On Bubbles and Beer

Jeff at Beervana has a post on new numbers from the Brewer's Alliance and wonders whether we need to start seriously worrying about a bubble in craft beer.  As evidence, he notes this graph.

He also mentions anecdotal evidence that at Jeld-Wen during Timbers games Widmer far out-sells Bud. 

Why do I mention the two together?  It is because, as readers familiar with the blog will know well, my theory of the craft beer industry is that demand is endogenous.  In other words, the more craft beer the more people try it and like it, the more it appears in stores, etc.  I think Portland, Oregon has the largest demand for craft beer in the country not because there is something different about the people or culture, rather because of the length of the history of craft brewing in the state as well and the breadth (see post below about quality beer taps in random pizza joints).  When you get to the point where craft beer far outsells macro lager in sports stadiums, you know the world has changed.

Most cities and states are far behind Oregon and I see no reason why the same kind of demand cannot be developed in other parts of the US.  Therefore I am not ready to call a bubble based on the graph above (and in general as an economist I never think I can call a bubble because by definition if it is obvious it is not a bubble).  I do, however, worry about the ever present economies of scale aspect of brewing which - especially among packaging brewers - will probably lead to winners and losers.  This is not a bubble however, simply that market sorting out the good from the not so good.

But no matter what, the unequivocal good news is in the short run at least, there will be a ton of new beer to try.

Only in Portland

Yesterday, after picking my kids up from their soccer camp, we stopped in at Pizza Roma in Woodstock for a slice.  For non-Portlanders it is a good pizza place, typical and has a nice little tap list despite not being known as a beer bar.  It was lunch and so I didn't partake but among the great beers on offer were Double Mountain IRA, Terminal Gravity IPA, Fort George Vortex IPA and Ninkasi Total Domination.  All four would proabably make my list of top ten favorite beers.  Nice.

Only in Portland do you wander into a random neighborhood slice shop and have such a stellar tap list.

Beervana indeed. 

Visiting Summit

Sam in front of Summit's bar

The last in a series of Summit related posts, I promise.  But as brother Sam gave me a tour of the now 25 year old brewery, it is worth talking about.

Fermenting/conditioning tanks

Summit now resides in a purpose built building that is located close to the Mississippi river in St. Paul.  Apparently they bought, for $1, the land for the building on a brownfield site that the city was interested in redeveloping.  What they built is an enormous brewery using the guts of the old ---- brewery in Germany including a lovely copper lauter tun and boil kettle:
 

The scale of the place is impressive: their brewhouse is 150 barrels and it runs about 20 hours a day.  They also bought Sierra Nevada's old bottling line which bottles at the rate of ten twelve ounce bottles a second (and yes, that tells you how big Sierra Nevada has become).  It is an impressive place, the scale of which is rarely seen in the craft beer world.

Summit's bottling line

It also gave me the chance to finally try Summit beer.  I had just about the full gamut at their in-house bar, and thus everything was a bit too fast to give a real review but here are some impressions.  The beer I expected to like least, the Red Ale, I liked best: it was nicely hoppy (with Cascades prominently featured) and balanced, it was not malty like I associate with the non-style that is the American red.  I also liked the ridiculously hoppy (and out of balance) silver anniversary ale - I am a hop head after all and a full on blast of hops is always welcome as long as it is not simply bitter and harsh.  , The IPA is a wonderful British IPA - Northwesterners would not embrace it, but old-worlders would find it right in the wheelhouse, full of Norther Brewer and East Kent Goldings it has a lovely soft hop profile.  It is not as transcendent as the Old/New-world masterpiece that is Bridgeport's IPA but very, very nice.  The best selling Extra Pale Ale was not for me, but seems a perfect gateway into the world of craft brew for the macro set.  The porter and the stout were both nice with the stout on nitro and very much the Guinness clone in the sense of being a lower alcohol beer that is dark in color but light on the tongue.

Cold room

 The thing that was most remarkable to this Beeronomist was the fact that 300 barrels of the the one-off Honeymoon Saison were made.  This suggests that the Unchained series has an identity of its own and they are confident it will sell no matter what the style.  And with the PR folks doing a good job selling the human interest side of Sam and Cambers wedding beer story, it will probably not last long on shelves.  

Sam and his beer

Plus, it is a damn good beer.

Sam's Summit Honeymoon Saison

Photo credit: Elizabeth Flores/ Star-Tribune

I arrived in Minnesota to find a big Minneapolis Star-Tribune article on my brother Sam and his beer.  Fortunately it was written by a real beer writer and the result is a very good article on the beer from conception to completion.  Nowhere is it mentioned, but Sam used the same yeast as Upright and, not surprisingly, the end result is an exceptionally dry beer.  I think it is fantastic.  The honey is very faint, but I detect it a little on the nose and in the finish.  The honey I am sure added nothing to the color but Sam's grain bill produced a lovely honey colored beer.  It is a nice Minnesota Saison.

The article is well worth a read.

Beery Notes for Locals

For those in Portland there are some great, great beers to be had these days.  The lion's share are at Belmont Station where the Puckerfest is ongoing.  Calling it a fest might be slightly misleading as there is no tent, crowds, whoops, etc.  It is just a special set of beers on tap in the bar with meet-the-brewer events each night.  I went Wednesday and tasted the four Upright beers as well as the Flat Tail Corvaller Wisse (pictured above in a photo by Jeff Alworth).

The Uprights were, what else, great - with a few warts: one was too ginny for my taste. But the Blend Love is a real crowd pleaser and I was ... pleased.  For me the real find was the Corvaller Wisse which was phenomenal.  At 3.6% is is a real summer session beer and the lacto sourness is not as astringent as brett can be.  Citrus esters are present and after a long bike ride to make it from Sellwood to Belmont Station, it was a wonderfully refreshing beer.  I hope this becomes a summer standard at the brewpub.

The star for me was the Double Mountain Devil's Kriek. This is no surprise, it is one of my all time favorites.  Beautiful cherry notes wrapped up in a sumptuous bronze malt base - just sour enough but not too sour.  Rhapsody.  Check out the nice video at Jeff's Beervana site about making kriek at DM.  

White IPA.  Another Jeff Alworth Photo, but that's my hand dunking the fish and chips - which have improved at Deschutes, BTW.

After that it was off to Deschutes to grab some dinner prior to the Timbers game.  There they had the Armory XPA on cask.  I don't think I have had a beer that is so different on cask as on tap - in fact I asked for a taster of the tap version to confirm. There are all kinds of fruity esters present in the cask version, hints of cherry and apple that are covered up by the CO2.  It was great.  After that, I tried the Chainbreaker White IPA thinking it was the collaboration beer with Boulevard.  Apparently not.  This is an all-Deschutes version and it rocks.  To me it is a hoppy saison, with the characteristically Dechutes pitch perfect use of hops.  It is the perfect beer for a hop head who appreciates Belgian-style beers but who loves his hops. 

Finally the Black Butte XXIII is rapturous.  I had left my bike parked in front of Deschutes (conveniently) so I ducked in for a snifter of the elixir before heading home.  It was the perfect nightcap.  What I like most about it is the very, very subtle blend of 1/4 bourbon barrel aged beer with regular stuff giving it just the hint of bourbon not the overwhelming bourbon all too common in such beers.

NB: Deschutes' menu has changed (shrunk mostly) since I last visited, most notably absent now are the pizzas.  But the beer pretzel remains. 

Nice weekend to get out and experience some great rare beers.

Coopetition: When Competition is Good for All

This is something I have discussed before in these (what, pages? files? screens?), er in this blog, but is illustrated nicely in this interview Andy Crouch, the Beer Scribe conducted with Alan Pugsley of Shipyard brewing company in Portland, Maine.

AC How has [the craft beer market] changed to now?

AP It's completely changed. The bigger market for craft beer exists now, obviously. The craft beer market since those days has grown every single year.The craft brewing segment of the market is not going away. Back when Geary's started, Sam Adams was just starting. Even though it really wasn't a microbrewery as such, it was a contract brewing operation where all the money raised went into marketing. Jim Koch is a very good marketer. He did a great job in getting it out there and turned it into a multi-million dollar brewery. So that brand in itself helped pull others with it. All of his marketing money was not only making people aware of the Sam Adams brand, it was making them aware there was something outside of Budweiser. And that's really what he did. Even though we're competitors, at the end of the day, you say 'well done' and if you're honest, you say 'thank you for doing it that way'. It certainly did help.

AC After outgrowing the Federal Jack's location, you opened a package operation called Shipyard Brewing Company in Portland, Maine, in 1994. What was the result of this move?

AP The odd thing is that as opposed to taking away from Geary's sales, it actually increased them. The reason being there was one little face of Maine-made beer on the shelf which was easy to miss. When you put Export Ale here and Geary's Pale Ale here, all of sudden you've got a billboard. If you look in the supermarkets today, you've got Shipyard with three or four shelves and Geary's with three or four shelves and that's how you sell beer. Ironically, our growth and establishment helped Geary's. Plus, I think it gave them a little bit of a kick in the pants and realized they had some competition. They realized they needed to do something else and that's when they came out with Hampshire Special Ale. [emphasis mine]

Normally when we talk about competition we are talking about the number of firms that serve a given market that has a fixed (static) demand curve.  In most standard models of imperfect competition, increases in competition are good for consumers (more get to purchase at a lower price) and bad for firms (they have to accept lower prices).  But things change when demand it itself a function of the number of firms.  In this case more competition does two things, it has the traditional role of adding to the competition for existing customers, but it also increases the number of customers as well.  How this tension is resolved determines how an establish firm should feel about a newcomer.

Relations between craft brewers, in my experience, is exceptional - it is a very chummy industry.  This, to me, suggests that the tension right now is being resolved in favor of new firms.  Anecdotally, this seems largely true: new craft beer companies are finding new markets and virgin territory, pushing their way into venues that have heretofore been strictly macro-brew, creating even more shelf space in supermarkets as the number of craft beer drinkers continues to increase.

I think Portland, Oregon is an interesting laboratory for this: it is hard to imagine being a beer drinker that moves to Portland and isn't moved by the omni-present craft beer scene to give craft beer a fair hearing.  Many will decide they not only like craft beer, but that craft beer transforms their beer drinking experience into a adventurous experience that provokes thought, discussion and passion.

There will come a time (and we may be quickly reaching it in Oregon) when the growth of breweries outpaces the growth of craft beer demand and competition becomes more serious among craft brewers, but for the time being, I think the attitude that all breweries are rowing the same boat in the same direction is accurate.  

No Government, No Beer!

Uh oh, SABMillerCoors forgot to renew its license to sell beer in Minnesota before the government shutdown and now they have been ordered to remove their products from store shelves.

From The Atlantic:

Minnesota's government shutdown--the longest in history--has some unexpected victims. Sure, people living on feeding tubes in taxpayer-funded facilities are being taken care of. Janitors are still cleaning the prisons. Police are still protecting the public. But in all this budget-cutting madness, everyone forgot to ask: What about the bros? And now that negligence has taken its toll: Because MillerCoors didn't reapply for its $30-per-brand license to sell beer, bro classics Miller Lite and Coors Lite, among others, must be pulled from the shelves.

KSTP reports that Minnesota "officials have told the company, it must come up with a plan to remove it's 39 brands of beer from shelves and in bars in a matter of days. The company failed to renew it's brand license with the state before the shutdown. ...Without the license, Miller-Coors cannot sell in the state." The company tells the Milwaukee Journal-Sentinel's Don Walker that it's "working with the state to clear this up."

Yikes! I hope Summit is all up to date on its brand license...