A Bubble or a Maturation?

Some further thoughts on the whole bubble question.

My conversation with Noah Davis focused on what the maturation process for this industry might look like.  As an economist I see a number of interesting forces at work and I try to read the tea leaves as best I can.  The forces I see are as follows:

One, supply in this case spurs demand.  As an experience good, customers have a fairly steep learning curve.  They have to be taught what beer can taste like and develop a taste for these new flavors.  How far this demand curve can be shifted out is impossible to say, but if you come to Oregon and compare it with most other markets I think the conclusion is that it can go very far.  Shopping at a suburban Safeway yesterday on my way into Portland from Corvallis I noticed the sign above the beer isle said "Beer" and then "Micro Brew" and that the isle was about 2/3rds micro brew.  That is a pretty phenomenal extent to the amount of growth the market has made.

Two, the extremely strong force of economies of scale that will put pressure on packaging breweries who are going to face more and more competition in the market.  Novelty buys you some tap handles and shelf space but keeping them requires sales.  Especially in retail, stores care about what is moving off the shelf and maintaining a price point a buck or two above other similar brewers is probably unsustainable.

Three, the direct to market brewpub model is able to avoid the economies of scale and retail problems because the profit center in such a model is generally the kitchen.  These markets are intensely local and thus the expansion opportunities for these 'breweries' is almost unlimited.  There are still many areas in Portland, perhaps the most saturated market, that could sustain a brewpub.

When I mentioned to Noah that I expect to see some breweries failing, we were talking about packaging breweries - thus my reference to $11 six-packs.  I was not suggesting that we are in a bubble or that the bubble was about to burst, far from it.  I was saying that this is a natural process of a maturing market not an overheated one.  Overall brewery numbers might continue to grow thanks to the lumping of brewpubs in with packaging breweries, but I think there will be consolidation among the packaging breweries.

One interesting question that I keep wondering is if will only be the smaller packaging breweries or will we see a relatively big one go down.  For example, a number of west coast breweries (e.g. Sierra Nevada) are building east coast breweries.  Soon, I expect to see buy-outs of existing mid-sized breweries by competitors from more distant markets.  I also expect to see a couple of the newer packaging breweries to fail ofter a few years.  But this is what a mature market looks like, not a bubble.

Finally one more pedantic note: a bubble in economics terms is best described as a situation where the prices have become detached from fundamental values buy some kind of irrationality.  So a bubble in beer would be a situation where folks are currently paying much more for beer than they really value it. I don't see this at all.  Craft beer is a premium product that commands premium prices because people value drinking it.  Over time these prices will probably fall as the competitive pressures of having more larger craft breweries that are able to keep unit costs down.  This will not be a sign of a past bubble but again a maturing of the market.

A Craft Beer Bubble?

A really nice piece by Noah Davis in Business insider magazine.  Here is a great little taste:

Stone, it must be said, is one of the few beer-making outfits that has successfully made the transition from local to national. Seventeen years after it was founded, it's now the 10th-largest craft brewery in the country. But even Koch is feeling the squeeze from all the new, local breweries popping up across the country.

"I just got back from a short trip to Minnesota," he recalls. "A couple of the beer bars that have our beer on tap pretty regularly, just happened to not have our beer on tap. Why? Because their taps were filled with the new guys. It's not that they don't like Stone. It's not that they aren't going to be putting Stone back on tap. But when you have just so many physical tap handles — and now you have this rush of new stuff and everybody is in a shiny-new-object mode — it creates competition. You can't sell beer if it's not available."

The flooded market has bred a generation of beer fans with no allegiance to a particular brand but an unquenchable thirst for the latest and greatest. As a result, many beer bars regularly rotate kegs, meaning that breweries need to constantly innovate to maintain sales. "We usually won't keep the same beer around for a long time," says Joey Pepper, the lead bartender at Brooklyn's Torst. "We'll do one initial purchase of it and then maybe come back to it later."

Of course, it is particularly good because he quotes me.  Though when he quotes me as saying "We're starting to see some closings. As a cold-hearted economist, that's a good thing — it increases the pressure to be exceptional," either he or I made a mistake.  I meant to say that I expect we will start to see some closings not that we already have.  I thought this is what I did say but I am probably wrong about that, anyway the point is the same.  I do expect some bloodletting even as the overall market grows.

Holiday Ale Fest 2013

One of Portland's real treats of a beer fest starts tomorrow and runs through the weekend.  The Portland Holiday Ale Fest takes place beneath the Portland Christmas tree on Pioneer Courthouse Square in tents with clear plastic roofs that are kept warm by body heat and heaters.  It tends to be a fairly civilized fest and a nice way to spend some quality time with humongous beers.

In my humble opinion big winter beers does not always bring out the best in brewers: under the cover of copious malt and alcohol they tend to…ummm…lose some restraint.  But not always.  In my experience about 1/3 of the beers are exceptional 1/3 passable and 1/3 dreadful.  The trick is to do a little advance research, avoid things with peppermint and that are double bourbon barrel aged, and bring friends who are easily duped into trying stuff of dubious provenance or who like the wilder stuff so that you can see if the canary lives after tasting it.

But I digress… go to the fest and enjoy it all especially the lights of the Christmas tree twinkling overhead as you stroll with your tipple.

Eat, Drink and Help a Friend in Need: Drink for De Ieso, Bridgeport, Thurs. Nov 21

This Thursday, Nov 21, Bridgeport will be the next in line to host a benefit for local beer Blogger/Writer/Promoter Angelo De Ieso.  The Facebook link to the event is here.

The event is intended to help Angelo pay for his mounting hospital bills from 5 – 10 p.m. at Bridgeport Brewpub in the Pearl. All proceeds from sales the new IRI beer will go straight to De Ieso along with 20% of food purchases made by customers that mention Angelo that night.

To get the backstory on Angelo's health troubles, go here.  Unfortunately, Obamacare comes a little too late for Angleo, though he'll be pleased that his now pre-existing condition will not exclude him from the new affordable health insurance in the future.

So go and drink lots of IRI, and eat some grub while you are at it and help out one of Oregon's biggest beer boosters and therefore a friend to all NW beer enthusiasts.

Defining "Craft Beer" - An Economic Analysis

Once again the debate over the term 'craft beer' is on the front-burner after another missive by the godfather: Charlie Papazian.  See also, John Foyston's article that includes a counter-argument by a "gobal beverage consulting firm."  Here is an excerpt:

In the US, the Association of Brewers defines craft brewers as small (annual production of 6 m barrels of beer or less), independent (less than 25% of the brewery owned or controlled by an alcoholic beverage industry member who is not a craft brewer), and traditional (a brewer who has either an all malt flagship or has at least 50% of its volume in either all malt beers or beers which use adjuncts to enhance rather than lighten flavour). Whilst this definition has worked well locally, transferring it to other markets can prove problematic. Most consumers would define a brand such as Leffe as a “craft” beer, however, the brand is produced by A-BInBev, and therefore would be excluded. Similarly, when the UK DoomBar brand was acquired by Molson Coors, it would have ceased to be a “craft” beer.

Which is a pretty good point. The Brewers Association's attempts at coming up with a workable definition has problems.  Widmer is out, but Full Sail and Deschutes are in.  Goose Island is out simply because of ownership and so on.  And by the way, is sugar really an adjunct?  There are a lot of Belgian and British brewers who would disagree.

The problem for me is that it is not clear what we are trying to accomplish by creating a term that defines group membership.  It appears to be because the BA wants to establish a signal to the consumer  that the beer they buy was made by a small, independent brewery.  But of course they can say that right on the label if they want so trying to create a term for this is an unnecessary exercise.

For me, as an economist what is interesting is the "craft beer market."  This is what I think brewers really want to know - who are their competitors?  In fact trying to subjectively define craft beer is a waste of time.  Trying to be sure we exclude Blue Moon from the definition of craft beer is stupid when consumers are considering it at the same time they are considering an Allagash white.  It is, by revealed preference, a craft beer to consumers that are making that choice.  Artificially excluding it from the definition does not help the brewer that is competing against it.

That said, defining markets in economics is not easy either.  Is a land line phone in the same market as a smartphone, for example?  We generally collect information from cross-price elasticity estimates - what happens to the sales of smartphones when land-line phone prices change?  If nothing, then we can comfortably say that they are not in the same market.  If they change a lot, then that is good evidence that they occupy some of the same demand space of consumers.  [I tried to do this once by asking for scanner data from New Seasons - but they blew me off]

In beery terms what I want to know is how much the price of Blue Moon affects sales of other beers like Allagash.  Because in the end the craft beer market is defined by consumers who ultimately vote with their wallets based on their tastes.  If Coors can create a beer that consumers think is a reasonable substitute for Allagash, then a craft beer it is.

So I believe that the attempt by the BA is a bit misguided.  You cannot fool consumers into consuming based on an arbitrary definition.  I am no more likely to purchase a Deschutes beer over a Widmer beer because BA considers only the Deschutes the "craft beer."  All else equal, I like to support small independent breweries because it is part of my utility function, but that is not the same thing as craft beer and I can do so regardless (and yes, I consider Widmer a small and local brewery).

The fact is that beer is more science and industry than art.  Anyone can make an all malt, no adjunct, fantastic beer regardless of the size of the brewery.  What I like about the beer scene is that I can have a relationship with a brewer or brewers from small places, I can taste their personality and their own tastes through the beer, and I am willing to pay for that.  But if AB creates a fantastic beer I probably won't buy it much but I have no objection to calling it a craft beer if that is the market it inhabits.

In the end, I think this fear of macro brewers invading the 'craft beer' market is misguided.  It is not that they cannot create great beer if they want, it is that their size and scope make them unsuited to produce lots of variety, experimental beers, different labels, etc.  They are not flexible and agile, they are not local and they are not personality driven - all of which are things I think of as keys to the local beer scene.  Can AB create a small one-off?  How do they market it, distribute it, get it in bars.  To do so they would have to reinvent a small company inside the big one.  Alternatively, they can just buy breweries like Goose Island and let them do what they do.  But this is not an invasion as much as a capital infusion into a market that has real potential.  I see no reason to worry.

Oregon's GABF Haul

Here is the list of Oregon's winners at the 2013 Great American Beer Festival in Denver.  

Apparently I must get myself some Barley Brown's IPA!  Also, it is nice see Flat Tail's Kölsch, of which I have waxed rhapsodic, win a well-deserved silver.  Ditto Pelican's Silverspot IPA.

And I have been ordered quite ardently by Jeff to try The Commons Brewerys Urban Farmhouse Ale.  Will do.

Nice showing and kudos to all the winners (and the myriad other fantastic brewers in the state)!

Coastal Beer

It is not often I pass on press releases in this blog but the Oregon Coast is a true treasure (especially in fall in my humble opinion) and now it is becoming a craft beer mecca as well.  So it is with pleasure that I pass on to you this info:

HEAD BACK TO BREW-NIVERSITY THIS FALL

FOR OREGON’S NORTH COAST BEER 101 WEEKENDS

Astoria, Seaside and Cannon Beach Brewers Collaborate on Commemorative Brew Served Oct. 18-20 and 25-27

WHAT:  As its number of breweries continues to grow, Oregon’s North Coast is gearing up to become one of the Northwest’s next great beer destinations. The communities of Astoria-Warrenton, Seaside and Cannon Beach invite beer enthusiasts to join the fun this fall with two weekends of sudsy events. Taste the Beer 101 brew crafted for the occasion by Astoria Brewing Company, Fort George Brewery, Seaside Brewing Company and Bill’s Tavern & Brewhouse. Meet the brewers and beer icons, learn about Oregon’s brewing history, enjoy beer dinners and get great deals on lodging.

WHEN: Friday – Sunday, Oct. 18-20 and 25-27, 2013

Events include:

·         Tasting trays, tap takeovers and beer-food pairings at North Coast restaurants and brew pubs

·         Educational talks on proper glassware, the history of brewing in Oregon and more

·         Contest to name the North Coast breweries’ collaboration beer

·         Brewers dinner in Seaside

·         Astoria and Gearhart lodging specials

Event locations and details are posted on http://visittheoregoncoast.com/north.

TOP EVENTS:  The Alchemy of Glassware and Tasting with Lisa Morrison, The Beer Goddess

Saturday, Oct. 19, 3:00 p.m. at Fort George in Astoria. Forget size. Shape matters. And not all beer glasses are created equal − nor are they "one shape fits all." Find out from Lisa "Beer Goddess" Morrison why glassware is an important component and how aroma plays a key role in how your beer tastes. Morrison, owner of Belmont Station Beer Store & Cafe, hosts Beer O'Clock Radio across Oregon on the Radio Northwest Network and is the author of Craft Beers of the Pacific Northwest. Cost: Free. Limited to 30 participants. Sign up at the counter in the pub.

           

Behind-the-Scenes and Tasting at U Street Pub & Eatery

Saturday and Sunday, Oct. 19-20 and 26-27, 2-3 p.m. and 3-4 p.m. at U Street Pub & Eatery in Seaside. Join owner Teri Carpenter for an educational talk about U Street’s intricate “MacGyver style” operational system, and an exploration of proper pouring techniques and equipment. Did you know that a stout is poured differently than an IPA or Lager? This session is perfect for home brewers and curious entertainers. Cost: Free.

Oregon Beer Through the Ages with John Foyston, The Oregonian

Friday, Oct. 25, 6:30 p.m. at Astoria’s Wet Dog Café.

Educational talk and tasting about the history of brewing in Oregon with The Oregonian’s “The Beer Here” columnist John Foyston, who will share insights gained from covering the local beer industry since its early years. Cost: Free. Limited to 24 participants. Food and beer can be ordered from the menu during the session.

Brewers Dinner at Seaside Brewing Company with John Foyston

Saturday, Oct. 26, 6 p.m. at Seaside Brewing.

This four-course, five-beer dinner features brews from Seaside Brewing, Bill's Tavern, Fort George and Astoria Brewing. John Foyston will comment on the beers and how they pair best with food. Cost: $50 per ticket. Limited to 30 participants

Register to attend these events and more at http://visittheoregoncoast.com/north.

BEER TOURS:  Transportation is offered for one of two 4.5-hour tasting tour routes Oct.19, 20, 26 and 27. Tickets cost $49 and must be purchased in advance; limited to 25 participants. Get details at http://visittheoregoncoast.com/north.

Ale of Two Cities Tour – Seaside and Cannon Beach – at the Wine & Beer Haus, The Lumberyard Rotisserie & Grill and Seaside Brewing. The tour begins at 12:30 p.m.at Astoria’s West Mooring Basin parking lot and returns at 4:40 p.m.

Astoria Ale Trail Tour – Astoria – at Wet Dog Café and Astoria Brewing, Rogue Ales Public House and Fort George. The tour begins at 12:30 p.m. at the Wine & Beer Haus parking lot in Seaside and returns at 4:30 p.m.

HOTEL

PACKAGES: McMenamins Gearhart Hotel Beer 101 Package Overnight stay, two brewery tasting trays of six McMenamins’ ales, growler filled with your choice; double occupancy; rates start at $136 per night; call (503) 717-8150 for more info and to reserve.

Holiday Inn Express Astoria Beer 101 Package

Overnight stay, two 12-ounce cans of Trolley Stop Ale, two Goonies collector pint glasses, two Astoria Riverfront Trolley passes and museum passes; double occupancy; rates start at $149 per night; call (503) 325-6222 for more info and to reserve.

Cannery Pier Hotel Astoria Beer 101 Package
Overnight stay in a riverfront deluxe king or double queen, two Fort George glasses, beer tasting tray onsite at Fort George and transportation in the hotel’s vintage cars; double occupancy; $219 per night; available Friday-Saturday, Oct. 18-19 and 25-26; call (503) 325-4996 for more info and to reserve.

Beer 101 packages must be mentioned at time of booking. Photo ID is required at check in. Registered guests must be 21 years of age or older. No further discounts apply. Based upon availability at time of booking.

CONTEST: Four brewers from Oregon’s North Coast have concocted a special recipe for a collaborative brew commemorating the Beer 101 weekends. Brewers from Astoria Brewing, Fort George, Seaside Brewing and Bill’s Tavern developed one recipe for the same brew. The yet-to-be-named collaboration beer will be available for tasting at the following North Coast restaurants and brew pubs, and people will have the chance to name this special brew. Come up with the most creative name and you’ll win one of three weekend getaways to Astoria/Warrenton, Seaside and Cannon Beach.

·         In Astoria: Fort George, Rogue Ales Public House, Wet Dog Café and Astoria Brewing.

·         In Seaside: Seaside Brewing, McKeown’s Irish Pub, McKeown’s Restaurant & Bar, Wine & Beer Haus, Twisted Fish Steakhouse and U Street Pub.

·         In Gearhart: McMenamins Sand Trap Pub.

·         In Cannon Beach: Bill’s Tavern, Cannon Beach Hardware & Public House, Driftwood Restaurant & Lounge, Lumberyard Rotisserie and Warren House Pub.

Collaboration beer description: Brewed with organic two-row malted barley, crystal malts, malted wheat, peat-smoked malt and five gallons of blackberry honey, this beer is a beautiful, deep, smokey-red Wee Heavy Scotch Ale that is slightly peaty and very malt forward. Brewers used just enough mildly spicy hops to balance and give perspective to this big ale.

CONTACT: For more information about the region, the event and local lodging options, call the Seaside Visitors Bureau at (888) 306-2326, email: info@seasideor.com or visit http://visittheoregoncoast.com/north 

What the Current Washington Stand-Off Means to Beer

The DC shut-down over the congressional Republicans refusal to sign a continuing resolution that does not include new cuts to Obamacare actually impacts the craft beer industry in two meaningful ways.

The first and most obvious is that with the shut-down the Alcohol and Tobacco Tax and Trade Bureau (TTB), a little-known arm of the Treasury Department, is also mostly shut-down as well.  That means no approval for new recipes and new labels.  Of course, TTB will continue to collect taxes from existing permit holders.

From the Associated Press:

Lagunitas Chief Operating Officer Todd Stevenson called the TTB shutdown a "headache." He said the company was planning to submit an application to package its autumn seasonal Hairy Eyeball in 22-ounce bottles instead of 12-ounce bottles but can't move forward.

"It's just aggravating," Stevenson said. "It is frustrating that government can't do its job. Doing what they're doing now is unprecedented."

Bryan Simpson, a spokesman for New Belgium Brewing in Fort Collins, Colo., said his brewery has three recipes and five new labels awaiting approval. The company is especially worried that the release of its new spring label, Spring Blonde, could get pushed back. More delays might force New Belgium to shell out extra money to speed up the label printing and rush the beer to market, he said.

"Everybody is frustrated in general," Simpson said. "The whole way this has played out has been disappointing for the entire country."

The second is that Obamacare might, in fact be a boon to craft beer businesses that are typically of a size that will be helped immensely by it. Here is James Surowiecki of the New Yorker:

[T]he likely benefits of Obamacare for small businesses are enormous. To begin with, it’ll make it easier for people to start their own companies—which has always been a risky proposition in the U.S., because you couldn’t be sure of finding affordable health insurance.

***

Even more important, Obamacare will help small businesses with health-care costs, which have long been a source of anxiety. The fact that most Americans get their insurance through work is a historical accident: during the Second World War, wages were frozen, so companies began offering health insurance instead. After the war, attempts to create universal heath care were stymied by conservatives and doctors, and Congress gave corporations tax incentives to keep providing insurance. The system has worked well enough for big employers, since large workforces make possible the pooling of risk that any healthy insurance market requires. But small businesses often face so-called “experience rating”: a business with a lot of women or older workers faces high premiums, and even a single employee who runs up medical costs can be a disaster. A business that Arensmeyer represents recently saw premiums skyrocket because one employee has a child with diabetes. Insurance costs small companies as much as eighteen per cent more than it does large companies; worse, it’s also a crapshoot. Arensmeyer said, “Companies live in fear that if one or two employees get sick their whole cost structure will radically change.” No wonder that fewer than half the companies with under fifty employees insure their employees, and that half of uninsured workers work for small businesses or are self-employed. In fact, a full quarter of small-business owners are uninsured, too.

So Obamacare should make it easier for small craft breweries to hire and retain employees and could lead to more folks taking risks and starting their own business because they don't have to fear leaving that job with benefits.

On the Evolution of Fresh Hop Beer

There was a moment, after having spent a couple of hours with Mr. Beervana himself at the Oregon Brewers Guild's Fresh Hop Festival at Oaks Park on a beautiful Oregon fall evening, when I turned to Jeff and said something along the lines of 'fresh hop beers have come a long way.  Do you remember a few years ago where there were many more duds than good beers at this fest and tonight it is precisely the opposite.'  He did.

Indeed, Oregon brewers are really beginning to master the fresh hop beer.  Most of the beers I tried were good to exceptional.  Those that weren't were generally not due to the misuse of wet hops.  I am firmly in the camp that there is no 'correct' way to brew with wet hops, a fresh hop beer is brewed with wet hops and is characterized by that earthy, raw fresh hop essence.

Not only were the beers good, but the fresh hop essences were refined - much less grassy than in the early days and more of the fecund essence of the hop flower.

These days many brewers take a lot of the guess work out of it by reserving the wet hops for dry hopping (wet dry hopping?  dry wet hopping?).  This is fine with me as long as the above mentioned fresh hop essence is present in the finished product.

Anyway, the point is there are a lot of truly exceptional fresh hop beers out there this year and here is a list of my faves from the fest (keep in mind I tried only 10 - I am sure there are many more):

Crux: Off the Fence

Maybe the Queen of the ball.  I found many Belgian fresh hop experiments lacking in the fresh hop essence.  The Logsdon Seizoen, for example, is a fantastic beer but you couldn't detect a hint of fresh hop. Ditto The Commons. This 'Belgian Pale' mixed hints of Belgian yeast, pale ale body and fresh hop essences beautifully in a truly new and winning way.

Deschutes: Hop Trip

The reigning masters of the fresh hop do it again: just about the perfect fresh hop American Pale.  The Blueprint.

Double Mountain: Killer Green & Killer Red

I prefer the Killer Green, the Red not being my preferred malt base, but both are exceptional. 

Gigantic: Sodbusted Simcoe

Go big or go home: this is Gigantic in all the name connotes.  Completely hop infused like their IPA but with another layer of fresh hop on top.  Yummy.

Ninkasi: Total Crystalation

Like Gigantic this is a hop infused IPA and even the fresh hops are saturated and envelope the tongue.  Very, very good. 

And, of course, you have to give a nod to perhaps the coolest of all the fresh hop beers: Lucky Lab's The Mutt.  Full of hops from backyards all over Portland, The Mutt is quintessentially Portland and tastes just like you would expect: a muddy, mashed up hop note, but a surprisingly good beer, especially when you know from whence it came.

Beer Growler Man

I had completely forgotten that the good folks at Oregon Beer Growler Magazine asked for permission to reprint a blog post I had from a while back until a colleague mentioned it to me.  He was visiting the Corvallis Brewing Supply store and picked up a copy of the mag and saw my mug.  I am on page 4 of the September issue:

By the way the photo of me was taken at Thornbridge's Packhorse Inn in Little Longstone in the spectacular Peak District by Beervana's Jeff Alworth during our British Beer Odyssey.

The Packhorse Inn featuring cask ales from the exceptional Thornbridge Brewery

The Portland Beer Market in One Picture

This is the sign at Eastmoreland Golf Course, a public course owned and operated by the City of Portland:

Wasn't long ago your choices were Bud, Bud Light and PBR.

Okay So Maybe You Can Get Rich in Beer

Although it will take a lot of hard work, good publicity and marketing skills, considerable luck, and well, maybe it would help if you started nearer to the start of the craft beer renaissance.  You can tick all of those boxes for Jim Koch founder of Sam Adams, whose recent stock gains have made Jim a billionaire at least on paper.

Closer to home, one can only wonder how well Gary Fish is doing.  He built Deschutes from scratch and it remains a privately held concern, but one that appears to maintain healthy growth.

But as Jim Koch mentions in the article, getting rich is not (or shouldn't be) the point. Having fun and enjoying what you do is.

Most craft beer businesses are built around creating a sustainable local business but there are some, like Ninkasi to name the fist brewery that pops into my head, that are build on raid growth and expansion.  As beer is a large economy of scale business, that is the one way to make it to the 1%.  Or in Jim's case the .1%.

Cheers!

Widmer Octoberfest

There are so many beery events in Portland I don't get too uptight about missing them, but the Widmer Octoberfest is one that I have been wanting to attend.  Fortunately, this year the good folks at Widmer have invited me to come along and I plan on accepting. 

The brewery site is a pretty cool place (and especially easy to access now that MAX goes right by) the Widmer's make consistently excellent beer and the pub focuses on Germanic-y food so they got the sausage and pretzels nailed presumably.

The fest runs Friday and Saturday and after this freak storm, hopefully the weather will be good. 

Recommended.

The Oregon Brewer's Festival

Some may think it suspiciously coincidental that my two week return to Oregon from my sabbatical in Brazil coincides with the Oregon Brewer's Festival (OBF).  I call it a happy accident.

So, despite my extended stay in Brazil (where, try as I might, I could not find much beer to blog about), I will attend the OBF this year.  As is my tradition, I will attend the afternoon of the opening day which is now a Wednesday (July 24).  No idea how the Wednesday opening will affect this, but in the past it was the only time one could enjoy the fest without the hooting hoards - and even then you only had about 3-4 hours of peace which seemed to shrink each year.

What I am looking for this year as always are nice hoppy session ales (not a contradiction as Widmer has proved with their Citra Blonde).  I also look for pilsners and other lighter lagers.   I am glad to see many low ABV beers on the list representing a number of styles.

There are many great beers to try but here is a short list of ones that have caught my eye all but one below 5.5% ABV:

10 Barrel: Swill.  Their take on a German Radler beer might be the perfect thing if the fest gets really hot.

Alameda: Huckleberry Hound.  Low ABV and fruity - could be interesting.  Must say that their description of fruit and malt-forward makes me think overly sweet - so this will be an interesting experiment.

Boulder: Blueberry Wheat.  Bleuberries are hard to brew with in my opinion (formed from some less than stellar experiments) but David Zuckerman might just be the man with the magic touch.  Proving that that Lewis & Clark education didn't go to waste.

Boundary Bay Brewery: Double Dry Hopped Bravo Pale Ale.  I am especially excited about this.  One of my favorite breweries that never fails to impress me at the OBF with a new (to me) hop - Bravo.  Might just be my first stop.

Breakside: Float.  Breakside + lager = yum.

Bridgeport: Long Ball Ale.  Meridian are one of the new 'it' hops and I suspect many have tried this one brewed for the Hillsboro Hops, but it'll be new to me.

Cascade: Raspberry Wheat.  Because no one does fruit beer better than Cascade, this one is a must-try.

Eel River: Cali Pale.  Meridian, Citra and Simcoe all in one pale?  Sounds like it will be squeezably citrusy - and that sounds pretty good to me (disclaimer - I am in thrall of the new citrusy hop varietals).

Epic: Hop Syndrome Lager.  I know Jeff is interested in the hoppy lager trend and this will no doubt be the subject of discussion.  Aramis hops is enough to get me to taste.

Gigantic: & Juice.  Because it is Gigantic.  Do you need any more reason?

Ninkasi: Bohemian Pils.  The hop masters have proven that they can make a damn good pils, I expect that this will be no different.

Occidental: Occidental Dortumunder.  Occidental has bucked the trend in Oregon breweries and is planted solidly in the German tradition.  Look forward to finally getting a taste of their beer.

Speakeasy: Tallulah.  This one features El Dorado hops, a hop I have just brewed with for the first time but my beer won't be ready for a couple of weeks so I can get a glimpse of what I have in store with this beer.

Upright: Offen Kölsch.  Kölsch is one of my favorites and Upright is almost always a sure bet. 

Vertigo: Key Lime Tropical Blonde.  I predict this will either be sublime or terrible.  Will be fun to see which.

Wild River: Kölsch.  Another Kölsch from a brewery I have not yet sampled.

Wildwood: Organic Ambitious Lager.  One more lager again from a brewery that is new to me.

That's more than I would typically get through but this year the pours will be 3oz rather than the 4oz of years past, so maybe I will...  Besides with all of them pretty low ABV by American standards, it should not be too much.

Enjoy the fest!

Consumer Reports and Craft Beer

Consumer Reports has had a go at craft beer...with predictable results.  Over at Beervana, Jeff has a go at them, pointing out the myriad problems in their analysis. 

This doesn't surprise me, I love CR and have subscribed to their digital version for years and I always consult them for purchases where objective tests and ratings convey real info.  But they always fail when it comes to food.  Tastes are subjective and personal.  A restaurant critic, or beer critic for that matter, can discuss what they liked and did not like about a food or beer, but trying to create a subjective evaluation, which is the CR method, is always going to fail.  I'll just add the little amusing anecdote that they seem to have taken the electronics template and put the beers in it as they refer to different beers as 'models.' Oops.  Check out the ratings of the 'models' below:

You'll find lots to hate about this list, probably beginning with the presence of Shock Top, Kirkland and other not-quite-what-we-think-of-as-craft beers. 

But I'd like to make the rather obvious point that this endeavor is yet another milestone in the popularizing of craft beer.   If CR is doing it, it is because of the widespread and growing appeal of craft beer.  And I can tell you from my experience with my in-laws that these ratings will send a whole bunch of folks past the macro lagers and into the craft beer section of the local Safeway.  

The fact that their first taste of 'craft beer' will be Stone IPA may set the whole movement back, however - Stone IPA is not a gateway beer.  It is a full on face melter for the uninitiated - but I digress.  

Craft beer is full-on mainstream now and that means lots of good intentioned if misguided efforts like this and we all should welcome these clumsy embraces.  The far greater crime would be to dismiss craft beer as a niche enthusiasts occupation and ignore them. 

Oregon Craft Beer Continues to Grow Rapidly -- and What it All Means

Hipster Sweet Spot: Bikes, Gritty Industrialism, Ironic Humor and Good Beer - GIGANTIC 

Craft Beer in Oregon (or locally produced non-macro lager if you prefer) is still going gangbusters according to the Oregon Brewers Guild:

PORTLAND, Ore. (June 26, 2013) – The Oregon Brewers Guild announced today that Oregon’s breweries crafted 1,296,000 barrels of beer (or roughly 321 million pints) during 2012, an 11 percent increase from the previous year. 

***  

Oregon currently has 137 brewing companies operating 174 brewing facilities in 59 cities across the state. There are currently 51 breweries in Portland, 15 in Bend and 10 in Eugene.  

More than 17 percent of the 2.79 million barrels of all beer — both bottled and draft — consumed in the state were made in Oregon. For draft beer, that percentage is even higher, with Oregon breweries producing an estimated 47 percent of all draft beer consumed in the state. Oregonians consumed 12.8 percent more Oregon craft beer over last year, equaling 483,400 barrels. Craft beer production in the U.S. grew 15 percent in 2012 and now represents 6.5 percent of the total volume of beer brewed in the United States.

This last bit is what really strikes me: consumption in Oregon grew 12.8% and 47% of all draft beer consumed is Oregon craft beer (add in the out-of-state craft beer and you are certainly talking about more than half of all draft beer consumed in the state being craft beer of some sort).

To the extent that Oregon represents the most mature craft beer market in the US and perhaps the world, this shows that there is still a lot of room to grow.  My favorite personal index is the college student consumption that I see in my day job as an OSU professor - watching college-types buy beer at the market, drink beer in the bars and talk about their likes and dislikes among a myriad of styles suggests to me that the sea change has come: beer has been redefined.  Beer is now defined by having a plethora of styles, brands and tastes.  Beer is now connected to place, time and personality.  Beer from Bend or Eugene or Hood River is considered different stylistically and provenancially (I may have just made that word up).  Seasonal and special one-offs give beer a time dimension it did not have in the macro days.  And brewers are becoming figure-heads, spokespeople for their beer and their brewing philosophy. 

All of this to me suggests that we are defining a new market not re-defining an old one.  I am not so sure how much it makes sense to talk about taking market share from the macros any more as it really is about shifting a different demand curve.  What these Oregon data suggest to me is that there is still a lot of shifting of the curve that can be done.  For example I suspect that part of the dominance in draft beer is that craft is really growing the pub trade again.  Take the 'tap room.' Almost all craft breweries have them and they are extremely popular --- why?  They are typically underwhelming spaces with limited ambiance and food, often out of the way in industrial enclaves and have limited hours.  But they are extremely popular and I think it has to do with the way people want to relate to their beer: they want to connect to the source.  [There is, of course, the element of ironic hipster-ism: let the suburban affluents roll up to the bucolic Yamhill wineries in their Volvo SUVs and sip wine, we are biking on out fixies to the grungy industrial district to chug beer in a corrugated iron warehouse!]  This is a 180 degree turnabout from the macro days and suggests again that we are talking about a different product all together. 

So with each release of these annual statistics there is the inevitable talk about saturation, future growth and so on.  Though there will inevitably be failures and shake-outs I suspect that the overall growth in craft beer, even in Oregon, will continue unabated for quite some time.  The market might be less forgiving to breweries like Migration that took quite some time to find their footing and the inevitable grow-or-die calculus that is the inexorable result of the inherent economies of scale in beer will claim victims, I would still back most new breweries to survive and even thrive. 

Gambrinus, Sellwood and Portland Breweries of Yore

No, not that one, this one:

HT: Vintage Portland

Bill Night has made a map to historic breweries in Portland (of which I was reminded by his comment to VP's post).

Bill, however, did not Bill's map includes the Sellwood Brewery:

Though it is not clear where exactly this was.  What I love about it is the clear notion that Sellwood is another city down the river - so remote in fact that Mr. Wilhelm's Half-and-Half has reached Portland and is so popular that he has opened a Portland Depot.  I can only assume that this is the same Wilhelm family that ran the funeral home.

[Corrections added - see comments]

Will Work in Beer: Rogue is Hiring

Rogue is hiring and holding a job fair THIS WEEKEND and they asked me to let you know.  So, now you know:

Beer in Glass or Plastic

This little tidbit came my way via The Telegraph.  Apparently in nightclubs in the Highlands of Scotland after 9pm due to 'fears of injury.' Which I suppose is a euphemism for 'a great big bloke smashing it over your head.'

Okay, fair enough, but now the government is being accused of overreaching: extending the plan to ban the pint glass in Highland pubs:

Mr Lawson, who owns Johnny Foxes and The Den, added: "The biggest complaint I get from customers is about having to drink from plastic containers. "You have to serve bottles of wine or champagne in a plastic glass. It's not good for the image of the Highlands." 

One drinker added: "The Highlands have seen an incredible revival in microbreweries producing some truly distinctive and wonderful beers, and it goes without saying that Scotland's whiskies are world-renowned. It's insulting to suggest they could be enjoyed out of plastic." 

Which brings me to another discussion of glass and plastic.  Finally, after 25 years of plastic tasting mugs, the Oregon Brewers Festival is switching to glass:

The last several years, the quality of the plastic tasting mug at the OBF has not been as acceptable as in the past. Consumers have noticed an unpleasant plastic smell that didn't dissipate rapidly, and it became evident that it was time to make a change. At the same time, the festival has been seriously looking at its carbon footprint; we've increased our recycling efforts, both on the back end with food vendors, and on-site with consumers. Switching to glass is one more piece of the puzzle. 

We've had concerns expressed about glass breakage, and have looked to other festivals as an example. Locally, the Spring Beer & Wine Fest has always served its beers in glass, as has the Portland International Beerfest. Neither event has had serious issues with broken glass. 

The OBF tasting glasses will have the current year's artwork printed on them with the date, and will be considered a souvenir item. For those who don't wish to take their glass home, we will have recycling stations set up at every exit. 

Ultimately, the Oregon Brewers Festival believes most beer drinkers would prefer to see, smell and taste a beer in a glass over a plastic mug. A glass offers the consumer the ultimate beer tasting experience, and in the end, that's the goal of any festival. Cheers!

Hooray for that.  They, of course, failed to mention the absolute travesty of the color changing plastic glassware that they used for a year or two which turned a color when it got cold and made the beer appear blue.  Ugh!  So good on the Highlanders of Scotland and the OBF.  (Full disclosure: I am a member or Clan Munro but I have never smashed a glass on top of any one's head)

Map of Beer Taxes in all 50 States

From the Tax Foundation:

Could Legalization of Marijuana Spell Trouble for Craft Beer?

Not really, I suspect, but there is strong evidence that medical marijuana laws had a considerable and negative effect on beer sales in the states in which they were enacted.  Total per-capita sales decreased by 5% as a result of the law which suggests that beer and marijuana are strong subsitiutes. This is overall sales and so we don't know the differential impact on sales of macro versus craft beer, but I suspect that to the extent these substances are subsitiutes, they are so due to their intoxicating properties and not the refinement of the beer itself.  Thus I suspect that this drop in beer sales is mostly macro beer.  But who knows - maybe my impression of the refined craft beer drinker is all wrong?

It would be interesting, perhaps, to test the effect on craft beer sales in Washington and Oregon after the legalization of marijuana in the former. 

JV Southern Hemisphere

I spent an extended weekend in Buenos Aires last weekend. I had a lovely time, perfect weather and a city that I found pretty, pleasant and recovering (at least in spirit) from the crisis.  I was happy because my last visit in 2009 left a lasting impression of a decaying city with a grim population.  It is a lovely city and one hopes for a return to better times economically will allow it to flourish once again. 

But all this is by way of introduction.  The real reason I found my visit blog-worthy was my discovery, whilst strolling in lovely Recoleta, of an American-style brewpub: Buller Brewing Company.  Sadly I had just eaten and we were on our way to Palermo so no time to stop and sample the beer but I did have enough time to take these two pictures and I was delighted to find, as far south as Argentina, a JV Northwest brewhouse.

Buller Brewing Co, Buenos Aires, Argentina

Bueller's brew house, manufactured in Canby, Oregon

 What is especially interesting is that, like most of South America, the beer culture in BA and the beer at the pub is mostly German and Czech influenced so you might expect a brewhouse from those parts. Well, I suppose it makes no difference, except for the shape of the fermentation vessels.  Anyway, it was fun to see.

I did try the Quilmes local macro brew and while it is a notch above Brasilian beers, it is fairly character-less.  Other than that the local Malbec wine was too inviting (and too good - wow) and so I never sampled any other beer.

John Harris - Solo

Photo Credit: John Foyston

Oregon, filled with the legends of beer: Tony Gomes, the Widmer Brothers, the McMenamin Brothers, Art Larrance, Gary Fish, Alan Sprints, Jamie Emmerson and Irene Firmat, and on and on and on.  Then there are the new legends: Jamie Floyd, Christian Ettinger, Ben Love and Van Havig, Darron Welch 

But one legend surely rises above all others and that is John Harris.  The string of iconic beers that he has created at McManamins, Deschutes and Full Sail is amazing.  He is also one of the nicest guys you'll ever meet. So if there is one person who deserves to become an independent icon of the Oregon beer scene it is John.   

I have written about John Harris numerous times in this blog, suggesting his worth is tremendous and comparing him to Lady Gaga.  I have also waxed poetic about his beers many times (and I will miss his presence at the Pilsner Room but he has trained so many good brewers that I don't think I have to worry about the quality of the beer suffering there). 

If you are not very aware of John it is because he has always brewed for someone else (though it could be argued that at Full Sail as a member of the employee stock ownership plan he was working for himself).  Finally, I am delighted to report, he is taking his act solo.  And trust me, he is more Neil Young than David Lee Roth (though Crazy From the Heat is pretty awesome).   

It has been quite a while since John left Full Sail and many, many beery folks have been waiting anxiously for the arrival of his solo venture. Finally it is here.

John is launching his solo Project Sunday, here are the details from the press release:

On Sunday April 28th at 805 N. Cook in Portland from 2-4pm the space will be open to the public. There will be brewery renderings and floor plan displays on-site, as well as initial company graphic design elements. T-shirts will also be sold. Unfortunately John can’t legally serve beer there just yet, so this will be a non-alcoholic information session.

Event Details (stolen, shamlessly, from The New School):

WHO: John Harris, brewmaster with 26 years of experience, including two years with McMenamins’ breweries, four years with Deschutes, and 20 years with Full Sail.

WHAT: Brewery and Brewpub Sneak Preview and Name Unveiling

WHERE: 805 N Cook St., Portland, OR, 97227

WHEN: Sunday, April 28, 2013. 2-4pm Public Open House

WHY: Get an inside look at the new Portland brewery being started by an Oregon brewing pioneer, John Harris. John will be on hand to talk about the space and answer questions. There will also be renderings and floor plan displays for public viewing, and t-shirts for sale.

 

Photo Credit: Ezra (or, perhaps, Google)

When I talked to John last year his plan, as I understood it, was to do a brewpub.  This space looks like he is thinking of a production brewery as well but I don't know if the brewpub is still the first step or if it will be like Gigantic: a production brewery with a tasting room.  I hope the former but either will be welcome.  You can find out the details on Sunday (I will have to watch from afar in Brazil).

The location, it has to be said, is great - though I was, selfishly, very much hoping to see him in the SE. I know he looked far and wide including Woodstock and, ironically, I suggested to him the idea of the Westmoreland space that Laurelwood eventually moved into (see how prescient I am?). 

Anyhow, go and give John your support as a way to thank him for decades of great Oregon beer. 

The Rise of Craft in the UK - As Viewed by the BBC

Jeff, doing the legwork for his book at Thornbridge

 
I was about to simply tweet this article from the BBC about how US beers (once only a subject of scorn and derision) is inspiring brewers in the UK.  They are talking about craft beers of course, but what I found fascinating is another echo of something that Jeff and I found on our beer tour of Britain: the presentation that the establishment against which craft beer is rebelling includes old traditional producers of "Real Ale"  

British firms like Darkstar, Meantime and Marble have all manufactured drinks influenced more by California and Colorado than Cornwall or Coventry.

These do not always qualify as "real ales" - a term popularised by British beer lovers when they launched the Campaign for Real Ale (Camra) a generation ago in rebellion against the prevalence of mass-produced carbonated beers.

According to Camra, beer should be left to ferment "live" in casks.

Craft beer, by contrast, is often pasteurised in kegs with added nitrogen or carbon dioxide - a technique which makes traditionalists shudder.

It's a reaction that enthusiasts for the new wave of American-inspired beers are happy to provoke. Indeed, they are often keen to dissociate themselves from Camra's beard-and-cardigan image.

While Camra has held its annual Great British Beer Festival since 1975, February 2013 saw London's first Craft Beer Rising - an event complete with modish DJs and trendy pop-up restaurants stalls, dedicated to the upstart movement.

"It's a more exciting product," says Neil Taylor of the Scottish brewery-cum-pub-chain Brew Dog. "It doesn't taste like anything else. People who are willing to push themselves are going to get more out of it.

"The establishment in the US is bottled lagers; here it's lagers and real ales.

This is a point of much debate in the UK.  Coming from America Jeff and I were, of course, in thrall to the ancient and traditional breweries like Greene King and Fullers.  But these are old, fuddy-duddy breweries that make bland beer and are resistant to change, say some of the young upstarts like the Brew Doggers. 

But the sentiment of folks like Brew Dog are not universal.  Fullers for example has made a point of collaborating with craft brewers in the UK like the aforementioned Marble.  Jeff and I thought it was great shame that there was a tension between these smaller, traditional breweries and the upstart craft breweries.  But markets are hard to penetrate in the UK and the image of Fuller's and the like is Grandad's beer and something craft brewers are hesitant to associate themselves with. 

The rigidity of the CAMRA types does not help.  It is clearly time for CAMRA to embrace both real ale and craft beer. These two groups are really allies and have a lot to teach each other, which is why it is great to see collaborations like Fullers and Marble.  The US experience has shown that there is plenty of potential market to share.  While Greene King and Fullers have the pubs, Dark Star and Thornbridge have the hip American style beer the kids love.  Together, it would seem they could totally compliment each other.  Craft beer would bring in the youngsters to the staid old pubs and re-introduce them to real ale.  Traditional brewers would provide craft brewers market access and advertising and publicity. A win-win. 

The horror!  Dark Star putting its (exceptional) beer in kegs...

What is certainly true is that the UK craft brewing scene is very heavily influenced by the US, and why not?  It is is tremendous success story here and generating a very coveted consumer base - young, hip, money to spend.  Brew Dog, Dark Star, Thornbridge are all very clearly inspired by US craft brewers and make no apologies. 

It should also be mentioned that the UK has just as many bland yellow fizzy lagers as the US (some thanks to the US) and it is also true that beer is losing out to spirits in the UK as well as the US. The bland fizzy lagers have a virtual lock on supermarkets making the challenge for craft beer that much harder. But I have no doubt that craft will eventually see the same success in the UK as it has in the US.   

Now, if we could just get Brazil going...

Beer Can Innovation

In lieu of any real content, I give you the topless beer can! [HT: Jacob Grier]

This cute little gif is from the Beer and Whiskey Brothers

I have to say that I think this is fantastic - especially for very aromatic beers like IPAs, being able to smell the beer is why I always decant. 

Craft Beer Still Going Strong

Speaking of the Brewer's Association, here is their latest annual report on the state of craft beer in the US.  To paraphrase the President the state of our beery union is strong:

Odds and Ends from the Beery World

A collection of beery tidbits that I, like the magpie, have collected...

First, how cool is the new Hillsboro Hops hat?  It is not possible to be a craft beer fan and not love this hat.

Second, NPR picks up on the big beer consolidation and the success of craft brew story once again. Here is a taste:

America loves beer.

In the U.S., we drink $200 billion worth of the hops-brewed libation annually. What many Americans might not know is that most domestic beer, 90 percent in fact, is dominated by just two companies: Anheuser-Busch InBev and MillerCoors.

Innovators, however, are challenging that dominance in the form of craft beer breweries. Small "mom and pop"-style breweries — or regional breweries — now account for about 6 percent of domestic beer sales. That may seem like a small number, but it's been growing every year since the early 1990s, while big brewer share is declining.

There are now more small breweries than there were before Prohibition, when beer was largely a regional business.

Interestingly, they go on to discuss the idea, promulgated by the BA of 'crafty' beer, so called faux craft beer like Blue Moon and Shock Top that are actually brewed by the big boys but whose provenance is not evident on the package. It is interesting because this is a theme the BA decided to highlight and here it is getting play in the national media. You may disagree with what the BA is doing but you can't deny that they are effective.

There's also the issue, Flock says, of what the Brewer's Association calls "crafty" beers — beers owned by big beer companies disguised as small craft beer. A common example is Blue Moon, a Belgian-style beer.

"A lot of people think that [Blue Moon] is a craft beer, but is in fact owned by MillerCoors," she says.

Craft brewers argue, Flock says, that this limits consumer choice. For instance, if a bar stocks the top brands from a big brewer along with these "crafty" beers, consumers are essentially only buying from a single company.

***

Julia Herz, the craft beer program director for the Brewer's Association, says big beer should print its names on the bottles.

"What we've called for is a transparency of parent company ownership, and to put that on the beer label so the beer-lover has a chance to know who's behind those brands," she says.

Herz says branding matters to many beer drinkers, especially those who care about the brands they consume and who owns those companies.

"A lot of millenials are associating themselves with what they consume, and what they hold in their hand," she says.

As for this economist, I am always for more information in general, but I am not terribly convinced. It is what is in the bottle is what is important, if provenance is important to you, you'll figure it out.  The bigger issue is economies of scale - big brewers have it, little guys don't - so they have access to the same ingredients and at much lower average costs, there is a real threat.  But they are also less nimble, less creative and less able to be hyper local.  This, to me, is the hallmark and future of craft beer.

But I think it is wrong to suggest that craft beer is the growing share of craft beer is at the expense of big beer.  Big beers market is being hammered by spirits, I am not sure they even notice much of craft beers effect as focused as they are on the competition from spirits.  

Finally a little rah-rah piece on how SBA loans have helped Oregon craft brewers.  They feature Migration, which pleases me a lot because in my mind they are to be commended for two reasons.  First, they showed a lot of gumption and drive in creating a new brew-pub from scratch.  And two, they have not stopped learning and getting better.  They now seem to be producing quality and consistent beers when at first they had a lot of problems.  I am, frankly, surprised they were able to survive (I think their best decision might have been the location which was a masterstroke) in a city awash in other quality alternatives, but I am very happy to see they have.