Wednesday, January 22, 2014

How Not To Open a Brewery



Think about all the controversies in the brewing industry these last couple years — the buy-outs, the sell-outs, the lawsuits and copyright infringement, the huge vertical growth and breathless reports from those daring enough to stand before the dread 'Beer Bubble' and gaze into its noisome maw. In the wake of every controversy, a chorus can be heard to ring out: "Running a brewery is still a business!" The lesson learned: just because beer may be our passion, a brewer's passion, a successful brewery cannot exist without making profit, and therefore, breweries can and should be expected to act like proper businesses from time to time.

It's true. Breweries are certainly businesses, and few of them would survive without taking actions that are vaguely business-like in nature and in favor of their general fiscal benefit. (I might point out that an art gallery is a business too, but delving into that comparison is probably a tangent for another time.)

Brewing is a business — and the slight irony, in my opinion, is that the real passionate brewers, the ones that truly excel at making beer and tout their crazy love for it in everything they do, don't generally seem to have much trouble keeping the doors open (once they get them open.) No, it's the breweries that appear to be nakedly, purely business-ventures that I think are doomed.

New York is becoming an intriguing microcosm of the brewing world at large, a regional slice of an industry ignited by a sudden excitable gust of fresh air. For those paying attention, it's going to be like watching a hundred years of evolution progress at hyper-speed. So many breweries have been announced in the last year that I am still finding newcomers in my general region that somehow popped onto the scene without me noticing.

Maybe it is just me — being a pretentious beer-snobby hipster or something or other — but it seems discouragingly easy to spot which breweries are driven by the love of investment (by people who see it as a smart, fun venture in a hot market), and those which are driven by the love of beer (by people who are willing to take on a huge amount of risk for something they believe in). And while that oft-touted advice absolutely holds true — breweries are a business, not a hobby — I would put money on the passion-driven breweries in NY surviving. Some of the others? I don't think they'll exist in ten years.

How can I, a random schmuck from the internet, even begin to gauge other people's passions? Who am I to guess how these business-owners feel deep down inside? I don't know; I would only argue that when you're truly passionate about something, you can generally spot someone else that shares your symptoms. (For example, I can tell within five minutes of meeting someone how deeply they appreciate bears.) Positioning a gimmicky brand name above your beer — or making your beer itself seem like a gimmick — is a good way to raise my eyebrows.

Or, the example that inspired this whole rant. The other day I was leafing through a regional magazine of the sort that commonly sits in coffee-shops throughout the Hudson Valley. The very first thing, inside cover, full-page, was a vibrant advertisement for a local brewery. I recognized the location of the brewery but had no idea that any breweries existed there. So, the ad was a success — of course I am going to check this place out.

I head to Facebook, which confirmed that the brewery was brand new. No hours are listed. There is an "About" blurb with some marketing buzzwords about bringing good beer to the area and so-forth; the usual. "Ales and lagers." Okay. Well then. Nothing in the description that couldn't apply to almost any brewery in the country. Back on the feed, the brewery has posted links to some news articles about their development. Clicked on a couple, which said that the brewery was slated to open in summer 2013. Well, the magazine in which I had seen the advertisement was the winter 2013/2014 edition, so seemingly the place should be open by now, I reason, or else they would have given some kind of update alerting people to a major delay. Based on the various comments on the page asking general questions, it's weirdly hard to tell.

I click over to their website. There is nothing there but an unclickable image, their logo again. Not so much as an address. Huh.

One of the news articles includes some quotes from the guys opening the place. There are a couple of partners. None of them mentions any sort of background in brewing or awareness of beer outside of enjoying it, and realizing the area was lacking a brewery. One imagines they must have hired a brewer to work the equipment, but nothing is said of that. Beer is alluded to as an abstract concept, but never in detail. Now, it is absolutely possible to open a brewery without being the brewmaster yourself. In fact, there can be strong advantages to this scenario. But even in these situations, most people involved gush passion for beer, or at least spurt passion and defer to those who gush the rest of the time. One can tell if a brewery has a reason for being, because generally, the people who worked so hard to open the damn place will mention it. I understand that delays happen, contractors screw up your construction timeline, permits don't go through, and Facebooks get neglected. But if in all that time you can't be bothered to mention a single vague inkling of the beer you'll be offering, what's going to inspire someone to try it?

Unless what you're selling is simply: "a brewery." In which case: it'll have beer, it'll deliver alcohol to your body, who gives a shit? What are you, some kind of beer snob?

Now, this unnamed brewery in question might turn out to be one of the good guys, in the end. I don't know. Admittedly, the complete lack of any information or context makes it too hard to tell... which is of course the problem. Maybe something went horribly amiss during construction and they've been too busy to update their website with a beer list, or mention their hours. Maybe they placed that ad in the magazine months and months in advance, and after their brewery sank into a swamp, no one bothered to cancel it. It is entirely possible that their beer is, or will be, excellent. I would love to try it, but with all these warning signs, would you be willing to drive a few hours to find out? Well, not me, since I can't even tell whether the brewery is open.

I do think that there is a Beer Bubble. A number of breweries will not make it in the coming years. But I wonder who's going to miss the ones that go down first.

11 comments:

  1. It could be a paper brewery - big advertising presence, no physical presence, beer made under contract on someone else kit. Cheap to start, and if it goes nowhere, none of the rich investors are too out of pocket. If it gets somewhere, you can keep it going and grow it and make some cash, or flog it all to another investor down the road.

    The beer will be unobjectionable, me too, sort of stuff. 'Crafty' enough to be different to any BMC beers, but playing it safe, heavily reliant on conventional Big Beer methods to carve out a market.

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    1. Oh, I should have mentioned that there are actually pictures of the brewery under construction in all the articles. So there was definitely framework and everything underway over a year ago. It actually looked like a pretty sizeable investment — one of those rustic, destination brewpubs for rural areas that you see in lots of parts of the country.

      I think you make a good description of that sort of approach — people think they see this opening where they can apply Big Beer philosophy to what they simply see as a "Craft Beer Marketplace." They're missing the point of where the opportunities for growth really are.

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  2. Wow, did you hit the nail on the head on this one, I felt like you could have been talking about what I just went through. I was approached by an acquaintance and someone he called his business partner in late 2013 about opening a brewpub. Not only do I know this fella as a Miller Lite drinker (also his wife has their fridge stocked with every flavor of Summer Shandy that Leinie's makes), but I never had any indication he was the least bit interested in craft beer. Nevertheless, both own small businesses unrelated to brewing and fit the "opportunistic in a hot market" descriptor you mention. When I met with them, within 5 minutes the phrases "we're in this to make money" and "I really don't care what kind of beer we make" were uttered, and before the end of the meeting , the description for the tap room thrown out was "Two words, Pottery Barn". Despite what was an attractive offer financially to be in their words "the beer guy" I felt like if I said yes to what amounted to a brewpub for upper-middle class soccer moms, I would have been selling my soul.

    Small brewpubs like this, and nano style operations where the passion is there but the skill set (often times including poor sanitation) is not are creating this bubble. Let's hope in 5 years we are talking about this as a thing of the past.

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    1. Thanks for sharing that story, I can imagine how strange it must have felt to have that 'opportunity' presented to you. I wonder how many times this more-or-less-exact scenario has played out across the country. Some breweries you just have look at and wonder "who came up with THIS?"

      On the other hand, investors in general are usually a necessity. Many breweries are likely largely financed by people with money who don't care about craft beer — it's all a matter of who's left with the creative control.

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    2. Again your point is right on. Investors are a necessity when you don't have a lot of your own money to invest, and their interest in craft beer isn't explicitly essential. Unfortunately in my case, they were pretty dead set on a concept I had no interest in being a part of. Things like location, and the target demographic they were going for were big gaps. The concept being pitched basically was to attract people who probably wouldn't walk into 80% of the 30 or so breweries within a 45 minute drive of where they wanted to open. In other words, a brewpub for people who don't normally go to brewpubs, which in their eyes would work because it was being put in a small rural/suburban community where there were very few entertainment options. From my standpoint, that's doing it for all the wrong reasons.

      My brewing preferences align somewhat closely to what I've seen you writing about on your blog, and that's not the type of crowd that would go for the type of beers I would want to make, at least in my opinion. I'm just not the type of brewer who wants to build a brand around approachable blonde ales and wheat beers.

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  3. couldn't agree more. I think opening a brewery like Farm Hillstead would be the way to go... :)

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  4. Agreed- passion about your product and process has to be there first with the business acumen to back that up. But I think as there are more and more breweries in planning, it ups the bar for has to be done to succeed even more, which can include the personalities of the brewer-owners. For me, the model to follow is that of John and Jen Kimmich, which operate the Alchemist in my home state of Vermont. Heady Topper's quality & fame goes without saying. But time and time again, these two have made their business decisions (including closing their brewery to the public) through consideration of their community, their employees, AND their consumers. I admire them for that- it only makes me want to druik their products even more.

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  5. Derek, nice post & a very intriguing issue that I have pondered over the past few years. Personally, from the start-ups that I have seen in my area and the start-up brewery that I worked at, I can honestly say that it comes down to a Maslow's Hierarchy type pyramid to success.

    At the base, the crucial necessity, is the love for craft beer by the owner(s). The person or people who make THE critical decisions for the company need to have a passion for beer, if they don't they will never be able to think like minded with their market and, as you write, the market will easily spot it.

    Business sense is also a must and comes in a close 2nd. I can't tell you how many start-up breweries I have seen that have a lineup full of "Peanut Butter Stout" and "Oak aged raspberry Berlinerweiss" that fail to understand the concept of profit margins and problematic process changes during brewhouse expansions, not to mention the utter lack of the beauty of beer for what it is; water, malt, yeast, hops. Forecasting a business plan 5-10 years out with details for staffing needs, expansion, marketing, etc.. are a HUGE necessity to starting a brewery that, I have often seen, get tossed to the side by brewers who just love beer and would rather not answer these crucial questions.

    Third, and last (for now - I could go all day), is the ability for a brewery to understand it's market and predict trends in the industry and it's market. For example, I'm down here in South Florida, which has over the past few years been witnessing a craft beer enlightenment period. IPA is now a common term that people understand, where a few years ago, almost nobody knew of. Wild beers are still a mystery to drinkers down here for the most part, but with our hot weather year round, breweries like J. Wakefield Brewing are capitalizing on this by making a series of fruited Berliners that will set the trend and expand people's palates. Being able to identify market demand, respond, and predict future demand trends is another thing I have seen successful breweries master, down here in sunny Florida at least.

    Cheers, love the blog Derek, keep the posts coming man!

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    1. Thanks, great comments!

      You're exactly right about catering the market which you're entering, it's something that's very often neglected by new breweries. Or not even neglected — taken for granted might be more accurate. You raise a great point about how certain beer styles are well-adapted to the brewing conditions in Florida, and I'm sure Wakefield and others are going to reap great benefits from taking advantage of understanding that home turf. A mix of cleverness, creativity, and understanding what works for your market is what gets new breweries starting up successfully and sustainability, I think!

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  6. Maybe it burnt down, fell over and then sank into the swamp

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  7. Maybe it burnt down, fell over and then sank into the swamp

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