The Audacity of Hops: The History of America's Craft Beer Revolution (54 page)

The larger operations were those producing at least fifteen thousand barrels a year, and their production accounted for well over half the craft beer produced in 2001. (This number from the Association of Brewers was released in tandem with the annual Craft Brewers Conference in April 2002, held this time in Cleveland, Ohio; it did not include the larger brewpubs.) Individually, these regional craft breweries were seeing strong growth; New Belgium's production, for instance, jumped more than 38 percent annually in 2001, Sierra Nevada's more than 8 percent, and Deschutes' more than 7. As for the larger brewpubs, Gordon Biersch, the biggest brewpub chain, saw its production rise annually more than 5 percent.
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Much of these jumps could be attributed not only to the steady quality of their brands—the shakeout had, indeed, shaken a lot of iffy product from the marketplace—and also to their expanding physical capacity. John McDonald's Boulevard Brewing announced in August 1999 a $2.5 million expansion adjacent to its existing Kansas City, Missouri, brewery that would boost its capacity by about nine thousand barrels annually. New Glarus Brewing, the brewery started by Dan and Deb Carey in 1993 with a capacity for three thousand barrels, was on its way to more than twenty-five thousand because of a $2.2 million expansion. And Sierra Nevada's late 1990s expansion afforded it a capacity of nearly eight hundred thousand barrels, enough theoretically to do twelve batches a day.

Jim Koch's Boston Beer bought the Hudepohl-Schoenling Brewery, Cincinnati, Ohio's last regional, in 1997. Boston Beer brands had been brewed there for several years, and, in an ironic twist, the new owner continued to brew Hudepohl-Schoenling under contract—mostly, though, the brewery became a major producer of Boston Beer, which would pour millions into renovations. The brewery on Central Parkway, a stone's throw from the Kentucky border, would eventually produce more than 40 percent of the beer sold every year by Koch's outfit. It was a nice trifecta for Koch. He had grown up in Cincinnati, where he had first proposed his harebrained scheme of a craft brewery to his father, Charles (“local boy makes good” stories in the Cincinnati media accompanied the acquisition). Charles had once apprenticed at the Hudepohl-Schoenling plant, and the deal helped dispel the nagging criticism of his company as merely a contract brewer. Boston Beer by the new century was still far and away the biggest craft operation, with production at nearly 1.2 million barrels; the next closest in production were Sierra Nevada at 541,000 and New Belgium at 229,000—a ranking that would change little over the coming decade, even as the numbers grew. The ranks of the biggest craft operations by volume throughout the 2000s would be dominated by ones with born-on dates in the 1980s and early 1990s.

Kim Jordan, cofounder of New Belgium, next to the brewery's bottling line in Fort Collins, Colorado.
COURTESY OF NEW BELGIUM BREWING CO.

In general, the survivors of the shakeout, large and small, were showing positive signs for the years ahead. For one thing, certain pre-shakeout dynamics still held. By 2002, the Association of Brewers estimated there were 1,458 craft breweries and brewpubs, about what there had been in the mid-1990s. The majority were brewpubs (999, or just over two-thirds), just like before the shakeout. Of those remaining, most were small, producing far fewer than fifteen thousand barrels annually, with only about forty-five voluminous enough to be considered regional craft breweries. It was like before, with smaller operations dominating the craft beer landscape, some popping up seemingly overnight.

This go-around was going to be different for everybody, however—it had to be. No more trying to grow as fast as possible to every corner of the country; no more throw-it-against-the-wall-and-see-what-sticks mentality; no more get rich quick off hops and malted barley. As John Hickenlooper, the cofounder of Colorado's oldest brewpub, who would have a more interesting decade than most, explained: “For a while, every Tom, Dick, and Harry got
into it not for the love of beer but because they thought they would get rich.” At the same time, there was to be no passivity when it came to making consumers understand that it was about the beer. As David Geary had realized when he started the first craft brewery in New England, quality beer was the price of admission—can't pay it, and you get tossed eventually. It was a psychological shift of sorts that existed on two levels.

First, beer quality became holy writ. As a result, brewers poured capital into better equipment and better labor, with training at places like UC-Davis, Oregon State, and Siebel more in demand than ever. As a result, by the turn of the century, the United States boasted more modern small breweries than any other nation. With the IPO wave played out, the price wars were over except in a few isolated markets. Craft brewers knew they would never really compete price-wise with Big Beer brands and most imports. They could grab consumers with quality, though. Geoff Larson, cofounder of the Alaskan Brewing Company, put it this way in the spring of 2000: “People ask about growth. Whenever we come to a point of adding equipment or facilities, the primacy driver is increasing the quality of our product…. Cost is a secondary issue for us, because we know we can't compete on price. We can only compete based on the quality of the product in the glass.” By 2000, Alaskan was growing by double digits again.

The second level of this psychological shift was simpler, and certainly cheaper, yet more profound: the craft beer movement tucked in its shirt and dragged a comb across what was left of its hair. For the Craft Brewers Conference in Cleveland, Ohio, in April 2002, Charlie Papazian put together a slide-show made up mostly of photos from the 1980s. There were not a few hirsute young men in old T-shirts and frayed blue jeans in the photos; Fritz Maytag looked downright anachronistic in his tie. While the rebel element, a certain swaggering insouciance that comes from knowing you took the road less traveled, would remain in the movement and would still be a draw for newcomers, things did get a bit more professionalized. Just as the brewhouses became as a rule more modern, so too did the business sides. Craft beer pioneers found themselves calling and attending more meetings about matters like production efficiencies and sales strategies than they ever might have before. This was partly because there were more people to do other tasks: hiring jumped after the shakeout and rose steadily as the movement once again began to expand.

States and cities for the first time started calculating the economic impact of breweries and brewpubs on their physical landscapes and bottom lines; attention was finally being paid to craft beer as a jobs generator and tourist attraction. This was true in metropolises like New York, where city hall and the chattering classes credited the Brooklyn Brewery with helping shepherd in the real estate renaissance of the surrounding borough, and San Francisco, where Anchor and newer arrivals like 21st Amendment were quickly becoming the last true manufacturers within the city limits. It was also the case in smaller locales like Bend, Oregon, or the Outer Banks of North Carolina, where brewpubs like Gary Fish's Deschutes and Uli Bennewitz's Weeping Radish, respectively, might be among the top two or three reasons for even visiting the areas at all.

David Geary of D. L. Geary in Portland, Maine, with US senator Susan Collins. Elected leaders began regularly touting craft brewers as job creators in the new century.
COURTESY OF HOLLIE CHADWICK

The resiliency was there; it was bolstered not only by the awareness of having run a gantlet to emerge on the other end stronger and more confident but also by the return of healthy sales growth. Would it last, though? Or was it just another start of a climb to a peak and the cliff right afterward? The keynote speaker at the 2002 Craft Brewers Conference was Michael Jackson. His goatee and curls were more salt than pepper now, the spread around his middle showing the effects of the occupational hazards of his decades of work. He had been traveling again and again to America since the 1970s to study its beer, to give pep talks to its brewers, to all but plead with its consuming public. For all that, he was an endearingly revered figure in the movement, perhaps only matched in regard by Fritz Maytag and Fred Eckhardt. As a critic, as a seer of trends in the global beer world, Jackson had no peer.

His Cleveland speech, then, is worth quoting at length, as it was a truncated history of what had just happened and what could happen. He began
by noting the acquisition of Beck's, Germany's biggest export brewer, by the already-large Belgian concern Interbrew as well as the growth of Denmark-based Carlsberg and Netherlands-based Heineken into other markets. For that matter, Coors had snapped up the iconic Bass brand in Britain that February. And Jackson could not avoid mentioning the pending merger of South African Breweries and Miller, a deal that would close in July for $3.6 billion and create in SABMiller the world's second-biggest brewery behind—you guessed it—Anheuser-Busch. The two breweries would immediately set about divvying up the global beer map as if playing Risk, competing for companies as varied geographically as Romania, Italy, and China (Jackson noted, too, that SAB already controlled Pilsner Urquell out of the Czech Republic, famed for its archetypal pilsner). The two breweries would also reignite their decades-old tradition of attacks, with Anheuser-Busch, for instance, buying a full page in
USA Today
to remind consumers that Miller was now “South African owned” and Miller taking a full page in the
New York Times
to declare its archrival “the Queen of Carbs.” To Jackson, such cattiness represented a boon to American craft beer, a way of creating fresh consumers if only the sector seized the opportunity:

This notion of the global brewers' fallout benefiting the craft brewer may seem Pollyannaish, but it has already been evident in the Nordic and Baltic countries. Having never quite hacked North America, Carlsberg has been building a dominant position in these countries. In precisely the same period, Denmark has gained a beer movement, with an annual festival and a crop of new products. With the exception of Anheuser-Busch, which has grown organically, the biggest brewers have sought growth by acquisition. Breweries available for sale are usually big but less successful. Thus groups consolidate overcapacity. They then close breweries, centralizing production in fewer plants and lengthening the road to market at a time when preservatives and other additives are under scrutiny by the consumer. The growth to global from national ambition also lowers the common denominator of flavor. This is already so low that many young consumers see aroma and flavor as being faults, distractions on the path to feeling drunk. The same follows for super-premium vodkas and gins….

The big brewers made some very good specialty beers for a time, in an effort to benefit from the success of the micros. Their head brewers knew what they were doing, but the cost accountants and marketing people could not think micro.

For them it seems to have been the road not taken. They chose “beer as soda pop.” Craft brewers are “beer as wine.” That is the road we must take. We must stick to it, and climb higher along the way.

We have come a long way already. When I started writing about beer, there were fewer than fifty brewing companies in the US….

There are now more breweries in the US than in any other country, including Germany: about 1,500 make beers in more than fifty styles, many more authentic than the European originals upon which they are modeled. This is a remarkable achievement, an astonishing success story. Why don't we tell the story? Were we distracted by the opportunists who came into the business when it was being hyped by Wall Street? Remember them? “Mr. Jackson, I don't know much about brewing, but I know that Americans enjoy a beer like Budweiser.” I would point out to them that someone had already noticed that market, a man named Busch. They were all going to overtake A-B in two, three, or four years. They've all gone now, telling the world that they got out just in time. It is their absence that makes this such a pleasant conference….