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Monday, March 04, 2013

"We Are Craft Brewers"

The Brewers Association announced this morning that it was adding grodziskie and adambier to the ever-expanding list of official styles.  (More on that soon.)  I happened to be looking through my notes on an interview with New Belgium's Peter Bouckaert this morning, too, and I found a nice resonance between a comment he made and that news.

Credit: Brewpot
Obscure styles may have some commercial prospects, but probably not.  Yet brewers make them anyway.  When I spoke to Bouckaert, I asked him why New Belgium spends so much money on the foeder program, a project that--in an era when another brewery may be plausibly watering down their light lagers--can't be a huge profit center.  Here's what he said.
“One of the meanings of ‘La Folie’ is that it’s a business endeavor you’re sure to lose money on so we thought that was a great name for it. Why would you overly dry-hop a beer? Why would you do something stupid like that? Why would you make something that is the highest alcohol beer? We are craft brewers. That’s what we do. We are creating different flavors; we are reviving older beers that used to exist and faded away. Maybe there were financial reasons they faded away and that’s a good reason for us not to do it.”
The phrase "craft brewery" has become nearly meaningless in modern usage, but I would agree with Peter that projects like New Belgium's qualify as actual "craft."  That's why you'd brew an adambier or grodziskie, too.

18 comments:

Alan said...

That is interesting as I know other craft brewers who take the position that every separate project must pay for itself and not be subsidized. It would be interesting to have the two approaches form a list but that would take disclosure and you know where that would lead.

Pivní Filosof said...

What New Belgium is doing isn't very much unlike the pilot or laboratory breweries many a macro has working in their shops, only that in most cases whatever it is that is brewed there never sees the light of day.

Jeff Alworth said...

Alan, I didn't press Peter on the balance sheet, but I expect that beers like Ranger and Fat Tire are successful enough to allow a little experimentation on the side.

Max, possibly, although it's worth mentioning that New Belgium has one of the largest barrel-aging programs in the world, including gorgeous Rodenbach-like foeders they use as soleras for their beer.

Jack R. said...

On the Colorado front range, the retail price of New Belgium Lips of Faith La Folie bombers are 2X the price of typical New Belgium 6 packs of 12oz bottles.

At 6.5X the price per ounce, the consumer is partially funding the experimentation. We're fortunate, spoilt for choice.

Alan said...

"...you’re sure to lose money on so..." sure doesnit jive with +6.5x per OZ.

Maybe get back to them and ask for those spread sheets, Jeff. You may have been bamboozled.

Stan Hieronymus said...

Way back in 2000, when they only had wine barrels to make LaFoile, Peter said:

"There are no real plans around it. There were no plans when we started ... 'What are you going to do?' people ask me."

"We are going to do something."

I believed him then, and at the risk of appearing bamboozled, I believe him now.

It has a benefit to the company, both internally and with is fans, that goes beyond ROI. That said, if it "lost" too much money I'm sure a bean counter would be sitting on Peter's desk one day when he came to work.

New Belgium is in business to make money, and I don't think I've ever talked to an employee who said otherwise.

But they didn't "invent" LaFoile with the idea it would sell at X margin (and I have no idea what that is). The did it to make an interesting beer. As important, now that they have something interesting people will X for they aren't looking for ways to lower the cost of production that would also lower the quality.*

* While charging the same price, of course.

Alan said...

Not sure what you mean, Stan. It is pretty easy to believe someone's statement made 13 years agowhen the statement is:

"We are going to do something."

I believe that to. But, fortunately, it is beside the point. The point is there is a suggestion that the brewery eats the cost of this line of their beers while at the same time there is the fact that they cost 6.5 times per ounce at retail. It is clear that both facts may co-exist but it is proper to know rather than believe.

Belief systems in matters of business reporting are unnecessarily slippery things. Costs are on spreadsheets. Easily available.

Jack R. said...

I agree with Mr. Hieronymus.

Well done exotic ales reap a good measure of 'goodwill' for their producer. Many craft beer consumers are constantly searching for the new / unusual; it's in our DNA. Brew it well and it will sell.

I regard NBBC in the highest regard on several levels. I fondly remember my first Eric's [sour] Ale. I have a NBBC Biere de Garde in my refig; it will not be there tomorrow.

Alan said...

Now I think I understand better why it is called beer evangelism.

Jeff Alworth said...

Alan, I don't know which brewers you work with, but I certainly haven't seen the books of any breweries around here.

That said, I think you've taken Jack's data and run out the back of the building. He said the Lips of Faith are twice the cost of regular bombers, which must cost about 3.25 times the amount of an ounce packaged in a sixer. (We could look at the SPE to get a sense of whether that's typical.) La Folie has tremendous costs. NB has a large, temp-controlled space with 60+ hl foeders (which are themselves really spendy). The beer is made with a lager yeast, fully fermented out and centrifuged (so yeast doesn't fill the foeders over time--they use a solera system), and THEN they spend months sitting and aging. Could I imagine a scenario on which the cost to produce La Folie is more than 6.5 times the cost to produce Fat Tire--made on a massive scale in one of the most sophisticated breweries in the world? Yes, yes I can.

Alan said...

I run nowhere. I read these words from Jack:

"At 6.5X the price per ounce, the consumer is partially funding the experimentation."

And I repeated 6.5 x per oz. And as for the planet Krypton like technology, that is swell and understood because I wrote "both facts may co-exist."

Which means you have agreed with me. Happy to have the company. But let's get to the facts, too.

Stan Hieronymus said...

Alan, you are trying to make this a discussion about price. I am interested in quality, creating it and maintaining it. I give double points for value, since when you choose career paths of journalism and archiving you are are definitely going for a beer drinker's budget vs. a wine drinker's budget.

So moving on to value (which might be a mistake) . . . Best I can recall - and it is post 2000, probably about 2003 - people walking away from New Belgium with 750ml bottles paid a little bit more than I pay today (per ounce) for a 22.

Alan said...

No, I am asking about an assertion by the brewery referenced by Jeff, Stan, that they carry expenses in the face of a statement of fact from another comment maker about the retail price per ounce. This isn't hard. But it isn't about where you want to take the discussion.

I understand from above that Jeff hasn't but have you not asked a brewer about their margins? You know I buy things professionally from pencils to roads and am quite aware of the need to understand the expenses of suppliers to come to an informed decision. This is no different.

Stan Hieronymus said...

Alan - I do talk to breweries about costs, though not so much margins. As far as "looking at the books" goes that is more likely to be brewing logs.

At the beer store near my house a bottle of La Foile costs a little less then 5X per ounce than a "standard" 6 pack of New Belgium beer. Given that the beer ages for a year or more in a brewery that is at max (real estate comes at a price) that doesn't strike me as outlandish.

Funny, when I put my consumer hat on I don't think about cost of production. For instance, same store (since I was there checking NBB prices), they have an imperial stout that costs almost 5X more than another imperial stout. They have many RIS choices, so it isn't like it has to come down to those two. Fortunately for me I prefer the one that costs less. Easy decision. But if I liked the other more I think other factors - like how rich or poor I was feeling - would matter more - than cost of production.

(There other is in a 12-ounce bottle, BTW, so no "wine-ification.")

Alan said...

See, I have 500 onion seedlings started in my basement as I know I cannot bear the retail burden they impose on me over the course of a year. I even buy my seeds from the farmer's catalog. 100 basil seed packets? 3 bucks. 10,000 basil seed seed packets? $3.25.

Jeff Alworth said...

I personally don't care about balance sheets. Alan, you raise a valid point, but one that doesn't particularly interest me. Way upthread you started down the road of testing the brewery's veracity on the "folly" point. Personally, I see no such claim in Peter's comment ("One of the meanings of ‘La Folie’ is that it’s a business endeavor you’re sure to lose money on so we thought that was a great name for it.") The brewery figured it was a money-loser but decided to pursue the project anyway. So maybe they make money--I don't really care either way.

I think the more salient point is that they didn't start this project with the idea of making buckets of cash. That's true with a lot of programs breweries start. Allagash spent tens or hundreds of thousands of dollars building a cool ship and cool ship room: clearly a poor "business" decision. There are tons of examples of this in the beer world. What Peter's saying is that the idea behind the sour barrel project was NOT driven by business. It was about flavor. For him, that's what defines craft brewing. And for me, that's a fine definition.

Alan said...

That is fine but make that disclaimer early on in the process maybe by saying something like "offering a detailed view at 79% of the beer business." If the transactional subject matter is off limits, then don't raise it in the first place. I can only read English and expect when someone say "it’s a business endeavor you’re sure to lose money on" take it for what it is worth. Repeating it and assuming we all agree that "hehe - its really not like that but we all talk that way, right" is just odd.

I guess I am not in that club.

Layne Adams said...
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