The Future of Beer is Hiding in the Footnotes

For decades, folks in Denver have been tracking the growth of craft beer and the size of American craft breweries, and each year the Brewers Association releases figures on both. This has become an increasingly difficult exercise in recent years, however, because many of the flagship breweries making craft beer have changed their organizational structures to better compete in the marketplace. And that puts them outside the Brewers Association defintion.  According to the revised definition, the Brewers Association says a craft brewery is "small, independent and traditional." (I'd have liked an Oxford comma in that definition, but that's a different debate for a different time.)

Craft beer is, tautologically, beer made by craft breweries. But 2015 was the year that brewing broke "craft beer." The once-elegant dichotomy between craft and noncraft, fraying at the edges since the formation of Craft Brewers Alliance, was shattered with brewery acquisitions, mergers, sales of minority stakes, and mission creep into non-beer products.

As usual, April heralds the annual Brewers Association list of largest breweries. The most startling element of this year's tally is how many breweries have a small letter appended after the name. Those footnotes connect to a description of the compromises and deviations from the pure essence of "craft brewing" each brewery has taken. (I'll include the entire, extremely long list in the first comment below this post.) In other words, these are in some sense all "crafty" breweries. And even with all those footnotes the BA elided some of the changes by failing to notice sales of minority stakes--which I've addressed by adding an asterisk.

So, of the largest 25 breweries in the United States, how many unambiguously meet the definition of "craft?" Six.

Rk	Brewing Company
1	Anheuser-Busch, Inc (a)
2	MillerCoors (b)
3	Pabst Brewing Co (c)
4	D. G. Yuengling and Son
5	Boston Beer Co (d)
6	North American Breweries (e)
7	Sierra Nevada Brewing Co
8	New Belgium Brewing Co
9	Craft Brew Alliance (f)
10	Lagunitas Brewing Co (g)
11	Gambrinus (h)
12	Bell's Brewery, Inc (i)
13	Deschutes Brewery
14	Minhas Craft Brewery (j)
15	Stone Brewing Co
16	Sleeman Brewing Co (k)
17	Ballast Point (l)
18	Brooklyn Brewery
19	Firestone Walker (m)
20	Founders Brewing Co*
21	Oskar Blues Brewing (n)
22	Duvel Moortgat USA (o)
23	Dogfish Head Craft Brewery*
24	Matt Brewing Co (p)
25	SweetWater Brewing Co*

This is not a list of the largest American breweries, it's an obituary for "craft brewing." It demonstrates that a mature market is not one in which the big players are "small, independent and traditional." No amount of fiddling with the definition will ever repair this breach, either--because "craft beer" won. It has become mainstream and is in the process of entering the mass market. And companies that make hundreds of thousands of barrels of beer a year need to use all the advantages size affords. So of course "craft breweries" now look a lot like "macro breweries." The difference between the former craft and macro segments never had anything to do with beer, it had to do with size.  The absurdity of a list that has to include a 300-word footnote to account for all the complexity in a market makes this reality explicit. We have entered the post-craft era; welcome to the future.

Craft beer is dead. Long live beer.

Beer Bible Wins an IACP Award

I'm far enough out of the foodie loop that I'm not sure this is even a big deal--though my normally quiet editor sent me an email with the news, decorated with a number of exclamation points. (It's from the International Association of Culinary Professionals, and they hand out awards for cookbooks and food writing each year.) Here's her photo:

Anyone out there know how happy I should be about this? If a Beard award is akin to the Oscar, an IACP award is ...? (The Corvallis Board of Film Reviewers Awards, probably.)

(And yes, I will knock off the self-promotion already.)

Fallows and Alworth Agree: Breweries are Good for Cities

This is slightly convoluted, but bear with me. James Fallows is a writer for The Atlantic--and one of America's best journalists, with a history that goes back to speech writing for Jimmy Carter. Over the past three years, Fallows and his wife Deborah worked on a project for The Atlantic called “American Futures” that took them around country to small and midsized towns in a single-engine airplane. Their goal was to get a different view of American life than we normally see reflected in the media. It culminated in a cover story in this month’s Atlantic, and includes a lot of insight about what makes America tick. One of the things Fallows noticed was that the presence of breweries seemed to be associated with community vitality.

That led me to write a piece for All About Beer pointing out that breweries don't appear like mushrooms after a rain in healthy cities. Rather, they're one of the drivers of health. And now we come full circle as Fallows comments on my piece.

I mention it now on general principles, and because its site now features an interesting piece by Jeff Alworth, author of The Beer Bible, extending my premise that craft breweries have become a no-joke indicator of larger civic revival. This is how he explains it, in a way that rings absolutely true to what my wife Deb and I have seen from Georgia to California to Mississippi to Minnesota.

I bring your attention to this solely for the purposes of self-congratulation. I've been reading Fallows for decades, and this may be the only chance I ever have to appear in The Atlantic (never mind how distant this piece is from the print edition). Hey, if you can't do a bit of the old self-promotion on your blog, you're doing it wrong.

Thanks for the shout-out, Mr. Fallows--

Mughal Cistern Beer (Mugal Talaab Sharaab)

Today, Patrick and I are delighted to introduce what will probably be an unknown beer to the world--Mughal cistern beer (Mugal Talaab Sharaab), forgotten potable from the court of the Mughal rulers of India. It’s one of those oddities that might have stayed buried, if not for a revival that’s taking place again in India. It's a very special April 1st pod we hope you enjoy.



Make sure you listen to the end!

The Identity of Irish Beer

[Full disclosure. Diageo/Guinness paid for my trip to Dublin, including the flight and hotel. They bought me beers and food when I was out with brewery folks. Diageo Guinness are also a sponsor of this blog.]

You learn a lot when you visit a country. One of the things you learn is what beer people actually drink. In Ireland, for example, we imagine that basically everyone drinks stout, the majority of it Guinness. Nope. Just like everywhere else, lager is king, with as much as (statistics vary) 74% of total volume to something just over 50%. Heineken, not Guinness, appears to be the best-selling beer in Ireland. Again, numbers vary, but it looks like Heineken has about 40% of the market and Guinness about a third. Carlsberg (owned by Diageo) and Budweiser (both brewed by Diageo for the Irish market) are also major players. Craft beer is a tiny, tiny slice in the Irish market, and in 2014 constituted just 1.5% of overall volume. Finally, just to wrap things up, the amount of draft beer sold in pubs continues to diminish and is now below 50%--but how far depends on the stats you consult.

Which raises the question: what's "Irish beer?"

I spent a couple nights with the best Dublin beer guy there is, and we circled around this question the whole time. I will reveal my bias up front. People think about beer in a lot of different ways, and the lens I use is slightly idiosyncratic. I think of it in terms of national tradition. This is a lens that includes not just beer style, but history and culture--the reasons beer styles emerge. It is the only way I know to explain why, say, people in Cologne drink kolsch, but in Munich they drink helles. It's why cask ale, lambic, and weisse beer still exist.

So of course, when I think of the "Irish tradition," I think of stout. That became an even more pronounced compulsion as I walked around Dublin sampling different craft beers. Leaving aside the whole lager thing for the moment, I kept looking for a bit of Irishness in the craft beers I tried, which included:

• Irish Pale Ale by Galway Hooker
• Of Foam and Fury (double IPA), 8 Degrees Polar Vortex (Cascade pale), and a chocolate stout by Galway Bay
• 40 Foot Potato Stout by Postcard Brewing
• Rosehip Schwarzbier from Yellow Belly 

The Beer Nut was also drinking beer as we went along, which doubled my tally (but don't ask me to recall what the beers were). I went out of my way to look for stouts--I also had a couple at Porterhouse, one of the first Irish craft breweries--but what I kept finding over and over again was ... America. At my last stop, one of the Galway Bay pubs, I watched as the enthusiastic young server and the Beer Nut went on and on about the beers they liked--which were plucked directly and entirely out of the American oeuvre.  Each year, Beoir, an organization founded in part by the Beer Nut to promote craft beer, polls its members to identify the best beer in Ireland. Of Foam and Fury won this year, and it was such a perfect facsimile of an American beer there would be no way to pick it out of a lineup of actual American DIPAs.

There are definitely more craft stouts in Ireland than the US, but it's not clear if this is because breweries are acknowledging a national tradition or to have something on hand for the old Guinness drinker should he happen to wander in. At least among the beer geeks, stout is fine, but nothing to prize or protect.

It's worth noting that although US craft beer is the overwhelming force driving brewing revivals across the globe, not every country recreates our beer precisely. English craft is inflected by the cask tradition; Czech craft is heavily influenced by the pilsner tradition. In France and especially Italy, they take the US as a jumping-off point and have made beers that are unlike anything else. So how a country responds to the American example is not predictable.

The Beer Nut was not only untroubled by this, he seemed to chafe at my suggestion--my American suggestion--that Ireland stick to its tradition. Point taken. The US absorbed Irish culture a century and more ago, and we expect to see it when we return. We expect to see shamrocks and leprechauns and blarney stones ... and pints of stout. We hold Ireland's past against it's present. I can imagine how tiresome that must get.

But I'm still not excited about a future where the entire world brews sticky American IPAs (even when they're brewed as competently as the ones I sampled in Dublin). Pilsner is one of the finest examples of the brewing craft, but the world lost a lot when it swamped native traditions. Of course the Irish will decide what Irish beer looks like, and they'll thank Americans to stay the hell out of the discussion. But here's hoping that in the next two decades, what emerges looks at least a little different than what I saw last week.

(And there is some tradition there, too. Those stouts I now hail as a national Irish expression were originally just London porters. It took decades for them to fork off the original lineage, and centuries to become what they are now. So there's hope.)

______________

How to deal with lager? Since that's the biggest segment of the market, we have to acknowledge it. But as in the US, overemphasizing it is a mistake. Lager swamped stout a long time ago, just like it swamped native beer styles across Europe. But the stats are pretty clear that lager is not Ireland's future.

Happy 500th Birthday, Reinheitsgebot

This is the 500th anniversary of the world's most famous brewing law. I did a big story for the anniversary in the print edition of All About Beer--and I see that it's online now. There's a lot about this law that is curious both historically and culturally. It is, of course, a Bavarian law, which is why folks to the north continued to blithely and complete ignore its dictates until well into the 19th century. Despite that, its legacy is evident in every brewery in Germany now, whether they're making lager in Munich or gose in Leipzig. But what I find most interesting is the context of the law now, in 2016, and what its status is likely to be in the next few years. 

The 500th anniversary comes at an interesting moment for German brewers and may be an opportunity for a reconsideration of the venerable law. As people stop to look at the law this year they may discover a couple of things. First, there’s the public perception of what the law disallows, which isn’t exactly correct. Urban Chestnut's Florian Kuplent expects this to cause one kind of reckoning. “I do see the danger of somebody coming up and saying, ‘Hey, this whole thing is actually not valid anymore because you are using PVCC, you are using malt extract, you are using salts to modify your water, so you’re really not brewing according to Rein­heitsgebot.’ I think people will have a hard time distinguishing the truth.”

I did my best to include absolutely everything in here and get it accurate. So there's a consideration of the myths of Reinheitsgebot (like the old chestnut about 16th century brewers not knowing yeast exists), its history, the weird ways it's applied now (that PVCC reference is a hint), and the ways it has shaped German brewing. It's one of the things I'm most proud to have written (actual reporting!), so go have a look if you haven't seen it.

Schlenkerla's Matthias Trum, who
educated me about Reinheitsgebot.

Irish Guinness vs. American Guinness

[Full disclosure. Diageo/Guinness paid for my trip to Dublin, including the flight and hotel. They bought me beers and food when I was out with brewery folks. Diageo Guinness are also a sponsor of this blog.]

Okay, this may be a bit gimmicky, but I wanted something on the internet to address this issue. My whole life I've heard, no matter where the Guinness is brewed, that Irish Guinness just tastes better than American Guinness. I decided to do a sensory test of this theory and while I was in Dublin last week, we put it to the test. For obvious reasons, we had to test can versus can. (If you believe a pint of freshly-pulled Guinness tastes better in the shadow of the brewery than at your local Irish-themed pub, well, of course it does.)

Here's Stephen Kilcullen, Global Director of Guinness Quality and one of the brewers at Guinness, walking us through the tasting. (I also sampled the two cans and agree with Stephen--but my palate is doubtlessly more crude than his and that counts for little.)




Sorry it cuts out there at the end--that was a videographer error. Stephen concludes by saying "I would absolutely, categorically struggle to tell them apart."

The Dangers of Expansion

Just a quick follow-up to that Deschutes post. As so often happens, it precipitated a nice discussion on Facebook--which no blog readers would have seen. In the post, I alluded briefly to "tough sledding" for Deschutes as they move forward. I didn't unpack that at all, and I think there's some benefit in doing so.

No one outside the Pacific NW has any idea what this
is or how it relates to Deschutes Beer.

Every brewery faces business challenges. If you're a brewpub, you must get people in the door. If you're a small production brewery, you have to compete in the craft market with very efficient large breweries even while making comparatively more expensive beer. If you're a mid-sized regional, you have to develop a mass market approach, but you don't have the might to defend against better-funded national brands. Of course, each of these has certain advantages, too. They're all local, and have a home-court advantage on sales. Brewpubs appeal not just through their beer, but the ambiance and food at the pub. Regional breweries are more responsive to local trends.

Every time a brewery expands, though, it takes on a new level of risk. Most outright brewery failures happen during expansion. You predict where the market will be and how you'll fit into it, take on a bunch of debt, and then hope you weren't wrong. Nowhere is the risk greater than when a brewery wants to go national. The barriers, costs, and complexity are immense:

• You have to establish relationships with distributors in every market;
• You have to understand the vagaries of each market with respect to retail access (some states only sell beer in liquor stores; others have restricted hours, etc, etc) and build a national sales force;
• Laws governing beer sales differ in every state;
• You have to create national brands that will sell in places as diverse as NYC, Houston, San Francisco, and Des Moines;
• You take on a ton of debt and can't afford to suffer through too many years of underperforming sales;
• You're competing against breweries backed by multinational corporations with almost unlimited resources to secure distribution, advertise, play hardball at the retail level, run promotions, and staff giant sales forces;
• You have to maintain your identity as a local brewery that's from a place while at the same time create a bridge to people with no natural affinity or interest in that place. Deschutes is a case in point: people in distant states don't even know how to pronounce the brewery's name, much less have any idea what Mirror Pond or Black Butte are;
• You have to predict where the market will be nationally in five, ten, and twenty years and make sure your brand can continue to compete with national brands that might seem more current or sexy.

There's nothing to say that Deschutes can't pull this off. If you think of the 4,000 breweries in the US, there are only about twenty that have any kind of shot at this, and Deschutes is definitely one of them. They have one of the strongest and most diverse line-ups in beer, a great brand, and they've been incredibly astute about anticipating trends (think of the timely releases of Chainbreaker White IPA, Red Chair, and Fresh-Squeezed). But they will also be competing against companies that could afford to drop hundreds of millions of dollars just to acquire a brand--never mind the millions they're prepared to spend establishing them. So it is a pretty ballsy move and carries with it huge risk. If the bet fails, the brewery may end up a slowly-receding brand in the AB InBev portfolio in twenty years--the fate of so many other brands over the past century.

Deschutes in Virginia

While I was in Dublin, Deschutes announced it would be opening a new production facility in Roanoke, Virginia. Three east coast states were wooing the brewery, but Virginia got the call.

[Virginia Governor Terry] McAuliffe met with Deschutes executives in Oregon last fall and company officials recently visited Richmond, where they enjoyed Deschutes beer in the Executive Mansion kegerator before telling the governor that Virginia won the bid, said Todd Haymore, Virginia Secretary of Agriculture and Forestry.

... Deschutes is getting a $3 million state grant for the project and will be eligible for additional state aid, officials said.

It's going to be a very slow process--Deschutes doesn't even plan to break ground until 2019. There doesn't seem to be any suggestion that this augurs a future change in ownership, so it looks like Deschutes is going to try to compete with AB InBev, MillerCoors, Constellation Brands, and Heineken on its own terms. That could be some tough sledding, but it certainly adds some intrigue to the market as it shapes up.

Interesting times. Anyone have any hot takes on this news?

Michael Ash

When you walk into a pub, one of the beers might be "on nitro." It's usually a dark beer (though lately, not always). It has been used to most famous effect by Guinness, which celebrates the "surge" it produces when a pint is poured into a glass. Indeed it was invented at Guinness by a mathematician named Michael Ash back in 1959. Today, the folks at the brewery in Dublin honored him. I'll have more about this moment in brewing history later, but here's a shot of the inventor enjoying the fruits of his labor.

Is the Guinness Storehouse Experience Worth 20 Euros?

No. But it's a lot more impressive than I would have imagined.

A little background. Guinness is, as you may have heard, a brewery in Dublin. The brewery tour is one of the (the?) most popular in Ireland, except that you don't get to see the brewery. Instead, you wander through the Guinness museum, learning a bit about how beer is made along the way, but mostly you're getting an immersive experience in Guinnessiana. Interestingly, despite the fact that it's geared entirely toward beery novices, there is quite a bit of interest for those with a historical bent.

As you wend your way up seven stories, you come across an old roasting drum, the largest Steel's masher I've ever seen, a repurposed 19th century kettle and ancient wooden conditioning tun (the kind you've seen in photos), and a somewhat surreal museum of old 2D ads rendered in three dimensions. (And a lot of Guinness's ads were surreal to begin with.)

If you're in Dublin, you're almost certainly going to spend the twenty euros to see this. You do get a free pint at the circular, glass-walled Gravity Bar on the seventh floor at the end of the tour, which you can sip while gazing out at the town. But even if you figure 15 euros, that's pretty steep. The good news is you won't mind it too much once you're finally up on the top floor drinking that pint.

Pics below.

Under Gray Irish Skies

(Dublin, Tuesday 22 March 2016) No country has left a larger psychic imprint on the United States than Ireland. It's one of those few countries to which people clamor to establish a genetic link (and maybe not just white people), and therefore one to which nearly everyone does claim some connection, real or imagined. That cultural bridge makes us somewhat more aware of what's happening here, magnifying Ireland's influence on our imagination. And yet, even without involving our own vanity, it's hard to imagine such a little country having accomplished so much.

Dublin on the Liffey

It produced two of the 20th century's greatest writers (Joyce and Beckett), who stand in a crowded hall with other literary giants. It has not only an indigenous musical form, but some of the biggest pop stars of the past 50 years (and Van Morrison's musical legacy, like Joyce's literary one, is immense). Then there are druids, celtic knots, and a gorgeous, elvish language to add an otherworldly allure. Oh, and since this is a beer blog, I should at least nod in the direction of the hometown brewery here, which some people have heard of. (And they've got some pretty decent whiskey, too.)

All of which is to say that visiting Ireland's capital is therefore a disorienting experience. Because what we--or I, anyway--somewhat fail to appreciate is just how small this country is. The entire island is the size of South Carolina, and it has barely more people than Oregon. (If you include the population of all Irish people, which includes UK citizens, it's similar to Washington state. Dublin's population of 527,000/1.2 million compares quite closely to Portland's 619,000/1.8 m. Those of us who live in Portland have a hard time calling it a city, but it feels far more urban than Dublin, which is low-slung in the typical European fashion (few buildings top four stories). The lanes and roads are small and winding, and the buildings are old; it reminds me, in fact, of Portland, Maine's old town.

Being here reminds me that this is no center of European life. It feels like a place on the fringes, far enough out of the way to have stayed small and developed those wonderful quirks and idiosyncrasies that we all relate to. Later this week, I'm going to be spending time at the Guinness brewery (full disclosure: they paid for the trip), and one of the key pieces of context in understanding the brewery will be this remoteness--perhaps not just the brewery, but the brewery's place in the fabric of local life as well.

Today I'm off to immerse myself in the city as much as one can in a day's time. I hope to meet up for beers with a local informant tonight, so that will be enlightening as well. More to come--

Taxes and Production

The Tax Foundation sent me the following graphic about beer taxes in the US. It is interesting largely because the difference between low tax states (around a dime a gallon or less) are way lower than the high tax states (in some cases over a buck a gallon).

I wondered, how does this compare with the production numbers in those states? No time to do a sophisticated analysis(Ireland planning!), but the raw numbers are at the very least suggestive.

The Trouble With Butyric Acid (Nerdy)

Last night I was drinking a gose and noticed a flavor I've encountered in some beers soured by Lactobacillus: the faint flavor and aroma of vomit. Delish! It's never been overwhelming in any beer I've encountered, but does tinge the whole affair with unpleasantness. Horse blanket, a touch of compost, vinegar--all of these have their place. Vomit not so much.

I tweeted out my finding and the result was a flurry of information. The culprit here is butyric acid, actually an ester, which is indeed found in human vomit.

Butyric acid is a carboxylic acid found in rancid butter, parmesan cheese, and vomit, and has an unpleasant odor and acrid taste, with a sweetish aftertaste (similar to ether). Butyric acid is a fatty acid occurring in the form of esters in animal fats and plant oils. Interestingly, low-molecular-weight esters of butyric acid, such as methyl butyrate, have mostly pleasant aromas or tastes. As a consequence, they find use as food and perfume additives. 

(Interestingly, it's not such a problem in beers where Brettanomyces is also present, because that wild yeast can convert the esters to more pleasant tropical-fruit aromas.)

The curious question is where it comes from. One brewer reported that it can be produced by Lactobacillus in the presence of oxygen (lacto are a anaerobic bacteria). But as I dig around in my admittedly crude fashion, it seems more likely to come from Clostridium, another anaerobic genus of bacteria. It seems like a terrifically pernicious beast; there are some species of Clostridium tolerant of boiling temperatures. Even more unsettlingly, it likes carbon dioxide:

Carbon dioxide from both fermentation and artificial introduction has been shown to have a stimulatory effect on the growth of Clostridium butyricum (as well as other bacteria such as E. coli) ^[11]. If sanitation issues allow for Clostridium to enter the brewery, CO2 purging may encourage butyric acid formation.

It doesn't seem like lacto is a significant factor in all of this. So why do some kettle-soured beer develop the delightful flavor of vomit? My theory is that brewers are introducing Clostridium when they use grain to inoculate their wort during kettle-souring rather than a pure culture of lacto. Grain does indeed have lacto, but it has other stuff, too. (It's why sour mashes almost always produce gross ancillary flavors like garbage and, yes, vomit.) The pH drop eventually inhibits Clostridium, but perhaps not before it's had a chance to add its own charming compound.

This is all just noodling about--the reason, I'm told, blogs were invented--and I would love love love actual scientific info should anyone be in possession of such. One blogger's half-baked theories may make for an interesting three minutes' read, but it would be preferable to actually learn what's going on.

If you know, do tell.

Welcome the New Sponsor: Guinness Brewing

As you boot up your computer this morning (not that anyone really does that anymore), you'll notice a new banner add to the left of these words. Some time ago, I mentioned that I would be seeking sponsors for this site. You might have wondered what happened. Well, interesting story. I got a surprising number of inquiries (you know who you are--thanks!). One of them was the Guinness Brewery, which was totally shocking. Even more interesting, they wondered if I would consider them as sole sponsor--an arrangement I'd never considered. It doesn't take a rocket scientist to see how it turned out--though because one of the largest drinks company in the world was involved, getting that banner up took longer than I expected. We're doing an initial run of two months, so I thought maybe you'd be curious to know my thinking--plus one other information tidbit.

Why Guinness?
Guinness is, as everyone knows, one of the largest and most successful beer companies in the world. Nevertheless, not everyone loves them. They are also owned by Diageo, owner Guinness as well as Smirnoff, Crown Royal, Tanqueray, Johnnie Walker, and many others. I have had my own curious relationship with Dublin's giant: Guinness was the only brewery to flat out deny me a tour of their facility, and then I had an awkward call with Fergal Murray, then the face of brewing operations. And finally, many people consider their products bland and industrial.

When I decided to seek sponsors, I wanted companies that would be partners, folks to help me make a few bucks while getting my endorsement in the form of a banner ad. When I heard from Saraveza, General Distributors, and Double Mountain, I was delighted--they're exactly what I had in mind. It never occurred to me that a larger brewery would be interested. Blue Moon, Goose Island--even Bud of Coors might have inquired. I'm not really sure what I'd have done in that case.

But Guinness? A no-brainer for me. I have loved this beer (here in the US, we get a product called Extra Stout that has been a top-ten beer for me) for over 25 years. Many years back, the company ran a promotion to win a pub in Ireland, and friends and I wrote mini-essays with fantasies of moving to Ireland to pour pints of the stuff the rest of our lives. My favorite living author is the Irish author Roddy Doyle, who manages to situate a fair number of his most funny and/or poignant scenes into pubs where characters are gulping Guinness. (A Star Called Henry is one of the best books ever written.) This no doubt led to some inexcusable romanticizing of Ireland's most famous brewery, but then I would not be the first person to romanticize a brewery.

But even more than all that, this is Guinness. It's one of the most important extant breweries on earth. For long decades, it was the only multinational ale brand left, when the world had all gone to lager. It dominates both a national tradition and a nation more fully than any other brewery on earth. Guinness was one of the companies to invent branding. One of its employees, an economist, developed the student t test. Michael Ash, a mathematician, developed the nitrogen draft system. And even if it had done none of that, just surviving since 1759 earns a certain amount of respect.

All of which is to say that I am quite pleased to have that banner on the site. Please welcome them aboard.

To Ireland
While I was discussing this sponsorship idea with Guinness, something interesting happened. The brewery had reconnected with Michael Ash, the man who developed the nitrogen draft system in 1959. Amazingly, he is still well and living in England at 88. The brewery decided to have an event honoring him, which will happen next Thursday at the brewery. Guinness has invited me to come along and interview Ash when he arrives, and they've also promised to give me a tour of the brewery. I believe they're inviting an English writer as well.

Guinness are arranging this on their dime, which is the only way it would be possible for me to attend. I hope and plan to get a trove of material to write about, and I expect, with this double arrangement with the brewery, that you might wonder how objective I will remain as I report it all out. And, while I don't have a formal connection to the brewery beyond what I've described, I wonder about this, too. I worry more about the soft influence such largess contributes. (When I wrote The Beer Bible and Cider Made Simple, I paid for all my travel.)

This is a new experience for me, and a bit of a trial run. I will continue to report back how it's going. I hope you watch what I write carefully to see if it passes your smell test. It is certainly not the most ideal circumstance--I would so much rather be living in an era when I was a staff writer at a magazine with a travel budget. Fortunately, Guinness isn't a brewery I write about much in the first place; so except for my dispatches from the brewery in coming weeks, it shouldn't affect things around here much at all. But we'll all be watching.

I'm off on Sunday to Dublin, so expect Irish blogging next week.

Consolidating Continues Apace -or- Mind Your SKUs

The indefatigable Chris Funari reports this morning that Cigar City has gone the way of private equity.

Cigar City, a leading independent brewery based in Tampa, Fla., has agreed to sell controlling interest to Boston-based private equity firm Fireman Capital Partners, which already owns majority stakes in Oskar Blues, Perrin Brewing and the Utah Brewers Cooperative outfit that includes the Wasatch and Squatters brands.

Together, the five craft breweries make up what the firm calls United Craft Brews LLC., a separate holding company and special purpose fund set up specifically for craft brewery acquisitions.... Collectively, all five companies produced more than 320,000 barrels in 2015 and ranked as a top-15 craft producer. In addition to its presence in Utah, the group has beachheads in the major craft markets of Colorado, North Carolina, Michigan and Texas.

The whole article is worth a read--though at this very late date, there's not a lot to add. I did find it to be satisfyingly congruent with another bit of reportage that came out today from Jason Notte. (It's listed as "opinion," but it's more heavily reported than anything I ever do.) In that piece, Notte describes the glut of SKUs and the potential challenges they pose. (An SKU or "stock keeping unit," is a product's identifier on store shelves; for example, Deschutes might have five SKUs at a grocery store for Mirror Pond, Black Butte Porter, Obsidian Stout, Fresh Squeezed IPA, and "seasonal." That seasonal SKU would rotate throughout the year, so you'd see eight Deschutes products at that grocery store over the year--even though there are just five SKUs.)

Bump Williams Consulting has made a living providing analytics to the beer, wine and spirits industries since 2008. In that time, it’s watched the number of beer SKUs rise from 4,843 to 11,833. Craft beer SKUs alone have soared from 2,274 in 2008 to a whopping 7,400 last year, more than tripling the amount of products that the industry sent into the marketplace.

All of that variety is great for consumers, but it acts as a spur to larger companies who want prominent placement so they can cut through the chaos and get a sizable chunk of the whole. There are a number of players now grabbing for that market, and they know there's not room for very many winners. More Notte:

According to data from IRI, a Chicago-based market research firm, 48.85% of all craft beer sales came from the top 10 brands alone: Samuel Adams, Sierra Nevada, New Belgium, Shiner, Lagunitas, Small Town (Not Your Father’s brands), Deschutes, Stone, Goose Island and Bells. A whopping 62% come from the top 20. 

The reason there's so much consolidation happening right now is because each passing week makes it harder to enter that top high-selling tier. Gaining national distribution is hugely expensive, and hanging onto it will require substantial funds. Small brands have the appeal and market experience, and big beer companies have the money. With ABI money, Goose Island managed to push their 20-year-old IPA into the country's top five. That's what this combination can do for brands. But, if you're a regional brand selling 50,000 barrels, the opportunity to grow 20x and become a national player is starting to sunset. And big beer knows it only needs a few horses to ride, so the scramble is on.

Markets Don't Care How Much It Cost To Make That Beer

There is an ancient debate among beer geeks about "forced scarcity"--the idea that breweries do special releases of special beers in limited volume just so they can charge twice the money for it. Riffing in part on a discussion we recently had on the Beervana Podcast, Bryan Roth runs down the main points. He even uses one of my quotes from the podcast. But the most interesting part of all that was Patrick's response. Patrick is, in addition to being the co-host of the podcast, an econ professor at Oregon State. And his response was both surprising and illuminating.

A pour of Pliny the Younger last year at Roscoe's

To set it up, I was arguing that I wished consumers understood how expensive it was for breweries to make barrel-aged beer. That would help them judge whether a $15 bottle of beer was "worth" the price--particularly when compared to a $15 bottle of double IPA that may have been comparatively cheap and easy to produce. Patrick said that, from an economics perspective, I was missing the point. (All bolds are added for emphasis.) From the podcast (slightly edited for clarity):

"The economist in me would say it's all just about the beer itself: is it good or is it bad. If it's good, even if it took you two weeks to ferment and package and you're done, that's what should determine the price. What you're saying is that the process that goes into it matters to you. Obviously the process can add to the cost, so that will drive up the price anyway. But you're more willing to pay a higher price if you know [that it cost more to produce]?"

I answered, yes, I am willing to pay more if I know a beer costs more to produce--arguing a pretty standard beer geek position. Patrick continued:

"Well, that's okay; I can understand your philosophy. And there's actually some sort-of economics in there in the sense that efficient markets require complete information. And that requires that you know what the product means to you. As an economist, it's the market that determines the price. So when you say a brewer wants to charge you this much, it's true--you put a price out there and it sells or it doesn't at that price."

"What I would say is that it's clear barrel-aging imparts very distinct flavors that you can't get elsewhere. If A-B had figured out how to make a chemical and added it to a beer, then you'd have all kinds of 'barrel-aged' Bud. It imparts unique flavor characteristics and profiles that you can't get any other way and those are clearly something consumers are willing to pay for. And that's a good thing, because otherwise you wouldn't see barrel-aged beers; it just wouldn't be cost-effective. There wouldn't be any economics behind it. The market, at least now, values them [barrel-aged beers]. If there comes a time when the market gets tired of these flavors, they'll suffer."

Patrick's making a very interesting distinction here. If I think about other product categories, I can see how often cost and price are not highly correlated. A bag made by Prada may be priced at $1500 but only cost a bit more to make than a bag made by Michael Kors that sells for $150. More Patrick:

"Talking to beer people about beer prices is fascinating, because it's not really about beer markets. They take this stuff very seriously. You get into things like the morality of these prices. But to an economist it's all quite clear--there's a supply and there's a demand. So for something like Pliny the Younger, they keep the supply down and the demand huge and boom, prices skyrocket. It's the beauty of markets at work."

Patrick made one final comment about the economics of pricing that is very important to consider in all of this. We used Pliny the Younger as the example in the podcast, and it's actually not a very good one. Something bottled like Three Floyds Dark Lord. But don't pay attention to the beer, pay attention to the principle Patrick's describing.

"One of the other points I wanted to make about prices is this. You have to ration Pliny the Younger somehow. Think of different ways you could ration Pliny the Younger.  You could make everyone line up three days in advance--sure, that's one way you can ration. But typically markets ration through prices. The way the market rations it is that the people who value Pliny the Younger the most are the ones who get Pliny the Younger."

Food for thought. None of what Patrick says here necessarily negates the points many beer geeks make about pricing--except to say that they are not making arguments relevant to economics. Markets have an elegant simplicity about them, but as citizens we don't have to submit to their tyranny. They do ration, and we may not agree with the way they do it. In the US, the way we ration health care is by providing extremely expensive services to the people who can afford it and nothing or very little to those who can't. Other countries choose to address the rationing question differently, by offering slightly less expensive services to a wider variety of people. But I find Patrick's points of view so valuable because they clarify my own thinking.

Of course, I would be horribly remiss if I didn't plug the podcast here. You can listen to this episode here, or subscribe to the podcast on iTunes or Soundcloud. And please do!

What Oregonians Drank in 2015

Each year, General Distribution's Jim Fick closely tracks the sales of Oregon beer in Oregon, and he very graciously forwards me the spreadsheet with the numbers. The final figures are out for 2015, so we can look at which breweries were selling the most beer here in their home state. (Important note: these figures come from the OLCC and track just the barrels of beer sold in Oregon by Oregon breweries; they do not track total barrels sold by each brewery nor the amount of beer sold here by non-Oregon brewers.)

I'm going to festoon these numbers with a lot of caveats and explanations in a moment, but I wanted to point out one important figure first before we drill down. In 2015, adult Oregonians drank an average of 6.4 gallons of locally brewed beer. That's a per-capita rate, and includes all non-beer drinkers--every Oregonian 21 and older.  That's just beer brewed here. Since Oregon no longer has any industrial plants producing mass market lagers, 100% of that local beer falls into the "craft" segment. If the rest of country consumed beer like Oregon, the craft segment would be 48 million barrels--and it's currently just at 21 million. But even that understates things, because these numbers don't capture the craft-segment beer we drink from other states. If the rest of the country consumed craft beer like Oregon, the craft segment would currently constitute somewhere between a quarter and a third of the entire market. There's not a single reason in the world I can think of why this is not the future of beer.

And that's why companies are paying a billion dollars for 150,000-barrel breweries.

But now onto the numbers. I'm not going to go into enormous detail here, because the system the OLCC--the agency that tracks beer sales in Oregon--uses to track sales began to fray badly in 2015. For some reason, sales of the fourth-largest Oregon brewery just vanished from the list in October. The Craft Brewers Association Alliance moved their storage warehouse offsite in the fall, and that somehow caused the OLCC to stop tracking their numbers. Folks at CBA gave me a rough update on their figures, and I calculated 10 Barrel's sales based on the existing year-to-date figures that went through September to come up with these numbers. Also, the beer for Laurelwood's six-packs is brewed in Washington state and isn't reflected in these numbers.

One final comment. Although CBA appears at the top of this list, Deschutes is really still Oregon's best-selling brewery. CBA's numbers include sales of Kona, Widmer Brothers, and Redhook; listed separately, they'd fall somewhere behind Bend's big dog. Here's the top twenty.

A few comments and notes. The big gainers and decliners are pretty obvious. Gains among the top twenty breweries far exceed losses; these breweries made 30,363 more barrels in 2015 than they did in 2014. The far right column reflects the cumulative percentage of all the beer sold. So, for example, the top six breweries sold half of all the Oregon-brewed beer in Oregon; the top 12 brewed two-thirds, and so on. These may seem like lopsided numbers, but they're actually declining a bit. Growth among the top five was just 2,183 barrels--an growth of 1%. Overall, the entire market grew an estimated 56,000 barrels, from 565,472 to 621,328

As the president would say (sort of): the state of beer in Oregon is strong.

How Do New Breweries Break Through?

I finally got around to reading the new Willamette Week Beer Guide over the weekend, and one thing really jumped out at me. There are so many new breweries. A lot of them are in places that heretofore have been under-served, like Southwest Washington and the areas west of the Willamette River. That makes sense and is what you'd expect as the market matures.

Names rolled by: Ancestry (Tualatin), Awesome Ales (gypsy), BackPedal, Brewed by Gnomes (another gypsy), Drinking Horse (Clackamas)--and that's just through "D." There are a few fanatics out there who manage to keep track of every new brewery opening, but beyond them, who will have heard of these? As I read the descriptions, I was reminded that I'd heard of some of them--BackPedal in this list--but that actually made the sense of dislocation even greater. The brainpan can contain only so much information, and then new info just flows out of my ears to be lost forever. It's not enough to catch my attention, you have to keep it--which is harder and harder with so many new places opening up.

One of the 198 breweries in Oregon struggling
for your attention. |  Source

Each year, a few high-profile breweries will open, and we'll all be aware of them. Fat Head's and 10 Barrel recently opened new multimillion dollar brewpubs in the Pearl, and it was hard to miss those. But these smaller breweries, the kind that even five years ago might have been rare enough to attract our curiosity? They are having a harder time. The annual OLCC numbers were recently released (more on that coming up), and it listed 198 Oregon breweries that sold beer in 2015. The bottom half sold just 17,816 barrels--a bit less than 3% of all the beer sold in Oregon. The bottom 25% of the breweries sold 2,533 barrels--a few barrels more than Gigantic sold and .4% of all the beer sold in Oregon. Some of those just opened, and some are side-projects and nanobreweries. But many are not.

If you're opening a brewery in 2016, you're going to have to compete with 198 breweries in the state--not just the beer they make and the shelf space and tap handles they already own, but the mental space they occupy among the overflowing brains of beer drinkers. I'm still very bullish on the prospect of beer and brewing, and I think opening a new brewery with a clear identity, great products, and (in the case of brewpubs) a great space is a great investment. But you better have a clear identity and great products, because getting brainspace is harder and harder to pull off.

A Brand New Pod!

Today Patrick and I are going to brew a couple batches of beer.* Yesterday we podcasted. You may listen to our disquisition, erudite as always**, on barrel-aged beers. You will hear Cantillon's Jean Van Roy talk about the flavor of old wood, and Samuel Smith's Steve Barrett talk about how to cure a brand-new oak cask. Among, of course, many other fascinating revelations***.  Enjoy!



_______________
* Pilsner and IPA. We do a pilsner every year, relying on primitive lagering tech--Oregon's mild winters. We're getting a little late in the season for that, so we're probably going to end up with a fruitier-than-usual lager. Hey, it's homebrew.
**You mileage may vary.
*** Ibid.

The Madness of Causation: Why Do We Care?

You may find yourself in a brand new pub, and you may find yourself in a nice part of town. You may find yourself behind a pint of beautiful IPA. And you may ask yourself, how did this IPA get here?

Thus passed a week in Beervana--with theories spun about how American IPAs evolved, counter theories, and counters to the counter theories. Don't worry!--this is not going to be another round in the madness. But it is a consideration of the madness itself: why do we care so much about the causal explanation?

This is not a new debate. Establishing causality is a way of creating meaning now, in this time, and that's what we care about. For decades, Americans have fought bitterly about the American Civil War--was it a dispute over states' rights, or human slavery? The causal argument is critical because if we trace events back to a defense of slavery, those who support symbols like the Confederate flag and policies like voter ID laws are indicted by it. But, if we can trace them back to a more noble defense of state sovereignty, then the politics of today are cast in a similarly more noble light.

Dusseldorf, where the ale is altbier and only altbier.

We fight for the history of beer for the same reason. (Fortunately the stakes are somewhat less dire.) So often, though, we don't realize that's what's happening. We are convinced by our argument without seeing why we are committed to its logic. If we argue that a certain beer style goes back to a particular brewer, we're attempting to both elevate the accomplishment of that brewer and diminish the breakthroughs and innovations of others. (This is the "great man" theory of history.)

It seems fair to mention my logic, and why I find the great man or single-origin theories unpersuasive. Beers and beer styles are the result of a conversation between breweries and beer drinkers, and the whole process is heavily influenced by local culture. Breweries make beers and offer them to the public. They start with beers they like, with a vision for how they should be made. But the drinkers have the final say. Breweries make the beers that people buy. Along the way, they tinker and refine, so that the preferences of the drinkers get fed back into the thinking about how to improve the beer. This is the process that has led to the very different brewing traditions and beers of Europe, and why we in the US are developing our own brewing tradition and beer.

No case is ever airtight. In some cases, certain beers do exert and outsize influence; they're the beers that get the ball rolling style-wise. Josef Groll's pilnser springs to mind. Acknowledged.

I'm committed to the idea of the brewer-drinker feedback loop because it acknowledges the role of society in the process. That's the only secret sauce I've ever encountered that explains why Germans grew to like clean, unadorned lagers while their neighbors in Belgium favored funky, sometimes bizarre ales. When I look at the evolution of American hoppy ales, it seems too vast and too nested to have any single origin. We have been on a road for at least twenty-five years (and possibly forty) that led to this moment. Along the way there have been extremely important contributions, but this invention had many, many fathers. Millions, I'd say.

If you a theory of causation, where's your commitment in all of this?

How American IPAs Evolved

Over at our local alt-weekly Willamette (rhymes with dammit) Week, arts and culture editor Martin Cizmar has an interesting article that got me thinking. In it he argues a point I've been making for years--IPAs are moving away from bitterness and toward flavor and aromas. Willamette Week often takes a provocative, bubble-piercing approach that is a nice antidote to a self-congratulatory city. But in this case, I think that urge led Martin down a blind alley.

When Portland beer geeks sampled the beers blind, it turned out they preferred brighter, juicier versions like those in the Northeast, which have only recently popped up in Portland. The five best IPAs in the city come from brand-new breweries, and most of those have been influenced by Heady Topper, Julius and Sculpin, beers that present hops as a reward rather than a challenge.

I think this is wrong in a couple small ways and one big way. The Northeast, like the rest of the country, is not a monolith. Martin seems to be talking about New England here, but New England was actually very late getting to the hops party.  Heady Topper is a fascinating beer, but its influence was basically nil in the pubs and breweries of New England, which have largely tended toward English-inflected, balanced, and notably malty beers. (Its influence among the uber-geeks of BeerAdvocate is another matter.) Martin proves this pretty ably because in the three examples of Northeast IPAs he offers, one is from San Diego. It's not an old trend there. Those small New England breweries didn't even drive a palate shift in Portland, Maine, so I have a hard time believing they drove one in Portland, Oregon.

Like hops into cooling wort, so are the IPAs of our lives.

And anyway, Portland has its own fairly long history of the kinds of IPAs Martin describes. It starts with a beer he actually did mention--Bridgeport IPA, which dates back 20 years and is a beta version prototype for these kinds of beers: mid-IBUs with tons and tons of flavor and aroma. That would seem a more influential beer in moving the Oregon palate than a beer you could only buy onsite in Vermont. 

The more important mistake is thinking in terms of imitative causality at all. (Though this is a nearly ubiquitous idea, and one to which I used to subscribe.) There has been a shift from very bitter IPAs to IPAs marked by flavor and aroma, but it has happened around the country as brewers each made natural discoveries on their own. It developed incrementally, inside hundreds of breweries across the country, as the national palate shifted toward not just IPAs, but IPAs that expressed as much of that heady flavor and aroma Americans hops are capable of. When you understand the mechanics of trying to produce these qualities, it makes sense that the discoveries would happen brewery by brewery, with hundreds of little "a-ha!'s" happening co-emergently around the country.

The first inkling I had of this was talking to Ben Edmunds more than a year ago, when he mentioned how much more IBUs were extracted in late-addition hops that we realized. Last summer, we sat down and talked about hoppy American ales for my homebrew book, and he blew my mind when he described discoveries the brewery made as it tried to drive ever more flavor and aroma into its beers.

I finished an article describing this process for All About Beer that will appear in the next issue--and I don't want to completely steal that piece's thunder. But it's worth hinting and the broad themes now, in perhaps a pump-priming fashion. In talking to breweries from Maine Beer Company, Ben, Harpoon, and Ardent Ales (Richmond, VA), I kept hearing the same story (I heard it again from Gigantic's Van Havig recently). There was definitely a big trend in super-bitter beers, but it wasn't the only trend. Breweries have for a long time been trying to create beers with more vivid flavors and aromas that de-emphasized the bitterness. The difference between 2006 and now? In 2016, they can actually do it. Here's the thumbnail version of how this all happened.

American Hops
It of course starts with these incredible American hops we have. Unlike European varieties, they're not subtle or nuanced. They are gale-force flavor-bombs--so much so that they were originally derided as unusable. It didn't take too long before Americans started to find their hop tooth, and by the 2000s we were getting more and more attached to these tropical, citrusy, piney, dank flavors. They were mostly pretty high in alpha acids, hops' bittering agent. That would prove to be an issue down the line.

Flavor
Dry-hopping is an old technique that has been used for decades (centuries?) in the UK and Germany to infuse hop aroma into beer. Americans learned it a long time ago, too, so American ales have often had wonderful aromatics. So bitterness is easy, and aroma is easy. The difficulty is flavor. Breweries have learned to push hop additions later and later in the boil, and many (most?) now do a post-kettle hop addition for their hoppy ales. That is, after the beer is taken off the flame, they add another dose of hops and let them steep in the slowly-cooling wort. This is often the largest dose of hops, and breweries sometimes structure their recipes by thinking of this addition first--not starting with the bittering addition, as has been usual for centuries. 

IBUs
The fascinating part happened next. Those post-kettle hops? For basically all of history, brewers assumed they contributed no appreciable bitterness to the beer. If you google around and look at hop utilization charts, you'll see that according to conventional wisdom, steeping hops in sub-boiling wort shouldn't give you IBUs, or not many. And because breweries hadn't ever used very many post-kettle hops, they didn't have any reason to dispute this idea.

So fast-forward to the US, as Americans were trying to make IPAs with tons of post-kettle, high-IBU hops. They would plug their hop schedules into their beer recipe software, dialing in the amount of IBUs they wanted. Instead, they found that they were getting way more IBUs than the software predicted they would. Ben Edmunds told me, “The thing it opened our eyes to was that from a balance point of view, we were way higher in BUs than we wanted.” Since he had to use the flavor addition (late in the boil or following it) to keep that electric hop flavor up, the only thing he could do is start reducing the bitter charge “ So we started peeling away, peeling away. And the beers all got better.” In many of those IPAs that Martin Cizmar (and I) love, the first-addition bitter charges are tiny.  Ben: “Frankly, it’s not a secret, but all the brewers who make these award-winning beers—everyone does it. Those sixty-minute hops are basically for kettle performance.”

This was a pattern that repeated itself in breweries across the country. Brewers weren't learning this because they tasted beer from other breweries, they were learning it in their own process. (In that forthcoming article, look for the stories from the brewers themselves.)

Upshot
It's still common to hear people talk about IPAs as having regional differences. I think that's not only wrong, but it distracts from a far more interesting phenomenon. Over the course of the past decade, because of the influences of an emerging national palate, American brewers were beginning to develop new techniques to adapt to the hops and an orientation toward flavor and aroma. It wasn't a clever brewer or three who, like a hoppy Johnny Appleseed, spread the gospel of this new brewing style. It was the endpoint of an emerging national approach to brewing, one replicated in brewery after brewery across the US.  So I agree with Martin's major point: we love American IPAs that have very intense flavors and aromas. But this an American, not regional, style.