In recent years, craft beer industry folks and beer geeks alike have been focused on the efforts of big breweries to co-opt the mojo of craft brewers or worse yet, take over their operations entirely. About a year ago, in the context of the sale of the Old Dominion Brewing Company, I wrote about how craft beer enthusiasts should get used to an era of consolidation, not involving big brewers but other craft brewers. Around that time, I also wrote about Magic Hat’s purchase of Pyramid Breweries and the consolidation of the efforts of Widmer, Redhook, and Goose Island. I also counseled that craft beer fans should get used to a new age of brewing operations.
But the nature of the industry itself is also changing in other ways. Many craft beer pioneers are now elder industry statesmen. Fritz Maytag bought Anchor Brewing 43 years ago; Ken Grossman started Sierra Nevada 28 years ago; Jim Koch toted his briefcase from bar to bar 24 years ago. Beyond these well-known figures, many founders of regional breweries have been in the business for 20 years or more now. And as with any other small business, many are owned by one person or a small group of aging entrepreneurs who’ve long been toiling in the brewhouse, glad-handing distributors, and hawking product every weekend at beer festivals. For these hard working individuals, vacations are few and downtime almost non-existent.
Consolidation, either with other craft breweries or with larger brewing concerns, will be the norm not the exception. And while we can all appreciate how far craft beer has come since its early days, it’s time to contemplate the business realities that lie ahead.
It is with this shifting paradigm in mind that I report that the Long Trail Brewing Company of Bridgewater Corners, Vermont, is in the process of purchasing the Otter Creek Brewing Company, of Middlebury, Vermont. The parties are in the process of perusing all the relevant financials and a deal would give Long Trail access to necessary additional capacity, while leaving Otter Creek and its brands in an unknown position. Details regarding the actual sale remain pretty closely held.
Opened in November 1989 by the somewhat elusive former owner Andy Pherson, Long Trail produces an eclectic array of mainly German influenced beers. In writing The Good Beer Guide to New England, I said of the brewery’s location:
The former hay field where the new brewery sits is a beautiful place, but a logistical nightmare for an industrial business. In the small town of Bridgewater Corners, there is only a general store, a post office, and a brewery. Beyond the natural beauty, it’s hard to see what Pherson saw in the place. The staff had to install three power poles to provide electricity to the site and drill two bedrock wells 200-feet deep to secure brewing water.
Opened in March 1991, Otter Creek is also one of New England’s oldest breweries. The Middlebury brewery was purchased struck an important business deal in 1998 to begin producing the Wolaver’s line of certified organic ales. In May 2002, the Wolaver family purchased the Otter Creek Brewing Company and kept its name and products.
Comprised of two very different beer brands acting in concert, the Otter Creek Brewing Company was originally founded by passionate homebrewer Lawrence Miller. Starting as a one-man operation, Miller released his signature Copper Ale on March 12, 1991. Rob Tod, of Allagash Brewing, got his start here washing kegs and soon decided he wanted to dedicate his life to beer.
I interviewed Miller several times early in my work for Beverage Magazine after moving to Boston. Characteristic of Otter Creeks spirit, he was a passionate advocate for turning consumers on to craft beer. Some of his memorable quotes include:
I think beer education starts with me. I continue to go to a lot of beer technical conferences. I drink a lot of other peoples’ beer, both domestically and abroad and try to keep learning. The wonderful thing about brewing is that, depending on how much detail you want to get into, it can be as complex as you ever want it to be. So it is really neat in that respect. You can virtually continue your education forever.
And perhaps this one, which celebrates all beer.
Lawrence Miller also focuses on the importance of tact in field representatives. “Our field reps are expected to introduce not only Otter Creek, but also to place the other brands that restaurants sell in context in a positive light when they go to do server education.” In restaurants, the field representatives should talk about the beers and how the styles compliment certain foods. Miller notes that if field representatives do their jobs well, their education efforts should pay off in higher gratuities for the servers.
This interview was given nearly ten years ago. I’m not sure we’ve yet even met this standard.
In the coming decade, craft beer fans should indeed expect to see many of their favorite breweries change hands. In some cases, that may involve a transition from father or mother to son or daughter, but in many others, as with many other closely held corporations, outside suitors will be the best or only possibilities. While we do not know what the purchase of Otter Creek holds for its brewery, employees, and brands, let alone those of Long Trail, this sort of business consolidation will quickly become routine in this industry of nearly 1500 small, often family run breweries.
We saw what happens when this doesn’t work out so smoothly at Penn Brewery in Pittsburgh. Tom Pastorius founded the brewery in 1987, built it up slowly — as befits a lager brewery — through a mix of in-house and contract brewing, then finally realized that his family was not interested in continuing with the business, that he was approaching retirement age, and that the lack of capital that had kept Penn small was not getting better. He sold a majority share of the business to venture capitalists, then sold more to them…and watched them mis-manage the company almost into oblivion. He gathered some investors and bought the company back this weekend.
So the company’s saved. The beer continues. And now Tom has to find a new exit strategy, just as he was beginning to enjoy retirement.
This is not going to be easy.