Friday Notes

Oregonians, your wait is over! Boundary Bay's extraordinary IPA is pouring at the Concordia Ale House, as is their oatmeal stout. Get thee some!

UPDATE! Ack, the IPA has now be dropped from their tap list - and I haven't even had a chance to get myself there (I was planning a trip tonight). Someone else needs to start pouring BB in Portland. Come to think of it, we are pretty short on Washington beers in general...

The Honest Pint Project's Jeff Alworth testified to the Senate Business and Transportation committee yesterday about the honest pint bill in consideration. Shortly thereafter, it was killed in committee. I am/have been ambivalent about the bill so I am not too sad but feel bad for the supporters of it. Time for the "Beaver Pint!" ^(TM)

Beer prices are soaring at my local grocery. I grabbed a sixer of Full Sail because it was the cheapest at $7.99, Deschutes' offerings were $8.99 and Rogue $10.99. Wow. Is this everyone's experience?

An Economist's Preferred Honest Pint at Belmont Station

This escaped my attention until now. Via John Foyston, a message from Belmont Station:

A FULL 16 ounce PINT EVERY TIME. You asked for it, we're delivering. We are now using oversize glasses with a 16 ounce line. Be patient. Let it settle a moment. If it's not 16 ounces we'll top it up. More beer for you. Less waste!

Yeay! Kudos to them for going to marked glassware. I have not seen them, but I can only hope that the mark looks a little something like this:

Ingredients

I had a fascinating conversation with a brewer recently about beer ingredients. It started with a talk about a possible impending shortage. This time in malted barley as, he claims, the ethanol market and subsidization is making more and more acreage go to corn. Plus, he said, growing barley for malting is risky because if the quality is not there, it is no good for malting and the price of non-malting barley is very low. There is also continuing concern about hops as well as the acreage of hops apparently continues to shrink. All this suggests that we may be paying even more for beer in the future.

But what really interested me was the claim that we should also expect the average quality of ingredients to suffer. Makes sense: with smaller amounts of barley and hops, even marginal crops will make their way into beers that they might not have before. Apparently there is also a pecking order for ingredients whereby bigger brewers get the best stuff and smaller brewers get ingredients of lesser quality. [That means home brewers are getting the real crappy stuff, I said, and he concurred] I have never noticed quality differences from smaller breweries, so does this means that they are especially good at overcoming poor quality ingredients to produce great beer?? Any brewers out there like to refute this assertion or concur with it?

Switching gears, because it is Friday and because where else would you turn for beer reviews than an economist, Beervana? Ha! I don't know where Full Sail is in the pecking order (probably pretty high) but either way, John Harris continues to produce remarkable beers. His latest, Keelhauler, is a Scottish ale meaning a malt-forward beer. I don't tend to like these very much as I am a bit of an incorrigible hop-head, but John's is, predictably, magnificent. It retains the traditional rich malty body but is nicely rounded with hops giving it a delightful scent and making it a more flavorful beer than most. Kudos. The spring season also brings out my favorite of the seasonals: Full-Sail's Prodigal Sun, new faves Ninkasi's Spring Reign and Deschutes' Red Chair. All three are worth the price of admission a few times over. Get ye some.

Making the pub rounds: Deschutes Bitter (on cask at the PDX pub), Fish Organic IPA (on cask at Belmont Station), Ninkasi Tricerahops (on cask at Bailey's Taproom) and how about an old classic served Real Ale style: Deschutes Mirror Pond (on cask at Horse Brass). Do you see a pattern? Yes, Portland needs more casks...please!

A Story of Honest Pints and Poor Pours

In which the Beervana blogger and Honest Pint Project mastermind is told by his economist friend (guru really) that he should not be upset at this pathetic pour at the Deschutes Portland Pub because it is a full information game - the glass is 20oz. but the pour is about, what, 16?!? The point is you know it is a lousy pour. And there is a solution: tip not, says I, though our server is great - but she needs to be on top of the bartender who is lazy. After a nice beer, however, everyone relaxes, the server is tipped well and the sun breaks through the clouds on a wonderful spring day in Portland.

And the beer is fantastic - XPA on cask. Wow. Go now. Just ask them to give you a full pour.

Is Craft Brew Recession Proof After All?

I stumbled across this little tidbit when I was looking for some coverage of Boston Brewing's Q1 report (the essence is business is down at Boston Brewing about 5%). Here is the interesting passage from the Patriot Ledger of Quincy MA:

Craft beer sales appear to be holding up during the recession, boosted by customers strong demographics.

Throughout the U.S. beer industry, overall shipments from brewers have declined 3 percent year-to-date compared with the previous year, said Benj Steinman, president of the trade publication Beer Marketer’s Insights. Import shipments have declined 19.3 percent, with domestic shipments down 1.8 percent.

For the 52 weeks that ended on March 9, craft beer sales rose 12.6 percent from the previous 52-week period, compared with 3 percent for all beer, according to data from market researchers the Nielsen Company.

What is particularly interesting to me is that I had assumed that imports were probably a decent proxy for craft beer sales and I knew sales of imports have been down. But in reality it seems that consumers are very loyal to craft beers and not shifting to macro from craft. In economics terms the cross-price elasticity of craft and macro brews appears to be very inelastic, or that beer drinker do not think of macro lagers as a good substitute for micro brews.

This is good news, I wonder if Oregon brewers are experiencing the same thing? I hear through the grape vine that things have been tough, perhaps this is due to inventory depletion on the part of distributors and retailers (something that would explain the seeming 3 percent down 3 percent up contradiction in the second and third paragraph). If this is the case, inventory depletions rather than sales, we might see a lot of new orders coming in soon as the inventories run out.

But Boston Brewing's recent struggle also suggests that within craft beer the environment is getting more and more competitive and they need to continue to fight off the challenge of all of the new 'it' beers that come along. As I mentioned a few days ago, I think this is precisely why Deschutes is pushing its specialty releases hard.

This is also good news for my brother, who is finishing his master brewer certificate program soon and is looking for work. He has offers in hand, but nothing yet from Oregon. Anyone hiring out there?

Mass or Niche Markets and Incentives

I had to stop at a Safeway to get some milk on the way home alst night and on the way to the dairy case I spied a bottle of Deschutes Red Chair IPA. Well, I have a duty to sample it for the loyal readers that tune in for my erudite discussion of economics, right? Sure. Seriously, this is a magnificent beer - hop-forward IPA you get seriously strong hop aroma and taste but without the heavy bitterness of, say, a Hop Henge. Wow - what a wonderful result. Good thing I only bought one. It is medium bodied, slightly more malty and darker than a typical IPA, but exceptionally balanced and eminently quaffable. Yummy.

It made me think of the other new beer I have tried recently: after a long wait my local grocery finally started stocking 'Drifter' from the Bros. Widmer. This beer followed a similar philosophy, they used Summit hops to create a medium bodied pale ale that has the nice citrus-y aroma characteristic of Summits but without the bitterness.

What is interesting is the completely different approaches to the business of beer these two offerings represent. Drifter is a fine beer (but a bit far from my personal sweet spot - I like bitter): it is a mild, medium bodies pale ale that is designed to please the masses. My immediate thought was: "this is their Fat Tire fighter." In my mind this is a beer deliberately designed for mass appeal to a defined market that supports a huge volume of Fat Tire sales. "Let's go for that market," I can hear them saying. And, with luck, it will - it is a better beer than Fat Tire.

Deschutes is busy these days (with a stable of exceptional standard beers in place) pushing the fringes with specialty beers, cementing its reputation not only as an outstanding volume beer producer, but a truly top class boutique brewery as well. By doing this, I imagine they think they can keep up their reputation and keep getting noticed and thus the sales of the standard line up will be bolstered.

Widmer does this too, of course, but I wonder how much being a public corporation changes the incentives. Does always worrying about the return to investors cause a more intense focus on producing beers with mass appeal? I don't know, but I suspect so. It doesn't really matter - as long as they keep making good beers, I am happy to have both around. Oh and someone had switched out a couple of Drifers with some Hefewizen, and drinking them took me way back to when it all began and reminded me that, though my tastes have moved on, it is still a really good beer.

Globalization and the Cost of Bottling

[Photo Credit: Angelo De Ieso II of Brewpublic]

Mike Weksler of Portland's Green Bottling e-mailed me yesterday with this dilemma:

In January of this year my cost to purchase a case of 12 22oz amber beer bottles went up $.65. It is less expensive for me to purchase my bottles from China, ship them here, and rent a facility to store them than it is for me to purchase them from the local distributor.

What is worse is that the local distributor gets the bottles from an OI plant that is in NE PDX, 3 miles from our HQ.

I don't like the idea of sending our money away from the local economy, and the extra fossil fuels that I would have to consume to get my glass shipped to PDX.

I could also choose to buy my bottles from a plant in OK for $1.20 per case less than I spend now as well.

I am rushing off to Eugene so don't have time to comment too much, but will try and do so later. The standard trade argument would be: well, we should not want to make bottles here, just the high value-added beer and by letting China make the bottles we are all better off (us and the Chinese) . A rejoinder to this is that the cost of shipping is artificially low as the shippers do not have to pay the true cost of carbon usage, so while it may be privately profitable to source bottles from China it is not socially profitable. [This assumes, by the way, that the China plant is not more energy efficient than the PDX plant, which I think is a safe assumption]

The answer? Well, a global carbon tax that accurately reflected the cost of carbon emissions would get the prices right, but let's get real, that 'aint gonna happen anytime soon. So what do you tell a guy like Mike, who is trying to do the right thing, but who knows that if he goes local, some other person could start another bottling business that sources from China?

What do you think?