The Audacity of Hops: The History of America's Craft Beer Revolution (51 page)

It was sage advice, and Maytag himself followed it. After thirty-three years under his control, Anchor was producing one hundred thousand barrels annually, an impressive amount nearly double that of a decade ago, but still a relative pittance even within the movement. Anchor was distributing farther and wider than ever before, though, to several European countries as well as Australia, Japan, Canada, and Hong Kong. Its sales would total $10 million in 1998—again impressive, but again a relative pittance, especially stacked against those who chased IPOs a few years back.

Maytag's advice was, of course, too late for many; and it's unlikely it would have been widely heeded. “Small is beautiful,'' as he put it at the conference, was simply not an axiom many in an industry that had been growing so explosively wanted to hear. Nor were they likely to heed Maytag's call for beefier pricing, not when some brewers were discounting their brands to spur sales or to simply clear back inventory amid the shakeout. “Most of the wine in the world sells for two dollars a bottle. Quite a bit sells for four dollars to five dollars a bottle, and there are many that sell for ten dollars a bottle. Then you have wines that sell for three hundred dollars a bottle. What the world needs is a beer that's worth five dollars a bottle. I think that would be great. If all beer prices are forced down to the level of Busch Bavarian, none of us will be here.”

There were bright spots amid the ruins. Some were simply symbolic, others much more portentous. As much as Maytag emerged amid the tumult to speak at the Craft Brewers Conference, Jack McAuliffe of the long-defunct New Albion emerged, too, in a way. Six months before Maytag's speech, the Mendocino Brewing Company released a small batch of what it called New Albion Pale Ale to honor the twentieth anniversary of the first startup craft brewery in America. McAuliffe, who had long since left the movement, had no hand in the release, but Don Barkley, the Michael Lewis student who became New Albion's first employee in 1978, and Michael Lovett, also an old New Albion hand, were involved through their ongoing roles at Mendocino. Two kegs were
shipped cross-country to the Brickskeller in Washington, DC, where the first beer dinner had been held in September 1985 and which still boasted one of the biggest beer selections on the planet. The batch birthed a mild burst of remembrance of New Albion—the Brickskeller hosted a beer tasting for journalists—although McAuliffe remained a J. D. Salinger-like figure in the movement, reclusive and legendary.

As for Mendocino itself, freshly minted majority owner Vijay Mallya hit his first roadblock in establishing a national chain of craft breweries and brewpubs. Tiny Humboldt Brewing Company, a brewpub in Arcata, California, started by Vince Celotto and his brother Mario, a former NFL linebacker, rejected the Indian billionaire's $1.7 million offer in December 1997. They decided instead to go it alone by expanding distribution into Southern California and lowering the price of their six-packs from $6.49 to $5.99. Humboldt would just outlast the shakeout and serve as a rebuke to the way things were going.

The same was true for Shipyard Brewing Company. Founders Fred Forsley and Alan Pugsley bought back full ownership of the Portland, Maine, brewery from Miller in April 2000, after four iffy years partnered with Big Beer. Miller's 50 percent stake was supposed to infuse Shipyard with enough capital to grow well beyond the Northeast. Instead, production actually dropped, from 39,500 barrels in 1996, the year of the Miller partnership, to 25,300 barrels in 1998, as Shipyard pulled away from markets where it wasn't selling as well, including nearby New York. Forsley and Pugsley recalibrated the brewery to focus closer to home with three-fourths of its distribution in New England—sales promptly grew by 10 percent.

Such recalibration was all the rage as the shakeout took its toll. Craft breweries once planning for national domination—or, in the cases of the much smaller ones, regional reach—now deliberately pulled back on their distribution and therefore their production. Maybe small was beautiful, as Maytag had said. David Geary of New England's oldest craft brewery, D. L. Geary, put it this way: “The lesson is: Devote your time, your money and your effort to your core market, and you'll be fine.” Geary's own distribution covered the Northeast, a market with nearly fifty-five million people, more than most countries in Europe—plenty of potential customers there.

The same was true in other regions, especially ones where craft beer's share of the marketplace might be much larger than its sub-5 percent share nationally. Gary Fish's Deschutes Brewery cut distribution in Colorado and the San Diego area and discovered plenty of fans in the brewery's northwestern backyard to pick up the slack. Seattle-based Pyramid Brewing and Breckenridge Brewing in Denver also cut back out-of-state distribution, as did a number
of much smaller companies. Steve Hindy and Tom Potter's Brooklyn Brewery happily distributed 80 percent of its thirty-two thousand barrels in 1999 in the New York City metro region, the nation's largest consumer market.

About four hours' drive to the north, a new brewery in Cooperstown, New York, served as the perfect example of the new local focus. Husband and wife Donald Feinberg and Wendy Littlefield ran the import company Vanberg & DeWulf, which brought Belgian brands like Affligem, Duvel, and Frank Boon to the United States. In 1996, they started Brewery Ommegang on 136 campestral acres of an old hop farm in Otsego County, New York. The brewery specialized in bottle-conditioned Belgian beers, and Ommegang's brands quickly became whispered-about treasures as they inched their way farther and farther from the Birthplace of Baseball. The New York City tabloid the
Daily News
dutifully instructed readers in the summer of 1998 that Ommegang's new golden ale, Hennepin, named for the Belgian discoverer of Niagara Falls, “was only available in a few places.” At the same time, Feinberg and Littlefield deliberately made the brewery a local nexus, offering tours and tastings and using hops from Cooperstown's Farmers' Museum in a later ale called Centenniale. The couple were also perfect protagonists for media stories about the rise of Belgian-style beers in America in the late 1990s. This newfound enthusiasm for what would soon be known more widely as locavorism was the triumphant reemergence of one of the original conceits of the whole craft beer movement: traditionally made local beers you couldn't easily get anywhere else. It slapped back on a level of romance that was lost amid the red-hot growth of the early and mid-1990s, as beer became more about product than provenance.

Another portentous event during the shakeout was the 1998 retirement of Henry King as the head of the Brewers Association of America (BAA). The move marked King's departure from brewing in general, including a twenty-two-year run as president of the United States Brewers Association that ended in 1983, shortly before its dissolution. In retirement he was recognized rightfully—and belatedly, some said—for the positive impact he had had on craft brewers. Lost in King's regular boosterism for Big Beer, including his chumminess with the likes of August Busch Jr. and his son, was the pivotal role he played in the 1976 tax change that helped keep costs considerably low for smaller American brewers, which spawned eternal envy among their Canadian counterparts.

As we've seen, that change, which had failed in one form or another in Congress several times over the thirty years before King lobbied it through, reduced the federal excise tax on beer from nine dollars to seven dollars on the first sixty thousand barrels, provided the brewery produced no more than two million barrels annually—not a problem for the earliest craft beer pioneers,
who recognized King's contribution a lot more keenly than later entrants. “There is no one that I have known in my business life for whom I have more respect,” Maytag would say a few years after King's retirement, when in his early eighties the World War II hero was battling cancer. King again provided craft beer a stimulus for growth when he helped keep beer's excise tax at seven dollars in 1990, when Congress doubled the regular one. To King, though, beer was beer was beer, and he often expressed a polite indifference to the craft beer movement. He reserved little sympathy for smaller concerns that couldn't find distribution if they didn't advertise, and he lamented the lack of institutional memory among the upstarts.

King's eventual successor at the BAA,
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chosen in a search led by association chairman Rich Doyle of the Mass. Bay Brewing Company, was, on the other hand, steeped in craft beer: Daniel Bradford, Charlie Papazian's right-hand man in starting the Association of Brewers and its Great American Beer Festival nearly twenty years prior. The AB and the BAA had complemented each other now for that long, with the latter throwing its muscle into lobbying and other political activities and the former now industry famous for its festivals and conferences. With Bradford helming one and Papazian the other, the two appeared headed toward a merger as the new century dawned. They would need the firepower. Some were calling the shakeout just the beginning of the end. “At the end of the day, five or six big microbrewers will survive, in my view,” Vijay Mallya told a reporter. “The rest of them will be the brewpubs. Everybody in between, according to my view, is going to go. They'll either get bought, or they'll have to close down, or they'll have to merge; they'll have to do something. They cannot stay where they are.”

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Gary Galanis served in the position for a year before moving on to a job with Guinness.

T
here had been 1,127 entries
from 370 breweries in thirty-seven countries. The Japanese had fared particularly well, tying the vaunted Germans with
8 percent of the medals at the 2000 World Beer Cup, despite until recently having a beer culture as homogeneous as America's before 1980. American breweries and brewpubs accounted for 63 percent of the entries and swept two-thirds of the medals. The biennial World Beer Cup was a de facto brewing Olympics started by Charlie Papazian's Association of Brewers in 1996 in Vail, Colorado. It had grown to become arguably the most prestigious beer awards in the world, not least because the United States was now recognized as the undisputed comer in brewing, shakeout or not.

The AB arranged a panel after the awards ceremony at the Marriot Marquis in Manhattan's Times Square. Michael Jackson, the redoubtable critic from Yorkshire, and Carlo Petrini, the founder of Slow Food from northern Italy, spoke of American craft beer as an unstoppable thing, a part of the brewing marketplace ipso facto. “Mass marketing is a declining dinosaur,” Jackson told the audience. It must have been an odd yet reassuring pronouncement to hear, given the rollback in craft beer growth and market share the last few years. “The natural dynamic is to drink less, but drink better,” Jackson continued. “There are no longer masses of workers exiting steel factories in Pennsylvania and coal mines in northern England, ready to wash away the day's work with cases of Pabst Blue Ribbon and the like. Most workers sit at computer screens. They still get thirsty, but not for Pabst Blue Ribbon. They want something better-tasting.”

Jackson was right about the shift in the American workforce. The cliff that America's manufacturing sector had been barreling toward for decades finally showed itself in 2000. The total number of manufacturing jobs in the United States began a decadelong slide from more than seventeen million to fewer than twelve million; by the start of the new century, there would be, for the first time since records were kept, more white-collar workers than blue-collar, though there were fewer of these as well, fewer of the workers sitting behind the computer screens. The tech bubble on Wall Street had burst in spectacular fashion, and unemployment was creeping upward as the nation's economy sank into recession. The go-go 1990s were over; other industries were joining craft beer in the doldrums. How long might the doldrums last? Petrini pointed to something. It was idealistic, a throwback—but then, he had started a movement that reveled in the ideas of preindustrial consumption. “Craft beer is not a niche,” Petrini explained. “It is fulfilled by people. Small production requires culture, and the culture of beer is to know the difference.” Did people know the difference? Yes and no. “For most people, there is not a difference in beer. In some countries, there is only one type of beer and many people know only this type. Others are looking for a better-tasting product, and the two can't get along.”

And the people wanting the better-tasting product won't know what they've lost until it's gone, according to Steve Hindy, the Brooklyn Brewery cofounder who was one of two Americans on the panel (Papazian was the other). The craft brewery closings the last few years had left a void in the “beer culture,” something a nation didn't necessarily get back once it was lost. “The culture of beer will be lost,” Papazian warned, “unless the masses understand that it is a cultural item.” Jackson pointed to the consolidation that we've seen in the brewing industry of his home country; the genuine culture of the British pub, the subject of Jackson's first book a quarter-century ago, was in danger of disappearing. “It's equal to McDonald's versus fine food, or generic Chablis versus fine wine,” he said. “Beer culture is a part of the world of food and drink. It's not just a commodity in cans and bottles, but has value as an agricultural product with good ingredients.” Alas, it might prove impossible to get people to think of it that way, especially American consumers who absorbed the Big Beer assault of the 1990s and didn't quite trust what the newer brands said on their labels. Jackson, whose oeuvre was the Rosetta Stone for whatever beer culture there was or could be, sighed at the challenge. “I still see people buying and swilling terrible beer. I sometimes think that my job is like farting against a gale, but I just keep moving forward.”