BETHLEHEM, Pa., March 30, 2016 — Ken Grossman (Sierra Nevada), Jim Koch (Boston Beer/Samuel Adams), and Dick Yuengling (D.G. Yuengling & Son) took to the stage Thursday to discuss the current state of the industry during a three-part night of events open to the public.
It was fitting for the owners of three pioneering breweries that today tower over the craft brewing segment of the beer industry to meet at the ArtsQuest Center at SteelStacks — a strikingly beautiful backdrop on the former site of Bethlehem Steel, the one-time titan that helped build this country.
The centerpiece of the evening presented by Brewers of Pennsylvania (BOP) was entitled “Meeting of the Malts V.” Attendees were treated to a sumptuous four-course meal paired with beers from each of the breweries, as well as an opening toast beer from the relatively new HiJinx Brewing Company and a dessert beer from the Lehigh Valley’s longtime favorite, Weyerbacher Brewing Company. According to the BOP, more than 500 beer-lovers turned out for a night that included a Pennsylvania Brewpub Festival featuring 15 brewpubs from across the region and a Prohibition Party to close out the evening in the neighboring Sands Casino Resort.
While the brewpub festival presented opportunities for attendees to sample beers from the region’s largest and smallest brewpub operations, the dinner showcased full pours of HiJinx’s Kung Fu Gnome, Sierra Nevada’s Otra Vez, Yuengling’s IPL, Samuel Adams’ Nitro Belgian White, and Weyerbacher’s Tiny. During the dinner, veteran industry analyst Bump Williams moderated a discussion among the three brewery owners and covered topics including the phenomenal recent growth in the industry and the hotly debated role of the macro segment of the beer industry.
The event was held in the wake of the Brewers’ Association recent release of annual statistics. The numbers were in and the highlights reported 4,269 total breweries as of Dec. 31, 2015, with 620 new openings and 68 closings during the year. At year’s end, the “craft” segment comprised 12.2 percent and 21 percent shares of the total beer market, based upon volume output and dollars respectively. Growth was measured at 15 percent (in terms of number of breweries over 2014), 13 percent (increase in volume share), and 16 percent (increase in dollar share). Eight of the last 10 years have seen double-digit year-over-year growth.
All’s good then, right? Maybe. The tone of the discussion throughout the evening could be described as balancing guarded optimism with cautious concern. Coexisting with the macro segment of the industry that is dominated by the multinational conglomerates was a topic that could not be ignored.
Koch weighed in with his take on the word “craft,” describing it as important to the significant portion of beer drinkers who care about what they drink, who makes it and the labels that are attached to it. Grossman took the side of transparency, suggesting that the topic is more a moot point as long as brewers are forthright about what is brewed by whom and where and how.
Koch countered, however, with the assertion that too many big brewers hide behind pseudonyms and lack the transparency that Grossman urges. Yuengling played off this concern and expressed his own worries for the “little guys” simply trying to get established and finding their way in an ever more competitive marketplace — a marketplace that has changed the dynamics of brewing from skilled labor to resources to financing and to retail marketing.
In recent years, numerous west coast breweries have set up second and third breweries, particularly in Virginia and North Carolina. Grossman pointed out that, while a few east coast breweries (he was unwilling to divulge names) are looking to set up some level of west coast operations, the cost-effectiveness related to setting up shop in the east to take advantage of the significant naturally-occurring movement of resources that come eastward across the country is really what drives brewers to locate farther east.
Finally, Koch contemplated what it means for the continued and increased proliferation of private equity firms getting involved in financing and ownership of breweries. He drew attention to the typical window of time being up to seven years (sometimes as little as three) within which the firms are looking to boost revenue, cut costs, maximize capital and get out to maximize returns to investors. He says he’ll be “really interested” to see how some of these deals play out when that time comes for the private equity firms to move on.
On an interesting tangent, Grossman addressed a question regarding water shortage in his home state of California. While his Sierra Nevada Brewing Co. has long been at the forefront of, and won awards for, eco-friendly and sustainability efforts, he stated that they are continuing to look for more ways to reduce their brewing impact.
That said, he deflected water concerns in two ways: first, that Sierra Nevada has access to deep wells at Chico that have been able to sustain their production and, second, that the sum of all California’s small brewers use the same amount of water that it takes to water 600 acres of nut trees.
He jokingly redirected the conversation to the almond tree farmers.
Does it sound like you missed a fun and educational night? The next planned Meeting of the Malts is planned to return to the ArtsQuest Center at SteelStacks in Bethlehem on April 13, 2017.
About the writer: Bryan Kolesar has been on the trail of great beer for over 20 years and writing about it for more than 10. In 2015, his Beer Lovers Mid-Atlantic book was released and in a mere 416 pages covered the diverse beer scene of Delaware, Maryland, New Jersey and Pennsylvania. Find his book online and in bookstores and follow him on Twitter @BrewLounge.