Category: Brewers Association

A Look at Beer and Food: Recent Events and Upcoming Books…

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For Charlie Papazian, founder of the Brewers Association, inspiration struck twice in remarkably similar ways. In the late 1970s, Papazian traveled to London, England, to attend the British Beer Festival. While sampling stouts, porters, and cask conditioned ales from around the United Kingdom, Papazian, an avid home brewer, started thinking about beer in the United States. When Papazian wondered aloud about whether Americans could host a similar festival, famed beer writer Michael Jackson famously quipped, “Yes, but where will you get the beer?� A few years later, Papazian welcomed eight hundred attendees at the first Great American Beer Festival, offering them forty beers from twenty-two breweries.

Fast forward two decades and travel to Italy, where local supporters of the Slow Food movement host several large international events dedicated to “good, clean, and fair food.� Founded in 1986, Slow Food has grown to more than 80,000 members in 120 countries. As part of its mission statement, Slow Food espouses that “everyone has a fundamental right to pleasure and consequently the responsibility to protect the heritage of food, tradition and culture that make this pleasure possible. Our movement is founded upon this concept of eco-gastronomy – a recognition of the strong connections between plate and planet.�

The Birth of SAVOR – Pairing American Craft Beer with Fine Food

It was in this environment, while enjoying wine and cheese pairings, that Papazian began wondering again whether such an event could work in the United States, only with beer. The resulting event, SAVOR: An American Craft Beer and Food Experience, was held May 16 and 17 in Washington D.C at the Andrew W. Mellon Auditorium. Tucked just behind the National Museum of American History, just steps from the National Mall, the auditorium provided a fitting and picturesque venue for an event that sought to elevate the public image of beer. Considered one of the finest classical structures in America, the auditorium was placed on the National Registry of Historic Places as part of the Pennsylvania Avenue Historic District on October 15, 1996.

The event served several different purposes for the Brewers Association. SAVOR was the cornerstone event for this year’s American Craft Beer Week, which was held from May 12 to 18. Recognized by Congress in House Resolution 753, the event changed to a week long event in 2006. Celebrated annually, the week gives craft brewers a chance to highlight their industry and to promote their efforts. The event also gave craft brewers an opportunity to step up their legislative efforts on Capitol Hill. The Brewers Association, along with many of its top members, spent more than a week in the nation’s capital, where they attended the National Beer Wholesalers Legislative Conference and met with legislators from several states to press issues important to smaller brewers. As the culmination of their efforts, SAVOR gave craft brewers a chance to showcase their products to congressional staffers, many of whom attended the opening session on Friday night.

Beyond politics and legislation advocacy, the event gave the association the opportunity to raise public and media awareness of craft beer by associating it with upscale food. SAVOR offered its 2100 attendees the chance to taste ninety six craft beers from forty eight breweries from around the country. Each beer was specifically paired with a sweet or savory appetizer selected by the brewery and made by Federal City Caterers.

At eighty five dollars per ticket, the event was not an average beer festival for interested consumers. The price tag, which did not fully cover the association’s expenses for even the food portion of the event, was an area of concern for some brewers and attendees. Beer enthusiasts and well-heeled novices slowly roamed around the auditorium, stopping at the center table for the event’s main supporters, which included the Brooklyn Brewery, the Harpoon Brewery, Rogue Ales, and several others. Smaller breweries from around the country offered an eclectic assortment of beers at crescent shaped tables lining the outside walls. Late in 2007, the Brewers Association opened a lottery system for the selection of most of the forty eight slots for the event. While SAVOR offered many familiar names, including Avery Brewing Company and Deschutes Brewery, the association also sought to offer geographic diversity from some smaller names. These participants included the Blacfoot River Brewing Company of Helena, Montana, Free State Brewing of Lawrence, Kansas, and Heiner Brau Microbrewery of Covington, Louisiana.

The pairings, which were offered either at an individual brewer’s table or from passing servers, included a number of interesting options. The Sprecher Brewing Company of Milwaukee, Wisconsin, offered its Pub Brown Ale to match pan-seared pilsener sirloin tips with shiitake blue-cheese sauce. Sierra Nevada Brewing Company of Chico, California, suggested its Summerfest Lager and lager steamed Thai turkey and shiitake dumplings. The Stone Brewing Company of Escondido, California, presented its Ruination IPA with either Peking duck purses or Christopher Elbow citrus spiced artisan chocolates.

Despite the initial bumps and hurdles to be expected at a new event, consumer response to SAVOR has been generally positive. In keeping with the general theme of the event, the Brewers Association asked attendees to “dress to impress,� which resulted in some interesting choices by beer enthusiasts, ranging from tuxedos to tuxedo t-shirts. Some attendees felt that the event was overpriced and complained about the relative scarcity of all the advertised pairing by the end of a session. Other attendees believed that SAVOR was underpriced considering the presence of otherwise difficult to find beers and the opportunity to speak with some of the most recognized small brewers in the country.

One clear failure for the event was its SAVOR Salons, a forum in which brewers, journalists, and other beer luminaries spoke in smaller, tutored tasting sessions to attendees. The Brewers Association designed the salons to “deepen ones [sic] appreciation and understanding of beer and food pairings.� The events included brewer Garrett Oliver pairing American artisan cheeses and craft beers, Boston Beer’s Jim Koch discussing how people can get started with beer and food, and Clipper City Brewing’s Hugh Sisson discussing the nuances of pairing beer with seafood from the Chesapeake Bay.

Limited to approximately seventy people by the venue’s tight space, the salons were poorly marked and proved too popular for the auditorium. Originally advertised as first come, first serve, the association quietly switched to a ticket system. As people approached the forum before it was supposed to start, security had to bar their entrance to the room and explain that the salon was unavailable for attendance. The venue’s limitations, combined with the popularity of the offerings and the lack of communication, left many people disappointed by their inability to attend.

Two years of preparing for the event left the staff of the Brewers Association, which is based in Boulder, Colorado, a bit strung out. The economics of the event are challenging and despite its popularity and its utility in promoting and improving the public image of beer among legislators and media on the East Coast, it is unclear whether SAVOR will be repeated next year. The association’s staff has also discussed the possibility of moving the event from the capital to New York City in future years.

Anheuser-Busch Pushes the Concept of Beer and Food

As part of its efforts to promote the public image of beer, Anheuser-Busch has also seen value in reconnecting beer with food. As part of its Here’s to Beer initiative, A-B hired ‘celebrity chef’ Dave Lieberman of The Food Network to host its Beer Connoisseur segment of its website. In this online video section, Lieberman teaches visitors about beer and about pairing foods with beer. The Here’s to Beer website (www.herestobeer.com) offers an excellent tool for consumers to select the best matches for their particular dishes or drinks. The site allows consumers to pick from dozens upon dozens of entrées, desserts, or cheeses, and the program will then suggest a recommended match, as well as a complementary and a contrasting match. The offered styles are then described in detail and suggest other food pairings. Alternatively, consumers can select the type of beer they are drinking and the program will suggest a suitable dish for pairing.
The Here’s to Beer website also leads consumers on an educational tour of food and beer pairings, with storage and pouring techniques and how to start pairing food with beer.

Anheuser-Busch has also taken its food and beer pairings into the real world. During its recent St. Louis Heritage Festival, a second annual event promoting the local brewers of St. Louis, Missouri, Lieberman also hosted a five course beer pairing dinner, along with brewmasters from the city. Lieberman has hosted similar dinners in cities around the country on Anheuser-Busch’s behalf.

Anheuser-Busch also kicked off the year with the release of its own cookbook, appropriately titled, The Anheuser-Busch Cookbook: Great Food Great Beer. Produced in conjunction with Sunset Books and released in January, the softcover book offers 185 recipes for pairing with specific styles of beer. The brewery worked with brewmaster George Reisch and Brent Wertz, executive chef at Anheuser-Busch’s Kingsmill Resort and Spa, to create the pairings. While the book avoids mention of specific brand pairings, opting instead for generalized styles, it does offer an entry level user the opportunity to progress to a new appreciation of the available possibilities. The recipes include offerings such as Spicy Shrimp Cakes with Corn Salsa, Tuna Ceviche with Cumin and Chile, and Fallen Chocolate Cake with Cherries

“Beer is one of the most versatile, moderate alcohol beverages in the world, and pairs well with a range of cuisines by complementing, and not overpowering, complex flavors,� said Wertz in a press release. “Beer adds pizzazz to any menu and with Great Food Great Beer we want to help provide culinary enthusiasts with a fun, creative twist when preparing dishes. As detailed in the book, beer should be paired carefully with the right dish to bring out the best of both.�

The Future of Beer and Food in America

While in the past most Americans have limited their idea of beer and food pairings to American light lagers and burgers, fries, and nachos, the increasing popularity of better beers, combined with the general consumer trend of trading up, has led to a radical shift in the popular perception of beer. Once cast away from the table and relegated only to life near the grill, flavorful beer is pushing forward to once again regain its place. On any given day in any major city around the country, consumers ranging from beer enthusiasts to complete novices can attend a beer dinner led by a brewer or interested restaurateur. Beer and food events can be found in package stores, where store staff or brewery representatives offer cheese and ale pairings.

The opportunities to mix food and beer are only limited by the mind of the creator. When considering possible matches, try matching beers and foods that enhance one another and call specific attention to one or the other’s particular attributes. Consider the aroma, bouquet, and taste of particular beers and the accompanying flavors found in your selected foods. Great pairings need not always blend seamlessly and strongly contrasting selections can also provide an enjoyable and palate expanding experience.

A number of resources exist for individuals, restaurants, or package stores interested in leading friends or consumers on a tasting tour of food and beer. Garrett Oliver of the Brooklyn Brewery published his ‘Brewmaster’s Table: Discovering the Pleasures of Real Beer with Real Food,’ which takes consumers on an upscale journey through world beers and cuisines. For a more literary experience, Chicago based author Bob Skilnik wrote ‘Beer & Food: An American History,’ beer cook Lucy Saunders released ‘Best of American Beer & Food: Pairing & Cooking with Craft Beer,’

2008 will also see the release of several new volumes related to beer and food, including Fiona and Will Beckett’s ‘An Appetite for Ale: 101 Ways to Enjoy Beer With Food.’ Brewer Sam Calagione and wine writer Marnie Old have published ‘He Said Beer, She Said Wine: Impassioned Food Pairings to Debate and Enjoy – From Burgers to Brie and Beyond.’

–Article appeared in June 2008 issue of Beverage Magazine.

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The SAVOR Wrap-up And Concerns About The Growing Snobbery Of Beer…

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I traveled to the nation’s capital last week to attend the Brewers Association’s much anticipated food and beer event. SAVOR: An American Craft Beer and Food Experience, was held May 16 and 17 in Washington D.C at the Andrew W. Mellon Auditorium. Considered one of the best classical buildings in the U.S., the venue was a fitting one considering the event’s focus on elevating the public image of beer.

As a keystone for the association’s American Craft Beer Week, SAVOR served many purposes.
The event first gave craft brewers an opportunity to showcase their efforts to a Congressional audience on Capitol Hill. Many small brewers spent the better part of a week in D.C. lobbying Congress and making their presence known as part of the National Beer Wholesalers Legislative Conference. In turn, many congressional staffers and lobbyists attended Friday’s opening session of the event.

Beyond politics and legislative advocacy, SAVOR gave the association an opportunity to raise public and media awareness of craft beer by associating it with upscale food. The association wanted to spread the craft beer gospel to media on the East Coast and hoped the event would accomplish that goal. While it’s a little early to tell, media database searches show a bit of a paucity of coverage of the small event.

Initially planned to host nearly a thousand attendees per session, the Brewers Association’s staff wisely decided to cut back to 700 persons per session. Sold out by the day of the event, SAVOR offered its 2100 attendees the chance to taste 96 craft beers from 48 breweries from around the country. Each beer was specifically paired with a sweet or savory appetizer selected by the brewery and made by Federal City Caterers.

The event’s $85 price tag was a point of debate among beer geeks and the public, both before and after the event. Some felt that the price far exceeded what they were willing to pay, while others thought it might not be enough. From a financial point of view, the price tag clearly wasn’t enough as SAVOR lost a fair chunk of the Brewers Association’s change. It appears the price tag may not have even covered the per person food costs, not even considering the other sizable expenses involved in hosting the event, including venue costs and the time and expenses incurred by the association’s staff.

As for the event itself, the venue was quite attractive and the staff did a nice job of decorating the interior portions. Beer enthusiasts and well-heeled novices slowly roamed the auditorium, stopping at a center table which hosted the event’s main supporters (who paid $5,000 each for the privilege, on top of donating a significant portion of free beer and their time). Smaller breweries from around the country dotted crescent shaped tables lining the outside walls. While SAVOR offered many ubiquitous names, including Avery, Dogfish, and the Lost Abbey, the association also sought to offer geographic diversity from some smaller names, including Blackfoot River Brewing Company of Helena, Montana, Free State Brewing of Lawrence, Kansas, and Heiner Brau Microbrewery of Covington, Louisiana.

Attendees had an excellent opportunity to meet and talk with brewery staff and the attendance by owners and brewers was impressive. Beers were plentiful and well selected. The food pairings, which were offered either at an individual brewer’s table or from passing servers, included a number of interesting options. The Sprecher Brewing Company of Milwaukee, Wisconsin, offered its Pub Brown Ale to match pan-seared pilsener sirloin tips with shiitake blue-cheese sauce. Sierra Nevada Brewing Company of Chico, California, suggested its Summerfest Lager and lager steamed Thai turkey and shiitake dumplings. The Stone Brewing Company of Escondido, California, presented its Ruination IPA with either Peking duck purses or Christopher Elbow citrus spiced artisan chocolates. The event staff, especially the waitstaff, did an excellent job of keeping the venue clean and in taking used food items from attendees.

The much touted food pairings proved a bit of a challenge for the new event. The venue’s tight confines caused bottlenecks at the crescent shaped tables, trapping people near the tables as others tried to approach the table. Food offerings became increasingly scarce as the event progressed, with a number of items running out an hour and a half into the event on Friday night (many blamed the ravenous appetites of the aforementioned Hill staffers). Attendees also saw a lot of the sirloin tips and chocolates as the event went on.

The booths also suffered from a decided lack of signage. While signage can certainly appear tacky if done wrong, I found myself coming upon breweries I didn’t even realize were in attendance, even late into the event.

One clear failure for the event were the SAVOR Salons, forums for brewers, journalists, and other beer luminaries to speak to attendees in smaller, tutored tasting sessions. The association designed the salons to “deepen ones [sic] appreciation and understanding of beer and food pairings.� The events included Garrett Oliver pairing American artisan cheeses and craft beers, Jim Koch discussing how to get started with beer and food, and Hugh Sisson talking about the nuances of pairing beer with Chesapeake Bay seafood. Limited to 70 people by the venue’s space restrictions, the salons were poorly marked and proved too popular. Originally advertised as first come, first serve, the association quietly switched to a ticket system after the first session. As people approached the forum well before its start time, security had to bar their entrance to the room and explain that the salon was unavailable for attendance. The venue’s limitations, combined with the popularity of the offerings and the lack of communication, left many people disappointed by their inability to attend the advertised events.

The event, which took two years to plan and execute, left some Brewers Association staffers a bit exhausted. In speaking with the staff, it’s not at all clear that this event will be repeated next year. Considering the expense and questions about the ultimate utility of SAVOR, it would not be surprising if the event went on hiatus for at least a year. The association’s staff has also discussed the possibility of moving the event from the capital to New York City in the future.

After attending the event, I was also left slightly questioning the purpose of the event. While I understand the potential media and legislative benefits to raising the public image of beer, I’m not convinced that an expensive beer and food event (where attendees are encouraged to “dress to impress”) is really the way to go. A certain air of elitism pervaded the event, which attracted a bit of an odd assortment of attendees (from tuxedoed wine folks to guys in t-shirts and shorts).

In traveling around D.C., I also found beer exposed to and ensconced in a similar and unexpected sense of exclusiveness. The city’s beer venues, from Georgetown to downtown, offer a surprisingly limited range of beers at some pretty exorbitant prices, even compared to other pricey cities. The cheapest draft beer offering we found was $5 at RFD and that was by $1.50 the cheapest pint we found in D.C. We saw several drafts above $10, including one at $14 (Brasserie Beck). The pours were also surprisingly small; in one case, Brasserie Beck offered a number of pedestrian beers of average quality for expensive prices and with ridiculously short pours. Maybe I’ve become disconnected with the real world, but I think $7.50 for a 8-ounce pour of Bavik pils is outrageous.

I’ve written a number of times in the past about my concern that beer will become untethered from its egalitarian roots and will spiral off into the price and snob stratosphere and my D.C. trip only served to aggravate my worry.

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What The Hell Does Craft Beer Mean Anyways? A New Definition Arises…

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As I get ready to head to Washington DC for the first SAVOR festival, sponsored by the Brewers Association, I’ve been reflecting on the state of the industry and the meaning of American Craft Beer Week, which starts today. In the last several years, brewers, industry insiders, beer lovers, and others have debated the true meaning of the term ‘craft beer.’ The debate has at times been very contentious, and it continues to split the beer community into increasingly small, if quiet factions. To hear the history of how this term came to be, from the earliest usage by writer Vince Cottone to the politicalization by the Brewers Association, is to behold quiet a tale. And it also should serve to confuse and upset you a little bit.

I’m itching at this scab because my friends Todd and Jason Alstrom over at BeerAdvocate.com have released their own definition of craft beer. Their definition, which for disclosure sake I had a hand in debating, goes a long way, in my opinion, to rectifying many of the divisive problems needlessly created by the overly political definition propagated by the Brewers Association.
For the purpose of context, let’s review the Brewers Association’s definition of craft brewer.

An American craft brewer is small, independent, and traditional.

Small: Annual production of beer less than 2 million barrels. Beer production is attributed to a brewer according to the rules of alternating proprietorships. Flavored malt beverages are not considered beer for purposes of this definition.

Independent: Less than 25% of the craft brewery is owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member who is not themselves a craft brewer.

Traditional: A brewer who has either an all malt flagship (the beer which represents the greatest volume among that brewers brands) or has at least 50% of it’s volume in either all malt beers or in beers which use adjuncts to enhance rather than lighten flavor.

This is the definition that many of the Brewers Association insiders have touted for several years now. The first time I heard it was from Jim Koch, founder of Boston Beer Company. When he told it to me in an interview in 2005, this is how Koch defined craft beer.

ANDY CROUCH What does the term ‘craft beer’ mean?

JIM KOCH There is actually a definition. It is small, independent and traditional. Small meaning it is under two million barrels, independent meaning not owned by a big brewery, and traditional meaning you only use traditional brewing processes. No non-traditional adjuncts, no high gravity brewing and so forth.

And here illustrates a problem with the definition of craft brewer as set by the Brewers Association: it’s inherently malleable. It’s subject to revision and indeed has been quietly changed since its introduction.

Fast forward to 2008 and here is how the growing Boston Beer Company now defines craft brewer.

Samuel Adams® is proud to be an American Craft Brewer. An American Craft Brewer is defined as being Small, Independent and Traditional. We follow the Brewers Associations definition of a Craft Brewer but include a Craft Brewer who grows beyond two million barrels and continues to brew Craft Beer. We hope to be the first Craft Brewer to reach this threshold. Here is what we mean by “Craft Brewer”:

Small – Annual production of beer less than 2 million barrels or annual production of beer exceeds 2 million barrels and the brewery was founded as a Craft Brewer and continues to satisfy the other Craft Brewer defining criteria.

Independent – Less than 25% of the Craft Brewery is owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member who is not themselves a Craft Brewer.

Traditional – A brewer who has either an all malt flagship (the beer which represents the greatest volume among that brewery’s brands) or has at least 50% of its volume in either all malt beers or in beers which use adjuncts to enhance rather than lighten flavor.

I’ve written at length about the problems I have with the Brewers Association’s definition of and attempted co-option of the term ‘craft brewer’ and the criticisms remain to the present day. At the heart of my critique is that the term suggests that if you qualify under the definition, that you per se make good beer. That is simply not true. And the two million barrel mark, even with its genesis in federal tax law, is also troubling as several smaller brewers are quietly attempting to use it to push Boston Beer out of the craft clubhouse. At least for me, I think it’s an uphill argument to convince beer enthusiasts that Boston Beer should not qualify as a craft brewer. That attitude simply smacks of competitive jealousy or a decidedly myopic view of the history of the development of better beer in the last twenty-five years and Boston Beer’s clear role in that achievement.

It is in this context, and in those described by myself and many others in dozens of articles on the subject, that I welcome BeerAdvocate’s new definition, not only of craft brewer, but more importantly of craft beer. Under their definition, smaller breweries can maintain their determined efforts to define themselves as being something other than that which is represented by the big three (and their subsidiary breweries) while also not decrying the considerable brewing efforts and talents of the bigger breweries. Let’s take a look at the simple definitions offered by BeerAdvocate.

Craft Beer

Beer brewed in limited quantities, often using traditional methods.

Craft Brewer

One whose primary focus is brewing craft beer, as defined.

In contrast to the unduly restrictive (and largely political) definitions offered by the Brewers Association, the BeerAdvocate definitions are left intentionally vague in several respects. The Brewers Association originally created its definitions to help refine the numbers in its annual production reports. Later, the definition came to shape that particular organization’s vision and advocacy efforts on behalf of its selected members. This simple definition alleviates a lot of the political purposes served by the prior definitions and allows ‘craft beer’ to grow unencumbered by unnecessary and needless constraints. While the Brewers Association may believe it makes sense to exclude the gains of brands such as MolsonCoors’ Blue Moon and Leinenkugel’s Sunset Wheat from its numbers, the exclusion undersells the full extent of the rise of more flavorful beer in America. And it also undersells and debases the efforts of some pioneering breweries, including Redhook, Widmer, Goose Island, and Old Dominion. I still maintain that in a blind tasting that hardcore beer enthusiasts would be hard pressed to pick out the big brewer’s brands from those produced by members of the craft brewer’s club.

I welcome and accept BeerAdvocate’s new definitions and I look forward to discussing them with my fellow beer lovers this week in DC as we celebrate the success of true ‘craft beer’ in America.

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Japan Wins Big at 2008 World Beer Cup…

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Amidst the stream of recent posts elsewhere about the results of the bi-annual World Beer Cup, held in conjunction this year with the Craft Brewers Conference in San Diego, California, was a little reported story about how big craft beer is growing on an international scale. About a year ago, I spent a few weeks traveling around Japan, seeing the country and trying its beers. I was impressed with the relatively young craft beer scene across the country, with its pockets of excellent breweries.

The competition has grown quite international since its early days, with 58 countries competing this year. Breweries from 21 countries took home medals. When the Brewers Association announced its recent awards, American brewers, as expected, pretty well cleaned house with 158 awards. From there, you’d expect traditional brewing countries, such as German, Belgium, and the Czech Republic to have dominated the rest. While German brewers took home a respectable 25 medals, Japanese breweries nearly outlasted their Belgian counterparts with 10 medals to the Belgian’s 11. Here’s the interesting part: German breweries, as expected, won medals in German styles and Belgian brewers won medals in Belgian styles. Japanese brewers, like their American counterparts, won medals across a broad swath of international styles, from hefeweizen to cream ale to Scottish ale and even in the experimental category. That is an impressive achievement. Brewer Bryan Baird of the Baird Brewing Company won two medals as did the producers of the Swan Lake brands. My congratulations go out to the Japanese brewers for their impressive performance.

-Baird Brewing Co, Big Red Machine Fall Classic Ale, Cellar or Unfiltered Beer, Bronze
-Baird Brewing Co, Nide Beer – The Ale, American-Style Cream Ale or Lager, Bronze
-Fujikankokaihatsu co., LTD, Fujizakura kogen Beer “Weizen”, South German-Style Hefeweizen/Hefeweissbier, Silver
-Hyokoyashikinomori Brewery Tentyokaku Co., Inc., Swan Lake Beer Amber Swan Ale, American-Style Amber/Red Ale, Silver
-Hyokoyashikinomori Brewery Tentyokaku Co., Inc., Swan Lake Beer Porter, Robust Porter, Bronze
-Kiuchi Brewery Hitachino Nest Beer, Espresso Stout, Coffee Flavored Beer, Bronze
-Kumazawa Brewing Co., Shounan Liebe, German-Style Schwarzbier, Gold
-Nasu Kohgen Beer., Ltd., Scottish Ale, Scottish-Style Ale, Bronze
-Sekinoichi Shuzo Co. Ltd, Iwate Kura Beer Oyster Stout, Experimental Beer (Lager or Ale), Silver
-Shimono Co., LTD, Kaorino Nama, German-Style Kölsch/Köln-Style Kölsch, Bronze

Congratulations are also due to Molson Coors for its strong showing with the Blue Moon Brands, culminating in a win for the Blue Moon Brewing Company and brewer Warren Quilliam in the Large Brewing Company category.

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A Look at the Hops and Malt ‘Crisis’…

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The Hop Crisis

The celebrations of craft beer producers have a darkening cloud hanging over them. The talk among brewers and distributors in recent months has turned from their recent successes to the possibility of a severe shortage of raw materials for use in the brewing process. While craft brewers produced a greater number of so-called fresh hop beers, those brewed with hops fresh from the field, hop growers and traders were becoming increasingly concerned about the sorry state of the world’s hop supply. The first whispers focused on a poor hop harvest in the Yakima Valley region of the Pacific Northwest and in the Hallertau region of southern Germany.

Despite recent increases in American demand for hops, worldwide hop production is significantly reduced from previous years. Between the late 1990s and early 2000s, an excess of hop production caused price depression. According to a recent seminar developed by the Brewers Association, overall hop production today is now ten to fifteen percent below the current demand, which has caused a tightened market. Worldwide hop acreage has dropped almost fifty percent in the last ten years, from 203,000 acres to 113,000, as farmers have chosen to plant crops other than hops. In 1996, the United States boasted 44,161 acres of hops. By 2006, that number had dropped to 29,435.

In addition to the loss of hop acreage, the remaining stocks are subject to poor weather, fires, and other catastrophes. A slight loss of the existing hop crop can cause reverberations and volatility throughout the hop marketplace. In Slovenia, which is a leading grower of the Styrians variety, hop growers may have lost as much as half of their crop to a hailstorm. A devastating warehouse fire in Washington State and fires at two hop-drying kilns caused a twenty percent decline in available hops.

The result has been a substantial increase in hop prices on the spot market for those who did not secure long-term contracts with suppliers. In the recent past, brewers could pay as little as $1.70 for a pound of the popular Cascade hops. This price hurt growers whose costs exceeded the sale price. Prices have now reached historic levels, with Cascade hops hitting seven dollars per pound and more, and with other varieties exceeding ten dollars per pound on the open market. The scarcity of hops has caused increase competition among world brewers. Many high alpha acid American grown hops, as well as aroma hops, are going abroad for brewers in China and Europe that now can benefit from the American dollar’s dropping value.

The difficult situation has resulted in two different reactions depending upon which side of the crisis you are facing. According to Ralph Olson, General Manager and Owner of HopUnion LLC, the growers who remained in the hop growing business are now enjoying their present situation. Dr. Johann Pichlmaier, president of the Association of German Hop Growers based in the Hallertau region of Germany, agrees. “The market is quite tight and times are good again.�

Things are not so good for the brewers who now have to meet higher hop prices. Olson concedes that he foresees that some brewers may have to shut down due to a lack of available hops. The danger is most present for those brewers that failed to contract enough hops before the shortage, according to the Brewers Association. While larger breweries buy options on raw materials several years in advance and existing customers will likely continue to receive their hop orders, smaller brewers may find their access to specific and favored hop varieties limited. This may lead some brewers to have to switch varieties and alter the flavors and aromas of their beers.

At the Brewers Association seminar, Olson counseled craft brewers to seek contracts with hop suppliers to combat against future price increases. “What we really need is for brewers to understand that it is OK to have longer than a year’s supply of hops…An extra inventory of hops can come in handy should sales go better than normal during a given year.â€? Olson also reported to brewers that he does not see the situation improving in the near future. “It is not going to get better soon, but will be likely just as bad, or worse, for the crops from 2008 and 2009, in other words, for beers brewed from now through 2010.â€?

The Malt Crisis

In addition to the global hop shortage, brewers are also starting to get hit with price increases for malt as well. Barley crops have taken a hard hit in recent years. In the last two years, North American brewers and producers have seen a significant decrease in their supplies as the demand for barley has risen. Poor global barley yields for two consecutive harvests have resulted in a barley shortage. Some meager worldwide harvests, which have largely occurred due to poor weather conditions, have sent European and Australian brewers to North American suppliers for barley. Due to high corn prices and demand, a shift in feed grain has caused farmers to move away from corn and towards barley and oats, further stressing the amount of barley available for malting. Recent poor returns for growers and maltsters has led to either a move away from barley planting or the use of barley crops in the production of bio-fuel, which results in a forecast of further reduction of barley acreage in the future.

Brewers have already seen the price of several varieties of base malt increase 5 to 10 cents per pound. Despite these increases and dire warnings, Ian Ward, President for Sales and Marketing at the Brewers Supply Group, counsels that the situation is likely to improve in the next season. “Most maltsters have by now purchased all the barley requirements they are likely to need since they have had to make contracts for malt with brewers,� he said at the recent Brewers Association seminar. “As the inquiries from maltsters have fallen, farmers who have grain left to sell have found themselves having to be somewhat less bullish. What this means for the brewer is that prices are not likely to rise further in 2008 based on barley cost.� There is, of course, always the possibility of price increases looming, warns Ward. “The upward trend in oil prices and currency may play a role in spot purchase malt, especially from overseas. What is important now is what futures are trading for in the 2008 crop and how the growing season plays out from April next year.�

So What Does It All Mean?

The increases will certainly affect smaller producers and those brewers who did not secure the necessary contracts in advance. But while hop and malt prices have increased on the spot market in recent months, many brewers have contracts for their raw materials that will serve them for several months if not years to come. There is no agreement how the prices, or the perception of price increases, will affect six pack and keg prices and when the effects will be seen. It is possible that some small producers may use the perception of the raw material cost increases as cover for a desire to increase the prices of their products. In the dozen or more informal conversations I have had with brewers over the last few weeks, not one has expected to keep his prices stagnant. Most expect to implement a price increase of anywhere from fifty cents to one dollar per six-pack by Spring 2008.

The Birth of A Craft Conglomerate

After years of working together in a sales and marketing joint venture called the Craft Brands Alliance (CBA), the Widmer Brothers Brewing Company and the Redhook Ale Brewery have announced their intention to merge into one company. The new brewery, which will be called the Craft Brewers Alliance, will create one of the nation’s largest craft breweries. Kurt Widmer will serve as the company’s chairman of the board and Paul Shipman will serve as chairman emeritus, effectively starting his retirement from the beer trade. Redhook’s current president and chief operating officer Dave Mickelson and Terry Michaelson, president of the Craft Brands Alliance, will serve as co-CEOs of the new company. The deal with also include Widmer’s forty-percent share of the Goose Island Brewing Company of Chicago, Illinois.

“I believe that the merger will allow us even greater opportunity to deliver unique and great-tasting beers for our customers,� said Kurt Widmer, president and brewmaster of Widmer Brothers. “The two companies have a common goal—we both strive to brew the best possible beer for our customers.� “Our combination of talented people, high-quality beers and first-class brewing operations presents tremendous advantages for the combined company,� said Paul Shipman, founder and chief executive officer of Redhook. “The two breweries have worked well together over the past few years, and I’m confident that we will be even stronger as one company.�

Relations have not always been so rosy between the two companies. In a 2006 filing with the Securities and Exchange Commission, Redhook complained that its brands were getting shortchanged in the sales and marketing alliance it forged with Widmer in 2004. In that filing, Redhook said, “The Company believes its third quarter sales in CBA territory have declined due to CBA’s unsuccessful execution of its sales and marketing strategy for Redhook’s core and emerging products. During this same period, CBA has been very successful selling the Widmer and Kona products.�

While the two breweries have agreed to merge, the deal remains subject to shareholder and regulatory approval, which includes the voice of Anheuser-Busch, which owns a significant percentage of both Redhook and Widmer. The breweries hope to complete the merger by first quarter of 2008 and expect to maintain both the Redhook and Widmer brands in the marketplace. The all stock transaction will result in Widmer shareholders and existing Redhook shareholders each holding approximately fifty-percent of the outstanding shares in the new company.

Widmer has by far been the more successful of the two breweries, growing from 199,000 barrels in 2004 to 269,000 barrels in 2006. Redhook produced 271,600 in 2006, on weak to stagnant sales. After releasing news of the merger, Redhook announced a decline in profits for the first three quarters of 2007. As a private company, Widmer does not release sales figures.

Aftermath of the Deal

After years of toiling as the little kids, it is now clear that craft brewers must view themselves as nearing adulthood. With the renewed interest of domestic macro-breweries and the merging and distribution alliances of larger craft breweries, regional breweries will have to consider their strategic visions for the future. What was once for many just about the beer and fun is now about serious business.

–Article appeared in January 2008 issue of Beverage Business Magazine.

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