ale and Roosters Cream Ale. All of these beers are favorites at the pub and will now be available in stores, bottleshops and select bars.

One of the newly available Coalition bottles

Double Mountain Brewing in Hood River is expanding into the space next to its current operation and will include a bottling line. They expect to distribute bottles of their year-round beers (Kölsch, Vaporizer, IRA and Hop Lava) and possibly seasonals at some point. Expect to see these beers in bottleshops and finer grocery stores sometime next summer or early fall.

Alameda Brewing, located on NE Fremont, has opened a production facility in southeast Portland and is expanding its bottle distribution in Oregon and Washington. Their beers have been available at Fred Meyer and other stores for a few years. I suspect they will be even more visible now.

These a just a few examples. Many other breweries are planning to pursue retail distribution. Breweries already in the retail game are doing what they can to improve their brand image. Lompoc, for example, is in the process of refining its labels.

Available by the bottle, possibly by summer

Behind the madness
What's all the madness about? Aren't there enough craft beers available on store shelves? How much shelf space can they grow into? How much of this stuff will the market support?

The answer is that sales of craft beers in US supermarkets increased by 15 percent in 2011, to nearly $1 billion. It was the sixth consecutive year of growth in the retail channel. Craft beer is the fastest growing alcohol/beverage segment in supermarkets.

Convenience stores and drug stores, which saw solid growth in 2011, are tracked separately from supermarkets. Expansion into this channel is expected to be brisk for 2012.

Numbers from the Brewers Association say craft beer reached a 10.8 share of the retail market last year. Please realize, this is a national figure. The share is probably 20-25 percent in Oregon, Washington and California. And closer to zero in places like Mississippi, where craft is struggling due to antiquated beer laws.

As mentioned in my prior post, some of the growth numbers are off the hook. Sales of craft beer in 22 oz bombers grew by 35 percent in 2011. Canned craft beer sales were up 97 percent to 350,000 cases. These numbers show no signs of slowing down or collapsing.

Bomber sales are expanding nicely

With all these numbers staring them in the face, it isn't surprising that brewers are positioning themselves for retail distribution. A large and growing pool of consumers is actively seeking craft beer in stores. Brewers are merely moving to take advantage of the opportunity.

Is there a risk with so many brewers intent on entering the retail space? Sure there is. The flood of new bottles and cans could create too much competition for shelf space, squeezing some brands out. There's also a possibility that too many choices could drive prices down, impacting profit.

But the game is clearly on...and escalating. You have to admit it's fun to watch as craft beers take shelf space away from the large brands. The craft revolution seems to be moving forward unabated.

When Small was King

One of the things that's happened to craft beer in its zeal to be the polar opposite of macro lagers is it has gotten big. Check the beer list at your favorite watering hole. You'll likely discover that ABV levels are regularly north of 5 percent, often a lot higher. Is all that alcohol really necessary?

Serving up the little guys

Yesterday's Mighty Mites Session Beer Festival was designed to answer that question. The event, nudged into reality by esteemed Portland beer writer and blogger, Jeff Alworth, was held at Coalition Brewing as part of PDX Beer Week.

There were 18 beers on tap. The program listed 17 breweries, but one of those was pouring two beers. More importantly, these were small beers, most coming in at less than 5 percent ABV. In fact, at least eight beers came in at less than 4 percent.

Of course, reduced ABV means nothing at all if the beer has the taste and character of a Bud Light. Anyone who looked at the list of participating breweries prior to arriving at Coalition probably had reason to believe the beers weren't going to suck. The list included: Hair of the Dog, Breakside, Cascade, Coalition, Oakshire, Ninkasi and Burnside, among others.

Before I move on to the beers, I want to talk about the session concept for just a second. The term apparently refers to a time when factory workers in England were allowed to drink during licensed sessions that lasted several hours. The beers had to be low in alcohol because the workers often returned to factor floors after consuming numerous pints. Session beers, then, can be consumed in significant quantity without causing incoherence.

A good time was had by all!

I didn't taste every beer, but I tasted more than half of them. There wasn't a bad one in the bunch, although Little Sir John, a cask-conditioned bitter, was flat (as expected) and warm (not expected).

My highlight reel:

Ninkasi Helles Belles 
I first met this beer, a German lager, at the Oregon Brewers Festival. As I said at the time, this beer is off-brand for Ninkasi, which is widely known for heavily hopped ales. Never mind the history. Helles Belles is well-balanced, crisp and has plenty of subtle flavor. At 5.1 ABV, Helles Belles barely passes muster as a small beer. Great stuff, anyway!

Hair of the Dog Little Dogs

Hair of the Dog has been producing top flight beers for years, most of them big ones like Fred and Adam. HOD had two beers at the Mighty Mites: Little Dog Fred and Little Dog Adam. Both are made by reusing the grains made to make their high gravity elders. I was pleasantly surprised to see HOD owner/brewer Alan Sprints pouring his beers. Alan is always happy to chat about his beers and yesterday was no exception. Both Little Dogs behaved nicely. Little Dog Fred was light and crisp, and my favorite of the two.

Alan Sprints (right) pouring his Little Dogs

Stone Brewing Levitation
I walked up to the Levitation tap without and real thought. In the glass, this beer smelled very similar to Laurelwood's Workhorse. For the unknowing, Workhorse is a fairly big IPA (7.5 percent ABV) that leans heavily on Amarillo and Simcoe hops for aroma and flavor. A quick taste. Levitation lacked the depth and punch of Workhorse, but the subtle flavors were terrific. I'd like to have a case of this stuff in the fridge for summer drinking. Great stuff.

In my estimation, this is an event whose time was right. I hope Jeff and some of the folks who helped organize the inaugural Mighty Mites will continue on next year. I think they should provide more shade next year, either in the form or umbrellas or trees (move it to a park). No one has been able to provide attendance figures, but it looked to me like the event was a success. On a perfect summer day in Portland, a celebration of small beers is just what we needed.