The Changing Face of the Craft Beer Industry…

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In the early 1980s, American craft beer pioneers dreamt of nothing more than producing a few beers that broke through the monotony of humdrum, mainstream lagers. A group of men and women who had traveled through Europe and had their eyes and mouths opened by local beers or who had adventured to brew their own beers. For these early entrepreneurs, the future was uncertain but filled with hopes of building a few hundred or even thousand barrel brewery.

Fast forward two decades and things have changed beyond anyone’s greatest expectations. Once top of the pops, America’s largest breweries are now reeling on their back heels. Once considered little more than a gimmick, craft beer has enjoyed startling success.

As the beer industry has aged, it has both matured and evolved. From its slow infancy to its turbulent teens, craft brewers are now experiencing the complications of adulthood. What started as a fun experiment for some has led to some pretty high stakes. From hobbyist basement systems costing a few hundred or thousand dollars to gleaming new brewhouses costing a few hundred thousand, the craft beer business is hardly just fun and games.

Times are changing quickly in the American beer marketplace and they’re not going to slow down anytime soon. In response to double-digit growth, breweries recently producing 10-15,000 barrels per year suddenly produce 75,000 barrels per year and have tank space capacity for many times more. To meet market expectations and changes, these brewers have traded sore backs for aching pocketbooks.

We are thankful that times are good right now and that despite a weak economy and financial hardships, craft brewers are not yet seeing a reversion to old buying habits.
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.

And as with any other hard driving profession, it eventually wears you down. With high debt levels and decades dedicated to building up their companies and employees, these brewery owners can’t just walk away. Not to the mention the disappointment felt by their loyal customers who they’ve worked so hard to gain. And so we must look to an uncertain future but one where we can be certain of corporate shakeups and where change will be a constant.

The Old Dominion Brewing Company of Ashburn, Virginia, for example, is representative of stories we will continue to hear. Founded by Jerry Bailey and other investors in 1989, the brewery was a pioneer in the Mid-Atlantic region. After nearly two decades of work, however, Bailey and others were ready to leave the business. They tried for years to sell to other craft brewery owners, but with no success. Then in 2007, they sold Old Dominion to a joint partnership of the Fordham Brewing Company and Anheuser-Busch. After making a run at it for a year, the group recently announced it will close the brewery’s pub and its future operations as a stand-alone brewery remain in question.

The Old Dominion case, while extreme, is a cautionary tale for the industry and consumers alike. Craft breweries are run by people not corporations and these folks can’t continue in this tough business forever. Shareholders eventually want their initial investments back, owners want to retire, and if they don’t have kids ready to take over the business, end game options remain limited. 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.

–Article appeared in Volume II, Issue IX of BeerAdvocate Magazine.

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A Brief Recap and Review of the 2008 Great American Beer Festival…

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The annual Great American Beer Festival has just concluded another eventful run in Denver and I just returned back to Boston after an early morning flight. During the trip, I spent time in both Colorado Springs and Denver, with attendance at two of the 27th annual festival’s sessions. This year’s incarnation continued to build upon the event’s successful history, if with some troubles. There is no question that with more than 2000 beers available on the floor from more than 450 breweries, the GABF remains an impressive logistical undertaking and a feat of coordination. This year’s event sold out for the second straight time and did so two weeks before the opening session. With all of its success, the festival stumbled in one critical area: crowd management. In giving access to the 46,000 people who attended the event, several thousand were forced to stand in line for more than an hour before entering the festival. Inside the convention hall, the festival was packed, even during the normally light Thursday session. Despite its gains, the GABF may have reached its tipping point in terms of population.

The festival gives attendees, especially those in the industry, an unparalleled opportunity to hob-knob with other beer lovers, brewers, and pub owners and this year didn’t disappoint. For those interested, there were countless side events and late-nights at the GABF’s unofficial headquarters at the Falling Rock. For my part, I especially enjoyed meeting Don Younger and getting to spend some time with my old friend Toshi Ishii of Japan (and England, Norway, and countless other brewing locales).

Beyond the usual events and overwhelming number of beers present, the festival this year appeared to lack a bit of the enthusiasm and sense of wonder that it has in the past. It’s a bit hard to put your finger on exactly the cause, be it the down economy or some other reason. In any event, brewers were in shorter supply at their tables and in attendance during the event itself than in years past. The focal point of the week appears to have shifted away from the convention floor itself and into the city and state more generally.

Without question, where the brewers left off, the burgeoning new media picked up. Bloggers were omni-present, with many reporting directly from the festival floor or the adjacent media room. For those who weren’t able to attend the event, you could read near-contemporaneous accounts from a wide variety of sources. I was particularly impressed with Draft Magazine’s work during the event, including its video interviews with a dozen or more brewers and other beer folks directly from the festival floor.

And while I’ll have more on the GABF here and in Beverage Business in the future, including on Anheuser-Busch’s strong specialty releases (excluding its oddly British ‘American Ale’), the Siebel Institute’s sensory evaluation course, and the somewhat surprising announcement of the return of SAVOR, I wanted to offer a few thoughts on the event. By the numbers, the BA handed out 222 awards out of more than 2900 beers entered in the competition, rounding out to about 7.5-percent of beers entered picking up a medal. Stop to think about that number for a moment. We often hear beer geeks complain about the GABF and nit-pick particular selections. But in the end, fewer than 1 in 13 beers received a medal and just over 2-percent received the much-coveted gold. When you think about the breweries that win multiple medals, fest after fest, questions about the judging process have to be laid to rest.

Attendance at the GABF by New England brewers, even where the Brewers Association’s Board of Directors is presently chaired by Rich Doyle, CEO and founder of the region’s largest craft brewery, continues to be poor. Of the 472-plus breweries in attendance, only 16 attended from New England. Of those in attendance, New England brewers managed to take home only 3 GABF medals, with Cambridge Brewing winning a gold in the highly competitive experimental category for its Arquebus, a bronze for Amherst Brewing Company’s Ryeteous Red, and a bronze in the aged beer category for Boston Beer’s Samuel Adams Utopias 2003. All told, New England brewers took home just over 1-percent of the total medals awarded. When you compare that to the impressive showings of a town like Philadelphia, let alone the Mid-Atlantic or California and Colorado regions, and New England’s performance is very disappointing.

As a final note, I want to extend congratulations to the winners of the Brewers Association’s Michael Jackson Beer Journalism Awards, including Lew Bryson in the Trade and Specialty Beer Media category. While I personally disagree with journalists participating in the awards, Lew is a good and thorough writer and I look forward to reading his winning piece.

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Why Reporters and Journalists Should Not Participate In The Beer Journalism Awards…

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Entering its fifth year, the Beer Journalism Awards is a program sponsored by the Brewers Association trade group that seeks to recognize “outstanding media coverage that increases beer enthusiasts’ understanding of the diversity and flavor of American craft beer.â€? Originally started by Ray Daniels, the original Director of Craft Beer Marketing for the former Association of Brewers, the program has proven a popular conduit between the association, which represent small American craft brewers, and the writers who cover the trade. According to the Brewers Association, the program has grown in submissions by 156% (58 in 2006, 136 in 2007), with a greater number of entries expected in 2008. The program has also been newly renamed in honor of legendary beer writer Michael Jackson, who passed away in 2007. Past winners include Lisa Morrison, Stan Hieronymous, Julie Johnson Bradford, Fred Eckhardt and several others.

The 2008 awards is sponsored in part by the Boston Beer Company, the Brooklyn Brewery, and the Rogue Ales Brewery. The program highlights the work three journalists each year in the following three categories:

  • Consumer Print Media: For work appearing in general circulation consumer print publications such as daily newspapers, as well as consumer-oriented news, food, and lifestyle magazines. Any publication that is not routinely focused on beer qualifies for inclusion in this category.
  • Consumer Electronic Media: Eligible work includes coverage which runs on broadcast or cable television or broadcast radio as part of a program aimed at a general consumer audience. Content that appears on the Internet on a general interest consumer site in which the site name and the preponderance of content are not concerned with beer will be considered in this category.
  • Trade and Specialty Beer Media: This category includes work appearing in publications and on programs that routinely focus on beer in their editorial content. This would include newsprint “beeriodicals,â€? and magazines concerned primarily with beer or brewing as well as programs that routinely concern themselves primarily with beer. Internet sites where beer is the primary focus will be considered in this category. Internet radio programming dedicated to beer is also included in this category. Please note that these awards focus on beer appreciation, so content that is significantly concerned with “how toâ€? aspects of brewing beer as a hobby or profession will not be considered. Should a question arise regarding the proper classification of an entry according to these categories, the Brewers Association will be the sole and final arbiter.

Entries can be advanced by the journalist or by a member brewer with the permission of the journalist.

The three winners of the competition, the closing date for which is July 31, are expected by the Brewers Association to attend the awards ceremony at the Great American Beer Festival held in Denver, Colorado, in October. The association pays the airfare from the recipient’s home state (up to $350), two nights in a hotel, Denver-area ground transportation (up to $50), $23 per day food per diem for each recipient, and an honorarium of $500. Winners of the Beer Journalism Awards are excluded from entering the category they won in for three years after winning.

I have entered the competition in the past, as well as a predecessor competition sponsored by the North American Guild of Beer Writers. In going over my work for the past year, I began to take a closer look at the somewhat vague and indefinite criteria listed in the Brewers Association’s guidelines. Over the past year, I have mainly written columns and news pieces for BeerAdvocate Magazine, columns and feature articles for Beverage Magazine, and a miscellaneous assortment of pieces for this website. And while I have generally been happy with the quality of this coverage, and it has attracted interest from both consumers and the trade, I initially wondered more about the criteria behind the judging of the Beer Journalism Awards. My interest was also piqued by the inclusion of a guideline, which I believe is new this year, that “only coverage/stories on ‘American’ craft beer will be accepted.� Considering the controversies raised over the Brewers Association’s definition of ‘craft brewer’ and its deliberate announcements that it was not trying to define ‘craft beer’, I started to think a bit more about the competition in general terms.

As readers of this website are aware, I’ve written a few times (a few too many some have said) over the past year about the ethics of beer writing and their importance in plying the journalism trade. After pondering the subject and doing some additional research, I went back and reconsidered my work over the past year. Avoiding too much self-reflection, suffice it to say that much of my work, especially in the Unfiltered column for BeerAdvocate and on my website, is contrarian in nature and hardly the kind of pro-industry prose that one would assume to fair well in a competition sponsored by a trade group. And in fact, I have written several articles about the Brewers Association itself or touching upon its policies and actions, some of which I agree with and others that I do not. And that is when I stopped to reconsider the Beer Journalism Awards and whether writers and journalists, on an ethical level, should be participating in them.

In trying to make up my mind, I decided to speak with Julia Herz, Director of Craft Beer Marketing for the Brewer Association and the person in charge of running the Beer Journalism Awards. Ms. Herz has done a very effective job of refocusing the association’s once scattered approach to marketing. From the outset, it is easy to understand why the association and its trade members would want to sponsor an awards program for journalists who cover their business efforts. In this respect, the awards, which “help our members acknowledge and recognize coverage of American craft beer,� serve as another marketing tool that helps court favor from the journalists. It encourages positive coverage of craft beer and brings journalists into the association’s fold. In short, it’s smart business for the association and its members to embrace those who cover their business interests.

While the Brewers Association and its staff would not likely deny this goal, they also speak about reaching out to writers who often toil in anonymity and rarely receive much compensation or attention for their efforts. “In our business, there is not a lot of time for brewers, who get a lot of love from the media, to say ‘thank you’ directly to the journalists,� said Julia Herz.

Ms. Herz was also able to answer some questions I had about how the judging process works. After the entries have been received, approximately 20 to 30 judges will receive copies a select number of entries for their review. The judge panel is comprised of Brewers Association staffers and member brewers who have not nominated any entrant. The top three or five entries are then provided to a new set of judges in a final round of judging.

The association provides an evaluation sheet that lists the judging categories and criteria, which include accuracy, quality of writing, and whether the entry overall “meets the objectives� set forth by the competition. According to Ms. Herz, these objectives include assessing whether the entry “increased consumer understanding of the diversity of American beer, whether it discussed the 1400 plus small breweries in America, whether it educated consumers about various beer styles produced in the U.S., and whether it discussed beer flavor characteristics or pairings with food.� In determining whether the entry focused on ‘American craft beer,’ the association does not define the term according to Ms. Herz. Instead, the Brewers Association allows judges interpret the guidelines in their own, personal ways. Accordingly, an article focusing on Blue Moon or Michelob Porter could be considered as coverage of American craft beer, depending upon the judge’s interpretation.

In discussing the possible ethical issues facing writers who are considering participation, Ms. Herz noted that “certain journalists cannot accept the awards due to the rules of their organization or publication.� She also noted that participating journalists can decline any part of the remuneration offered as part of the contest.

From my perspective, I see several potential ethical problems with participating in the Beer Journalism Awards. As many contest participants may be only occasional journalists, let’s start with the note that certain journalists are actually prohibited from participating in the awards. At the Kansas City Star, all editorial employees, full or part-time, freelance or contract, regardless of their position, title, beat or personal circumstance, are covered by the newspaper’s Code of Ethics. The Kansas City Star’s policy starts with this caution.

If we expect readers to view us as credible, then Star editorial employees must aggressively seek and fully report the truth while remaining independent and free from any legitimate suggestion that their independence has been compromised.

After detailing a litany of possible situations and the prescribed ethical actions, The Star then covers ‘contests.’

CONTESTS

Staff members may not enter articles, photographs or graphics published in The Star in contests that are not sponsored by professional journalistic organizations. An exception would be a contest of journalistic excellence sponsored by a foundation, university or organization deemed by the managing editor or Editorial Page editor to be free of commercial, partisan or self-serving interests.

No awards of significant value may be accepted from any organizations other than those just described. In cases where a staff member’s work was submitted by some person or group outside The Star, the employee should check with a supervisor to make sure the award can be accepted.

No staffer may use The Star’s name to enter any contest without the approval of the managing editor or Editorial Page editor.

I believe The Star’s policy and guidelines describe a traditional approach to journalistic ethics. A quick review of the policies of news media outlets across the country confirm this general prohibition to be a standard in the industry.

The Orlando Sentinel’s Editorial Code of Conduct provides:

Contests and awards. Staffers should not enter contests sponsored by trade or advocacy groups – even if those contests are administered by a journalism organization or school – because they may exist primarily to promote those groups’ agendas. The Editorial Department maintains a list of approved national, regional and state contests whose central purpose is to recognize journalistic excellence. Staffers who want to enter contests not on the list must first obtain the permission of the Managing Editor or Editorial Page Editor. Staff members also should refrain from accepting unsolicited awards from trade or advocacy organizations.

The Fort Worth Star Telegram’s code of ethics counsels

CONTESTS:
Staff members should not enter contests without approval of managing editors or the editorial director. With approval, they may enter contests sponsored and judged by selected journalistic and professional organizations. Entry fees for a select number of contests will be provided by the Star-Telegram.

The Los Angeles Times requires:

Awards

Staff members should enter their work only in contests whose central purpose is to recognize journalistic excellence. The Times does not participate in contests that exist primarily to publicize or further the cause of an organization. Under no circumstances may staff members accept awards from groups they cover. A staff member who is offered an award should consult his or her supervisor before accepting it.

New Hampshire Public Radio informs its employees:

XII. Miscellaneous

1. We do not enter journalism contests or competitions when they are sponsored by groups that have an interest in influencing our coverage. All entries for contests or competitions must be approved by the Managing Editor or designee.

And finally, and more comprehensively, the New York Times provides:

Entering Competitions and Contests

45. Staff members may not enter local, national or international competitions sponsored by individuals or groups who have a direct interest in the tenor of our coverage. They may not act as judges for these competitions or accept their awards. Common examples are contests sponsored by commercial, political or professional associations to judge coverage of their own affairs. Senior newsroom managers may make exceptions for competitions underwritten by corporate sponsors if those are broad in scope and independently judged by journalists or disinterested public figures.

46. Staff members may compete in competitions sponsored by groups whose members are all journalists or whose members demonstrably have no direct interest in the tenor of coverage of the field being judged. Staff members may act as judges for such competitions and accept their awards. For example, a staff member may enter a university-sponsored competition for coverage of foreign affairs but not accept an advocacy group’s prize for environmental coverage.

47. Each newsroom’s management should maintain a current list of competitions it has approved. Staff members who would like to enter others should consult the responsible news executive. A critical factor in approving a competition, whatever the sponsorship, is a record of arm’s-length decisions, including a willingness to honor unfavorable reporting. Staff members who win unsought awards from groups that do not meet the criteria established here should decline, politely explaining our policy.

A problem that occurs within the beer writing and journalism community is that many reporters operate as freelancers for publications that do not clearly set forward their ethical requirements. Worse yet, as I have written before, many editors ingratiate themselves in to the beer industry they cover to an extent that their employees and contractors would not otherwise know any ethical issue was raised.

Even though the publications that I write for generally do not have written ethical code, I have decided not to participate in the Beer Journalism Awards for a number of reasons. First, as noted about, participation in a competitive event that allows a reporter’s work to judged by the subjects of the work is professionally inappropriate and has a chilling effect on the reporter’s objectivity and independence. It allows the association, with a vested interest in a particular type of positive coverage, to pick and choose the pieces they believe best fit their interests. The Beer Journalism Awards, however well-intended, is not a journalism contest but a competition to determine which journalists can best portray and market the Brewers Association and its brewer members. Second, it is clearly inappropriate for a reporter to accept financial remuneration from the subject of his or her work. I believe this to be a core and irrefutable ethical guideline for journalists and reporters. And finally, I’m troubled that a journalist or reporter can be nominated by a member brewer with the permission of the journalist, a recent addition of the contest that the Brewers Association has heavily promoted on its electronic listserv and to brewery members. This all-too-cozy partnership between the reporter and the subject, which occurred 40 times last year, threatens a journalist’s independence. I personally do not believe that reporters can ethically participate in the Beer Journalism Awards and would counsel fellow journalists to either decline to participate or to withdraw their already provided submissions.

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Anheuser-Busch Sold To InBev; Boston Beer Becomes Largest American Owned Brewery…

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With the recently announced sale of the Anheuser-Busch Brewing Company to Belgian-Brazilian brewer InBev, which creates the world’s largest brewery, it’s interesting to take a second to consider one of the unusual side effects of the deal. Anheuser-Busch has long been the largest American brewery and it has spent a lot of marketing time since the sale of Coors Brewing to Molson Brewing and Miller Brewing to SAB in promoting its ties to America. From Budweiser, the Great American Lager, to other nationalistic appeals, the American in Anheuser-Busch has been a strong selling point for the brewery and its brands. With its sale to a multinational corporation, these appeals will quickly drift away.

In looking to the list of America’s largest breweries, it’s interesting to note that with the recent sales, Boston Beer Company is left as the largest American owned brewery. I am excluding the Pabst Brewing Company, which has a larger production volume than Boston Beer by several million barrels, because it is a beer marketing company with no actual brewing facilities of its own. And while Boston Beer does a fair amount of contract brewing, it owns several of its own facilities and its percentage of in-house production continues to climb. I’m not sure if the achievement of a craft brewery becoming the country’s largest American owned brewery is something to celebrate or just behold. In any event, it is certainly telling of the hyper competitive state of the international brewing scene.

One other consequence of the deal, if it survives regulatory review in several countries and shareholder agreement, is that breweries such as Old Dominion, Widmer Brothers Brewing, Redhook, and Goose Island (less directly through its part ownership by Widmer) will become distant members of the global InBev family.

How the deal will affect distribution channels and craft breweries in particular is going to debated for months to come.

Edit: After reviewing the web a bit, it appears that Jay Brooks has scooped me on the above point, kudos to him for similar thinking.

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Crafting New Challenges for Beer in 2008…

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Fast on the heels of another highly successful year, the American craft beer industry is gearing up for another profitable year and the challenges that accompany success. As the segment continues its development from a tiny niche to a legitimate force in the beverage alcohol marketplace, craft brewers are increasingly coming to grips with the changing realities of their improved prospects. With the big brewers showing a renewed interest in the category and the recently announced merger of Redhook Ale Brewery and Widmer Brothers Brewing, 2008 is shaping up to be the year when craft brewers, both large and small, solidly enter adulthood.

Anheuser-Busch ‘Crafts’ A Better Beer

In the months of December and January, football fans across the country were introduced to a familiar face, but with a new shtick. The television advertisements showed various Anheuser-Busch employees touting the quality of Michelob and its grand history, tradition, and reputation for quality. The ad’s focus then surprisingly shifted from the standard Michelob lager to the brewery’s less familiar ‘family’ of Michelob brands. The ad featured the Michelob Porter, Pale Ale, and Hefeweizen and again heralded their quality. The ad ends with the campaign’s new tagline, ‘crafting a better beer.’

My initial reaction was admittedly one of mild shock. While I had read the standard industry announcements that routinely precede such television releases, the audacity of this particular ad is something to behold and signals an odd note of acceptance by America’s largest brewer. The television ad, part of Anheuser-Busch’s $30 million campaign to rejuvenate the ailing Michelob brand, was a low key, exploitation free promotion of the flavor and heritage of the Michelob brand. The ad is also the brewery’s latest attempt at fighting back against the gains of brewers in the better beer segment.

Beyond the unmitigated gall that it takes to co-opt the hard fought name and message of the craft brewing movement, the television spot also closely mimics the successful ads released in 2007 by the Boston Beer Company. Those ads, which often feature founder Jim Koch and his team of brewers talking passionately about their beers and smelling baskets of fresh hops, helped the Samuel Adams brand gain tremendous strength last year, which in turn drove greater growth amongst all craft brewers. In Anheuser-Busch’s knock-off spot, a brewer smells the malt and talks about Michelob’s traditions and dedication to brewing flavorful beers. The campaign goes far beyond merely releasing beer after new beer and hoping one sticks. It is a celebration of flavor, quality, and better beer. To stop and think about the ad’s tagline, ‘crafting a better beer,’ leads football fans and other viewing consumers to necessarily inquire, ‘Better than what?’ The only answers a viewer can be left with are Budweiser and Bud Light.

One member of the Michelob brand family that does not appear in the ad is Michelob Ultra, the company’s former low carbohydrate sales golden boy. In response to the news of the new campaign, one company executive told Advertising Age that the disassociation was a conscious decision. “You’re going to see us reduce the reliance on the name Michelob with Ultra, maybe even to the point of taking it off the packaging down the road,� the executive said. Regardless of whether the campaign, which again finds Anheuser-Busch trying to promote Michelob as a connoisseur’s brand, actually increases Michelob’s sales, the overall message is clear. Craft brewers have succeeded in changing the nature of the game and they need to be ready for the effects of greater corporate interest in their profitable category.

A Fight Of A Different Kind

After months of speculation, the Bell’s Brewing Company of Kalamazoo, Michigan, recently confirmed that it intended to return to the Chicago area market with two ‘new’ brands in early December. As part of a small, initial test run, the brewery shipped its ‘new’ Kalamazoo Amber Ale to six bars in the Chicago area. Now I use ‘new’ because Bell’s is using this limited release to test the waters of Illinois distribution and franchising law with these brands. Formerly doing business as the Kalamazoo Brewing Company, the brewery stopped shipping beer to Illinois one year ago because of a dispute with National Wine & Spirits, the company that has the rights to distribute Bell’s Beer in Illinois. The brewery’s brands, long a fixture in Chicago’s better beer taverns, disappeared from the market after owner Larry Bell decided to end his relationship with NWS, which acquired the rights to the brand after Bell’s former distributor was purchased.

Bell founded his brewery as a home-brewing supply shop in 1983, with the first pint going across the bar in 1985. He has grown his brewery from a tiny, one-man operation with a production of 135 barrels in 1986 to more than 90,000 barrels in 2007. After a substantial recent expansion, which now covers 60,000 square feet of space in Comstock, Michigan, the brewery now boasts 140,000 barrels of brewing production.

The case is consequential because it raises several important legal questions about the legitimacy of state franchise laws which appear to restrict a brewery’s rights to switch distributors. Some in Illinois argue that the laws should be interpreted to allow for a brand to return after a year’s absence from the market, while others interpret the dense code to prohibit the transfer of brands to another wholesaler without the agreement of both parties.

With his return, Bell is trying a backdoor approach. He says that he has released three new beers specifically for the Chicago market that are not subject to the prior distribution agreement. The new beers, offered under the Bell’s Brewery name, will include the Kalamazoo Porter, the Kalamazoo IPA, and the Kalamazoo Royal Amber Ale. The labels read, “Brewed especially for the people of the great state of Illinois.� To some, including the distributor’s lawyers, it may appear that these new releases look similar to the Bell’s Porter, IPA (or Two Hearted IPA), and Amber, all products that were once popular in the Chicago market. Whether the new beers and their flavors bear any similarity to the old beers will likely be subject to many glass clinking debates.

The Stakes Are Not Always So High

The husband and wife owners of one of Maine’s oldest microbreweries, the Bar Harbor Brewing Company, recently announced their plans to sell their business to a Florida-based advertising executive. The sale of the brewery, which produces the award-winning Cadillac Mountain Stout and Thunder Hole Ale beers, is expected to close in early 2008. The new owner, Evan Contorakes, is the Chief Executive Officer of the Ronin Advertising Group of Miami, Florida, and also owns the Parkside Restaurant in Bar Harbor. Tod and Suzi Foster, present owners of the brewery, will retain a consulting role for one year following the sale in order to aid in the transition of the brewery.

The Fosters founded Bar Harbor Brewing in 1990 from the basement of their area home. While living in California, the couple sat front row center for the early days of the microbrewing movement. Tod took up homebrewing while a student at UC-Santa Barbara and the Fosters traveled throughout the state visiting new breweries as they opened. After moving to Suzi’s hometown of Bar Harbor, the couple would talk about Tod’s idea for opening his own brewery. He knew Bar Harbor had a huge tourist industry and that anything with the town’s name stenciled on it sold quickly as souvenirs. He discussed the idea with his wife so often that one day Suzi just looked at him and asked him whether he was actually going to do anything about it.

From the beginning, Tod knew that he wanted to run a very small operation, called a cottage brewery, where he would handle the brewing and Suzi would run the business. On a return trip to California, the Fosters met with several brewery and pub owners to get a sense of what they’d need to accomplish their goal. The couple almost decided against opening their own place after repeatedly being told they would need nearly $400,000 of startup capital to succeed. After securing a small two-barrel Pierre Rajotte brewing system, Tod created the first batches of his flagship Thunder Hole Ale. When the beer proved popular, the Fosters eventually moved from their cramped, 150-square foot basement a new house on two and a half acres a few miles outside of town. The new owner plans to move the brewery, which presently covers 850-square feet of the Foster’s basement, to a store front in downtown Bar Harbor. The new space will include the brewing facilities and a tasting room for tourists.

Comments by Contorakes to the local newspapers show that he has great plans for the little brewery. While the Fosters had trouble maintaining the brewery’s 325 barrel production, Contorakes plans to catch up with local demand and then expand the brand “up and down the East Coast,� as he told the Mount Desert Islander. Contorakes’s bold plans also include taking the small, little known brand to a national audience. “I guarantee there’s a national pipeline we could put this into,� he told the local newspaper. “People around the country are always looking for these microbrews.� To achieve these goals, Contorakes says that he will likely contract with a larger brewer for off-site production of Bar Harbor Brewing’s brands.

The Rise, Fall, and Possible Rebirth of Another Local Brewery

In its short existence, the Concord Brewery has seen some very tough times, bouncing between four different names, a succession of new owners, and a handful of homes.
The brewery’s accountant, David Asadoorian, purchased the brewery in 2003 from the former brewer, renamed it the Concord Brewery, and relocated operations to the old Brewery Exchange complex in Lowell. Despite the change in environs, the brewery struggled under Asadoorian’s ownership. The brewery’s once-popular Concord and Rapscallion brands never grew beyond their local following in Lowell and the quality of the beer, in the marketplace and at the adjacent pub, also suffered.

A new chapter in Concord’s complicated history is presently being written and it looks pretty similar to previous pages, with new owners, a name change, and a change in location. The brewery has been sold to Peter and Cedric Daniel, who plan to change Concord’s name to Rapscallion. The new owners plan to decamp to Milford, New Hampshire, where the company’s brands will be brewed under contract by the Pennichuck Brewing Company.

Developed as a personal artisanal project by former brewer Dann Paquette, the Rapscallion line has perhaps been the brewery’s most visible project and was a pioneering brand that pushed the definitional boundaries of ‘beer.’ Born in the spirit of beers that are intentionally different from batch to batch, the Rapscallion line of beers defied the notion that consistency in flavor profile is the brewer’s only goal. The three early Rapscallion brands, named Blessing, Creation, and Premier, varied in consistency and flavor from batch-to-batch, but were widely lauded by beer enthusiasts.

The new brewery’s first release will be the Concord Extra Pale Honey Ale, rebranded as the Rapscallion Honey Ale. The new owners expect to resurrect other beers from both the Concord and Rapscallion lines.

The brewery’s troubles show that a rising tide in the craft brewing segment does not necessarily translate to an increase in sales. The company’s shift from a local brewery with a solid native customer base to a brewery in Lowell with no ties to the community has wreaked havoc on the brand’s growth prospects. On the rebranded brewery’s website, the new owners joked about the company’s troubled history. “Maybe you never understood why a beer brewed in Lowell, MA went by the name of Concord. Well, we didn’t either.�

In light of the segment’s continued growth and the increased profitability of better beer (craft beer now accounts for more than five-percent of total beer sales in the United States), smaller brewers should expect that their once unnoticed industry will continue to meet with new challenges and the renewed interest of deep-pocketed competitors.

–Article appeared in April 2008 issue of Beverage Business Magazine

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