Discussing the Discussion Over the Brewers Association’s Recent Craft Beer Sales Numbers…

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As I trudge my way through the book (and a pile of legal work frankly), I occasionally lift my head to read what others are writing about beer-related topics. As a testament to my limited world view, the few topics I inevitably pop into tend on occasion to reference things I have written. So was the case with the recent press release from the Brewers Association touting the craft beer industry’s recent sales numbers, which was then discussed by Beernews and Tom over at Yours for Good Fermentables. Both discuss my recent BeerAdvocate column in which I question whether it’s such a good thing to have every craft beer available on your local store shelves and use it to parallel the Brewers Association’s announcement of the following numbers:

Dollar growth from craft brewers during the first half of 2009 increased 9%, down from 11% growth during the same period in 2008. Volume of craft brewed beer sold grew 5% for the first six months in 2009, compared to 6.5% growth in the first half of 2008. Barrels sold by craft brewers for the first half of the year is an estimated 4.2 million, compared to 4 million barrels sold in the first half of 2008.

The folks at Beernews see this announcement as sort of a bad omen for craft brewers. While acknowledging that craft beer continues to grow, especially compared to the losses suffered by many larger brewers. In truth, I haven’t really digested or even thought about the numbers with my present schedule and that probably won’t happen until closer to the Great American Beer Festival next month but at first glance I can’t say I think the numbers are anything to really worry about. 9-percent dollar growth is pretty impressive in a down economy, especially considering that consumers, by most retail accounts, took the first two or three months of the year off from buying everything, including beer. Boston Beer, which comprises as much as a quarter of the craft beer industry’s sales numbers, took an especially hard hit in the first quarter of the year. I wouldn’t be surprised to see these numbers edge up a point or two by the end of the year. On the other hand, Coors Light has apparently raised its sales 6-percent so far this year by volume, so who knows.

I do agree with Beernews that the Brewers Association’s simultaneous announcement regarding the number of craft brewers was a little bit odd or even sleight of hand.

The U.S. now boasts 1,525 breweries, the highest number in 100 years when consolidation and the run up to Prohibition reduced the number of breweries to 1,498 in 1910. “The U.S. has more breweries than any other nation and produces a greater diversity of beer styles than anywhere else, thanks to craft brewer innovation,” Gatza added.

I suppose it’s just reassuring the media about the success of craft beer, which is certainly understandable in a world where decreased sales can be seen as a sign of weakness, even in a crap economy.

I won’t spend any time rehashing what I’ve said in previous columns about the serious issues facing the craft beer industry, including its selected method of achieving these levels of growth and whether they are sustainable except to say the following. While in Bar Harbor, Maine, this past weekend, I had a great dinner at a restaurant in Southwest Harbor, the Fiddler’s Green, which had a fantastic and detail beer menu. While that was a pleasant an unexpected surprise, it paled in comparison to my shock at being able to buy, on-premise, several of Stone Brewing Company’s 22 ounce bottles, including its Old Guardian Barleywine and Smoked Porter, for ridiculously cheap prices ($7 and $6 respectively). By way of reference, these prices are equal to or cheaper than what these beers cost at a liquor store in Boston. Now I think that this particular restaurant may very well have been the furthest possible place you could enjoy Stone’s beers away from the brewery while still in the continental United States (approximately 3320 miles). And while it was nice to have the option, I can’t help but wondering about the wisdom of sending beers so far from home and whether anyone is making any money on these sales. (For the record, we opted instead for the 750 of Val Dieu Grand Cru for $12, which went great with the Pot du Creme)…

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Manufactured Controversy and the Radical Traditionalism of BrewDog…

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A month or two back I wrote an article for Beverage Magazine on the BrewDog brewery of Scotland. I had met the brewer, James Watt, a few months ago at local bar Deep Ellum and found him to be a thoughtful, entertaining bloke. His beers had stirred up quite a hornet’s nest in the US, for a variety of reasons including their price and the brewery’s marketing approach. Amongst all of the beer geek fawning, the thing that struck me most about the offerings was how the brewery positioned the beers to mimic the marketing approach of Stone Brewing but actually resulted in very traditional, middle-of-the-road beers (in a good way). That article just went to press so, with the recent (and seemingly annual) controversy over the brewery’s release of its high alcohol Tokyo imperial stout, I figured I’d cross-post the article below…

The culture and influence of American craft brewing is quietly moving across the world. From upstart Danish micro brewers to quirky Japanese extreme ale producers, subtle changes are taking place in the way we all think about beer. These operations are often run by beverage alcohol industry veterans who are now looking to take a different track in their business lives. But sometimes even a few novices are trying to change the way their respective countrymen think about beer.

A mere twenty four years old and with a little savings in their bank accounts, friends Martin Dickie and James Watt of Scotland decided the time was right to put their joint passions to work brewing and selling boldly flavored beers in a place where tradition long ruled. After nearly a year of planning, the pair opened the BrewDog Brewery in Fraserburgh on Scotland’s north east coast line. Dickie brought the knowledge of beer to the venture, having studied brewing and distilling at Heriot Watt University in Edinburgh and spent two years as head brewer for the upstart Thornbridge Brewery in Derbyshire. A long-time home brewer, Dickie now heads the company’s brewing operation.

On the opposite end of the ledger, Watt brings the passion for marketing, sales, and promotion to BrewDog’s operation. Watt has a curious background for someone in his position as managing director, having studied law and economics at Edinburgh University, followed by a lengthy stint working on a herring and mackerel trawler run by his father.

Mainly self-financed, but with some backing from the local Aberdeenshire Council, BrewDog is a curious operation on many levels. The brewery seemingly appeared from the Scottish mist and with the help of the Internet, its reputation grew exponentially even before its beers hit American shores. BrewDog’s beers first started rolling of the lines in early 2007 but within a few months the brewery was already selling bottles in Japan, Denmark, and North America. At a glance, this might appear to be a curious marketing and sales strategy. Welcome to the new age of beer, one where a combination of electronic discussion boards, passionate beer enthusiasts, and extra discretionary cash fuels a global clamor for niche better beers. Like many American brewers, BrewDog is finding that the world is no longer a series of isolated beverage markets but that beer geeks across the planet constitute a profitable, viable market.

Since BrewDog started distributing to the United States, Watt has already visited markets from Boston to San Diego twice. In a recent trip, I met Watt at Deep Ellum in Allston where he presided over a tasting of the brewery’s line for a group of enthusiastic beer geeks. From a light strawberry ale to potent barrel aged offerings, BrewDog’s lineup impressed many attendees. Watt and his partners are grappling with growing pains and remain responsive to the marketplace and their consumers, with whom they communicate through e-mail and beer web sites. After consumers complained that BrewDog’s beers, served in 11.2 and 22.4 ounce bottles, were priced too high, often in the ten to fourteen dollar range at retail, the brewery responded by lowering the price of its next shipment.

During his first trip to the states, Watt hit the nation’s major beer markets before heading to the Stone Brewing Company in San Diego, California, where he collaborated with a group of breweries on a new beer. According to its website, when it came time to plan Stone’s next collaboration, founder Greg Koch and production manager and head brewer Mitch Steele turned to BrewDog, whose beers had impressed them during a trip to Europe. “Greg and I were introduced to James’ and Martin’s beers about a year ago, when we traveled through Scotland,? said Steele. “We were blown away by their ability to brew hoppy, assertive beers and get away with it in the UK.? Steele then turned to a friend, Will Meyers of the Cambridge Brewing Company, from his days brewing in New England to join in the collaborative effort. “I was familiar with BrewDog as I’d stumbled across their beer in England last June, and was psyched to be offered the opportunity to work with two other forward-thinking, ballsy brewers,? said Meyers in the release. Due to the distance between them, the brewers initially collaborated via e-mail to design the recipe for the pilot batches.

The resulting beer, a black pilsner called Juxtaposition, achieved two records for the Stone Brewing Company: its hoppiest beer ever brewed and the first lager produced by the brewery. The brewers used 10,000 pounds of malt and ten separate kettle hop additions of Japanese Sorachi Ace and Motueka hops from New Zealand, with 326 pounds total used, for a rate of three pounds per barrel. The brewers also employed mash-hopping and mash-wort hopping, both firsts for the brewery. In June, Watt traveled back to Stone to test samples from the batch the team brewed. The brewers decided to tweak the beer with some additional dry hopping. The final beer will achieve 10 percent alcohol and no release date has yet been set.

The Stone collaboration was a bit fait-accompli for BrewDog as it has clearly modeled its operation on the in your face promotional philosophy employed by Stone Brewing. Stone has long attempted to court controversy or achieve public attention by setting its efforts apart from other breweries through bold and boisterous bravado. Its provocatively worded labels, written by Koch, stand as a testament to the brewery’s public relations effort. In comparison, BrewDog’s radical and boastful labels appear to largely mimic the Stone operation. On the label of its Punk IPA, deemed a post modern classic pale ale, Watt writes: “This is not a lowest common denominator beer. We don’t care if you like it…This beer is in no way mainstream or commercial, it is proud to be the alternative…You probably don’t even care that this rebellious little beer contains no preservatives or additives and uses only the finest fresh natural ingredients. Just go back to drinking your mass marketed, bland, cheaply made watered down lager, and close the door behind you.? Compare this to the wording on Stone’s popular Arrogant Bastard Ale bottle, which reads: This is an aggressive beer. You probably won’t like it. It is quite doubtful that you have the taste or sophistication to be able to appreciate an ale of this quality and depth. We would suggest that you stick to safer and more familiar territory — maybe something with a multi-million dollar ad campaign aimed at convincing you it’s made in a little brewery, or one that implies that their tasteless fizzy yellow beer will give you more sex appeal.?

BrewDog has whole-heartedly adopted the Stone Brewing method of promotions and has even extended the extreme nature of it a few extra paces, to some controversial ends. The brewery’s beer, Tokyo, a 12 percent imperial stout brewed with jasmine and cranberries and aged for four weeks on toasted vanilla French oak chips, launched a firestorm of criticism in the British press upon its release. Newspapers such as the Financial Times, the Daily Mail, and others quoted individuals such as Jack Law, chief executive of Alcohol Focus Scotland, a group promoting responsible drinking, who complained about the beer’s alcohol level. “What justification can there possibly be to bring an extra strong beer on to the market,? he said. “Super-strength drinks are often favoured by young people and problem drinkers – is this really who the brewery wants to target?? The criticism was mirrored by several other individuals, including Dr. Bruce Ritson, the chairman of Scottish Health Action on Alcohol Problems. “It is the last thing we need. It is absolutely the wrong direction to be going as far as Scotland’s health problems are concerned. If it became popular it would have devastating consequences for health as well as social order and violence on the streets.? The Times ran similar quotes criticizing the brewery when it released a honey beer brewed with poppy seeds called Speedball, a reference to a drug cocktail of heroin and cocaine. The beer, which has been renamed Dogma, caused a stir in the brewery’s hometown of Fraserburgh, which the Times called the “smack? capital of Britain. In response, Watt told the Times, “Sure, calling a beer Speedball is provocative but the public health campaigners, as they did with Tokyo, will generate hysteria to conceal their own shortfalls in falling to educate drinkers properly. I agree with what these campaigners are doing, but what we’re about is getting drinkers to enjoy a quality drink. The industry continually has a go at us, but they’re too short-sighted to see that we are the one company with precisely the same objectives.?

The irony here is, for all of the bravado and boastfulness, BrewDog actually makes very simple, approachable and traditional beers that do not push the envelope of taste or flavor. The Punk IPA is indeed a classic pale ale with a dull hazy orange hue and appearance and a light, wispy head. The beer’s aroma offers a light herbal and minty note with a slight touch of wheat. The flavor itself, while traditional, has a little steeped tea-like influence, with a pleasant texture and consistency, and quick, light bursts of citrus and hop bitterness. The Dogma, formerly Speedball, pours with a nice amber color and offers a pleasant pale malt aroma mixed with light fruit notes. Despite its near 8 percent alcohol, the medium bodied beer remains quite drinkable, with a light cotton candy sweetness, a touch of molasses and biscuity malt notes, and a slight hop and yeast bite in the finish to balance everything. The listed ingredients, honey, kola nut, poppy seed, and guarana, make little to no impression on this very traditional English ale.

The brewery’s Paradox series involves aging its ales in a series of different barrels. The Paradox Isle of Arran is a stout aged in whisky barrels and is 10 percent alcohol. Pours with a deep, ark black color and a light, fizzy, and unsustained head. The aroma is a bit chalky like mocha at times with a light, passive smoky aroma, akin to a distant camp fire, throughout the beer. The medium bodied beer has a light, sustained richness mixed with touches of roasted malt and a bit of woody flavor from the barrels but is quite mild overall. In contrast, the Paradox aged is Islay Scotch whisky casks possesses an almost overpowering belt of peaty smokiness representative of the nation’s under-appreciated Scotch offering. There is a big alcohol heat here as well in both the aroma and flavor, which results in an unusual molasses and mint flavor, light tobacco notes, and an underlying sweetness that balances the whole package. This beer is an interesting suggestion for your Scotch whisky customers who prefer the aggressive, peaty, smoky versions common in Islay varieties.

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Beer Wars Filmmaker Responds To Criticism, Sort Of…

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In the interest of fair play, I thought I’d link to the response of Anat Baron, producer and director of the recent Beer Wars release, to the heavy criticism that has pounded her film since its release a few weeks back. The response is probably not going to be what most industry-related critics of the film might have hoped for as she seeks to address some of the more ludicrous criticisms, usually offered by beer enthusiasts or novice bloggers. These include how a person allergic to alcohol can make a film about it, that Rhonda Kallman had no business being in the film, that someone’s favorite brewery was not covered, etc. These are the low lying fruit, easily dismissed, and it would perhaps be of more interest if she addressed some of the more substantive issues raised by myself and other writers. She briefly touched upon one such issue, as she puts it: “The film is dated. Everything is good now. Craft beer is growing so the distribution issues are moot.” Her response is cursory and its underpinnings were uniformly rejected by numerous speakers (from all sides) at this past week’s Craft Brewers Conference in Boston. Her citation to a post by Stone Brewing’s Greg Koch is a bit more illuminating but only goes to show how the film missed another opportunity to capture something real and relevant. But, in any event, give it a read and we’ll put this subject to bed once and for all.

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“I Am A Craft Brewer” Video From CBC Keynote Posted…

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At the beginning of his keynote address to the Craft Brewers Conference in Boston, Stone Brewing Company’s CEO and co-founder Greg Koch played a video he and others had collaboratively produced for the occasion. It is a great video, especially the first minute or so (a great viral or television commercial in itself) and was an excellent start to a solid and interactive address to the conventioneers. I anticipate that a lot of viewers of the recent Beer Wars documentary expected to see something similar and that is one of the reasons they left disappointed. The tone gets a little preachy at times and also takes several direct swipes at the big guys, promotional approaches whose appeal and viability can be debated (and were yesterday during the conference, with one presenter actively advising against them). In any event, definitely take a look at the video below and feel free to offer your thoughts.

I Am A Craft Brewer from I Am A Craft Brewer on Vimeo.

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Rethinking The Blog Love Fest Over Beer Wars The Movie…

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Unless you’ve had your head in your glass for the last few weeks, it’s pretty hard to have missed the onslaught of blog posts and Twitter tweets/tweeks/whatever about the upcoming release of Beer Wars. The first documentary film by producer/writer/director Anat Baron seeks to go “behind the scenes of the daily battles and all out wars that dominate one of America’s favorite industries.?

bw2.jpgLike many others, I first heard of the Beer Wars project at the Great American Beer Festival in Denver, Colorado, in 2005. The producers shot some scenes at the festival and there was a little buzz about it. The project then fell off the radar and I occasionally ran a search to find out what had happened, with no results. Fast forward to last month and Beer Wars was suddenly back with some strength. In a post on her blog, Baron explained the delay as her having missed “the window when documentary films were big news and were getting rich distribution deals…But now that I’ve given up on that fantasy, the reality is actually more exciting. I get to make the decisions and sheppard (sp) my film without having ‘suits’ make decisions for me.?

While I’m interested in seeing and reviewing the film, the recent blog coverage has piqued my interest the most. In recent weeks, we’ve seen some very fawning endorsements of the film, not only from people who appear in the film, but from beer industry insiders and novice and professional beer writers as well. One particularly breathless account by my usually level-headed colleague Jay Brooks sums up the sycophantic blog mood of recent weeks.

Beer Wars is nothing new. The war itself has been quietly raging for years and years. But only insiders have been aware of it and even fewer still have been willing to admit it and talk about it publicly. This film should blow the lid off of that and make honest debate at least possible. That would be a great first step in bringing more people over to the craft beer side. Just like Star Wars, the craft beer movement is the rebellion and we’re fighting the empire for galactic beer domination. Once enough people realize we’ve got Han Solo, Luke Skywalker, Princess Leia and the Ewoks on our side, how could anyone possibly continue to support the dark side? Still not convinced. Watch the trailer. Let the fermentation be with you.

The frenzied fan fare has me wondering about the ways craft beer enthusiasts interact with and respond to mainstream and alternative media coverage of their favorite hobby. Similar to the recent New Yorker piece on Dogfish Head and extreme brewing, craft beer lovers crave attention for the subject of their passion. And that is certainly understandable, especially after many years of not being taken seriously by the media (although it’s debatable whether that attitude has really changed). But there is something about the Beer Wars project itself, and the groundswell of excitement surrounding it, that I can’t quite put my finger on.

In truth, we know little about the project. On her website, Baron provides some details that help to smooth the outer edges.

Everywhere we went, we heard grumbling about the decline in mainstream beer sales. It seemed that innovation was now coming from the small players instead of the giants. The highlight was an interview with Rhonda Kallman who had left Sam Adams to launch her own company. Her tenacity and energy were inspiring.

So the story began to take shape. The independent brewers vs. the big corporate players. The timing was right. An increasing number of Americans were interested in making their own choices and not kowtowing to the corporate marketing machine. Whether in coffee, cheese, chocolate, locally grown produce, people were willing to experiment and explore, even if it meant paying a little more. Craft beer was a natural extension of this trend.

At the outset, one critical note that keeps ringing in my head is that the independent brewer versus big corporate player dynamic would have been spot on five to seven years ago. The Slow Food-style comparisons are even more dated. But today, both paradigms ring pretty false. There remain, of course, challenges between these two tiers of beer industry competitors. But, compared to even just five years ago, the main sources of friction between them have greatly receded and craft brewers have new sources of concern (managing growth, providing consistent and fresh products, balancing innovation versus customer expectations, balancing debt service against expansion needs). It’s an anachronistic exercise to continue to view the beer industry through the prism of us versus them, small versus big. Case in point: ask any craft brewer you know about their access to market concerns five years ago compared to today. It’s the difference between having trouble getting a space on a big brewer’s truck versus finding enough time to return all of the new distributor inquiries from around the country. Access to market is no longer the looming problem. Deciding which markets to turn down and how to keep fresh product on the shelves are the problems today. This is undoubtedly a much simplified view of one aspect of the industry but it serves as an example to illustrate the greater point. The opening scene in the trailer has an individual offering that “They’re all fighting for a piece of a pie that is not growing.? If this is the documentary’s premise, it’s a hollow and inaccurate one in today’s beer marketplace.

The continued relevance of the idea behind Beer Wars has come up in some conversations I’ve had with industry insiders recently. From what I can tell, in tackling the subject of the beer industry at large, Baron wisely relies upon the tested documentary technique of following a limited pool of individuals and using their personal narratives to tell a wider tale. Baron notes on her website:

Beer Wars begins as the corporate behemoths are being challenged by small, independent brewers who are shunning the status quo and creating innovative new beers. The story is told through 2 of these entrepreneurs – Sam and Rhonda – battling the might and tactics of Corporate America. We witness their struggle to achieve their American Dream in an industry dominated by powerful corporations unwilling to cede an inch.

Of course we all knew that the affable Calagione would be a focus of the film, it’s almost a precondition of media coverage these days. But Rhonda Kallman is a very interesting choice for a second act. Kallman is well-known among beer industry insiders but is decidedly less so for beer enthusiasts, especially young ones. I profiled Kallman in one of my first pieces for Beverage Business Magazine in 2001. While we all recognize Jim Koch and his accomplishments, Kallman co-founded Boston Beer Company with Koch in 1984. He has described her as “smart, resourceful and motivated? and noted that while Boston Beer Co. had no corporate ladder to climb, Kallman built her own ladder. Koch credited Kallman with helping to bring about a fundamental change in the American beer industry and she shared the 1997 Institute for Brewing Studies Recognition Award for outstanding contribution to the microbrewing movement with him. Kallman left Boston Beer at the end of 1999 and went on to form her own contract brewing operation, the New Century Brewing Company.

At the time, Kallman was seeking to release her own national light beer, set to be a step above macro-brewed light offerings. A daring if questionable idea from the start, Kallman’s new beer, playfully named Edison Light, had some buzz of its own. In my interview of the time, Kallman suggested an approach that laid the basis for Beer Wars.

It’s an above premium light beer, a segment that is clearly dominated by giants. There has been no news in the light beer category in years, no real new news at all. And 75 percent of the light beer segment is made up of the big three – A-B, Miller, and Coors. Other brewers, particularly importers, all have light beers as well. But they all really can’t get out of the way of their flagship. Light beer is clearly the direction the consumers are going, at least the targeted demographic that we are all after, which is males aged 21 to 27, and increasingly they are drinking more and more light beer. And that demographic is expected to grow, so people are clearly after that. But we’ll appeal to these people and that young demographic looking for change, a new choice and variety.

Fast-forward seven years and the Edison Light beer project, and its sister product, the short-lived caffeinated beer called Moonshot, have stalled. The national rollout never happened and now Kallman acknowledges that the brand’s reach is limited. After an initial push in the Massachusetts market, Edison quickly retreated to a few hideouts around the state. It’s now available by request in certain parts of Massachusetts, New York City, Southern California, and Trader Joe’s markets east of St. Louis. It probably didn’t help that the beer was released to the public the day before the September 11th attacks.

So with all of this in mind, I’m curious to see Beer Wars and how it handles Kallman’s situation, among other issues. Will the film be honest and note that her operation and its big plans have met with little success or will it simply frame the debate in outmoded terms better suited to a decade ago? And will it draw the necessary distinction between Kallman’s business model, marketing a national premium light beer against entrenched and well-funded competitors in a similar category, and the operations of nearly every other “craft brewer.? I look forward to finding out.

Beyond these substantive points, the trailer itself is full of things that will appeal to the red meat beer geeks, including the otherwise sensible Greg Koch talking some ridiculousness about making angry beer and how it turns people happy. Frankly, I think the late Michael Jackson may have been the only to make any real sense in the trailer and he sadly passed away more than 18 months before the film’s release. I’m also curious to learn whether Ben Stein has some perhaps yet unreleased connection to the beer industry or if his moderating services were simply available for rent at the right price.

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