A History of Microbrews, as Told by the Press

 

But first a message from your sponsor:

"Brewed beverages have been a 'nectar of the Gods' for centuries. For most of us, they are pleasant, refreshing, relaxing delights. For the ancients, they were holy potions, to be consumed only after a great deal of ceremony. Unfortunately for some they have become easy narcotics.

Mass merchandising, and the 'homogenization' of the once lofty beverage, has led to a great misunderstanding. Beers, and indeed all spirits, are abused, and the results have been awful.

Microbrews, along with the small vineyards that produce locally available fine wines, return beers and wines to their rightful state of respect. As part of a research project to generate a case history, I gathered these press releases. To my surprise, I found that, unedited, they tell the story of the rise and fall of microbrews, and they help form a perspective of the place microbrews may finally hold in our (the U.S.A.'s) society."

Pabst brewing veterans now think small; 1988

Listen Bud, Columbus, Ohio loves microbrews; 1990

How supermarkets must deal with microbrews; 1990

The Portland Brewing Company - Heady Success; 1992

Sales for small beermakers in 1993

Selling beer with style, 1993

Tapping the masses, 1993

This year's Great American Beer Festival; 1993

300 microwbrews this year; 1993

Craft-breweries" now produce up to 60,000 barrels a year; 1993

Enter the Gorilla, 1994

Microbrews in Oregon, 1994

Portland Brewing Company gets its start, 1994

Mail Order Beer, 1994

Brewed awakenings, 1994

Brew City, 1995

GenXers adopt microbrews, 1995

Feb 1995 report from Restaurant Hospitality; A related article on "The beer boom, and The World Beer Champions for '94

Believe it! 1995

Supermarket News Magazine Report, 1995

Anchor Steam invades Europe, 1995

Popularity of microbrewery restaurants extends across the US, 1995

New beers introduced at the Great American Beer Festival, 1995

Specialty beers see competition from microbrews, 1995

Microbrews make it to TV, 1995

Sam Adams; an overview, 1995

Microbrew party on Wall Street, 1995

Specialty beer: a winner in '96, Jan. 1, 1996

Supermarkets accommodate the strong growth of microbrews, 1996

Life partners Mark Goodwin and David Verzello make their beer a hit with gays and then move into the mainstream, 1996

Six brewing experts name their favorites, 1996

Oregon microbrewing takes off, 1996

Brewpubs are strong in 1996

Contract brewing is seen as a negative, 1996

Microbrewers see slower growth, shakeout, 1997

A-B opens microbrewer in Busch Gardens, 1997

Star Brewing goes flat and folds, 1997

Redhook survives, 1997

20-30 tap beers in the average bar a product of contract brewing, 1997

Microbrews lose sales to cans, 1997

Sales flat in Washington State, 1997


Pabst brewing veterans now think small

Source: The Business Journal-Milwaukee, May 18, 1987 v4 p1(2).

Title: Pabst brewing veterans now think small: Brewing Systems brings love of beer to microbrewery consulting business. (also KMS Consultants) (company profile)

Author: Jon Connole

Subjects: Microbreweries - Services Business consultants - Services Companies: KMS Consultants - Services Brewing Systems Inc. - Services People: Strauss, Karl - Management SIC code: 2082; 7392; 8742Business Collection: 33R5813Electronic Collection: A5082443 RN: A5082443

Full Text COPYRIGHT Business Journal-Milwaukee 1987

Pabst brewing veterans now think small

Many beers have made Milwaukee famous. Karl Strauss would like to get in on the next one.

Shortly after he retired from the Pabst Brewing Co. four years ago after a 44-year career with the Milwaukee brewery, the 74-year-old Strauss formed a consulting business, KMS Consultants, and last year he helped found Brewing Systems Inc. with another former Pabst executive. Both the private consulting business and Brewing Systems help set up microbreweries and brew pubs.

A microbrewery is a small brewery that makes specialty beers, generally patterned after European brews. Capacity is limited to less than 15,000 barrels annually. Brew pubs usually are smaller and sell most of the beer they make in restaurants or taverns on the premises. "There's nothing I love more than running around a brewery," Strauss said in his thick German accent. "I grew up in a brewery. My father was president of a German brewery, and I was actually born on the second floor of the administration building. My mother didn't get to a hospital. "He attended a brewing college, Technical University Munich, and earned a degree in the science and practice of malting and brewing in 1939.

He emigrated to America that year because several relatives already had left, the Nazis had risen to power in Germany and Prohibition had been repealed in the United States. The end of Prohibition in 1933 had made America a land of opportunity for Europeans with brewing experience, and Strauss quickly landed a job with Pabst.

He held a variety of production-related jobs and served as a vice president in his last 25 years at Pabst, including a final stint as vice president of production and assistant to the chief executive officer.

Strauss' partner in Brewing Systems, Arnie Winograd, joined the Milwaukee brewery in 1952 and held a variety of sales and marketing jobs. He had been senior vice president of brand management and was senior vice president of public affairs when he retired.

After retirement, Winograd moved to Fort Walton Beach, Fla., and set up a real estate brokerage firm.

"It was going quite well," Winograd said.

When Strauss asked him to join Brewing Systems, Winograd said he had to consider that he would take a pay cut to launch the firm. But the potential of the company convinced him to make the move.

"Right now, there are about 70 microbreweries and brew pubs in the country," he said. "In the next three years, there will be 300."

Charles Papazian, president of the Institute for Fermentation & Brewing Studies, Boulder, Colo., agreed that the number of microbreweries and brew pubs will increase in coming years.

"There is the potential that any bar could become a brew pub. Of course, that potential will be tempered by economic realities," Papazian said. Winograd compared the small-brewery industry right now to the fast-food craze of the 1950s.

"It's not going to be as big as the fast-food movement, but I think it's a similar phenomenon," he said.

Strauss and Winograd are part owners and both are executive vice presidents of Brewing Systems. There are two silent partners, Strauss said, but he declined to discuss financial arrangements between the partners.

Winograd said that within five years he expects the company to record annual sales of $5 million to $7 million.

Brewing Systems officially has its headquarters in Fort Walton Beach, but Strauss works out of his Fox Point home.

Strauss also runs KMS Consultants from Fox Point. His first clients, a Milwaukee-area malting company and a Canadian brewery, were not microbreweries or brew pubs.

"I really started to take a look at the microbrewery movement two years ago in Vancouver, British Colombia," Strauss said. "I saw a pub brewery there that was very successful. There was a little movement, it seemed, in Canada and on the West Coast." Strauss wanted to maintain his consulting business, but he also wanted to form a company that would target the growing small-brewery market.

They got a shot in the arm when it signed a contract with JV Northwest Inc., Wilsonville, Ore., a manufacturer of brewery equipment, to be its exclusive sales representative east of the Mississippi River. Phil Loen, a sales manager with JV Northwest, said his company reached an agreement with Brewing Systems about six months ago under which Brewing Systems would install one brewery a month.

Strauss said it costs $100,000 to $200,000 for the equipment to build a brew pub or microbrewery total cost for a project can run as high as $2 million.

This summer, Brewing Systems will set up breweries in Adamstown, Penn.; Northampton, Mass.; and Charlottesville, Va., Strauss said.

In addition, Strauss is acting as brewing consultant to the Oldenburg Brewery and Entertainment Complex, Fort Mitchell, Ky., which is scheduled to open this summer. The $7 million development will consist of restaurants, a live entertainment center, a 500-room hotel and a brewery. Developers are investing $2 million in the brewery, and Strauss was hired to design the brewery and come up with a beer recipe.

"We've probably got one of the most modern plants for a microbrewery," said David Heidrich, project director for the complex. "I think we have twice the conveyor equipment we really needed. People like to see that kind of stuff. "All the people on our team don't know anything about beer. I'm an attorney, and the guy I work for is a developer.

"I've never brewed a batch of beer in my life, but Karl has made more beer than you or I could in the next six lifetimes. We talked to a lot of consultants, and they all talked about making an 'artful' beer. I wanted somebody to get a brewery up and running."

Strauss and Heidrich recently traveled to Louisiana to run a test brew of Oldenburg Beer. The test site was selected because the equipment is similar to equipment being installed in Kentucky.

"Here's Karl dipping down in the beer vats and running around this little brewery in the bayou, and all i could think was that five years ago this guy was responsible for brewing 1l million barrels a year and here he is making eight half-barrels for me," Heidrich said.

Papazian said his organization knows of about a dozen consultants or consulting firms. He said Strauss has an established reputation, and the Fox Point brewmaster will address the organization's conference on microbreweries later this year.

Consulting fees for microbrewery and brew pub work range from $350 to $1,000 a day, plus expenses, Papazian said. Strauss wouldn't reveal his rates, but he said he's at the lower end of the range.

"I have a pension and Social Security, so I can charge less than a younger guy," he explained. Heidrich said Strauss "is competitive but doesn't come cheap."

Brewing Systems is bidding on projects in Florida, Illinois and Wisconsin, Strauss and Winograd said, and is talking with three separate groups in Wisconsin. "I think American beers are the highest quality in the world," Strauss said.

"By quality, though, I'm talking about the ingredients. And in America you have access to the highest quality of ingredients.

"It's kind of like making goulash. You might not add enough paprika for my taste. With American beers, they don't add enough malt.

"When you visit Germany, you acquire a taste for their beer. Then when you get on the plane to come home and they serve you a Budweiser, you take one sip and spit it out and say: 'Oh my God, I'm drinking water.'"


Listen, Bud, Columbus tastes run to home-made brews.

Source: Business First-Columbus, April 23, 1990 v6 n33 p1(2). Title: Listen, Bud, Columbus tastes run to home-made brews. (increasing popularity of local microbreweries over Budweiser and other brand name beers)

Author: Stephen Lilly

Subjects: Columbus, Ohio - Business and industry Brewing industry - Management Microbreweries - Management Brewpubs - Management Locations: Columbus, Ohio SIC code: 2082 Business Collection: 54Q4425 Electronic Collection: A9237259 RN: A9237259

Full Text COPYRIGHT Business First-Columbus 1990

Listen, Bud, tastes run to home-made brews

Scott Francis has a job that keeps him hopping.

Francis is vice president and brewer for District Brewing Co., more commonly known as Columbus Brewing Co., a small-scale brewery that has been operating in the Brewery District since last September. There, Francis buys ingredients, brews, kegs and distributes his four signature lines of beer to customers around a city with a rich German heritage and a thirst for beer.

Though consumed by brewing, Francis is not alone in tapping into this market niche. Since last summer, two other micro breweries, brew pubs to be more specific, have opened in Columbus. The operators of Growlers Grille & Brewery and Hoster Brewing Co. also believe that they have found both the recipes for distinctive beers and the ingredients for long-term profit. "This is a tough, tough business. But it is a lot of fun," said Francis, resting after preparing his brewery's 72nd batch of beer. "It's very tricky to come up with the right types of beer to brew, formulations of those beers that are going sell, the right name. It's harder to sell it than to make it."

Micro breweries are a phenomenon of the 1980s, according to Jeff Mendel, assistant director of Boulder, Colo.-based Institute for Brewing Studies, part of the National Association of Brewers. They have grown out of grass-roots interest in home brewing and continue to increase in popularity.

"There very much has been a gap in the beer market," Mendel said. "There have been the mainstream brands, which brew two or three categories of beer. Then there are the imports, which produce maybe five or six styles of beer and claim to have better quality, but they really are the same. Micro breweries provide something different, both in terms of style and quality.

They serve people who crave something different.

"In this era of niche marketing, micro breweries have been able to carve a niche for that reason.

"A subset of this category is brew pubs, which have restaurant components to their breweries and typically produce beer only to be consumed in those restaurants. These pubs typically produce between 1,000 and 2,000 barrels a year. Most cost between $200,000 and $1 million to start and operate. There are 111 registered brew pubs and 67 micro breweries in the United States. Canada is home to 30 micro breweries and 42 brew pubs, according to the NAB.

These breweries typically use one of two brewing techniques. Some brew from scratch, buying and roasting their own grain to produce malt syrup, which is fermented with yeast, carbonated, filtered and readied for consumption. Others purchase malt extract and begin the production cycle at that point.

"It's a relatively new thing," Mendel said of the micro craze. "It really started in California, Oregon and Washington and then spread to cities where there were educated and enthusiastic brewing publics like Boston and Chicago. They also have become popular in tourist areas, where they project a local flavor and taste.

" opportunities that attracted entrepreneurial interest nationwide are the same that prompted their interest here. Gerry Johnson, manager of Hoster Brewing Co., said the initial investment ranges anywhere from $100,000 to $500,000.

"We obviously are here to make money, but we want to do it right," Johnson said. "When we got started, we did not want our beer to be a novelty item that would attract people to the restaurant. We wanted to make the best possible beers we could. We have been totally preoccupied with quality." Hoster first opened its taps on Dec. 1. The operation, owned by a Toledo-based investment group headed by Dean Skilman, spent about $150,000 on equipment to brew the company's four signature lines of beer: a dark Bavarian lager, two types of pilsner and an amber beer.

Hoster has the capacity to produce about 3,000 barrels of beer per year. T average brewing cycle takes 21 to 28 days, depending on the type of be being brewed.

"The up-front costs were substantial, but beer is a low-cost item aside from the initial investment," Johnson said. "And we have been very encouraged by the reception the public has given our beers. Approximately 42 percent of our total sales, food included, are beer sales. Hoster beer sales make up about 30 percent of total sales. "Gary Gray, brewer for Growlers Grille & Brewery on Bethel Road, shares many of Johnson's views. Like Johnson, Gray says his four signature beers aren't simply a hook to attract food customers, but the pub's primary attraction.

Gray said his brewery hopes to produce between 1,200 and 1,500 barrels of beer a year. Right now, the pub is selling between 500 and 700 gallons of beer a week. Gray says about 50 percent of the restaurant's total sales are beer sales, and that Growlers Lager, Red Irish Ale, English Amber and Grog lines generate between $6,000 and $7,000 in weekly revenue and outsell domestic and imported labels by a 4-1 margin.

Gray said Growlers' investors spent about $350,000 in property and equipment costs to set up the Growlers brewery, which purchases a malt extract and begins its brewing cycle there. Francis, of Columbus Brewing Co., also uses a malt extract system, largely because the zoning restrictions around his brewery do not allow for the smoke produced by toasting and roasting grains and producing malt syrup. And he has no on-site location to serve his products. But he says his beers are catching on.

"At first the beers were associated with the Brewery District. Now they associated with Columbus," Francis said. "There are 13 restaurants that sell it around town, including Schmidt's, Jimmy's Place Up Stairs, Nonni's, Zenos, the Great Southern, Patrick J's, the Colorado Rose. It's finding its place."

Columbus Brewing Co. is owned by Suzanne Edwards, wife of Brewery District developer Peter H. Edwards. Francis, who encouraged the Edwards family to include a brewery in their development, was brought on to manage it. It opened Aug. 11 of last year. "It's an odd thing. Alcohol consumption is down nationwide and American beer sales are down overall. The customer base for beer is shrinking with the aging of the Baby Boomers," Francis said.

"But what I also see is that one-third of all beer consumed in restaurants either is produced by a micro brewery or imported. "Francis said it took approximately $350,000 to capitalize his brewery, including about $150,000 in equipment costs. He said he has the capacity to produce about 45 kegs of beer a week, each costing about $60 to produce. A new beer garden scheduled to open this summer, along with current demand, should tap out that capacity. He said he is not interested in producing more beer because he wants to maintain its level of quality and keep the cash flow black.

"In this business, a lot of the micro breweries and pubs will go belly up because brewing is an art form. Great emphasis has to be put on quality, and not all are doing so." Francis said. "This can be a profitable business because the numbers are right. I can make a glass of beer for 10 cents that can be turned around and sold for $2.50"


Ronald Sarasin, president of the National Beer Wholesalers Association, suggests ways of dealing with microbrews and the public image of alcoholic beverages.

Source: Supermarket News, Nov 5, 1990 v40 n45 p24(1).

Title: Growth of microbreweries an issue. (beer wholesalers must learn to deal with microbreweries and anti-drinking campaigns)

Author: Laura Klepacki

Subjects: Beer - Marketing Microbreweries - Contracts Brewing industry - Innovations Drinking of alcoholic beverages - Public opinion

SIC code: 2082; 5181

Electronic Collection: A9098250 RN: A9098250

Full Text COPYRIGHT Fairchild Publications Inc. 1990

Growth of Microbreweries an Issue

CHICAGO - Beer wholesalers must foster solid working relationships with microwbrews, as well as counter sweeping national anti-alcohol programs to insure the future success of the industry, according to Ronald Sarasin, president of the National Beer Wholesalers Association.

Sarasin, a former U.S. Representative from Connecticut, spoke last week at the Interbeverage Convention here on the current challenges facing beer wholesalers.

"The biggest damage to the industry today is the tying in of alcohol and drugs," said Sarasin." Schools have been teaching that drinking beer and other alcoholic beverages is the gateway that leads to heroin and crack. "Sure, alcohol is a drug, but so is penicillin," said Sarasin. "In moderation, it has even been shown to be good for you." Sarasin challenged the industry to take a stand. "So far, we have been very quiet," he said.

Even worse, said Sarasin, is that children are getting mixed messages from home and school about the link between alcohol and drugs. "When children see that Dad drinks a beer after mowing the lawn, and enjoys it, and that it is OK, they might think that drugs are OK, too. "Another issue of major importance to the industry is the growth of microbreweries, said Sarasin.

Microbreweries have enhanced the industry through the introduction of new varieties and quality, said Sarasin. However, the same small "mom-and-pop" operations could challenge the regulated sanctity that now sustains the industry, he said. Sarasin explained that since the end of Prohibition, the Government has drawn a line between the supplier and retailer to prevent alcohol abuses. It was the Federal Alcohol Administration Act of 1935 that prohibited such agreements between suppliers and retailers. Most states, at the time, established a three-tier system of going from the manufacturer to the wholesaler to the distributors. "We have an obligation to take care of [microbreweries]," said Sarasin." Or they might go to the state and ask for permission to sell their own. "Our concern is that there might be an erosion of the reason for the second-tier being," said Sarasin. "There is a regulated reason why there is a beer wholesaler. "Beer wholesalers also play an important role in insuring the quality of the product on the shelf. Since beer is perishable, wholesalers assume the responsibility for watching expiration dates.

Sarasin noted the industry must also contend with recent tax increases, which doubled the excise tax on beer, as well as increases in gasoline tax and gas prices.

As one of the nation's earliest regulated industries, beer wholesalers have developed one of the largest political action committees (PACs) to promote their agenda at the government level.



The Portland Brewing Company - Heady Success

Source: Oregon Business, Nov 1992 v15 n11 p44(4).Title: Heady success. (Portland Brewing Co.)(includes related article) (Company Profile)

Author: Ellen Wojahn

Subjects: Brewing industry - Management Microbreweries - Management Companies: Portland Brewing Co. - Management SIC code: 2082 Business Collection: 69S0450 Electronic Collection: A12946339 RN: A12946339

Full Text COPYRIGHT MEDIAmerica Inc. 1992

What will it take to bring this hobby-turned-business managerial maturity?

The Oregon Enterprise Forum made its call in September. You can only brew beer in an old aquarium for so long. If you're good at it, friends will be soon clamoring for a taste. Next thing you know, you're washing down the old fishbowl a couple times a week, you're stacking sacks of hops and malt in the garage and the laundry room, and everybody -- from your neighbors to your wife -- is telling you something's got to give.

That's how Portland Brewing Co. got its start in the mid-1980s, when founders Fred Bowman and Art Larrance transformed their hobby into a business and began serving up English-style ales to customers at retail, in taverns, and in their own tiny brew pub in Portland's northwest district. Ironically, it's also the situation in which the company finds itself today.

Once again, demand is outstripping supply, production has outgrown the old creamery/meat-packing plant the brewery calls home, and it's obvious to all 24 employees that it's time for a new round of changes. The first and foremost change, already underway, is managerial. Even its founders recognize that Portland Brewing has reached the stage where it needs to become professionally managed. To that end, Bowman and Larrance have handed the reins to one of their major investors -- Portland real estate developer Charles A. "Tony" Adams.

Another change underway is the construction of a "showplace" brewery near Portland's Montgomery Park. The remaining changes, still under spirited discussion among the members of the six-person management team, have to do with Portland Brewing's marketing, positioning, and financing strategies. How many beers should the brewery produce, and what kind? What should be PBC's long-term strategy for competing with other brewers, both in Portland and throughout the Pacific Northwest? And, how should PBC capitalize on its growth? These were among the questions batted around at a September meeting of the Oregon Enterprise Forum. Panelists and audience members lauded the brewery for its quality products and its devoted following, both of which, they agreed, bode well for the company's future. Still, they voiced concern over the obvious discrepancies between the goals set in the business plan, and the strategies the company employs day to day. Acknowledging the difference between the talk and the walk, CEO Tony Adams blames growing pains. "We're trying to get the boat to change direction," he says. Going from the hobby stage to the entrepreneurial start-up phase was tough. But spanning the gap between start-up and fully-managed business -- well, that's been "a real challenge," especially for a group of guys who all came from different professions.

The brewing bug.

Like most microbreweries, Portland Brewing was born of a sheer love for beer. Founders Bowman and Larrance were working in auto service and real estate jobs, respectively, when the home-brewing bug first bit. Itching to make bigger batches, they leased an old creamery building at 14th and Flanders in 1983. Then the pair obtained a professional mentor in Bert Grant, owner of Yakima Brewing Co. How did they win such experience advice? "Bert said we were the first ones to offer to pay money for it," shrugs Larrance. Soon, Portland Brewing began brewing Grant's products in Oregon as part of a licensing agreement. All the while, Bowman and Larrance courted investors, drew up construction blueprints, and planned the roll-out of their own label. By late 1985, a mere 185 days into construction, PBC introduced its first product, Portland Ale. Next came Timberline Ale, followed by Oregon Dry Beer, Portland Porter, and then Mount Hood Beer, a revival of a pre-prohibition classic. Recent additions to the list have been Portland Stout and McTarnahan's Scottish Ale.

Tony Adams came aboard as one of PBC's original shareholders in 1985, partly as a means of collecting an unpaid commission from fellow developer

"Art didn't think he owed me the money, but he paid me -- and then turned around and asked me to make an investment of about the same amount in Portland Brewing Company," Adams recalls with a smile. "I figured, what the heck." What self-respecting beer drinker wouldn't enjoy having a little brewery stock in his portfolio?

Adams fell for the business. "It started out as love, and became a love-hate addiction," he quips. Soon Adams became the peskiest of investors, asserting his opinions on a host of operational and financial issues, including urging his partners to reconsider their preference for English-style ales. "I happen to think the Germans make a better beer," Adams maintains. "Besides, the typical microbrew customer likes variety."

In 1991, Adams put his money where his mouth was. He and investor R. A. "Mac" McTarnahan -- a Portland steeplechase champion for whom McTarnahan's Scottish Ale is named -- offered additional investment in exchange for managerial control. When the offer was accepted, Adams renewed his efforts to convince Larrance and Bowman to introduce some German-influenced brews, if only to boost the company's growth curve. Tasting tour. "We'd been growing 35% in years when the rest of the market was growing at 70%," Adams reasons. To further ply his argument, Adams escorted the rest of the management team on a beer-tasting tour of Germany. Upon return, a decision was reached. Portland Brewing Co. would begin making more German-style beers -- and even a few microbrewed lagers, which was virtually unheard of -- if Adams could put together plans and financing for a new brewery. The original brewery topped out at a production level of almost triple the 400 barrels a month the site was built for. The facility had become too busy to handle the product diversification Adams had in mind. It was agreed that PBC would not seek outside financing to construct the new brewery. Instead, Adams and McTarnahan took on most of the burden themselves. Upon completion, Adams will lease the facility back to the company. The new brewery is the linchpin on which hangs the long-range marketing strategy that Adams and his team have developed for Portland Brewing Co. The increased capacity will help the company meet the burgeoning demand that already exists in the microbrew industry, and the increased production will bring with it better margins. "We'll cut our labor costs by 75%," says Adams. The new brewery will also afford PBC the space to brew lager -- a market now dominated by the large national brands.

There are also tentative plans to establish PBC's second brew pub, adjacent to the new brewery. In addition to the high margins such as watering hole generates, Adams considers a brew pub a useful tool in building brand loyalty and stimulating package sales. Still, because the pub isn't essential to the manufacturing operation, Adams says it's going to be "brewery first, pub second. "Adams hopes to have his new brewery open for business by next spring.

Accompanying the opening will be PBC's first real ad campaign and, soon thereafter, the introduction of the brewery's first lager product. No fan of traditional advertising and its expense, Adams will nonetheless spend the money. He regards it to be a golden opportunity to assert and reinforce Portland Brewing's identity with the beer-drinking public. PBC's image is a bit fuzzy, Adams admits. After all, his is not primarily a package-sales outfit, like Full Sail. It's not best known for its draught products, as is Widmer. And it hasn't built its reputation on brew pubs, as has Bridgeport.

"We do it all," sighs Adams, not sounding very proud of the fact. But the new should assist him in forging a more manufacturing-oriented identity. "It'll help us sell the brand -- Portland Brewing -- instead of the individual label or product." Beyond reinforcing the identity of the brewery and the brand, Adams isn't planning any specific effort to challenge his competition. It's not yet a situation where growth has to come at someone else's expense, he points out. "Micros are still only 2.9% of the market in Oregon. The real opportunity is there for all of us, in that other 97.1%." Besides, Adams is like most microbrewers: He naturally shies away from the rd-nosed niche-making that characterizes so many other small businesses. Beer isn't mere business, after all; it's that love-hate addiction Adams talks about. "We want to do what feels right for us; not what the competitors aren't !doing," Adams declares. Marketing has a growing role in the scheme, of course, but "the real issue is what beers we want to make -- not how to position ourselves against the competition."

PORTLAND BREWING CO., PORTLAND

* THE CONCEPT: Microbrewery. Makers Portland Ale; Mount Hood Beer; McTarnahan's Scottish Ale (a recent Great American Beer Festival gold medal winner); Portland Porter; Portland Stout; and two seasonal brews -- Oregon Dry Beer and Winter Ale.

* MANAGEMENT: Investor-turned-CEO Charles A. (Tony) Adams is also a Portland real estate developer. Art Larrance and Fred Bowman, vice presidents, founded the company.

* FINANCIAL BACKING: PBC management owns 54% of company stock, with options to purchase another 10%. CEO Tony Adams and ale-namesake R.A. MacTarnahan own a controlling interest.

* CURRENT AND PROJECTED PERFORMANCE: PBC ranks 42nd among the nation's 300 microbrewers. The company expects to triple its current production of 7,200 barrels by the end of fiscal year 1994, thus increasing sales from $1.2 million to nearly $4 million in two years.

* STRATEGIC CHALLENGES: Expand production to meet demand. Diversify product line. Improve distribution and increase promotion.

EXPERT ADVICE

The four experts on the Oregon Enterprise Forum panel find good news and bad in Portland Brewing's business plan. They love the idea of introducing a lager, but they have some concerns about the construction of a new brewery. They support the idea of seeking growth in the packaged-sales market, but they think Adams has overlooked some promotion and distribution opportunities to help achieve that growth. And, to a man, the panelists encouraged Adams to make "narrow and deep" company watchwords. PBC's product line has grown too broad, the four agree. "Use the 80-20 rule and trim the product line by the numbers," says Harry Roberts, president and CEO of Evans Group, a Portland marketing communications firm. He adds, "If you must preserve certain labels, relegate them to seasonal status." The four also call for standardized packaging and labeling. "The brand is too submissive to the product name," says Roberts. Like Adams, the panelists prefer promotion and free media to paid advertising. "Break some rules, be off-the-wall," suggests Rick Schmidt, former president of Olympia Brewing Co. Roberts, meanwhile, mentions event sponsorships and seasonal beers as public relations opportunities. With 20 different distributors heavily concentrated within 250 miles of Portland, panelists think PBC's distribution network needs reorganization.

Lee Jacobson -- a private-practice CPA who once was a beer-industry CFO -- encourages the company to consider a master distributor to handle accounts in outlying markets.

Roberts, Schmidt, and Jacobson say Adams' efforts to build a more focused identity for his company will greatly assist him in both marketing and distribution. "You'll hold your facings if you stay narrow and deep in your brands and your packaging," advises Jacobson. Roberts agrees. "You'll also have more money to promote and market. You'll build momentum for the brand faster and more profitably." Future concerns. John von Schlegell, managing partner of Endeavour Capital, raised questions about PBC's decision to build a new brewery.

"Murphy's Law is written all over plant moves," he says. Von Schlegell would have liked to see PBC explore contract brewing as a means of achieving its expansion. As for financing, von Schlegell's main concern is that PBC will turn off investors by raising too much money at a time. He encourages the company to give serious consideration to bank leverage. "There's no dilution of ownership, and you can bootstrap and go slower when you're using your own cash flow."

Tony Adams says he now knows that his business plan needs "some better definition" when it comes to wholesaling and distribution. He wholeheartedly agrees with most of the suggestions the panelists offer in these areas, and is already working to standardize packaging and labeling. Once his new lager is introduced, he'll trim the remaining product line -- if somewhat reluctantly.

"I still don't know how you balance that narrow-and-deep stuff against the consumer's quest for variety," he says. "But we'll take heed." Adams defends his decision to build a new brewery. "We need to be locally made with local ingredients," he says. "It would bother me to be making Portland Ale in, say, Minnesota. It's a perception issue with me." Similarly, Adams wants to avoid letting Portland Brewing become too sophisticated; too motivated by marketing and sales growth. "If we start acting like a national brewer, I think we'd also start losing some of our charm. We don't want to be a national brewer. We know there's room in the market for products that aren't promoted by girls in bikinis. Why else would there be 300 microbreweries, and only six nationals?"


The beer business may be flat, but the sales of the so-called microbreweries bubbled up last year some 40%

Source: Fortune, May 31, 1993 v127 n11 p15(2).

Title: Frothy sales for small beermakers. (microbreweries' sales increasing) (Brief Article)\

Author: Jennifer Reese

Subjects: Microbreweries - Market share Brewing industry - Market share SIC code: 2082 Electronic Collection: A13831715 RN: A13831715

Full Text COPYRIGHT Time Inc. 1993

The beer business may be flat, but the sales of the so-called microbreweries bubbled up last year some 40%. No longer defined solely by size, a microbrewery today is a small-scale beer maker that uses 100% barley malt -- no rice or corn -- in its product. The result: a darker, fuller-bodied, increasingly popular drink.

With micros like San Francisco's Anchor Brewing and Samuel Adams-maker Boston Beer continuing to gain fans, some big breweries have begun taking notice. In March, Philip Morris's Miller Brewing introduced an all-barley Reserve Amber Ale.

Are the little guys, who own under 1% of the market, fazed? Not Pete Slosberg or Mark Bozzini, founder and president, respectively, of Pete's Brewing in Palo Alto, California. Says Bozzini: "The big brewers obviously could do what a microbrewer does. But ours is a labor-intensive business, and they want to run 12-packs out the door from morning to night." Other small beermakers, like Joe Tighe, CEO of New Amsterdam in New York City, whose revenues grew 129% in 1992, find the efforts of the major brewers amusing. Says he: "Miller's trying to copy us, and I'm just a little peanut." Or is that beer nut?


Selling beer with style

Source: Restaurant Hospitality, May 1993 v77 n5 p116(4).

Title: Selling beer with style. (Beverages)

Author: Gail Bellamy

Abstract: Beer has always been a popular beverage. Since 1980, microbreweries have steadily increased from 90 brewpubs to as much as 153 in 1991. Its popularity has resulted in specialized and sophisticated marketing trends aimed at further increasing sales. Restaurants are marketing beer to accommodate varied tastes of its consumers and establishing specific markets for alcoholic and non-alcoholic beer, ales and other such products.

Subjects: Microbreweries - Marketing Brewing industry - Marketing SIC code: 5813; 2082Business Collection: 71T2220 Electronic Collection: A14332843RN: A14332843

Full Text COPYRIGHT Penton Publishing Inc. 1993

Beer has always been a user-friendly beverage--we even use affectionate nicknames for it like brewski and suds. However, sophistication and specialization are now leaving their mark. New products, creative promotions, and a whole slew of brewpubs are springing up.

A decade ago, a few microbreweries were sprinkled throughout the country; now, there are reportedly more than 90, not to mention the 153 brewpubs operating in the U.S. by 1991. Last October, the second annual Great Northwest Microbrewery Invitational in Seattle showcased beers--including Buzzard's Breath, Rhino Chaser's Lager, and Border Run Ale--from 27 microbreweries in nine states.

Although the Northwest undeniably has its share of microbreweries, the phenomenon is a national one. Herein, we report on operations in Arizona, Florida, Kansas, Ohio and Kentucky, plus brewpubs in Boston, Chicago and Philadelphia. Restaurant-breweries, unlike microbrewers, serve their product directly to customers rather than relying on traditional distribution channels. Other operations are offering private-label products.

Last month, Marriott Hotels began offering its own pilsner-style microbrew, Champions Clubhouse Classic, in the company's restaurants and lounges. In Cleveland, The Great Lakes Brewing Co. microbrewery/restaurant, promotes its own line of seasonal brews, which are named for significant people and events in the city's history. The Eliot Ness is a Vienna-style lager, for instance, named for Cleveland's one-time safety director. Seasonal brews available at Boston Beer Works restaurant and brewery include Bluebeery Ale, with its "blueberry nose," served with fresh berries marinated in their Hercules Strong Ale. The "Salute to Summer" Watermelon Ale is described as fruity with just a hint of sweetness.

NICHE MARKETS.

The "non" market for no-alcohol brews caters to those who want the flavor of beer. For instance, Haake Beck non-alcoholic brew is positioned as an all-natural adult thirst-quencher for consumers who pursue a lifestyle of fitness.

Those who are into organics will be eager to try a new import from Scotland, Golden Promise, promoted as the world's first organic real ale. It's named for the organic barley grown in Scotland's border country. The organic hop flowers used in brewing are grown in Kent. To be certified organic, a beer must contain only barley, hops, yeast and water, with nothing added, and ingredients must be grown in soils that have been pesticide- and insecticide-free for at least three years. Golden Promise is available on the West Coast, imported by Thames America Ltd. of San Rafael, California. Meanwhile, in March, Bicycle Beer was rolled out in the U.S. Its two introductory flavors--Misty Lime and VeriBerry--are based on radler-mass, a traditional beverage popular with Bavarian and Austrian bicyclists. The all-natural fruit-flavored beer is said to replace electrolytes, polypeptides, and carbohydrates lost during exercise. It's imported by Chicago-based Pacific Beverage Marketing Co. Another alternative product category is clear beer which, as it implies, is transparent rather than the traditional golden tone. Zima, a clear malt beverage, was introduced by Coors late last year and other brewers (Miller, among them) are testing similar ideas.

BEER AND FOOD.

At The Dock Street Brewing Company Brewery and Restaurant in Philadelphia, beer is an integral part of the restaurant experience. Servers are trained to help customers select beers that complement their meals. Since staff members have to remember more than two dozen beers, training sheets help workers pair tricky menu items with compatible beer choices. For example, the hearty pork dish of Puerco Tinga Poblano needs malty flavors to stand up to the chipotle peppers. Recommendations? Dunkel, Vienna, Burton, or Porter. Similarly, a beer and wine comparison sheet helps servers to recommend a beer that's in keeping with the customer's wine preference. Patrons who prefer full-bodied reds like Burgundy, Pinot Noir, Merlot or Zinfandel may be steered toward India Pale Ale, Buton Ale, Alt, or Porter. The dry-white-wine-drinking crowd will more likely be directed to hoppy pale lagers, such as Pilsner, Helles, Kellerbier, or German Pilsner. Dock Street's beer and wine comparisons are available for five general wine categories with several examples of each.

BEER AND MOOD.

One common denominator of bars that cater to beer-drinkers is that they have fun with their products and promotion During a promotion last summer, Willie C's Cafe in Wichita, Kansas, offered a free armadillo for every lady...Armadillo Amber private-label beer, that is. The restaurant was introducing a new signature beer. Irreverence is evident in Willie C's list, Official Beers of the Official World, which identifies the world's four great beer producing regions as Europe, The Americas, Armadillo Island, and Everywhere Else. The list includes 145 beers. By the way, Armadillo Amber is brewed for Willie C's by Oldenberg in Ft. Mitchell, Kentucky. Oldenberg Brewery and Entertainment Complex is part of Drawbridge Estate, which happens to be sponsoring a weekend Beer Camp in September. The complex itself includes J.D. Brew's brewpub, the American Museum of Brewing History and Arts, the Great Hall, and the microbrewery.

BEER SORBET.

In March, Oldenberg held an International Food & Lifestyles Media Conference. One specially developed recipe sounds intriguing: Oldenberg Beer Ice (sorbet). To make your own, bring 1 cup of sugar and 1/2 cup of water to a boil in a small saucepan, and simmer for 5 minutes. Cool the syrup to room temperature, then combine it with 2 cups of Oldenberg Blonde Beer, and the juice of 1/2 lemon and 1/2 orange. Place the mixture in an uncovered plastic container and freeze it overnight, in an ice cream freezer. The camp itinerary doesn't sound half-bad either, beginning with the beer camper's oath at the opening ceremony. Events range from a home brew course and a tour of the museum to a five-course lunch with a variety of beers, a pub crawl through Greater Cincinnati, 15 minutes of temperance plays on Sunday morning, and Alan Eames speaking on "Dumb places I have been in quest of beer." Beer Camp rates begin at $340 per person for single occupancy. Call 800-426-3841 for a registration form.

MORE BEER AND FOOD.

In Cave Creek, Arizona, The Satisfied Frog and its Black Mountain Brewery provide some hot eating and drinking experiences. For instance, Ed's Original Cave Creek Chili Beer (named for owner Ed Chilleen) was developed to accompany Mexican food. A serrano chili pepper floats in each bottle.

Coconut Creek Cinema 'n' Drafthouse in Florida is a combination movie theater/casual dining spot. On the menu, there are appetizers, pizzas, specialty sandwiches and desserts. Recently released movies appear in two theaters. Beer offerings--including Budweiser, Michelob, and Coors on draft--are priced at $2.25 per mug, or $6.50 per pitcher. Heineken, Corona, and O'Doul's are available in bottles. Admission is $2.50 Sunday through Thursday, and $3 on Friday and Saturday. Cinema 'n' Drafthouse International is an Atlanta-based franchisor.

THE SCHOLARLY APPROACH.

Goose Island Brewing Co. encourages beer education for its customers, and to that end offers an MBA program; Master of Beer Appreciation, that is. The Chicago brewpub, with a 2,000-barrel annual output, ranks as one of the nation's top brewpubs. Foods include casual classics such as spinach, tomato and gorgonzola thin crust pizza, beer chili, and chicken tacos. The Goose Island Brewery Brunch is a 27-item buffet served on Sundays. The MBA Program encourages patrons to sample the 27-style beer "curriculum," and weekly home-brewing classes further educate customers. Brewmaster's Dinners are the beer-based version of meet-the-winemaker dinners. Mayfest, held May 21 and 22, will mark the operation's fifth anniversary. The brewpub's promotional ideas have raised demand for Goose Island's beer, too. It'll be served at the Stadium Club at Comiskey Park and at Kane County Cougars games. To further educate us about beer-drinking, the Wharton School Study on Women Drinking Beer was prepared for the Dock Street Brewing Company. Findings include facts like these: 46% of women beer drinkers regularly drink imported beer, 38% drink light beer, 31% prefer boutique beers, 18% drink super premiums, 13% like ale or stout, 8% drink low-alcohol beer, and 5% each enjoy premium and popular brands.

Meanwhile, a Harvard Square operation in Cambridge, Mass., John Harvard's Brew House, is making a name for itself by taking the food seriously and offering "honest food and real beer," including fruit beer and a seasonal selection. The 325-seat John Harvard's Brew House features a menu that reinterprets classic pub offerings with items such as the "new brew wave" upside-down casserole of baked and grilled vegetables atop parslied noodles ($7.95). The Bard's Sampler from its beer menu provides five small servings of Cristal Pilsner, New Town Light Ale, John Harvard's Pale Ale, Irish Export Stout, and one of the specials, all for $4.75.


Tapping the masses

Source: The Business Journal Serving Greater Sacramento, May 10, 1993 v10 n7 p1(2).

Title: Brewpubs tap the masses. (economic prospects for microbreweries and brewpubs in Sacramento, California) (Industry Overview)

Author: J. Nils WrightSubjects: Sacramento, California - Business and industry Microbreweries - Economic aspects Brewpubs - Economic aspects Locations: Sacramento, California SIC code: 2082; 5813Business Collection: 73N4772 Electronic Collection: A13920420 RN: A13920420

Full Text COPYRIGHT City Business/USA Inc. 1993

The centuries-old brewpub tradition is enjoying its biggest comeback since Prohibition. In names like The Hogshead and The Rubicon have become common in beer and ale epicurean circles, since brewing and serving on the same premises became legal in 1984.

And while the rest of the beer market was stale, nationwide microbrewery sales in restaurants and stores rose 40 percent last year alone. The popularity of crafted beer attracts aspiring lager-meisters everyday.

Take Les Lyons, who was an ardent beer sipper for years. A former construction engineer who most recently owned a silk-screen printing company, turned his passion into a living last year when he bought the Dead Cat Alley Brewery in Woodland. In March he changed the name to Woodland Brewing Co. "If I was anywhere within 50 miles of a microbrewery, I'd turn off and go find it," Lyons says.

This year, two more microbreweries will open in Sacramento. River City Brewing Co. will open in Downtown Plaza, and a second site will be opened by the owner of midtown's popular Rubicon Brewing Co.

And in Davis, 3-year-old Sudwerk Privatbrauerei Hubsch will defend its title as the top-selling brewpub in North America, according to the Bureau of Alcohol, Tobacco and Firearms. The 2,900 barrels of Hubschbrau that Sudwerksold and distributed through a sprawling Northern California distribution network requires a full-time brewing staff of 10 people.

Many local brewpub owners, like Lyons, got their start as home brewers. In a sense, they've followed the footsteps of our nation's founding fathers. George Washington, William Penn and Samuel Adams were brewers, and Thomas Jefferson was a student of the science of brewing.

Large-scale beer production didn't start flowing until the mid-1800s when German immigrants with names like Pabst, Busch and Schlitz introduced beer to the masses.

Since then, the quality of most American beer has flattened. Bland lagers came to constitute most of the 195 million barrels of beer sold in this country every year. For those whose palates favor fuller flavors, imported beers became popular.

Increasingly, however, those who want more in their glass than Bud/Miller/Coors have turned away from imports and toward the domestic, crafted beers produced by microbreweries, says Ben Steinman, executive director for Beer Marketer's Insights, an industry newsletter. While imported beer sales have dropped by 1 million barrels a year over the last five years, microbreweries have seen sales increase by about the same amount.

Estimated sales last year for crafted beers will be 1.2 million barrels, Steinman reports. That's up an incredible 600 percent from only 170,000 barrels sold in 1987. Last year alone, the growth was 40 percent, while beer sales nationally inched up by only 0.3 percent.

To be classified as a microbrewery, a plant can't brew more than 15,000 barrels of beer or ale per year. There were 286 microbreweries counted last year, up from 73 in 1987. Studious entrepreneurs have observed the growth, and an increasing number want a piece of the action.

That doesn't mean they're all lapping up profits.

As Lyons assumes ownership of his brewpub in Woodland, he knows the brewpub concept hasn't gone over too well in that town. "I wish him the best," says previous owner Jim Schleuter.

"We were there 10 years ahead of our time in Woodland. If I had to do it differently, I'd have bought a boat."

The laid-back Lyons says his business is "picking up pretty good." When he took over Dead Cat Alley, he changed Schleuter's recipes. His Woodland Brewing Co. now serves three brews: Opera House Pale Ale, Victorian Red Ale and Harvester Oatmeal Stout.

All contain significantly higher degrees of alcohol than run-of-the-mill beer. According to law, any brew with more than 4 percent alcohol cannot be considered "beer." Other names -- like malt liquor, ale and stout -- may be used, but not "bock," which is a beefy German brew that can leave you crawling on your ear if you're not careful.

These stronger brews are faster and easier to make, requiring as little as two weeks from the initial brewing to the first keg tapping. That's how long it takes Rubicon Brewing Co., says Ed Brown, owner of the 6-year-old midtown Sacramento brewpub. The Hogshead Brewpub in Old Sacramento and Woodland Brewing Co. also serve ales. But Sudwerk Privatbrauerei Hubsch, which operates out of a restaurant in Davis with German ambiance built in, serves lagers in the strict German tradition. They take six weeks before the first pint can be poured. "The whole point behind the brewery was that we wanted to make a lager better than most European-style beers," says Dean Unger, a co-owner in the venture. Some of Sudwerk's success can also be attributed to its food. Patrons can sample beer served in one-liter mugs, while chowing down on bratwurst with sauerkraut, just like in a cozy German village on the Rhein. Only instead of a river, this joint is close to a freeway.

Sudwerk brews its lagers in accordance with Germany's brewing standards -- or Rheinheitsgebot -- which were decreed by the Duke of Bavaria in 1516. This Bavarian purity law mandated that beer could be made only with barley, hops and water. Yeast wasn't discovered until the 1800s, when Louis Pasteur revealed the true nature of the fungus.

Beer regulation is centuries old. In Hammurabi's ancient Babylon 4,000 years ago, brewers were incarcerated in their own vats if they were found diluting their drink.

(Boy! Is this a great idea or what!)

Luckily for American brewmasters, laws are less strict in this country. After obtaining a small beer manufacturer's license and a business license, an upstart brewer is good to go. The industry is pretty much self-regulated, Lyons says, although the county Health Department makes regular appearances.

Baby boomers are the main clientele. To capture more of them, the brewers are trying to sell in retail outlets. Lyons, like other local brewers, has branched into selling kegs and bottles, the latter fetching $2.75 apiece. The Rubicon, which owner Brown says is currently enjoying a head of steam with sales increases of 30 percent a year, has kegs in about 30 local restaurants.


1993's Great American Beer Festival

Source: Brandweek, Oct 18, 1993 v34 n42 p30(1).

Title: Microbrews come of age in the ways of marketing; erstwhile beer buccaneers wise to strategic thinking.

Author: Gerry Khermouch

Abstract: A number of microbreweries showed at the 1993 Great American Beer Festival that they were taking a serious approach to developing, marketing and selling their products. On display at the event were about 900 beers from about 207 breweries. The industry as whole is expanding it product base to gain a broader audience as was evident by the number of light beers at the festival. Other microbreweries are expanding production capacity or are seeking acquisitions.

Subjects: Great American Beer Festival - 1993 Microbreweries - Conferences, meetings, seminars, etc. Brewing industry - Marketing SIC code: 2082 Electronic Collection: A14583143 RN: A14583143

Full Text COPYRIGHT ADWEEK L.P. 1993

Turbodog. Bock Around the Clock. Ugly Dog Stout. Dittohead Porter. Dog's Breath Brown Ale. Barking Dog Bitter. Coal Porter. Terminator II Doppelbock. Dog Spit Stout. Chicken Killer Barley Wine. Big Nose Blond. Bucksnort Barley Wine.

It's hard to believe that an offering products under those names has entered maturity. But at this year's Great American Beer Festival, there were unmistakable signs that the larger brewers in what is loosely styled the microbrew industry are adopting a more rigorously professional approach to product development, marketing and sales.

True, this wasn't immediately discernible at Denver's annual brewsky bazaar, which featured 900-odd beers from 207 breweries. Revelers lined up to buy outrageous brewery T-shirts, then rushed to see how many 1-ounce beer samples they could down for $20.

If these were the "educated consumers" that micro owners talk about, they-must have been graded on a curve. But the audience also signaled that the segment's appeal has broadened considerably beyond a coterie of beer snobs. And many micros and regionals are ready to pounce on the opportunity. "We're starting to do consumer testing, which is pretty unusual for the micro industry," confided Tom White, an ex-agency exec (Tylenol, Tide) who just signed on as marketing director at Pete's Brewing Co., Palo Alto,. Calif.

Signs of momentum were everywhere. A Schmidt plant on the edge of extinction a few years ago is going public this month after local financial angels put it on its feet as independent Minnesota Brewing. It's revived Grain Belt, built a following for Pig's Eye Pilsner, and contract brews Rhino Chasers and Pete's.

Portland (Ore.) Brewing has opened a new brewery that boosts capacity six times to 75,000 barrels, and allows it to make lager for the first time. F.X. Matt Brewing, Utica, N.Y., is doing so well with Saranac that it's turning down contract-brewing jobs. William & Scott is sniffing around for acquisitions as it rides two-year-old Rhino Chasers (a surfing term) to a claimed monthly volume of 30,000 cases. Despite its colorful image, the Culver City, Calif., firm is a pure marketing play: staffed by marketing pros, lacking a brewmaster (it hires micro guru Joseph Owades as consultant) and contracting out production. Some execs think the market is on the verge of saturation. Tim McFall, a marketing brand manager at G. Heileman, said the heavy flow of capital into the segment is putting pressure on brewers to generate volume. A slowdown in the industry's heady growth could prompt price cutting as the brewers try to meet their volume goals, he said.

To reach a wider audience, many micros are broadening their product mix. The beerfest saw plenty of light beers, including a bronze award winner from San Francisco's Brewski Brew Pub. Non-alcoholic beers included Rhino Chasers Not! and a gold medal winner from Evansville (Ind.) Brewing.

After concentrating on heavier ale styles, some East and West Coast brewers are adding lagers and pilsners familiar to mass-market consumers. "After ignoring it because we prefer English-style ales, we all seemed to realize that 90% of the category in the U.S. is pilsner," said Peter Breslow, a sales manager for Philadelphia's Dock Street Brewing.

"People now know what they're drinking and understand more, so we can go back to paler beers," added head brewer Nicholas Funnell. But there's a risk: F.X. Matt brewing manager Jim Kuhr warned that lagers are harder to differentiate.


300 microwbrews were reviewed this year

Source: Bon Appetit, Sept 1993 v38 n9 p24(2).

Title: The news on microbrews. (growth of microbreweries) (Buyers Guide)

Author: Anthony Dias Blue

Abstract: Microbreweries are popular because they offer beer that is fresh and has robust flavors and aromas. People are tired of the bland tastes that national beers deliver. There are now over 300 breweries in the US. A list of microbreweries is given.


60,000 barrels a year of high-quality beers; little defines the disparate craft-brew operations

Source: Beverage Industry, Nov 1993 v84 n11 p10(2).

Title: Crafty brewers grow their micro share in a macro market. (the growth of small breweries)

Author: Kristine Portnoy Kelley

Abstract: The craft-brew industry has grown in recent years and has undergone a number of changes. Once known as microbreweries, which produced no more than 15,000 barrels a year, craft-breweries now produce up to 60,000 barrels a year. The growth of the industry has created new legal issues for both the industry and the federal government. Other than dedication to the production of high-quality beers, there is little to define the disparate craft-brew operations.

Subjects: Microbreweries - AnalysisSIC code: 2082Electronic Collection: A14709479 RN: A14709479

Full Text COPYRIGHT Edgell Communications Inc. 1993

They hold less than 1 percent of the $45 billion beer market, but the power of the craft-brew industry is fermenting in the American Melting Pot. Microbreweries, which include brewpubs and contract brewers, once were defined as breweries producing 15,000 barrels of beer a year or less. But with power-brewhouses such as Boston Beer and Anchor Brewing firing up tens of thousands of barrels annually, industry definitions are changing.

"Because the industry has changed so much, we now refer to it as the craft-brew industry," says Lori Tullberg-Kelly, a spokeswoman for the Association of Brewers, Boulder, Colo. Any small-scale brewery that makes "hand-crafted specialty brews" is included in that industry definition, Tullberg-Kelly explains. The larger breweries are called "regional breweries," the smaller ones "microbreweries," and the ones that brew for on-premise consumption "brew pubs,"

Now big brewers are rolling out the specialty-brew barrels. "The entire state of the industry is such that volume is volume, whether it's 1,000 barrels or 1 million," says T.J. "Jake" Leinenkugel, president of the Jacob Leinenkugel Brewing Co., Chippewa Falls, Wis., a Miller brewery. So how do craft-brewers keep their distinction? For one thing, they don't have the marketing power of the nation's top brewers. But, Tullberg-Kelly admits, "the definitions may have to change."

It's also difficult to unite an industry that has nearly 250 manufacturers, ranging in size from 100 barrels per year to more than 60,000. "The mission is to produce good, distinctive beer," says John Hall, president of Chicago-based brew pub Goose Island Brewing Co. Beyond that, he says, there isn't too much that the spectrum ends have in common. With the increasing popularity of these specialty beers, defining itself isn't the only challenge the craftbrew industry faces. There are a lot of legalities: distribution, export laws, federal excise taxes, permitting fees, labeling laws and more.

The federal government also is learning to manage the industry's growth. This summer, the Bureau of Alcohol, Tobacco & Firearms issued a new ruling that allows brewers producing less than 10,000 barrels annually to submit reports of operations quarterly instead of monthly. The change means fewer forms being filed and fewer to be processed by the government. In the area of distribution, smaller breweries are using a number of innovative methods to get their products onto shelves. Some sign on with larger beer distributors, while others seek out liquor wholesalers. In some places, brewers have banded together to make a more "saleable" package. At least one brewer, Brooklyn Brewery in New York, has created its own company to distribute 150 craft brews in New York.

As the industry continues to manage its new growth, many look forward to a bigger share of the beer market, especially since many states have made them legal in only the past few years (see map).

Even in the face of possible federal excise tax increases, decreasing consumption and lower blood-alcohol levels, crafty brewers are counting on beer drinkers to go for distinctive tastes.

As one craft-brew marketer sees it, consumers will say: "If I'm going to have just one beer, I'll make it a good one."

A word from your sponsor: Note the use of the phrase, "Craft Brewers." How long do you think it lasted?


Enter the Gorilla - Miller Brewing Co, Coors Brewing Co and Anheuser-Busch join the fray

Source: Restaurant Business, June 10, 1994 v93 n9 p144(2).

Title: Mass-market micros. (micro breweries ) (Beverages)

Author: James Scarpa

Abstract: Major brewing companies such as Miller Brewing Co, Coors Brewing Co and Anheuser-Busch, are hastening to cash in on the popularity of the type of craft beer being produced by micro breweries. Unlike the mild domestic lager beers that the major breweries produce, craft beers are uniquely flavored and although they account for just 1% of the total beer market, they have enjoyed strong sales and stronger profit margins.

Subjects:- Marketing Microbreweries - Management Brewing industry - ManagementSIC code: 2082Business Collection: 79R3774 Electronic Collection: A15438298 RN: A15438298

Full Text COPYRIGHT Restaurant Business Magazine 1994

Big brewers try to join the craft beer game. Will customers go for the difference?

These days the specialty end of the beer market is enjoying sales growth and good profit margins, even though it currently amounts to a mere 1% or so of total industry volume. Of course, the major brands are still moving millions of barrels, but they've been flat in recent years and hard hit by discounting.

In response, major brewing companies are embarking upon a strategy that would have been unthinkable not so long ago. They're launching brands that resemble microbrews or "craft" beers, those distinctively flavored products that are the opposites of the mild domestic lager beers they're famous for. The notable example is Miller Brewing Co., producing Reserve Lager, Amber Ale, and Velvet Stout. Each one is a hop head's fantasy: 100% barley malt, Pacific Northwest hops, exotic yeast strains. An ad touts Velvet Stout's "rich maltiness and superb bitterness." Another brags about the "Yakima Valley hops" in Leinenkugel Red Lager, a regional Wisconsin brand that looks like a micro but has been in the Miller stable for some time. All in all, they're spouting a message that's quite different from "less filling, taste great."

For its part, Coors Brewing Co. has a slew of new seasonal boutique brews in the works, such as wheat beer, bock beer, and Oktoberfest beer. It's also growing its established Killian's Irish Red brand and its seasonal holiday Winterfest beer. Stroh Brewery Co. has Augsburger Octoberfest and Doppelbock on the market. Rolling Rock has a Bock. So far, Anheuser-Busch, the nation's largest brewer, hasn't hopped on the bandwagon yet, but it can only be a matter of time.

Americans are warming up to more diverse flavors and styles of beer. The phenomenon is most pronounced in the brew burgs of Seattle, San Francisco, and Portland, Ore, where bars bristle with tap handles. However, the movement is filtering down in Main Street as well, where restaurant and bar operators quickly see the wisdom of selling a $2.50 ale over a $1.50 domestic lager.

So you can't blame big brewers for taking aim at the microbrew market. However, converting microbrew fans won't be easy. They're cool to the schmaltzy advertising that sells popular beers. Microbrew fans' hot buttons are the robust taste of the brews and the romance of artisanal brewing. But can mass-market microbrews pass muster with serious craft-beer drinkers, known to be finicky and disdainful of million-barrel brews?

They get grudging praise from a couple of craft brewers, of all people. "I was given one to taste without knowing that it was," recalls Patrick Flaherty of the Gordon Biersch Brewing Company in San Jose, Calif. "I said, 'This is a pretty decent deer, it's got some hops.' I was shocked." Tom Burkhardt Sr. of Buckhardt's Brewpub in Uniontown, Ohio, has quaffed the new stuff, too. "They're all good beers," he admits. "Not as distinctive in flavor as our own, but good anyway."

"A lot of people won't even give them a chance," says Flaherty. He believe that microbrew fans will hold the corporate parentage of such beers against them. Personally, he adds, "It's nothing I'd go out and buy."

Buckhardt points out that a microbrewer can follow customer whims more easily than a conglomerate. He makes such unique products as Holiday Honey Ale, a dark Mug Ale, and even a raspberry-flavored brew at Christmas. "They [big brewers] can't open up a line to make less than 330,000 barrels, but I can make just two or three batches and get a new beer out in just 30 days," he points out.

Mass-market micros won't hurt and may actually help the "real" micros, according to Larry Baush, publisher of The Pint Post, and head of the Microbrew Appreciation Society, a 1,000-member organization based in Seattle. But it won't be because of any appeal to dye-in-the-wool microbrew fans. "Even if it's all-malt, really good beer, it's not the same as a craft beer," he says.

The benefit, Baush says, will come in bridging the gap between the prevailing light domestic beer style and the many varied styles of microbrews. "If they can get Joe Six-Pack who knocks back Miller Lite, and then we get him hooked," Baush says.


microbreweries in Oregon

Source: Oregon Business, July 1994 v17 n7 p52(2).

Title: Putting their heads together. (microbreweries in Oregon)

Author: Stu Watson

Subjects: Oregon - Business and industry Microbreweries - Marketing Networks (Associations, institutions, etc.) - Usage Locations: Oregon SIC code: 2082Business Collection: 80T0495 Electronic Collection: A15601863 RN: A15601863

Full Text COPYRIGHT MEDIAmerica Inc. 1994

Oregon microbrewers pool talent and resources to expand markets -- through tourists, and through Japan. Two new networking efforts are putting a fresh head on Oregon ms. One aims to push Oregon beers to the heart of Japanese consumers. The other aims to pull American consumers to the heart of Oregon beers.

For a host of other businesses -- from printers to motels -- there's beauty in the yeast.

Trace both initiatives, at least in part, to Jack Joyce, whose Rogue Ales are trying to tap the Japanese yen for quality in all things, especially (ahem) fermented barley malt food products.

Joyce says export of his Red Fox Amber, Brown Bear and White Crane Bitter beers is the first time an American brewer has labeled product in Japanese kongi, the ornate script composed of more than 2,000 characters.

"What we try to do is put a twist into everything," Joyce says. "What it will do is open up shipping for all Oregon microbreweries into Japan." For several years, Joyce has been borrowing good ideas. He had seen the faddish popularity of beer in bottles with screen-printed labels -- Corona, Caribe, Rolling Rock -- and had adapted the labeling to his own brewery's 22-ounce bottles. "If you're going to put good stuff in the bottle," he says, "you might as well put good stuff on the outside."

He figured screen-printed labels, in kongi, was a natural for bottles entering Japan.

In addition, Joyce wanted to celebrate Oregon's historical ties to Japan. Portland and Sapporo have a "sister city" relationship. So do Newport and Monbetsu.

Ties and motives run deeper. Monbetsu is home to Phred Kaufman, owner of the Beer Inn Mugishutei, and Kaufman was looking to import some U.S. microbrew. Kaufman, who has been running the bar for 13 of his 18 years in Japan, had asked the Fish Brewery in Olympia if it wanted to export some microbrew. It passed -- and referred Kaufman to Joyce, whose Rogue Ales are brewed in Newport and Ashland. "I said, 'Great, come on down,'" Joyce recalls.

Newport also is home to Nick Harville, owner of FlexNet Development. The company specializes in forming flexible networks -- groups of businesses that join together on projects that none could do by itself. Harville secured a $10,000 state economic development grant for the Rogue Export Network after Joyce enlisted partners.

He knew just the people -- his longtime suppliers. Penny Kennen, of Medusa Design in Dayton, agreed to work with a Japanese designer to adapt graphics and characters for screen printing. "It was very important to have someone fluent in the language," Kennen says.

"The nature of the kongi is that every dot, every hole, every little thing is crucial."

It took some adjustment, getting all that script, plus the illustration, neat enough to print on the 12-ounce export bottle.

The people at Tri-S printing in Beaverton say this was a particularly challenging job, according to project coordinator Janine Milligan.

"It was just a matter of making sure the artwork was clean, and no dust specks in there that might change the meaning," she explains.

Eastbound beer. The first beer headed east in mid-May. Because of his longtime residency, Kaufman had arranged for the sale through his own pub, as well as through local distributors.

Joyce is optimistic, but says it's a drop in the barrel. "We're on the leading edge of the market over there," he says. "There's a growing market for microbrews, but as a share of the total market, it's infinitesimal. "In parallel fashion, Oregon's small brewers had been moving toward greater unity. About 18 months ago, all 23 got together as the Greater Oregon Brewers Association.

Jerome Chicvara, one of the founders of Full Sail Brewing in Hood River, says members assessed themselves a dime a barrel support fee, stashed the cash, set up regular meetings and defined some goals.

Top priority? Educate consumers about Oregon's craft brewing industry. More specifically, brewers wanted to get tourists thinking of Oregon microbrewers the way they now think of the state's wineries. But how?

Joyce, as it happened, knew this guy named Harville, who jumped the hoops to get a state matching grant of $40,000. With the grant this spring, the group changed its name to the Oregon Brewers Guild.

Brewers want to explore group insurance and promotion of a brewing program at Oregon State University. But first, brewers hope to complete a brochure extolling the charms, diversity and nutritional benefits of the state's microbrews.

Not to worry. The brochure also will steer tourists toward safe and sane lodgings, restaurants and other attractions best visited leisurely, with lots of cash -- on foot.


Portland Brewing Company, August, 1994

Source: U.S. News & World Report, August 1, 1994 v117 n5 p53(1).

Title: Portland Brewing: tapping into a heady trend. (Portland Brewing Co.) (Company Profile)

Abstract: Brewer Robert MacTarnahan has parlayed high-quality eponymous Scottish ale into a fast-growing publicly traded company. The 79-year-old masters track star was previously a manufacturing and real estate millionaire, and a teetotaler.

Subjects: Microbreweries - Finance Companies: Portland Brewing Co. - Finance People: McTarnahan, Robert - Management SIC code: 2082 Magazine Collection: 74L0432Business Collection: 80R1030 Electronic Collection: A15600865RN: A15600865

Full Text COPYRIGHT U.S. News and World Report Inc. 1994

He calls himself the Betty Crocker of the Portland Brewing Co., but Robert MacTarnahan is much more than that. The fastest-growing brewery in the capital of the exploding microbrewing universe, Portland Brewing owes much of its survival and prosperity to this 79-year-old native Oregonian. He has given the upstart beer maker his capital, more than $2 million, and his time, traipsing to shareholder gatherings and weekly management meetings. But probably more important than anything else, MacTarnahan has given of his name. For MacTarnahan's Scottish ale is the best-selling microbrew in Oregon, the state where small-batch beer captures the highest share of the overall beer market.

In younger days, MacTarnahan made millions of dollars developing Portland businesses, from hand-truck manufacturing to real-estate development. On the track, he has won international masters races, running the 3,000-meter steeplechase well into his 70s. But the self-described "hyper old guy" never achieved true fame in his hometown until slapped its principal investor's name on a languishing Scottish ale and watched sales quadruple. Today, beer drinkers from Missoula, Mont., to San Diego know Mac. Of course it didn't hurt that MacTarnahan's Ale won the gold medal for best American pale or amber ale at the 1992 Great American Beer Festival, beating out 60 other microbrews. Total company sales at Portland Brewing have more than doubled in the past year to $4.5 million.

Stock.

Portland Brewing got its start in 1986, when avid home brewer and auto-parts salesman Fred Bowman got together with his buddy Art Larrance and opened a brew pub in an abandoned Portland creamery with MacTarnahan's backing. At the original site, brewers still dip a canoe paddle into a 10-barrel vat to stir up batches of specialty beers such as stout and porter. Last year, however, the company opened a new brewery with 140-barrel copper vessels. MacTarnahan paid for half of the property, but Portland Brewing has found an even more plentiful source of funds for its expansion - public stock offerings.

The first microbrewer to successfully tap into the public market, the company has now raised nearly $4 million in three offerings. The stock isn't yet traded open market, however, and its only dividend is liquid: one free pint of ale a day at the brew pub.

MacTarnahan is an unlikely promoter of the brewing business. Until the age of 70, he wouldn't touch alcohol, concerned that it would slow him down. His mother, after all, had been president of the Oregon chapter of the Women's Christian Temperance Union. But now that there's money to be made, he calls his ale "health food" and doesn't shy from ordering a pint. "She's turning over now," he says, and raises his glass.


The mailman's tipsy; Mail Order Beer

Source: Advertising Age, Sept 19, 1994 v65 n39 p30(1).

Title: Mail-order beer clubs quench unique thirst. (Directory)

Author: Peg Masterson

Abstract: Mail order beer clubs, through which beer-lovers can sample micro-brewed beer, are becoming increasingly popular. A typical membership will yield monthly six-packs of two kinds of beer, a newsletter and/or magazine and access to merchandise and special-event information for about $20 a month. The first mail-order beer house was Beer Across America. Others include MicroBrew Express and Beer 2 You.


Brewed awakenings

Source: Inc., Oct 1994 v16 n10 p11(1).

Title: Brewed awakening. (Anheuser-Busch's distribution agreement with Redhook Ale marks its entry into microbrewery beer market) (Brief Article) (Editorial)

Subjects: Brewing industry - Market share Companies: Anheuser-Busch Companies Inc. - Contracts Redhook Ale Brewery Inc. - Contracts Boston Beer Company L.P. - Marketing SIC code: 2082 Magazine Collection: 75L1470 Business Collection: 82N2748 Electronic Collection: A15778377RN: A15778377

Full Text COPYRIGHT Goldhirsh Group Inc. 1994

There's a classic big company--small company brawl brewing in the beer industry. The first punch was thrown recently when the world's largest brewer, Anheuser-Busch, announced it was forming a "distribution alliance" with Washington-based microbrewer Redhook Ale Brewery. The press release announcing the union went on to explain that Anheuser-Busch would make an equity investment in Redhook. "That was no press release," said Jim Koch, founder of the Boston Beer Co. and brewer of Sam Adams beer, when asked to comment on the announcement. "That was a declaration of war. What it means is that the cozy, fraternal days of the microbrewery business are over."

Koch says that Anheuser-Busch has made it clear it intends to capture half of the $400-million microbrewery market within five years. "This is not a company that makes idle threats," says Koch. "Redhook now has access to virtually unlimited capital to build breweries throughout the country. As it increases production, you can expect to see brutal competition for shelf space, accompanied by intense price wars. This is not going to be pretty. "The one advantage we have at Boston Beer," says Koch, "is the strength of our sales force and the relationships we've built with a lot of people in the distribution channel--bar owners, independent liquor-store owners--who have no desire to see Bud take over the world. But when you look at it from the perspective of the typical microbrewery, this is a battle that Anheuser-Busch is clearly in a dominant position to win.

"You know, just when you think things are going pretty well, along comes Bud Hook, and you're reminded that microbrewers have prospered in the absence of any attention from the big breweries. What I'm going to do now is go home and rent the second movie in the Star Wars trilogy. I forget how it ends and whether the good guys win."

For those of you who have forgotten, the title of the movie Koch is referring to is The Empire Strikes Back. Undoubtedly, he's forgotten who wins because no one does. The story is left to be continued. How apropos as we wait to see how the microbrewery wars unfold.


Brew City

Source: Fortune, Feb 6, 1995 v131 n2 p16(1).

Title: You pay to brew your own beer. (do-it-yourself microbrewery Brew City opens in San Francisco, California) (Brief Article)

Author: Alan Deutschman

Subjects: Microbreweries - Services Companies: Brewers Guild Inc. - Services SIC code: 2082 Electronic Collection: A16054953RN: A16054953

Full Text COPYRIGHT Time Inc. 1995

What's the ultimate way to ensure that your product meets the idiosyncratic tastes of today's demanding consumers? Some San Francisco entrepreneurs think they've got the answer: Let the customers manufacture the product themselves.

That's the idea at Brew City, a do-it-yourself microbrewery that opened in December in the trendy Marina district. Here's the drill: You pick one of 60 recipes, which run from lagers to stouts. Brew City gives you the ingredients. You mix the stuff, per their instructions, in their copper-clad, stainless steel 15-gallon kettles. You go home; your concoction ferments. Two weeks later you come back and pick the stuff up, bringing your credit card and a dozen thirsty friends: The minimum batch is four cases (that's nine gallons) for $90 -- or $5.63 per six-pack.

Brew City can't guarantee that you'll love your batch of beer -- but the success of the brew-it-yourself movement, which began in Canada as a way around high liquor taxes, suggests that customers are getting the knack. So-called personal, or on-premise, breweries have now reached venerable beer towns such as St. Louis; Portland, Oregon; and Boulder, Colorado.

A S.F. startup is run by a local pub's former , a former commercial real estate location scout, and a recently graduated Berkeley MBA, who cooked up the idea as a B-school project. Unlike microbreweries that do the work for you, Brew City doesn't need a beer license; the state lets it operate under the guise of home brewing.


GenXers LOVE the stuff. No, duh.

Source: Nation's Restaurant News, May 15, 1995 v29 n20 p14(1).

Title: Beers and grub brew big bucks with GenX. (marketing study of consumers 18- to 24-years old)(Marketing Digests)(Brief Article)

Subjects: Post-baby boom generation - Marketing Microbreweries - Marketing SIC code: 2082Business Collection: 86U4428 Electronic Collection: A16838173 RN: A16838173

Full Text COPYRIGHT Lebhar-Friedman Inc. 1995

Those already practicing the fine art of brewpubbing are likely to find a loyal customer base with GenXers, according to a study by American Demographics. The study shows that 14 percent of all adults 18 to 24 drink micro-brew beers while 26 percent of beer drinkers in the same age category consume micro-brews. In addition, the study found that adults aged 25 to 34 are even heavier micro-brew consumers with 23 percent of all adults in that age category and 36 percent of beer drinkers in that category claiming micro-brew mixes are their top choice.

The consumption has helped fuel the specialty brewing business from a $600 million industry two years ago to a $1 billion business last year.


Feb 1995 report from Restaurant Hospitality

Source: Restaurant Hospitality, Feb 1995 v79 n2 p90(3).

Title: Microbrews. (includes related article)

Author: Gail Bellamy

Abstract: Breweries are emerging by the hundreds yearly and new beer products with quite creative names are being produced. The Institute for Brewing Studies has reported the existence of 570 microbreweries in 1994. Supplying timely information on products and services in the industry are 13 beer newspapers with another six publications catering to home brewers. Names of new beer products seem delicious enough to eat such as honey-basil ale and Czech Honey Brew.

Subjects: Microbreweries - Statistics

SIC code: 2082 Business Collection: 84T2487

Electronic Collection: A16759173 RN: A16759173

Full Text COPYRIGHT Penton Publishing Inc. 1995

According to The Institute for Brewing Studies in Boulder, Colo., as of September 1994, there were more than 570 microbreweries, brewpubs, and regional specialty breweries in North America. Last year, more than 88 new breweries (41 microbreweries, 47 brewpubs) opened in the U.S.; the year before, the total was 100 new openings.

There are also at least 11 regional "brewspapers," 13 beer periodicals, and more than a half dozen publications for home brewers. The Institute for Brewing Studies (a non-profit educational association that's a division of The Association of Brewers) publishes The New Brewer and offers particulars about beer and brewing. For information about joining, contact the Institute at (303) 447-0816.Some restaurants, of course, have already discovered the appeal of craft-brewed beer. In its 15th year of operation, The Great Lost Bear in Portland, Maine, features only American beers and ales on draught. It has recently expanded to 50 taps, and offers approximately 30 microbrews from Maine, as well as selections from Massachusetts, New Hampshire, and elsewhere.

Some microbrews sound good enough to eat. Bison Brewing Co. in Berkeley, Calif., makes a Honey-Basil Ale, for instance, and at Main St. Brew Pub in Galena, Ill., pub owner Jeff Tendrick says the Czech Honey Brew that sells for $2.50 per pint is "a true beer in a creative style." Microbrewers who want more information about brewing with honey can contact National Honey Board Food Technology Program, P.O. Box 281525, San Francisco, CA 94128. Beer and food pairings come in all styles these days. Despite its namesake, The Tequila Grill in Washington, D.C., hosted a food and beer extravaganza last summer, matching Miller Brewing Co.'s microbrews (Miller Reserve Amber Ale and Velvet Stout) with specialty dishes such as grilled swordfish with roasted corn relish. At John Dominis Restaurant in Newport Beach, Calif., guests paid $35 each to sample 10 beers paired with food. Jamaican-style jerk chicken, for instance, was paired with Red Stripe. Sonoma in Manayunk (in the Philadelphia area) recently featured a beer and food pairing that included a 6-course menu and cost $40 per person. Chef/proprietor Derek Davis worked with brewmaster John Holland of Dock Street Brewery to compile a list of "the world's 10 most unusual beers." As an example, Buffalo Bill's Pumpkin Ale was served as a dessert combination with apple-caramel buckle with walnuts and vanilla ice cream.

The Wisconsin Milk Marketing Board (WMMB) conducted a beer and cheese tasting during its recent Wisconsin Cheese Bistro Chef Showcase. A few of the pairings included gruyere paired with Cells White (a Texas brew spiced with coriander and orange); aged cheddar and Bass Ale; Brie paired with Lindemans Kriek (cherry-flavored lambric from Belgium); and quesadillas paired with Sprecher's Black Bavarian, a dark lager brewed in Wisconsin. For information on putting together a beer and cheese event, contact WMMB at 8418 Excelsior Dr., Madison, WI 53717, or call 800-373-WMMB. In Wisconsin, call 800-747-WMMB.

RELATED ARTICLE: The Beer Boom Is On

The Beer Boom is in full swing in the U.S., and could very easily surpass the Wine Boom of the late '60s and early '70s.

As the Wine Boom was lead by entrepreneurs and their "boutique" wineries, the Beer Boom is being lead by entrepreneurs and their "craft" breweries. There are now more than 500 breweries in the U.S., up from about 150 only 10 years ago, and a new brewery opens in this country every week. In addition, many are growing at a rate of 40% or more per year.

What makes a craft brew better than an industrial brew? This is the subject of many barroom brawls, but a few things are clear. Craft beers are usually made with a maximum of barley and a minimum of rice and corn. These cheap fillers add alcohol and little else. Many producers even seek special varieties of barley, much as a vintner seeks out the best grapes. And craft brewers are passionate about beer. For them, it is not simply a matter of profit, but a highly personal work of art.

There are other factors that put craft brewing in a position to compete with wine: Beer goes well with food. People of good taste are discovering astonishing gustatory pleasures in beer. And wine lovers will be surprised to discover that although some beers are best as thirst quenchers after cutting the lawn, others are best when paired with foods, and still others are best when served for dessert.

Beer is user-friendly. There is no snobbery associated with beer drinking. It is something anyone can do without pretension and intimidation.

Easy-to-open container. Unlike wine, you do not need a complicated tool and special training to open the bottle. Many of the world's best beers can be found beneath a twist top.

Beer is cheap. You can buy the best beers in the world for the price of a bottle of Ripple: In the first World Beer Championships, the median price for the 53 beers scoring 90 points or better is only $1.60 per 12 ounce bottle.

Beer is cheap to make. The costs of establishing a vineyard, maturing the vines, and making and aging the wines is far greater than the cost of starting a brewery. An skilled brewmaster can buy the right equipment and supplies, and within two months have high quality product on the market. And the best beers are fresh beers, so there is no capital tied up in aging inventories. Beer can be made anywhere. Wine requires particular climates and soils to bring grapes to perfection, and the best wineries are in the vineyards so the fruit can be processed when absolutely fresh. Because the grains and other ingredients for beer are dry, great beer may be made anywhere at any time of the year.

Homebrewers are passionate promoters. Amateurs can make commercial quality beer at home, anytime of the year. Although there are thousands of home winemakers, because they cannot get the best fresh grapes, their product is rarely of commercial quality. Homebrewers are also passionate beer buyers and tasters, and are spearheading the movement.

Beer has a larger customer base. There are millions of industrial beer drinkers who have not yet discovered craft beers, while there are probably no more than 3 million people who drink wine regularly.

The Winners

The World Beer Championships

The World Beer Championships reviewed 309 beers in 1994. When the smoke cleared, three brewers stood above the rest:

* 1994 Micro Brewer Of the Year (less than 10,000 barrels) is Great Lakes Brewing Co. of Cleveland, Ohio

* 1994 Small Brewer of the Year (10,001-150,000 barrels) is Brauerei Aying (aka Ayinger) of Aying, Germany.

* 1994 Mid-size Brewer of the Year (150,001-1 million barrels) is BostonBeer Co. (aka Sam Adams) of Boston, Massachusetts

* 1994 Large Brewery of the Year (more than 1 million barrels): None achieved the minimum average score to qualify.

Build a beer list.

Here is a list of the champions in 39 categories and their scores on the 50-100 point scale. If you don't already have a beer list to accompany your wine list, perhaps you should consider starting one with some of these champions. As with the wine movement of the '60s and '70s, restaurateurs who capitalize on the beer movement stand to profit.

ABBEY ALE: 95 - Affligem (Belgium) Tripel Abbey Ale. From Vanberg & Dewulf 607-547-8184.

ALT ALE: 82 - Sam Adams (MA) Boston Ale. 617-522-3400.

AMBER ALE: 94 - Full Sail Brewing Company (OR) Amber Ale. 503-386-2281.

AMBER LAGER: 90 - The Brooklyn Brewery (NY) Lager. 718.-486-7422.

BARLEY WINE (ALE): 96 - Kalamazoo Brewing Co. (MI) Third Coast Old Ale. 616-302-2338 or 616-382-2332.

BIERE DE GARDE (ALE): 88-Brewery La Choulette (France) Biere des Sans Culottes Blonde Ale. From All Saint's Brands Inc. 612-378-7820.

BITTER (ALE): 97 - Buffalo Bills Brewery (CA) Alimony Ale. 510-538-9500.

BOCK (LAGER): 91 - Sam Adams (MA) Triple Bock. 617-522-3400.

BROWN ALE: 96 (Tie) - Thomas Hardy's (England) 1988. From Phoenix Imports Ltd. 410-465-1155.96 (Tie) - Goose Island (IL) Nut Brown Ale. 312-915-0071.

DARK LAGER: 90 - Peroni (Italy) Rossa. From Barton Beers Ltd. 312-346-9200.

DORTMUNDER (LAGER): 92 - Great Lakes Brewing Co. (OH) Dortmunder Gold. 216-771-4404.

FARO (LAMBIC ALE): 81 - Boon (Belgium) Faro Pertotale. From Vanberg & Dewulf 607-547-8184.

FLAVORED LAMBICS (ALE): 94 - Lindemans (Belgium) Peche Lambic. From Merchant du Vin 206-322-5022 or 206-622-3373.

FRUIT BEERS: 88 - Buffalo Bills Brewery (CA) Pumpkin Ale. 510-538-9500.

GEUZE (ALE): 90 - Brewery de Troch (Belgium) Chapeau Gueuze Lambic. From All Saint's Brands Inc. 612-378-7820.

HERB/SPICE BEERS: 93 - Golden Prairie (IL) Honey Ginger Beer. 312-862-0106.

LIGHT LAGERS: 80 - Sam Adams (MA) Boston Lightship. 617-522-3400.

MAIBOCK (LAGER): 88 - Grolsch (Holland) Meibok. 404-955-8885.

MUNICH HELLES (LAGER): 86 - Ayinger (Germany) Jahrhundert-Bier. From Merchant du Vin 206-322-5022.

MUNICH (LAGER): 87 - Blue Hen (DE) American Premium Lager. 302-737-8375.

PALE ALE: 92 - Great Lakes Brewing Co. (OH) Burning River Pale Ale. 216-771-4404.

PALE LAGER: 81 - Old Style (USA). From G. Heileman Brewing Co Inc 708-292-2100.

PILSNER (LAGER): 91 (Tie) - Wild Boar (GA) Classic Pilsner.91 (Tie) - Pete's (CA)Wicked Lager. 415-328-7383.

PORTER (ALE): 96 - Great Lakes Brewing Co. (OH) The Edmund Fitzgerald Porter. 216-771-4404.

RAUCHBIER (ALE): 90 - Kaiserdom (Germany) Rauchbier. From Merchant du Vin 206-322-5022.

RED LAGER: 71 - Mid Coast Brewing (WI) Chief Oshkosh. 414-236-3307.

SAISON (ALE): 90 - Dupont (Belgium) Saison Dupont. From Vanberg & Dewulf 607-547-8184

SCOTTISH ALE: 94 - Mac Andrew's (Scotland) Scotch Ale. From Merchant du Vin 206-322-5022.

STEAM BEER: 82 - Anchor Brewing Co. (CA) Steam Beer. 415-863-8350.

STOUT (ALE): 99 - Rogue (OR) Shakespeare Stout. 503-867-3660.

STRONG GOLDEN (ALE): 80 - Kwak (Belgium). From Vanberg & Dewulf

TRAPPIST (ALE): 98 - La Trappe (Belgium) Trappist Ale Quadrupel. From All Saint's Brands Inc. 612-378-7820.

VIENNA/MARZEN (LAGER): 91 - Ayinger (Germany) Oktober Fest-Marzen. From Merchant du Vin 206-322-5022.

WEIZEN (ALE): 91 - Spaten-Franziskaner (Germany) Hefe-Weissbier. From Sieb Distributors 708-529-7671.

DARK WEIZEN (ALE): 90 - Nor'Wester (OR) Dunkel Weizen. From Willamette Valley Brewing Co. 503-232-9771.

WHEAT ALE: 94 - De Gouden Boom Brewery Blanche de Bruges. From Vanberg & Dewulf 607-547-8184.

DARK WHEAT ALE: 88 - Sam Adams (MA) Dark Wheat. 617-522-3400.


Believe it! They are here and they are successful.

Source: Beverage World, April 1995 v114 n1589 p16(1).

Title: Do believe the hype? (Institute for Brewing Studies reports 50% increase in craft brewing of beer)(Brief Article)

Subjects: Microbreweries - Statistics Brewing industry - Statistics Organizations: Institute for Brewing Studies - Statistics Business Collection: 86Q2837 Electronic Collection: A16858652 RN: A16858652

Full Text COPYRIGHT Keller International Publishing Corporation 1995

Craft brewing is living up to its hype, according to the Institute for Brewing Studies, which says 1994 production figures were up 50 percent over 1993 totals, with craft's beer market share rising from 0.4 percent to 1.3 percent. Among those growing in triple-digits was Pete's Wicked Ale, up over 150 percent last year, according to the Palo Alto, CA company. The Institute counts 537 craft breweries operating in the United States, compared to 29 a decade ago. That doesn't count the burgeoning homebrew movement.

To take advantage of that do-it-yourself phenomenon, The Chicago Tribune reports most Sears stores will be featuring the Mr. Beer Microbrewery Beer Kit for Father's Day.


Supermarket News Report

Source: Supermarket News, May 29, 1995 v45 n22 p14A(1).

Title: Microbrews getting larger: manufacturer outlook. (Supermarket Beverage)

Author: Richard Turcsik

Abstract: Red hook Ale Brewery Chmn Paul Shipman predicted that microbrewery beer and import beer would eventually comprise 10% of domestic beer sales, as opposed to the 1% it currently represents. Consumers appreciate the US-made and freshness aspects of microbrewery products, he said. Shipman also predicts the demise of contract brewers and regional brewers, and a market share gain for domestic microbrews against imported beer. He also feels that unfiltered beers will gain in popularity.

Subjects: Microbreweries - Product development Brewing industry - Forecasts Companies: Redhook Ale Brewery Inc. - Forecasts SIC code: 2082 Electronic Collection: A16942491 RN: A16942491

Full Text COPYRIGHT Capital Cities Media Inc. 1995

SEATTLE - Microbrews are not a fad item, but a rapidly growing phenomenon in the beer industry that will soon account for close to one out of every 10 beers sold in the United States, according to the head of one fast-growing microbrewer here.

"We think that the micro beer segment is going to represent, together with the import beer segment, perhaps as much as 10% of the beer business. Right now it is just crossing the 1% threshold," said Paul Shipman, chairman and chief executive officer of Red Hook Ale Brewery."

What the microbrewers represents to consumer is the flavor resent to consumers is the flavor profile of imported beers with the freshness of the fact that the beers are made here in the United States and that the brewery is accessible to the consumer. It is a relationship between the consumer and the producer in an industry where there was no such relationship," Shipman said.

"The typical microbrew customer is much broader than people think. There is definitely interest on the part of people from minimum age up and there is still a lot of sampling going on. There is participation by both baby boomers and Generation Xers," he said.

Partly because of the growing popularity of microbrews, sees other drastic changes on the horizon for the industry; including:

* Contract will fail retailers and give the industry a black eye.

* Regional brewers will become extinct and the industry will be dominated by large brewers like Anheuser-Busch and Miller, as well as microbrewers and imports.

* Unfiltered beers will be a big trend.

* Domestic microbrews will take market share from imports. Founded 14 years ago in a former Lee Myles transmission shop here, Red Hook now operates a microbrewery in a former trolley barn in the Fremont section, as well as a brewery in suburban Woodinville, with combined annual sales of $25 million. In addition, Red Hook just broke ground for its third brewery, a 100,000-square-foot structure in Portsmouth, N.H., that will supply the New England market when it opens next summer. At least initially it will make the same types of beers produced at Red Hill's other breweries, including its most popular beer, Red Hook ESP (Extra Special Bitter).

Red Hook also is now examining other areas of the country, including the Mid-Atlantic states and the Upper Midwest for sites for additional breweries as part of its quest to become a nationwide microbrewer. Red Hook's growth is an alliance with Anheuser-Busch, completed late last year. As part of the alliance, the St. Louis-based brewing giant maintains a 25% equity ownership in Red Hook and Red Hook is tied into Anheuser-Busch's distribution system. Anheuser-Busch cannot increase its equity in Red Hook for five years, and Red Hook maintains the right to adopt a poison pill strategy to stop additional unwanted investment. Supers have been instrumental in spearheading the growth of the microbrew industry, Shipman said, noting that Red Hook is currently stocked in most major West Coast chains, including Safeway, Albertson's, QFC, Top Foods, Vons, Lucky Stores and Ralphs.

"We've found that buyers in supermarkets in the regions where we are coming in are devoting more and more space. They are following the trends and actually paving the way in demanding these products.

Thus, we have found the supermarket environment to be very hospitable," he said, citing Albertson's, QFC and Safeway as having strong microbrew departments.

On the downside, Shipman said, single-bottle sets of microbrews have not done well in supermarkets."

Those ultimately are labor-intensive and represent a lot of breakage. And at the end of the day the consumer tends to already have been sampling the product off-premises anyhow, and likes to make six-pack decisions. Also key to the success of microbrews is on-premise consumption in local bars, pubs, restaurants and at the breweries themselves.

"One of the reasons why we've had a lot of success in the supermarket setting is because we tends to lead Red Hook on premises, and approximately 50% of the beer that we make is draft beer, which is only consumed on premises," he said.

In Shipman's eyes, a microbrewer has to brew its own beer in small batches, with local distribution, and be open to the public for tours or for purchasing.

"We think it is essential that breweries be close to their markets and be in places where consumers can visit them, see them and learn about beer in that setting. We also want to be close to where our retailers are so that we can build very strong relationships with them," he said.

"Restaurants and tasting rooms are consistent with the beer business, as well as the on-premise focus. At Red Hook brewery we always have a place where you can come and drink the beer at the brewery. We will have that in New Hampshire as well. We will also have a pub in New Hampshire offering tasty and hearty food," he said.

He sees contract s - those without their own production facilities, but who instead contract their work to other breweries - as being the bottom of the barrel in the beer industry.

Contract brewers represent a negative impact in the industry. They contract their production to breweries that would otherwise be bankrupt. Because the struggling breweries in the United States are really destined to fail, these contract brewers have a good chance of disappointing and failing to serve their retailers. I think the retailers have not looked closely at the consequences of favoring the contract brewers."

Many of the contract brewers use large, regional breweries, which Shipman predicts will soon disappear from the landscape.

"Many regionals are big, but failing. We see a phenomenon in the beer business that we call barbelling. That is when the industry gravitates towards big and little, and everybody in the middle gets fried.

"In the beer industry it is going to be the big three, no second-tier, and then the micros and brew pubs. Acquisition time for breweries is over. The struggling survivors of today are the Studebakers, Hudsons and Packards of the industry," he said.

Although industry sales have been basically flat over the last few years, Shipman said unfiltered beers, like the new Crossroads line being test-marketed by Anheuser-Busch, may be the next trend that will bring some additional sales to the category.

"I think that the unfiltered beer category has a lot of potential and that the level of activity in this category in the United States is going to skyrocket," he said.

Shipman also sees the growth of the microbrews coming at the expense of the imports.

"Over time the microbreweries will take sales away from the imports because of the freshness advantage that they offer. The freshness advantage is the key attribute to this business. Secondly, because we build the breweries in the United States and make it so that the consumers can visit them, the consumers will feel closer to our breweries, and react better to our brands," he said. One way Red Hook is seeking to boost sales is through a new program of limited-production specialty and experimental beers that it is merchandising under the Red Hook Blue Line label. Currently only available on tap, Red Hook expects to market 22-ounce bottles of Blue Line to retailers later this year.

"Blue Line is an experimental beer, so it is something new for consumers. Concept to execution is as little as 45 days. We judge consumer response and then decide if we are going to commit more resources and have it actually be a brand. It also is very stimulating for the brewers and everybody associated with the production process," Shipman said.


Anchor, Pete's find international thirst for crafted brews

Source: San Francisco Business Times, June 16, 1995 v9 n42 p3(2). Title: Beers without peers: Anchor, Pete's find international thirst for crafted brews. (Anchor Brewing Co.; Pete's Brewing Co.)

Author: Marcy Burstiner

Subjects: breweries - Foreign operations Companies: Anchor Brewing Co. - Foreign operations Pete's Brewing Co. - Foreign operationsBusiness Collection: 88Q5345 Electronic Collection: A17227730 RN: A17227730

Full Text COPYRIGHT San Francisco Business Times Inc. 1995

Bay Area microbreweries and American microbrews are invading foreign markets as European beer drinkers stop scoffing at U.S. beers and start quaffing them.

Over the last several years, San Francisco-based Anchor Steam has signed up pubs and retail outlets in Sweden, France, Italy, England, Australia and, in tiny measure, Japan and Hong Kong. Fritz Maytag,

Anchor's owner and operator, said it has taken him some two decades from the time he sent his first small shipments to Canada until now for him to safely say his still "modest" international sales are finally making a profit.

"It is a new phenomenon," said Jim Neighbors, an administrator at the Institute for Brewing Studies in Boulder, Colo. "For the most part, the American craft are really doing what they can to keep up with domestic demand."

Total U.S. beer sales are now at $50 billion a year, and micro brews, although they take just about 1 percent of that market, keep expanding their share each year, he said.

Lately, Anchor Steam has begun moving beyond select restaurants in Canada to liquor stores, where it is competing at a price of more than $9 a six-pack against Canadian microbrews that sell for a third less, said John Lowell, chairman of the Great Canadian Beer Festival.

The watershed for Anchor's exports came three years ago when its Steam Beer captured a major award at the Great British Beer Festival, Lowell said.

"That was quite surprising to the beer traditionalists in England that an American beer could have won," he said."

It is recognized as being a unique style of beer. In the world of beer it seems to be going over well."

Pete's Brewing Co. of Palo Alto has begun shipping small quantities of its Pete's Wicked Ale to Great Britain and has its eye on eventual exports to Canada, Australia and Europe, almost anywhere where English is spoken and the word "wicked" won't have strange cultural connotations.

"I don't think 'wicked' would play well in Korea," said Pete's President Mark Bozzini.

But under current international conditions, the barriers to export are too immense to spur the company into other foreign waters any time soon, he said. Overcoming those barriers has earned Maytag the title pioneer of microbrew exports and has put the company in an interesting predicament. Famous in beer circles for success despite a policy against advertising and against fast growth, Maytag is convinced that all his hard work in slowly building up export markets may have given him little advantage over other exporting microbrews now that trade barriers are coming down. He believes Pete's, Samuel Adams and other more ambitious micros will soon sweep over Europe. We are paying the price of being pioneers," he said.

It is one reason why Maytag is intensely secretive about his international sales and about his plant's capacity to meet growing demand.

"We've had no end of small brewers trying to find out what we do," he said. "Let them struggle a bit."

He won't disclose how many of the 100,000 cases he sold last year went overseas, although it is at the very least one marine container full of beer cases for England, one for Europe and one for Australia. That's because he has set as an absolute mandate that no beer will be shipped from the company's Potrero Hill brewery unless the beer is kept refrigerated from the time it is put in the bottle to the time it gets to the store shelf. And that means shipping in special refrigerated containers.

The British told him he is crazy. Not only does he have to pay 24 percent duties on the beer, but on the freight costs as well, so he is taxed on the refrigeration. All for beer destined to arrive in a country where people tend to drink their brews warm.

The high tariffs have made England, although the least difficult to crack in terms of sales, one in which profits are still elusive. Maytag said he will give it three more years or so, but if it doesn't turn a profit then, he will pull out of England.

The global beer market is changing rapidly, however, and many of barriers Maytag has had to deal with are coming down - and fast. With the implementation of the GATT trade accord, beer tariffs will all but disappear. One of the toughest obstacles, exclusive agreements between pubs and breweries that create "tied houses" in Britain and elsewhere, are loosening as consumers become more global and begin demanding foreign beers. Lowell of the Great Canadian Beer Festival predicted that once Pete's makes the decision to expand overseas in a major way, it could have tremendous sales in Europe. Consumers in Europe susceptible to advertising and the beer they ask for will likely be the last one they saw advertised on television.

Bozzini said that the only reason Pete's has not made any major expansion abroad to date has simply been the need to concentrate and build its domestic market first. Within a few years the company likely make the jump, however. First, it must find a way to overcome problems in speedy transportation. Foreign beers are generally known, even here, for being stale. "We need to brew there," Bozzini said. "That will take some time. Our (international) plans are not well defined but we are going to look more aggressively in the next year."

Anchor differs from many other brews in that Maytag, who defines himself as a "beer kook," sees himself more as a fine vintner. As such, his ultimate goal isn't high volume but high demand for his beer all over the world. Like fine wines, Maytag dreams of the day when instead of millions of people buying his beer at low prices, small groups of elite drinkers will spend generously to buy sparse supplies of Anchor Steam at high prices. In England, for example, his Christmas Ale sells at 2 pounds a bottle, or about $3.25.

"We reinvented the whole idea of seasonal beer all over the world," he said. "Even here, we sell it at a premium because our Christmas Ale is worth more. It's worth $5 a bottle!"


Popularity of microbrewery restaurants extends across the US

Source: Nation's Restaurant News, August 28, 1995 v29 n34 p3(2).

Title: Brewpub popularity hops across the US.

Author: Carolyn Walkup

Abstract: The popularity of microbrewery restaurants is extending across the US. Part of the reason for the increase of total brewpubs from 241 in Jan 1994 to 417 in Jun 1995 is that people want to drink better quality beer. Additionally, changes in state laws, in places such as South Carolina and Georgia, have also helped lead to the spread of these facilities. Investors are taking notice of these trends, especially when they see sales rise 50% from 1993 to 1994. Additionally, this increased demand for more microbreweries is leading to shortages at companies that manufacture brewing equipment.

Subjects: Microbreweries - ManagementBrewing industry - Management Restaurant industry - Management SIC code: 5812 Business Collection: 88Z4570 Electronic Collection: A17284197 RN: A17284197

Full Text COPYRIGHT Lebhar-Friedman Inc. 1995

While house-brewed draft beer was once a curiosity offered by only a handful of pioneering restaurateurs, the brewpub craze today is barreling across the country -- and even pumping up some excitement on Wall Street.

More than 100 brewpubs opened in the United States between September 1994 and June 1995, increasing the total to 417, according to statistics compiled by The Institute for Brewing Studies in Denver. That compares to 241 open in January 1994.

While the Pacific Northwest and Colorado have led the brewpub push, other regions that have lagged behind are starting to catch up. The Southeast, Midwest, Northeast and Texas are seeing considerable numbers of openings.

"We're a beer-drinking nation, not a wine-drinking nation," asserted Thomas Dalldorf of Celebrator Brew News, a regional microbrewery newspaper in Hayward, Calif. "We have an audience in the millions who already know how to drink beer and are raising their sights to quality craft beer. I think there is a tremendous opportunity for growth.

"Opportunity is especially growing in those states that most recently changed laws to allow brewpubs -- Georgia and South Carolina. "We are just now coming out of the stone ages with regard to alcohol," said Peter Finazzo, owner of The Chicago Brewpub in Greenville, S.C., and president of the South Carolina Restaurant Association.

Still not allowed to serve alcohol on Sundays, Finazzo, who also owns Peter David's fine-dining restaurant, was the first to open a brewpub in upstate South Carolina last March. Public response to his operation has been enthusiastic in this fast-growing region, he said.

Several operators have contracts to open brewpubs in Georgia, including Hops Grill & Bar, a 13-unit Tampa-based company that claims to be the largest chain of brewpubs under the same name. Hops expects to have four or five more units open by spring next year, according to chief executive David Mason.

Since Hops is in the process of pursuing an initial public offering, Mason would not speculate on long-range expansion plans. All 13 existing brewpubs are located in Florida, a state that had 27 brewpubs as of last May. Big River Grille & Brewing Works, which operates two brewpubs in Chattanooga and Nashville, Tenn., also has targeted Southeastern states, from Virginia to Florida, for expansion. Big River, which also hopes to go public, just landed a brewpub contract with Walt Disney World.

"I think people are hunting for alternatives to casual-theme restaurants," said Tim Hennen, Big River president. "People want entertained more."

The Disney project is scheduled to open next summer on the Boardwalk, a $200 million waterfront resort and entertainment district being developed on Crescent Lake in the Epcot Center area. That brewpub will be double the size of the Chattanooga unit, which seats 230.

Total revenue of $3.5 million in Chattanooga represented a 9-percent increase over the year-ago figure, Hennen explained. Sales in the Nashville unit, which has 310 seats, are running about $4 million. So far, Big River's financing has come from bank loans and "a lot of partners," Hennen said. Cash flow from the first two will pay for building the third.

Countless other investors around the country are putting their money on the growing popularity of craft-brewed beer. Sales of about 2.5 million barrels in 1994 reflected a 50-percent increase over 1993 production, according to the Institute of Brewing Studies.

Market share of total U.S. beer sales in 1994 was 1.3 percent for craft-brewed beer, up from 0.9 percent in 1993. Mass-produced 1994 domestic beer sales decreased 0.06 percent from 1993 volume.

"If people are going to drink less, they want better quality," said Thomas Moxcey, president of Denver-based Rock Bottom Brewery. "You can look at corollaries in wine and coffee."

With seven brewpubs open and per-unit average sales of about $3.2 million, Rock Bottom intends to open three more this year in Chicago; Cleveland; and Kansas City, Mo.

Not to be outdone on its home turf, Chicago's Goose Island Brewery, which opened in 1988, is building a second microbrewery with an attached restaurant near the United Center, home stadium of the Chicago Bulls and Blackhawks. "Chicago has lagged behind. We have been the only one in Chicago for the last three years," said John Hall, Goose Island owner, who said that five brewpubs are operating in the suburbs.

It's more difficult to set up shop in Chicago. Rock Bottom is one of the few real professional people to do it. You can't get into Chicago on a small budget," Hall added.

Goose Island's beers are known by beer drinkers who have never been to the brewpub because they are distributed to about 130 -area restaurants and bars. The new location will have a bottling plant, making it a microbrewery. In suburban Aurora, Ill., former Chicago Bears football great Walter Payton is heading a brewpub and microbrewery development. One of the beers is likely to be named Payton Pilsner.

Elsewhere in the Midwest, which had many small breweries in the last century that were operated primarily by German immigrants, brewpubs are making a strong comeback. At least 15 brewers have applied for brewpub licenses this year in Michigan alone, according to Harry Kourelis of Great Baraboo Brewing Co. in unincorporated Clinton Township near Detroit.

Jon Carlson, part of a group that worked with a lobbyist to get Michigan's law passed in 1992, just opened Grizzly Peak Brewing Co. in Ann Arbor. Although his initial interest in a brewpub was as a real-estate investment, the took on the role of proprietor as the idea grew on him.

"Ann Arbor is an ideal market," Carlson said. "This county sells six times more imports s than any other county in the state. It has a strong downtown area that's known as an entertainment center for Detroit, including University of Michigan events."

Carlson teamed up with Michigan restaurateur Schelde Enterprises of Grand Rapids to operate the restaurant. Food sales of everything from Shanghai pasta salad to goat cheese pizza to sautˇed walleye with cucumber-mint yogurt sauce are running about 65 percent of sales so far.

The St. Louis market will get its third brewpub this fall, Morgan Street Brewery, owned by Missouri pub owners Randy and Dennis Harper and Steve Owings, who operate four Harpo's and one Sundeckers. "Brewpubs are the rage of the country," Randy Harper said.

Demand for brewing equipment is so high that a manufacturing backup delayed the opening of Morgan Street, located two blocks from the new Rams football stadium. The partners went to Montana to find the brewing team they wanted. Out-of-state companies in addition to Rock Bottom also are looking at the Midwest as a lucrative brewpub destination. Alcatraz Brewing Co., a division of California Cafe Re Corp. of Corte Madera, Calif., will open its first brewpub soon in Indianapolis.

"You can't open one in California if you have multiple liquor licenses," noted Ted Sexton, who will manage Alcatraz. He expects the unit to be a prototype for national expansion.

The company chose to do a brewpub as a second concept that would be different from its upscale dinner houses. Alcatraz's menu is somewhat more casual and less expensive than a typical California Cafe menu, said Michael Merriman, corporate beverage manager, but the brewpub will be food-driven. West of the Mississippi, states like Texas are starting to get their share of brewpubs. At least 18 have opened in the Lone Star State since brewpubs became legal there in fall of 1993.

Still more brewpubs continue to open in the Pacific states, which, along with Colorado, have led the brewpub movement. As of last May, California had 79 open, Oregon had 31 and Colorado had 29.

Hawaii, which began to allow brewpubs in July 1994, has proved a good location for the concept. California-based Gordon Biersch Brewing Co. projects first-year sales of its Honolulu brewpub to be above $6 million.

Some observers of the brewpub phenomenon believe the movement's long-range potential has limits. The overall failure rate last year was one in seven although it can be higher. California brewpubs had a bad year in 1993, when 13 opened and seven closed.

Grenville Byford, chief executive of John Harvard's Brewhouse in Cambridge, Mass., and Providence, R.I., said: "I will be amazed if there isn't a shakeout because a lot of people are getting into the business without adequate capital. People who think that a brewpub is just a license to print money will find that just isn't true. "Several factors usually are responsible for failures, according to Celebrator Brew News' Dalldorf: an unclear concept, poor service and/or underfunding.

Brewery consultant Jonathan Tremblay of Cambridge, Mass., also blamed poor food and inconsistent beer quality for failures. "The beer is definitely a hook that gets people in there, but the food keeps them coming back," he said.


New beers introduced at the Great American Beer Festival

Source: Brandweek, Oct 16, 1995 v36 n39 p12(1).

Title: Brewtends: corporate HQ? What corporate HQ? (beers introduced at the Great American Beer Festival in Denver, CO)

Author: Gerry Khermouch

Abstract: New beers introduced at the Great American Beer Festival in Denver, CO, included microbrewed beers as well as novelty beers marketed by large companies. Several observers noted that the beers marketed by large companies, such as Coors' Blue Moon, were becoming more interesting. In addition, US beer drinkers are becoming more sophisticated about beers such as pale ales and extra special bitters. Changing trends in the beer industry are described, such as liquor-flavored brews and unfiltered rye beers.

Subjects: Great American Beer Festival - 1996 Breweries - Conferences, meetings, seminars, etc. Microbreweries - Product introduction Companies: Adolph Coors Co. - Product introduction Anheuser-Busch Companies Inc. - Product introduction SIC code: 2082 Business Collection: 89Y0456 Electronic Collection: A17631759RN: A17631759

Full Text COPYRIGHT ADWEEK L.P. 1995

If there was no overriding theme at the Great American Beer Festival in Denver this year, that was probably a further sign of the microbrewery sector's maturity. While last year saw a flourishing of fruit beers from scores of brewers, this year's 1,350 offerings from 300-odd brewers was more of a mixed bag. One thing was clear, though: bland amber and red beers may not cut it much longer as consumers gravitate to more specific styles.

"There's a deepening of all the styles," said Stroh brewer Joe Hertrich. "The number of entries in every category is broader and deeper."

"The American consumer is getting more educated about beers like pale ales, India Pale Ales and Extra Special Bitters," said Keith Villa, brewer of Coors' Blue Moon line and a show judge.

NAME BEHIND THE BOTTLE

Both Anheuser-Busch and Coors fielded what show-goers regarded as their most compelling specialty entries yet, with unified families of subtle brews offering fewer overt concessions to mainstream tastes. "They're certainly showing signs of greater commitment and making more authentic attempts," said Barleycorn News publisher George Rivers. "They're getting closer to understanding what it's all about."

Among craft brewers, the handicapping was that Coors stood a better chance of success with Blue Moon, tested at Coors' SandLot Brewery in Denver and now entering the eastern U.S. in three flavors, plus a Pumpkin Ale next month. Crowds at the "Blue Moon Brewing" table--not coincidentally far away from the Coors table--scrambled to snag "Moon Me" buttons and pumpkin beer originator "Buffalo Bill" Owens pronounced it a strong entry. A-B took the opposite tack with American Originals, sampling it at the A-Bebooth and playing up the brews' identity as reconstructions of recipes developed a century ago by Adolphus Busch. The line, rolling first in Seattle and Denver, drew respectful reviews, but many wondered whether an appeal to A-B's distinguished heritage would be enough to overcome the reluctance of hopheads, or micro diehards, to imbibe anything from a major brewer. In fact, most other big brewers were scrambling to eliminate any associations between their corporate identity and their specialty lines. Pittsburgh Brewing is stripping off the last references to the brewery from its J.J. Wainwright's line. The company is dumping the bland "steak sauce" label on its core lager in favor of foil-based labels that have given Wainwright's Evil Eye and Black Jack extensions shelf presence, said marketing director Tim McAleer.

Genesee Brewing, whose J.W. Dundee brand may hit 250,000 barrels this year, has grouped its Dundee and Michael Shea's trademarks under the Highfalls Brewing rubric. So far, that designation has been targeted at the trade, but next year the Rochester brewer will launch its first brand under the Highfalls mark, possibly an India Pale Ale, said marketing chief Mark Holdten.

Stroh Brewery was back with Red River Valley lager from "Northern Plains Brewing," actually its St. Paul brewery. Next up, said show sources, is a light lager called First Reserve from its Winston-Salem unit, identified as "Flagstone Brewing." Hertrich wouldn't comment.

THE REAL WORLD

The few blockbusters at the show, either in brands or categories, reflected the segment's maturation. "Nothing jumps out at you and say this going to be the next Best Beer in America," one sales rep said. "It's a sales issue now."

One result was a more pragmatic tone among micros as they dodge the big brewers' mines. Take Humboldt Brewing, Arcata, Calif., which launched a Gold Nectar that didn't taste much different than its Red Nectar, which predates the big brewers' recent red beer rage. Why bother? As a hedge "for when the wheels come off on red beer," said brewer Steve Parkes.

MMM, BOURBON-

If last year brought a wave of fruit beers, this year brought several minor ripples. One was beers with liquor overtones. Brown-Forman, which last year launched a mainstreamish amber called Jack Daniel's 1866, will draw upon its spirits identity to differentiate the brand with a February line extension, Classic Oak Aged Ale, which gets a smoky character from aging in whiskey barrels. Similarly, Chicago's Goose Island celebrated Jim Beam's bicentennial with Bourbon County Stout, aged in charred white-oak Beam barrels.

Unfiltered rye beers were styled a more palatable alternative to ubiquitous wheat-based hefeweizens. Rye entries included Redhook Rye and You Say Hello, I Say Good Rye from Leavenworth (Wash.) Brewery.

In the realm of high-priced, sippable dessert beers, Dixie was back with a crowd favorite: a white chocolate mousse beer called White Moose. In December, it hits retail shelves in 8-oz. bottles in four-packs, said sales chief Johnny Moore.

CULT OF PERSONALITY

Continuing in the tradition of personality-driven brands like Pete's Wicked Ale and Buffalo Bill's Pumpkin Ale, Denver's Broadway Brewing created a local off-premise sensation with Road Dog, a Scottish-style ale with label graphics by Ralph Steadman and a signed promise by Steadman's buddy, Hunter S. Thompson, that the bottle contains "Good Beer. No Shit."

The label promptly ran afoul of state liquor authorities, creating a storm of publicity and helping to sell out the first run of 1,000 cases in 10 days. The state rejected an offer to rephrase the label "No bull," meaning Road Dog may soon be road kill.


Specialty beers see competition from microbrews

Source: Brandweek, Nov 20, 1995 v36 n44 p25(5).

Title: A different brew. (beer; specialty brand competition)(includes related article on beer marketing)

Author: Gerry Khermouch

Abstract: Specialty beer brands, such as Heineken and Rolling Rock, are seeing increased competition from micro-breweries. The specialty brands, which have seen consistent sales decreases, are more likely to be damaged by microbrewery competition than beer giants, such as Anheuser-Busch and Miller. Line extensions, such as Rock Bock and Rock Ice, have failed to increase sales for the specialty breweries.

Subjects: Brewing industry - Market share Microbreweries - Market share Companies: Labatt's USA Inc. - Market share Heineken USA Inc. - Market share People: Martino, Joe - Addresses, essays, lectures SIC code: 2082Business Collection: 90X2583 Electronic Collection: A17735062 RN: A17735062

Full Text COPYRIGHT ADWEEK L.P. 1995

Once the brands of choice for iconoclastic beer consumers, the marketers of Heineken and Rolling Rock are now struggling to communicate what makes their brews unique in an age when every town has a microbrew. For Rolling Rock and Heineken, two of the most dynamic specialty brands of recent years, 1995 likely will be chalked up not as a great year, but as a decent one. But make no mistake about it: the marketers at Labatt USA and Heineken USA have become increasingly concerned about how to keep the brands on track.

After seven years of double-digit growth, iconoclastic Rolling Rock hit a wall last year, rising a scant 2% to 14.6 million cases, Impact data shows. Labatt USA execs expect only single-digit percentage gains in the coming years as the beer that boasts in its ads of being "the same as it ever was" contends with a stampede of specialty beers from breweries large and small. , having climbed steadily back from the hit taken by most imports when the federal excise tax was raised in 1991, expects its growth to slow from 8% last year to only 6% or so this year, although that comes on the heels of price increases taken earlier this year in most of the country. At 31.8 million cases in 1994 shipments, it's still the largest U.S. import by far.

If that's a crisis, it's one any number of other beer marketers would love to confront, in what continues to be a flat beer market overall. To a large extent, consumers' interest in authentic, well-crafted beers vindicates the painstaking approaches developed over the years by the two brands. Rolling Rock has staked out an enviable position as beer of choice for many 20-somethings, while Heineken's position as the ultimate prestige import has given it a formidable presence, both in the general market and among ethnic consumers. The recent slowing in their growth thus might be viewed as an inevitable outcome of the brands' prior success, but it still has gotten execs' attention. Because in the long run, the popularity of microbrews may do more to damage the brand equity of specialty brews like Heineken and Rolling Rock than impact the sales of giants like A-B and Miller.

"There's a lot more focused competition on the specialty side, a field Rolling Rock almost invented," said David Yale, marketing vp of Labatt USA, Darien, Conn. "There are more sophisticated micros and the mainstream sid is jumping in with its own entries. Throw in the import piece and it's a very competitive and challenging environment."

"Every threat's also an opportunity," said Mike Foley, president of Heineken USA, White Plains, N.Y. "The micro movement is growing the movement. But it would be naive to say it's not something we're concerned about. Some of those new brands have taken our customer. Walk through a supermarket with those outstandingly packaged products; that's my customer they're after. "In the past, both brands have done well with advertising strategies that, by dint of being low-key and intelligent, have stood out from the din created by bigger-spending mass brewers. Now, with other "discovery" brands proliferating, there is a risk that the ads won't be heard at all--a risk that was compounded for Rolling Rock by slight cutbacks in ad spending stemming from a broader retrenchment at Labatt USA earlier this year. Both brands took modest steps this year to make their ads more relevant to younger consumers, but neither appears to have radically rethought the fundamental tone and message of its campaign.

And at a time that marketers should be engaged in an intense soul-searching about the brands, both companies have been undergoing management shakeups that may have diverted focus from the issue. Labatt USA set up a joint venture with Mexico's Femsa and then saw its Canadian parent acquired by Belgium's Interbrew, while Heineken USA picked up the reins from the brand's long-time importer, Van Munching & Co. With time lost in 1995, that means that for both brands 1996 marketing plans will be critical.

The broader question is, to what degree in an environment undergoing upheaval, the marketers of and Heineken should stick rigorously to the equities that built those brands in the first place? It's an issue that is reflected in every aspect of the marketing mix, although for both firms it has proved particularly thorny in the area of line extensions. As Heineken's Foley noted, underlying the increased market clutter are some sweeping changes in consumer behavior among the coveted 21-to 25-year-old demographic, changes that are reflected in their choice of music, entertainment and beer.

"People are looking for something very different as part of a behavioral statement," Foley said. "They're bored with mainstream beers. With a micro, They're not drinking a brand at all, but an idea. "As a result, "the whole dimension by which we try to reach consumers is changing.

The big challenge for Heineken is that the three traditional platforms through which we've communicated to consumers--authenticity, heritage and quality--won't work any more. The young demographic is rewriting all the rules."

Foley noted that many micros are producing beers of excellent quality, eliminating that as a differentiator. And the huge growth of such contract-brewed beers as Samuel Adams and Pete's Wicked Ale seems to suggest that most consumers don't care where the beer is actually brewed. "[Samuel Adams deviser! Jim Koch was right: sourcing doesn't seem to be an issue, which calls into question how you communicate your heritage," Foley said. "Relevance to the consumer is the issue."

"The dynamics have changed dramatically over the past couple of years," said Brad Hittle, Labatt's director of Rolling Rock brands. Where Rolling Rock had succeeded in niching its brand as less mainstream than Budweiser, these days there is a crowd of beers even further off the scale.

"These micros are putting pressure on the ownership of our image," Hittie said. Brands such as Samuel Adams started with a high commitment to quality, have cultivated a strong image and lately are beginning to invest heavily in markee brands, both through advertising and consumer promotions, and through occasional discounting, he said.

"Rolling Rock is in a vise. And to make matters a little tougher, all this activity is making wholesalers divert attention from Rolling Rock. We've always faced that, but now it's augmented," Hittle said. Execs at both companies acknowledge the issue needs to be addressed while the brands are still growing, because the beer business has proved unforgiving to brands that lose their edge. There are some encouraging precedents, however. A smaller brand, Corona Extra, appears to have reversed its steep slide of the late 1980s in part by hewing consistently to its positioning as a good-time, fun-in-the-sun kind of product.

And even the most venerable U.S. specialty brand, Anheuser-Busch's Michelob, appears to have arrested its long decline, thanks to actions it has undertaken to invigorate the brand and soften its perceived stodginess among consumers. New ads are lighter in tone, promotional activities tied to golf and skiing have been well-received by consumers, and this fall Michelob even rolled out a micro-like line extension, Michelob Amber Bock. But Michelob volume also has been stimulated by declines in price, especially via new 18-packs, an action that has proved irreversible for many brands in the past and which Rolling Rock, Heineken and Corona have steadfastly eschewed. And in any case, the Michelob family's current volume of 5.2 million barrels is a far cry from its 1980-81 peak of more than 10 million barrels. Michelob execs were not available to discuss the brand.

So far this year, Rolling Rock has turned in a decidedly mixed performance. It continues to do well in its core Pennsylvania and Ohio markets and, thanks to the strong focus of its New York wholesaler, Manhattan Beer, the brand has kept growing there, too. That's "evidence that the brand is not dead," Hittle said.

But the brand has been hit hard in "mid-cycle" markets in New England and the Southeast, some of which have suffered Rock's first actual volume declines in recent years. Newer markets that a year ago were viewed as a reservoir of vast untapped potential have been spotty. Nor has the Pacific Northwest been kind to Rolling Rock, but then the epicenter of the micro earthquake hasn't been kind to most other mainstream, near-mainstream or contract-brewed beers. Since conditions there may be a harbinger of where the national market is heading, that's not a comforting thought. Hitler said it was premature to discuss some of the avenues he may take with the brand for 1996, especially since research in progress may dictate changes to the creative strategy, from longtime agency Hill, Holiday, Condors, Cosmopulos, N.Y.

"Overall, I'm taking the brand equities we have and the positioning we have and making sure we're using them properly," Hittle said. "I think our TV is dead-on, though it didn't get enough awareness," he said. He was referring to such efforts as a spot that tried to show, in a lighthearted way, how residents of Latrobe, Pa., where Rock is brewed, have unwittingly anticipated the latest fashion trends.

On radio, however, "I think Joe Garvey has run his course," Hittle said, referring to the soft-spoken "philosopher/beer drinker" who has expounded on Rolling Rock's virtues for the past several years. This year, the spots were made a little less arcane than in the past, but still got tepid reviews from restive wholesalers.

"They need to appeal to younger kids. They've got to get with it," said one major-market wholesaler.

Labatt also has been criticized for underspending on a brand that has been its best cash cow. Ad spending in 1994 came to $7.8 million, per Competitive Media Reporting, less than Boston Beer spent on its then smaller micro, Samuel Adams.

In fact, if Heineken's Foley is right that consumers generally don't care whether or not a beer is contract-brewed, that suggests that the heavy investments Labatt has made in expanding production in Latrobe may have bee misplaced.

"The investment in Latrobe, at the expense of raising the marketing budget, was a blunder of major proportions," said one exec close to Labatt. "Another $7 million or $8 million spent on radio and TV might have helped it keep growing, but instead they cut it. Now, they have 500,000 barrels of spare capacity."

Instead of focusing intently on these issues, Labatt has gone through a messy management transition as it wrestled to absorb Femsa's U.S. sales and marketing operation, then saw its Canadian parent acquired by Interbrew. Along the way longtime Labatt USA president Richard Fogerty abruptly retired, succeeded by a veteran of Labatt's Ontario brewery. "There was a transition we had to get through," Yale acknowledged. "Those issues are behind us."

Heineken, which this year jazzed up its TV advertising with louder, more energetic executions targeted at younger consumers, also has been going through a transition. It switched the Heineken account to Wells Rich Greene BDDP, N.Y., from longtime agency Warwick, Baker & Fiore, even as it sought to replace its marketing vice president, Chris Vuyk, who resigned abruptly this spring. The spot was recently filled by a Pepsi-Cola executive, Stephen Davis, with strong new-product experience but no beer background. "We took a bump all right in the organization," Foley acknowledged. "All I can say is we're over it and on the way. We're probably stronger now than we ever were." He credits Warwick's latest campaign with working "reasonably well," but promises Wells' first campaign will "get out of the clutter."

One wholesaler who came away impressed by a meeting with Davis pointed out that the disarray near the top hasn't stopped Heineken from fortifying its street-level and chain-sales ranks. "They've got young, aggressive guys who're on top of the market and are bringing some new enthusiasm," in contrast to the more staid Van Munching & Co., he said. Heineken's first-ever participation in a national beer wholesalers convention in Las Vegas in September also signaled that the brand is coming out of the relative isolation of the Van Munching years, several wholesalers said. One quandary for both Rolling Rock and Heineken has to do with line extensions, an area where both have stumbled in efforts to contemporize the brands through intriguing extensions. In theory, the right extensions could attract new consumers to the franchise, while freshening the appeal of the core brand. The risk, of course, is that the brand equity simply gets diluted even as potential consumers reject the line extension as well. "I'm nervous about line extensions on a great trademark," Heineken's Foley said. "

In the U.S., in my experience, they greatly cannibalize the mother brands. But when's mature, you segment like crazy." Rolling Rock has fared reasonably well with Rock Light, considering that the core brand itself is viewed by many consumers as light-bodied. More problematic have been two more recent extensions, Rock Bock and Rock Ice, which sought to build on consumer excitement for micros and ice beers, respectively.

Rock Bock's 1993 launching was intended to show the brand could play at micros' game, but in retrospect Labatt execs acknowledge the product was dogged by several miscalculations.

By going with a bock, the brand encountered resistance from wholesalers who thought the genre is strictly seasonal. Also misguided was Labatt's attempt to have the brand shelved with other micros, not with Rolling Rock, and priced against Samuel Adams. The marketer also might have erred in giving Rock Bock the painted-label look of Rolling Rock, albeit in a different color scheme and graphic style. Some wholesalers said Labatt would have been better going with the paper labels characteristic of most micros. Perhaps the biggest disconnect was that the line extension was so counter to what Rolling Rock seemed to stand for to consumers. "They've shown difficulty in participating in heavier beers because of the perception that Rolling Rock is light," said one micro exec. "Consumers view Rolling Rock as lighter than Budweiser, though it's not true." That suggests Labatt made the opposite mistake of Guinness Import when it brought out the now-withdrawn Guinness Gold, which went counter to the rich, heavy image of core brand Guinness Stout.

"Consumers liked the product, but there was some disconnect from the trade level in trying to understand and support the combination of price, name and product descriptor," Labatt's Yale acknowledged. Since then, Labatt has lowered the price of Rock Bock and converted it to a seasonal entry that ca shelved with Rolling Rock.

Rock Ice is another weak line extension. By some accounts, the product was launched against the recommendations of some Rolling Rock brand people who felt a trendy ice beer would undercut the positioning of a beer that purports to be the "same as it ever was." But Labatt USA's Canadian parent had a heavy investment in the ice-brewing process it had refined and was eager to see the process employed by one of its prestige U.S. brands.

The compromise reached was to go with an uncommonly full-bodied ice beer, one which actually helped anticipate the red beer rage, but to confine its launch to Rolling Rock's core markets, where the brand's blue-collar, sub-premium roots were fresher and where there would be less downside risk to the brand equity.

"Certainly there was that debate" within the company, Yale said. Both Rock Bock and Rock Ice "were excellent products, but didn't live up to expectations. Our marketplace learning would leave that as a viable question as to whether we would move forward with a line extension again." What next? Yale said the learning will be applied to products now under development for 1996. Industry execs figure it could always go with a new brand, perhaps Old Latrobe, but Yale noted that doesn't resolve the dilemma. Close-in line extensions using the Rock name "dilute off the brand, but further out you lack the leveragability of the parent."

Heineken stumbled with Tarwebok, a red beer that was given a name that was unpronounceable to most U.S. consumers, extremely heavy and high in alcohol content. This year, it has been restaged strictly as a lighter, seasonal beer, but any future new products likely will come in under different names than Heineken.

"I don't think you should expect another line extension from Heineken," Foley said. Big breweries must change their games, but "if micros go mainstream, they risk losing their luster."

State of the Suds Union

The following is adapted from a recent presentation made by Joe Martino, senior exec of G. Heileman Brewing, to a convention of Pacific Northwest distributors in Big Sky, Mont.

We all know how microbrew sales have been skyrocketing by 40% each year with no slowdown in sight. To big brewers, the really meddlesome thing about microbrews is that they are a strong indicator of a far more encompassing national trend: the consumer's willingness to spend more--lots more--to leave their traditional brands for wholesomeness, variety and novelty.

Micros may never outsell national brands, but they are evidence of an important change in consumer tastes and preferences. Light-bodied beer, wine and spirits are on the decline. New Age beverages are sweeping the marketplace. Mass production is out; specialty production is in. Traditional is out; today's consumer would rather be one of a kind than one of the guys. Never underestimate the power of consumer idiosyncrasy. As a result of these trends, major brewers are spending millions of dollars to compete with tiny, local businesses. All of us want a part of this action, and industry experts are telling us we'd better go get it.

But we're finding out it's not so easy. By their very nature, small-batchbrews are the antithesis of mass production. A big name on a small label carries no weight in the world of micros. In fact, the whole segment is an anomaly: its growth is an offshoot of moderation and its typical consumer is fiercely loyal to variety.

If we're going to make any headway in the microbrew segment, we need to set aside our traditional biases and take a close look at what gives this tiny market so much energy. Flavor and trendiness aside, beer doesn't sell itself. Or does it? The microbrewers' ability to command premium prices in a declining industry is pure seduction that translates into high profit margins f, wholesalers and retailers alike.

Retailers I recently spoke with are responding wholeheartedly to the microbrew revolution. Some are broadening the consumer base--say, by reaching women drinkers with fruit-flavored brews, Several are promoting micros aggressively in their ads. One told me the segment is doing so well in his stores that he can aggressively price premium and value-line beers at cost to draw shoppers. Then he merchandises the heck out of the micros to get shoppers to trade up. Which they do. In general, retailers across the region are becoming so protective of their micro dollars that they're reluctant to promote micro look-alikes--A-B's Red Wolf or Miller's Plank Road entries, for example--unless consumers are asking for them. And that brings us to the big brewers. There's no question all of us want a piece of this action. To get it, we have to change our game. The only way we can play, and win, is to start thinking small.

In order to compete, we need to understand our limitations. The microbrew segment is, by its very nature, contrary to big business in many ways. Tax and legislative benefits that extend to microbrewers but not to larger producers keep gross profits at nearly double those of big brewers. Brewpubs provide even higher margins with no distribution or container demands; we are literally defenseless in this area. And by positioning themselves as an alternative to mass production, microbrewers are able to concentrate their efforts and the bulk of their working capital on high quality and freshness. By contrast, large breweries direct a huge percentage of their capital resources to the exact opposite: the maintenance of their mass-production systems. Most plants simply are not equipped to handle small batches. It makes it tough to compete.

But our biggest challenge in penetrating the microbrew segment may be big-company name recognition. How different from the 1970s and 1980s! Focus groups are telling us that the minute we attach a big name to a small label, we risk alienating a substantial number of drinkers. They seem to be telling us: "If you're big, you're not in the ball game anyway. "Will the microbrew phenomenon fade anytime soon? Conventional wisdom suggests that a shakeout is imminent, that the growth rate will slow, that big brewers will figure out how to stabilize the marketplace. So far, none of these things has happened. In fact, with can and ingredient costs on the rise, premium brands could end up perilously close in price to microbrews.

That might even accelerate the trend.

True, major brewers with big budgets could drive up competition within the segment. But lots of noise might be just what the segment doesn't need. The real issue is this: if micros go mainstream, they risk losing their luster. The smartest way for big brewers to stay in the game may be to concentrate on keeping the game going. Maintaining this high-margin market is good business for all of us. To succeed, large brewers need to think small--and play big.


Microbrews make it to TV

Source: Brandweek, Dec 4, 1995 v36 n46 p21(2).

Title: "Discovering" television. (new-age beverage and microbrewed beer advertising)

Author: Gerry Khermouch

Abstract: Alternative beverage and microbrewed beer companies, such as Mistic Beverages and Boston Beer Company L.P., are considering television advertising campaigns. Television advertising, which represents a new advertising medium for the beverage producers, demands careful planning and execution. Marketers are concerned about preserving the high-quality and non-conventional appeal of the alternative beverages.

Subjects: Microbreweries - Advertising Beverage industry - Advertising Television advertising - Technique SIC code: 7313; 2082; 2080Business Collection: 91N2096 Electronic Collection: A17837154 RN: A17837154

Full Text COPYRIGHT ADWEEK L.P. 1995

They're often referred to as "discovery" , and who ever discovered anything on television? But as so-called "alternative" brands such as Samuel Adams beer, Pete's Wicked Ale and Mistic fruit drinks move to greater national prominence, a TV presence has become a rite of passage. To play against the saturation, intrusiveness and corporate giantism connoted by a TV presence, such brands are offering up new takes on conventional TV. Call it non-TV or un-TV, the ads try to be memorable, while avoiding the look of a big marketer.

Among marketers who have launched ambitious TV campaigns are Pete's Wicked Ale, which last fall became the first craft beer to break a multi-city TV effort, and Boston Beer, the marketer of Samuel Adams beer which broke a national campaign from Wieden & Kennedy, Portland, Ore., in late summer. Some faux micros from major brewers also have adopted the approach, notably Miller Brewing's Plank Road Brewery, which aired spots last summer soliciting consumers for the right slogan for Icehouse beer.

On the non-alcoholic side, Snapple Beverage three years ago broke its well-known "letters to Wendy" campaign from Kirshenbaum, Bond, while Mistic Beverages has experimented with a variety of approaches, most notoriously under the tagline: "Get Naked."

Given the positioning of the brands, some observers question whether TV is a mandatory part of the marketing mix, even at a more advanced stage of brand growth. Most achieved their initial explosive growth via effective packaging and POE guerrilla marketing tactics, and outdoor and radio ads. Boston Beer, in fact, claims to be one of the largest radio advertisers by dint of the familiar spots featuring company co-founder Jim Koch.

For high-quality brands trying to build a mystique, "the medium is, to a significant degree, the message," said one skeptic, Don Moriarty, managing director at Culver Moriarty Glavin, N.Y. He once worked on Miller Lite and now handles event marketing for several liquor brands (which legally can't advertise on TV).

"Once you introduce TV advertising into the equation, it suggests that the limited-supply, high-quality dynamic has shifted, that maybe this product is made in mass quantity and therefore is not as high-quality," Moriarty said. By contrast, Boston Beer brand development vp John Chappell sees TV as a risky, but appropriate, part of the mix. "Consumers judge the message, not the medium. As long as it's true to the brand, and reflects its positioning and its values, the fact that it's on TV doesn't hurt," he said.

On the beer side, industry execs cite several successful antecedents: what many regard as classic spots by Hal Riney for Henry Weinhard beer in the Northwest, and low-key spots that built Labatt USA's Rolling Rock into a preferred brand among young consumers.

Turning back to non-alcoholic beverages, the name that comes up over and over is Snapple. Although some marketing pros initially were put off by "letters to Wendy," many now regard the deceptively low-tech, approachable campaign as the model for how a big budget can be harnessed to TV ads that don't subvert the whimsical roots of a brand.

There is little question the ads succeeded in building on the brand rapport felt by consumers, who continually write thousands of unsolicited letters to Wendy. Execs at Quaker Oats, which now owns Snapple, indicated the concept will change and Wendy's on-air presence likely be abandoned, but they pledge to maintain the approachable tone. Kirshenbaum, Bond execs declined to comment until the work is more advanced.

That poses a tricky issue for a brand that has adeptly cultivated a "core fanaticism" among consumers, said Ken Kristen, co-chairman of Krimstein Clapps, N.Y., the agency that developed Mistic's 1995 TV campaign. "Snapple is facing an interesting problem: is the brand becoming more mainstream, and is that fighting its new age credentials?"

At Pete's, the company and agency Goodby, Silverstein, San Francisco, were able to draw upon the firm's unassuming founder to epitomize the brand to consumers. The spots, which aired last fall and this spring in five cities, featured Pete Slosberg gamely trying to sell autographed photos to uninterested pedestrians. The tagline: "Not yet world famous."

Company president Mark Bozzini said he is evaluating research before deciding when and how to craft the next TV effort. That will have to come from a new agency, following Goodby's resignation of the account in order to pick up an assignment from Anheuser-Busch.

Whatever form a new campaign takes, it will try to avoid two possible pitfalls. One, that the firm might appear too much like a major brewer, was averted in the first campaign by making the unassuming Slosberg the focus. By injecting humor, the spots sought "to be the antithesis of big and slick," Bozzini said.

The other potential pitfall? Setting off the B.S. alarm, at a time that consumers appear much more judgmental, Bozzini said. That's particularly true both of image products and of the young adults sought by brewers like Pete's. "When you try to do something and it's apparent you're trying to do something, people in general, especially young adults, begin to try to rip it apart," he said.

Given that reality, Bozzini is determined to avoid making any "ridiculous statement" intended to persuade consumers that his beer is better than any other, particularly since the firm can't afford to buy the tremendous amount of impressions it takes for even wholly believable messages to stick. "That sets off the cynical alarm in this kind of audience. You've got to get them rooting for you, rather than thinking whether they believe you," Bozzini said. The vehicle for that is memorable, entertaining advertising--"and there's no question that was Pete." If the Pete's spots smack of celebrity advertising, that's OK here, because "for us, the celebrity is the brand."

In the past, Boston Beer co-founder Jim Koch has not hesitated to employ what his archrival at Pete's calls the "ridiculous statement," touting Samuel Adams as "the best beer in America." But the brand's initial TV campaign was so self-effacing that some wholesalers pleaded for a more prominent brand message.

Against a soft-focus, warm-toned view of a tavern, the spots ask provocative, often amusing questions, to help viewers answer the question, "Do you love beer?" before dosing with an image of the Samuel Adams logo. "Did you ever notice how the good beer is the first to disappear from the fridge at parties? Do you think this might possibly be the best time in history for a beer lover to be alive?"

In doing so, the campaign tries to sell the category rather than the individual product. If some wholesalers worried that's too indirect, the approach seems to be in keeping with Chappell's view that advertising behind a discovery brand "can't be blatant or overly direct or it blows the mystique. You've got to leave things for the consumer to discover." One hedge to the risk of undertaking a TV effort is the very fragmentation of the medium. "You can look as small as you want on TV. People have to accept that by virtue of cable, where you can see small, quirky things that never would have existed 10 or 15 years ago," said Galen Greenwood, a Richards Group writer who previously worked on Rolling Rock beer at Hill Holliday Connors Cosmopulos, N.Y.

Like Snapple, Mistic has employed TV for several years, through a shifting cast of agencies. Its best known effort, from Avrett, Free & Ginsberg, N.Y., stressed the brand's all-natural pedigree by urging consumers to "Get Naked."

"'Get Naked' was good advertising: provocative, it made a lot of sense for the brand's positioning and it was shot on video with no budget," said Ken Gilbert, who recently joined Mistic as svp-marketing and then launched an agency search. He liked the tone of this year's tacky-looking effort from Krimstein, Clapps, but wants the punch of "Get Naked."

"The low production values were very intentional," Krimstein said. Consumers "have a very fine-tuned B.S. detector. But we're winking along with them, letting them know that these guys are on the same side of the fence and don't take themselves too seriously."

Perhaps the most intentionally outrageous new age spot played this summer, when McKenzie River Partners briefly aired an animated TV spot that parodied the famous baseball bat scene from The Untouchables behind its Crooked I tea and juice line, a sibling of the same company's St. Ides malt liquor. In this case, St. Ides spokesman Snoop Doggy Dogg was wielding the bat. His victims? A couple named Joey Snapazona and Misty.


An overview of the story of Sam Adams

Source: Inc. Magazine, Dec 1995 v17 n18 p54(7).

Title: Market maker.(Samuel Adams brewer Jim Koch)(Entrepreneur Of The Year Awards)(Interview)(Company Profile)

Author: Robert A. Mamis

Abstract: Koch, now age 45, left a lucrative business consulting career in 1985 to start Boston Beer Co. He combined product quality and aggressive marketing into the 10th-ranking brewing company in the US by 1994.

Subjects: Businessmen - Achievements and awards Microbreweries - Achievements and awards Brewing industry - Innovations Companies: Boston Beer Company L.P. - Achievements and awards People: Koch, James - Achievements and awardsSIC code: 2082Magazine Collection: 82A1111Business Collection: 91T1714 Electronic Collection: A17810492 RN: A17810492

Full Text COPYRIGHT Goldhirsh Group Inc. 1995

The main difference between Sam Adams, whose father was a brewer, and Jim Koch, whose father was a brewer, is that Adams didn't call his beer James Koch. Otherwise, each was passionately into causes, graduated from Harvard did business in Pennsylvania, was a populist, and was a thorn in the side of the competition. It's appropriate, then, that in 1985 Koch sold his first case of Samuel Adams barely a block from the site of its namesake's 1776 brewery.

The sale occurred only a few months after Koch (pronounced "Cook") had given notice at his former job (as a $2,500-a-day consultant to big business), drafted a business plan, raised $140,000 on top of his own $100,000, and launched the Boston Beer Co. (BBC). Even then, the new brew, samples of which Koch carried in an executive briefcase lined with ice packs, was exceptional enough - and Koch glib enough - to persuade the barkeep to order a few cases. Elated, the rookie salesman was well down the street when he realized he'd forgotten to ask how many. (For the record, it was 25.) No longer is "how many" a quantity that eludes BBC's founder, now that he's gone on from that bumbling beginning to become the country's 10th-largest beer producer, behind such family lines as Busch, Miller, Coors, Strohs, Heileman, and Pabst. In 1994 BBC sold $133 million worth of beer, for a pretax profit of $9.7 million; 1995 sales are estimated at $180 million, with income at $14 million. And, despite additional financing in 1987, which diluted his initial $100,000 investment, Koch owns 42% of the action (subject to possible adjustment because of 1995s planned initial public offering).

Like it or not, beer is the world's second-most-popular drink, next to tea. Which might explain the original Sam Adams's dumping the latter into Boston Harbor. More to the point, it explains how the big domestic brewers rack up commanding figures year after year (leader Anheuser-Busch's 1994 sales: $8.7 billion). Next to Anheuser-Busch's, Miller's, and Coors's combined 1994 production of 150 million barrels (a barrel yields approximately 52 six-packs), BBC's 700,000 barrels were a drop in the bucket. But they were enough to spirit the company to the head of the minuscule microbrewing niche. Really minuscule: despite its number 10 overall position, BBC manufactures only about three one-thousandths of the beer sold in this country. At that, its output is greater than that of the next six microbrewers combined.

What makes BBC's immediate acceptance and its 40% annualized growth thereafter so remarkable is that the company sprang from ashes. At the time of its founding, in late 1984, the ranks of colorful local breweries, which at their peak 1870s approached more than 3,000, had dwindled to fewer than 40. They disappeared "because they didn't make a product that was either cheaper or better. If you don't have one or the other," Koch holds, "you don't have a business." Not the least of the failures were the 13 breweries operated by his forebears, starting with great-great-grandfather Louis, who ran a brewery in St. Louis "when Eberhard Anheuser was still selling soap."

But since Jim Koch's arrival on the craft-beer scene, an estimated 500 small breweries and brew pubs have ventured to open, their ranks swelling at the rate of some 50 a year from 1985 on. Observers agree that the steep reversal was at least partly inspired by BBC's success and the publicity it received. The success itself was spurred by as astute and imaginative a promotional barrage as the industry had seen. In addition to handing out the typical T-shirts and coasters, Koch and company peppered Boston and its environs with restaurant umbrellas, pub-menu chalkboards, and gala beer parties - all touting BBC's brands. Koch himself took to the airwaves, drolly reciting 60-second spots of self-praise like a micro Iacocca. Eschewing "babes and hunks," BBC print ads educated drinkers about how to recognize and enjoy truly premium brew (and why they should expect to pay more for it), by inference taking competitors to task for not delivering the quality and consistency of Koch's offering. In grudging admiration of his merchandising instincts and sometimes abrasive infighting skills - "You can't do what I do without being feisty," Koch concedes - one major brewer recently responded to Koch's stated mission to make Samuel Adams the country's number-one-selling specialty beer by the deadline of the year 2006 with this curt appraisal: "He's going to beat it."

Not to say that Koch alone revivified the marketing concept of gourmet "craft" offerings concocted by neighborhood microbreweries. He was attracted to specialty beer after seeing an article about San Francisco's Anchor Brewery, taken over in the 1960s by one Fritz Maytag to revive the area's steamed-beer tradition. The article reminded Koch that if he remained in the safety of consultancy, he would be the first in his family in six generations not to become a brewer. He recalls: "I read the piece and thought, 'Maytag is making better than the imports right here in the United States! If I don't do the same thing, a tradition that's lasted for 140 will die with me, and I'm going be real disappointed in myself.'" No need. In April 1984 Harvard M.B.A. (and Harvard juris doctor - he's also a lawyer) C. James Koch resigned from the prestigious Boston Consulting Group (annual compensation: about $250,000) to become beermeister of his own fate (annual salary: exactly $50,000). Maytag's Anchor Brewery may have been his inspiration, but it wasn't his model. "Fritz had family money," Koch observes matter-of-factly. "He was a wealthy man when he went in, and took two decades to turn a profit. My grandfather was a brewer. He didn't invent a washing machine, so I didn't have the luxury of lots of time and money. As a result, I started my company with two priorities - making a great beer as soon as I could and getting people to drink it."

The best entrepreneurial advice the admittedly impatient Koch says he's received is, "Jim, nothing good happens fast." That axiom was whispered in his ear by a high school girlfriend. But, says its recipient, "when you're building a company, it's not bad counsel." Thus, in his 1984 offering prospectus he advised potential investors, "Sales of 5,000 barrels per year are required for attractive profitability based on the market alone. I believe this will take 3-5 years, but appears to be achievable." His calculations turned out to be way off. It took him just eight months to sell the first 5,000 barrels.

Koch also described the aims of the proposed company in the prospectus. He opted not to go after Bud and its ilk but to take on premium imports like Heineken and Molson, even though such brands constituted just 6% of the market. To produce the better-than-theirs beer he had in mind would require extra-expensive ingredients, but in the premium market sector, imports' freight bills and currency problems would give him room to maneuver.

Eventually, increased volume would allow Koch to achieve economies of scale and deliver beer more drinkable than the imports for the same or less money. And the imports' by-definition inability to deliver a brew as fresh as Koch's would be a promotable edge for BBC.

Getting people to brew the beer, however, was another story. For all the hyperbole Koch was to generate in boosting the cause of local brews, BBC had no local brewery. In the beginning Koch cooked his new elixir, a weighty lager, on his kitchen stove, using a complex recipe he had discovered in his father's attic. He and Rhonda Kallman - the then-22-year-old secretary he took with him when he left consulting, because, among other business talents, she knew the local bar scene better than he - lugged samples from pub to pub in quest of direct sales. After they made one, Koch, Kallman, and the company's first hire - a truck driver- hauled the cases around the city. No one else was willing to deliver the goods. "When I started, they all thought I was crazy," Koch relates. "Every distributor in Boston turned me down. Not only did we make the calls and get the orders, we had to rent a truck and lease a warehouse. When a batch was ready, we bottled it and delivered it. Try schlepping five cases of beer down the steps of one of those Faneuil Hall restaurants - you're talking 160 pounds! It gave me an appreciation of who does the hard work in the company."

Partner Kallman now heads a 115-person sales force that's been appraised by one Wall Street analyst as "by far the best in the sector." The group is not only the industry's most efficient - one rep to ever 500 clients - but its most balanced: half the salespeople are female. "That's way off the scale for the beer business," Koch notes. "I'm often asked why I hire so many women. The answer is, I don't; I hire talented, resourceful, intelligent, energetic people. It happens that God made half of them women."

In the absence of BBC's own facility, the solution to meeting the increased demand as sales expanded to other cities was to outsource brewing to an otherwise-underutilized brewhouse. "Here's what I'd like to do," Koch would say as he made cold calls, shopping his then-novel concept around. "I'll bring you my own recipe and ingredients, and I want to make my beer at your place." One of the takers was Pennsylvania's Pittsburgh Brewing Co., a capacious plant whose own label was then in decline. A nonbeliever when it came to formal market research, Koch chose the name Samuel Adams by printing mock labels and personally polling beer drinkers wherever they gathered, including captive audiences on airplanes (The runner-up name: New World.) "I figured here's a cheap way to do it, and what better place than a plane? It was my demographic - business people, a lot of them interested in a better beer." Today BBC products make up the majority of Pittsburgh Brewing's output, and BBC has struck similar contracts with breweries in Oregon, Washington, and New York. Now, Koch crows, "we're able to get beer into any market in the country within 24 hours of shipping." Koch is such a fanatic for freshness that BBC was the first of the beer crafters to stamp a noncoded sell-by date on its batches. Beer is at its best in the first minutes after bottling, Koch holds, and hangs on for only four or five months before its quality starts to deteriorate. "That's why we pioneered freshness dating. If you're selling quality, freshness is important. You shouldn't allow the consumer to buy stale beer without his knowing it. I'd rather call it back and destroy it than have someone drink it."

And he does just that, at no small cost. In 1995 BBC will take back and destroy about $1 million worth of old beer. Every year some is put into a tub, and Koch, dressed in a business suit, sits in a chair over it, charging $1 a throw for the crowd to take potshots at a target and drop him into his own drink. The considerable receipts go to charity.

Actually, destroying the beer increases BBC's profits, Koch calculates. "It sends a clear message to everybody - consumers, retailers, distributors, our salespeople - and gives them a simple decision-making rule: `Date passed, beer goes.'" The bottom-line rationale is "you get a lot of administrative overhead in business because you're always making trade-offs. Therefore, in matters where decisions can be made on clear and obvious principles, such as no old beer, you save time and money. You don't have bureaucracy debating things like `Well, how old is old?'"

Although he's "always wanted to have a brewery," Koch has yet to own a full-fledged factory of his own. (A miniature one on the outskirts of Boston is devoted to visitor tastings and research and development - of such concoctions as cranberry beer.) In 1987 he obtained venture capital clear marked to build a factory that could produce 225,000 barrels a year and bought $2.7 million worth of equipment. But when construction estimates came in at twice his budget, Koch scrapped the project, abandoning 30 huge tanks that had already been delivered to the site. "It was a big mistake," he admits. "I remember thinking, `Jeez, I'm almost 40, and I just wrote off more than I've made in my whole life.'" But pushing on would have sunk the company - not to mention annoyed its VC backers - "and wouldn't have made my beer any better."

After almost a dozen years into it, he's found extra merit to the contract route. "In the value-added chain, I choose the parts I can do better than anyone else," Koch says. "I capture the art-and-science part of brewing, while they run the plant. I'm not better at getting a roof fixed than they are." With Pittsburgh Brewing's labor pact with the union due to expire last May, Koch called union management five months in advance and suggested that negotiations start right away, saying, "If you take it to the deadline, I will already have found another place to brew my beer." The union settled in March. "Owning something can tie you down," Koch believes. "My beer gets good treatment because if the contractor were to do anything wrong, I could leave. Whereas with their own beer, they can't leave. So Sam Adams is brewed especially well."

So well, in fact, that it was the first American beer allowed into Germany, the only country in the world that enforces a beer-purity law. Koch seized the moment to hint that the language of the law showed that while his beer met stringent standards, his competitors' brews didn't. A relentless challenger who compares the opposition's products unfavorably with his own, Koch has more than once irritated his rivals, as any innovative merchant is apt to, by pushing claims to edge of exactitude - but not beyond. In fact, the statute didn't bar other beers because they had worms or such; barred them simply because their recipes called for ingredients German brews didn't contain. BBC brands are exported to England and Ireland as well and were sold in Japan until Koch pulled them because "the distribution system there has so many layers, we weren't getting fresh beer into consumers' hands." But Koch's forays into foreign markets aren't so much for profit as for posture: we're as good as the imports, he likes to say. "Going international is not a priority,", he admits. "We got Iowa only last year." With the Hawkeye State under their belts, Koch and Kallman now have covered all 50 states. Little wonder that, Koch charges, Anheuser-Busch recently tried to cut him off from a critical source of raw materials by bullying the farmers who supply him with rare Bavarian hops. Koch didn't blink. He flew to Hallertau, Germany, and invoked his family's long-standing relationship with the farmers themselves: "It's likely my great-great-grandfather bought hops from their great-great grandfathers. I maintain good relationships with those farmers o me, part of being a strong competitor is making sure to take care of the people you need." August Busch "is as tough a competitor as there is in American business today," Koch concedes. "But I'm a tough competitor, too. I enjoy the challenge. Let me answer them this way: we still have the hops."

And they're no ordinary hops. Koch spends as much as 20 times the going rate for "really elegant" varieties. Without costlier ingredients, he insists, BBC's 14 offerings - from a light lager to a 34-proof syrupy distillate that Koch invented and has applied for a patent on - would fall short of the distinctive tastes he claims BBC customers expect. "People ask how come Sam Adams is so expensive. My response is, how come it's so cheap, when we have higher ingredient costs by far? World-class beer for a buck more a bottle!" Koch's excited admiration of his own products may or may not be just another promotional posture; regardless, he's found a way to make it feel infectious. Those who share a sample with him in his model pub at BBC's R&D site receive an education in sight as well as taste. Here's Koch pouring cream stout: "See how it forms! It's almost like a parfait. It's beautiful! A well-made, well-served stout will have a head like that. This has an acid bite to it. When you smell it, the fermentation smell should be a little like black coffee." His guest tastes. "Get that bite!!" Thus ads and promotional pieces stress a painstaking brewing process that he himself supervises, standing by contractors' vats and tanks as a given recipe is nursed into fruition. While the rest of the industry's marketing features the party-thick lifestyle one's beer choice supposedly guarantees, BBC's emphasizes freshness, rich and complex tastes and fragrances, and exquisite ingredients. Samuel Adams's tabletop menu cards for restaurants picture a patriot with fire in his eye, not a terrier with a black eye.

Explains Koch: "I'm trying to educate American beer drinkers the same way California wine makers changed people's minds about American wines 15 years ago. Creating trust in the market is a competitive advantage against the big guys. They're still trying to figure out how to make something that looks and tastes like Samuel Adams."

Accordingly, Koch has been acclaimed for innovative marketing. But he insists the acclaimers have it wrong. He's an innovative salesman and deems the person-to-person aspect so important to the soundness of a business he still goes on the road two days a week. "At the start," he concedes, "I focused on selling because I couldn't afford advertising or . Other microbreweries didn't have brewing backgrounds, so they were into the marketing aspect: `We have to have a little local brewery because that's what people are buying,' they figured. I said, `That's not right. People buy beer, not shtick. I can sell beer in Boston if it's great beer. But I can make it anywhere.'" BBC didn't add a marketing director until last year. "We became a household word without a marketing department," boasts Koch. The marketing department was added only after "there was more staff than I could do anymore," he says. BBC now has some 400 collateral items with which it supports its sales staff, including the samples of fresh malts and hops salespeople bring with them for accounts' hands-on chewing and sniffing. Koch insists he still doesn't understand marketing - billboards, commercials, and the like. "I understand beer. The rest has gone beyond me. For years there wasn't a job in the company I couldn't do better than the person who was doing it. That's not true anymore. We'll get to a point where there's not a job that I can do as well as the person who's doing it. The sooner that comes, the better," says Koch.

Despite his business-school education, Koch favors simple rules throughout, "so people can understand and visualize and don't have to try to imagine what you mean." One area is hiring and firing, where the rule is, Don't hire anybody unless it improves the average of the company. "It's a wonderful rule because administrators can imagine what the average person is like; there's a fairly clear standard in their head. They look at this person and they can say, `Yeah, they're better,' - or, more likely, `No, they're not better than our average.' If you don't do that, what happens," Koch explains, in a hipbone's-connected-to cadence, "is, when you start on a scale of one to 10, you hire 8s and 9s and 10s. Then you start hiring 7s, and the 7s hire 6s, and the 6s start hiring 4s and 5s. And before you know it, what started out as 8s, 9s, and 10s is 4s, 5s, and 6s on their way to becoming ones and 2s and 3s." BBC's three full-time recruiters wait - and wait some more - to find someone who ups the average. They recently took two years and went through 2,000 resumes to hire a sales rep for Arizona. Patience must be a virtue, because no one has quit the BBC office in five years. The turnover rate in the sales force is less than 15%, and among salespeople there for at least three years, virtually zero. Although BBC has a professional tour director who walks visitors through the brewing process at its showcase plant, the company also encourages employees to put in some overtime as tour guides. "It's important to get everyone in the company involved in presenting us to the public," says Koch. "When your employees are proud of what they do, and what they make, and the company they're a part of, it shows; it's an unqualifiable asset. So I'm happy when truck drivers ask to do tours."

In its fundamentals, brewing parallels what Koch already had learned about manufacturing when he was a consultant to paper mills and chemical plants. "I respond to the romance, the soul, the heritage of beer, but also to the unromantic adherence to details, the nitty-gritty that leads to quality," here he reflects. "For quality to have meaning, it has to have a definition. In manufacturing, quality means conformance to specifications. In that mundane sense, Samuel Adams is a beer that's consistently good, that therefore conforms to specifications, that thus has quality."

But for all his determination and celebrity, Koch isn't satisfied. "I come from a German brewing tradition, not an English brewing tradition. English batches taste different; some are better than others, and that's part of their fun. My brewer's ethic is that every batch should be the best, should even be perfect. There is a perfect Samuel Adams. I can define it analytically, and I can taste it. My job as a brewer is to get as close as I can to the perfect Samuel Adams in every bottle. How often do I get that close? Maybe only 10% of the time. But the fraction I'm off by, you couldn't tell the difference."


Microbrew party on Wall Street - microbrewery stocks are frothy

Source: Fortune, Dec 11, 1995 v132 n12 p28(2).Title: Microbrew party on Wall Street. (microbrewery stocks such as Pete's Brewing Co. and Boston Beer have been surging, but competition is increasing)(Brief Article)Author: Eileen P. Gunn Subjects: Microbreweries - Securities Brewing industry - Securities SIC code: 2082 Electronic Collection: A17715934 RN: A17715934

Full Text COPYRIGHT Time Inc. 1995

Making a buck at craft brewing has been as easy as falling off a barstool the last few years. So Wall Street is now bellying up for a couple of IPO brewers. They'd better start chugging; the party won't last long.

Investors went on a bender last month when Pete's Brewing Co. hit the market. The stock, priced at $18 a share, closed its first day of trading at $25.25 and hasn't sold below $23.75 yet. No Netscape this, but not bad for a 5,000-year-old product. Boston Beer, of Sam Adams fame, will roll out in mid-December; the Northwest's Hart Brewing, which makes Pyramid Ales, is not far behind.

This intoxicating roundup of offerings began in August when Redhook Brewing, a specialty beer maker started in Seattle by former wine marketer Paul Shipman and Starbucks co-founder Gordon Bowker, tapped the market. The stock was priced at $17, never traded below $24.75, and was recently at $27.25. While total domestic beer sales slumped 0.6% in 1994, craft brews grew by 44%. The industry should grow more than 50% this year. That will give them perhaps 2% of the market. But industry watchers see the segment grabbing a 7% to 10% market share by 2000.

Growth is certainly slowing at Boston Beer now that it has reached national distribution, but sales still increased a hearty 20% in the third quarter, to $44.5 million. Pete's doubled its sales from the year-earlier quarter, to $19.8 million. If Boston Beer and Pete's have a weak spot, it's manufacturing: They hire old-line brewers such as G. Heileman or Pittsburgh Brewing to make their products. These are troubled operators. That why Pete's is building a brewery with its IPO money. Boston Beer founder Jim Koch's stake after the IPO could be worth more than

$100 million, heady reward for a career preaching the virtues of small beer. But he has many pintsize disciples, brewing away like monks: Last year 64 new microbreweries opened; the count is up to 59 so far this year. A microbrewhaha awaits. Specialty brews still carry beer-belly-fat margins, so some bars and grocery stores give them more than half their tap or shelf space. But as the competition thickens and margins thin, push will come to shove on the shelves. Piper Jaffray analyst Allan Hickok says first-tier brewers like Redhook and Sierra Nevada have staying power. The rest "are keeping the shelf space warm for them until they get there."


Specialty beer: a winner in '96, Jan. 1, 1996

Source: Nation's Restaurant News, Jan 1, 1996 v30 n1 p29(1).

Title: Specialty beer: a winner in '96.(On Beverages)(Column)

Author: Mort Hochstein

Abstract: Service people need to learn the differences between ales and lagers since beer-focused restaurants and brewpubs are becoming popular. Andrea Immer of Restaurant Associates educates servers for the New York, NY, group. Immer stresses that ales and lagers are different because of the types of yeast, fermentation and temperatures at which they are brewed. Many people mistakenly believe that ales are always dark beer and lagers always lighter in color. Dark beer comes from the type of malt used and the type of toasting. Restaurant Associates just opened Centro and Beer Bar in New York,

NY. Subjects: Microbreweries - Public opinionBrewpubs - Public opinion SIC code: 2082; 5813Business Collection: 91U4385 Electronic Collection: A17973758 RN: A17973758

Full Text COPYRIGHT Lebhar-Friedman Inc. 1996

As the new year gets underway, there is one safe prediction to make. Sales of specialty beers are going to climb, and the explosive growth of beerpubs and brewpubs will continue.

Beer drinkers don't seem to demand an education in what they consume in the way that wine drinkers do. But servers should know the basics, and the most basic concept is the difference between the two major families of beer, ale and lager.

Most definitions characterize ale as top-fermented and lager as bottom-fermented, meaning that the yeasts that cause fermentation perform either at the top of the vat or at its bottom. Yet in a recent presentation at the Smithsonian in Washington, beer authority Randy Mosher summed up the differences as not a matter of yeast strain, but as "a temperature thing. A lager," he said, "is fermented at cooler temperatures; an ale, at warmer temperatures. If you take a lager yeast and ferment it warm," he continued, "you get an ale."

"There's a lot of confusion out there, " says Andrea Inmer, beverage director for New York-based Restaurant Associates. "So many people think ale means a dark beer and lager means a light colored type, and we've got to dispel that impression. It's important that people understand that ale and lager are related to the type of yeast, rather than style per se."

The first step is sampling. Immer is a firm believer in having the staff know the product. "Everybody has to taste every beer," she explains. "The more different products they can get into their mouths and, frankly, the more often, the better. Of course," she adds, "we also teach them how to spit, the same as in wine training." In teaching servers at Ra's many outposts in New York and Newjersey and at its brew showcase, Cafe Centro and The Beer Bar near Grand Central Station in midtown Manhattan, Immer gives the staff something they can relate to.

After setting up the traditional idea of top- and bottom-fermenting yeasts, she then takes a different approach.

"I like to talk in terms of light, medium and dark. It's helpful, I find, to think of a light lager, a medium nut-brown ale and a really dark beer like a stout to illustrate basic styles. I want people to understand that the heaviness and darkness are more related to the type of malt and the amount and the degree of toasting.

"I also use a coffee analogy, making the comparison between an American roast, which is lighter, and an espresso roast, which is really dark and has a pungent flavor and aroma. The coffee analogy applies because with an espresso you get much more flavor and aroma, just as you do with a darker roast malt beer like a stout. It sticks in people's minds because everybody understands coffee."

Centro and Beer Bar is Ra's major brew outlet, but beer is becoming more popular in all its many units, in cultural institutions such as the Metropolitan Museum of Art and Lincoln Center, in corporate dining halls, and in New Jersey at Ra's Charley Bend Office chains.

With beer, beer and more beer everywhere, Immer constantly is concerned about freshness and checks shelves and does a lot of tasting when she visits RA sites. "If there's any time at all, I'll try the tap beer," she says. "If servers talk about a slow-moving label, I try to pull stock. If it's tasting fine, then the staff can enjoy it."

As a beer-focused restaurant, Centro and its Beer Bar carry 10 draft and 40 bottled beers. The Beer Bar holds monthly beer dinners for about 50 people, similar to those held a few blocks north at the American Festival Cafe, in Rockefeller Center, which is larger and has held events for as many as 175 fans.

Immer was once cellarmaster at Windows on the World, distinguished for selling more wine than any other restaurant in the world. "We also sold a lot of beer, and I enjoy both," Immer observes. "Beer and wine are two historic agricultural products, and they are both wonderful drinks to discover and enjoy."


Beer merchandisers are tailoring their sections to adjust for the continuing growth of microbrews

Source: Supermarket News, Jan 22, 1996 v46 n4 p38(2).

Title: Micro managing: beer merchandisers are tailoring their sections to adjust for the continuing growth of microbrews. (includes related article on the growing specialty beer segment)Author: Richard Turcsik

Abstract: Supermarket retailers continue to adjust their merchandising strategies to accommodate the strong growth of the microbrew beer market. Some of the methods include using temporary price reductions and developing special marketing programs, such as Magruder Inc's pick-your-own six-pack program. These specialty beers are generally higher priced than some of the mass market brands, but sales growth is strong because consumers seem to be more willing to purchase higher quality beers.

Subjectss - MarketingMicrobreweries - Products Brewing industry - Forecasts SIC code: 2082; 5411 Electronic Collection: A17850459 RN: A17850459 Full Text COPYRIGHT Capital Cities Media Inc. 1996

NEW YORK - The specialty beer segment, which includes microbrews, will an average annual growth rate of 15% through the year 2000, according to a report published this month by Beverage Marketing Corp. here, a research and consulting firm.

"The growth of the specialty beer market has been driven by the same factors since its beginning," Gary A. Hemphill, Beverage Marketing's vice president of information services, told SN. "Specifically, consumers are drawn to hearty, high quality, good tasting products and the grassroots, hometown nature of the business."

The specialty beer market share has grown from about 1.7% of the total beer market in 1994 to a projected 2.3% in 1995. Microbrews - beers with an annual production of less than 15,000 barrels - encompass 13.5% of the total specialty segment.

The largest segment of the category is the regional specialty brews, made by those annually producing more than 15,000 barrels. As microbrews became more popular, they join this regional segment.

National s, which includes Samuel Adams, Pete's Wicked Ale and divisions of the majors, such as Miller's Plank Road subsidiary, are the second-largest segment of the specialty segment, with a 34.2% market share. Hemphill said the appeal of the specialty beers transcends the beer industry and relates to a decreasing role of brand loyalty and willingness by the general populace to experiment with new products and brands. Consumers are also willing to pay a premium price to experience a taste that is different. "At least for now it seems that as long as a brewer has a good recipe, is well located and managed marginally well, it has a good chance of surviving," Hemphill said.

"Sixty percent of specialty beer is consumed in either the Northeast or the Pacific regions, which includes Alaska, California, Hawaii, Oregon and Washington," he added.

The 235-page report costs $2,395 and can be obtained by contacting Beverage Marketing Corp. at (212) 688-7640.


Life partners Mark Goodwin and David Verzello make their beer a hit with gays and then move into the mainstream

Source: Inc. Magazine, March 1996 v18 n3 p62(6).Title: A brew apart.(David & Mark Brewing Co marketing light beer to gays and lesbians; includes related articles)

Author: Christopher Caggiano

Abstract: Life partners Mark Goodwin and David Verzello founded their Atlanta, GA, microbrewery in 1994, hiring the Lion Brewer in Wilkes-Barre, PA, to actually make the beer. The pair hope to initially make the beer a hit with gays and then move into the mainstream.

Author's Abstract: COPYRIGHT Goldhirsh Group Inc. 1996

COMPANY: The David & Mark Brewing Co., in Atlanta, founded by business and life partners David Verzello and Mark Goodwin

CONCEPT: Establish a microbrew-beer brand by targeting an affinity market--gays and lesbians--before taking the beer into mainstream bars and restaurants

PROJECTIONS: Revenues of $5 million by fiscal year 1997

COMPETITIVE ADVANTAGE: The gay affinity helps the founders establish distribution, build brand recognition, generate cash flow, and attract sympathetic investors

HURDLES: Generating sufficient capital and distribution to create a mainstream national brand, while avoiding being pigeonholed as the "gay" beer

Subjects: Gays in business - Personal narrativesMicrobreweries - Marketing Gays - MarketingLesbians - Marketing Companies: and Mark Brewing Co. - Marketing SIC code: 2082 Magazine Collection: 83A1937 Business Collection: 92W2528 Electronic Collection: A18060315 RN: A18060315

Full Text COPYRIGHT Goldhirsh Group Inc. 1996

Fans of Saturday Night Live a few seasons back might recall a mock commercial about a gay beer. It was a table-turning send-up of the typical cheesecake beer spot, with comedians Chris Farley and Adam Sandler cavorting around a pool with a bunch of muscular dudes in skimpy bathing suits. A joke, right? Seriously, why would anyone want to brew a gay beer?

No joke; someone does, although it's not the beer that's gay but rather its target market. David Verzello and Mark Goodwin of the David & Mark Brewing Co. have good reasons to pitch their new light microbrew, Black Sheep Light Lager, to gay drinkers in Atlanta. Market research reveals that gay men and lesbians drink about 30% more beer than average and that they're nearly twice as likely to choose a light beer. Furthermore, they do much of their drinking in easily identifiable bars, patronized primarily by other gays and lesbians. Which means that to neophyte brewers Verzello and Goodwin, Atlanta's gay-and-lesbian-bar population is the kind of easily reached, thirsty market that their start-up venture needs.

It also doesn't hurt that the founders are themselves a gay couple liking in Atlanta, which makes theirs the local brew and gives Black Sheep Light Lager an extra dimension of appeal to their first-round target customers. But the founders' ambition goes beyond Atlanta and the gay market. They think they can grow Black Sheep into a national brand as mainstream as Anchor Steam or Sam Adams. The issue, of course, is whether success with Atlanta's--and other cities--gay beer drinkers will impart enough momentum to carry the brew into mainstream venues, or just build a market-limiting image of Black Sheep as the "gay"

In this joint venture, each founder plays a distinct role. Verzello, lanky, energetic, and 31, is the president and chief marketer. He is not, as he admits, much of a numbers person, so he's happy to leave the financial responsibilities to his business and life partner. Goodwin, 33, is the treasurer and has a type B personality that balances Verzello's type A. "I'm the risk taker," Verzello says. "Mark is the realist. I'm the balloon, and he's the guy holding the string."

When Verzello and Goodwin met, in 1992, neither had beer-business experience. Goodwin had brewed the stuff at home for five years, and Verzello, fascinated with the brewing process, had taken some college courses to learn more. Verzello learned that sales of "specialty beers"--those from microbreweries and brew pubs--had been growing at a compound annual rate of 47% since 1985, while overall beer sales had gone flat at about $50 billion a year. Goodwin and Verzello smelled opportunity here, but with more specialty beers appearing in 1994 than in the previous 12 years combined, they weren't the only would--be brewers to catch its scent. Besides having a great-tasting beer, Verzello and Goodwin decided, they needed another competitive edge. That's where the gay part came in. The gay market is currently in vogue. Big-name companies such as AT&T and American Express court the gay dollar through ads, run in national gay publications, that depict same-sex couples. Beer and liquor companies--for instance, Seagram, which markets Absolut Vodka, and Coors Brewing Co.--stop short of crafting overtly gay ads but spend considerable cash advertising in gay publications and hosting on-site marketing events. In fact, it's hard to find a national gay glossy without an Absolut ad on its back cover. Verzello had heard industry insiders say that they prized and targeted the gay market. To get his own sense of its size, he surveyed Atlanta's gay bars and learned that they sell about 30,000 cases of beer a month. "The big brands make up 80% of the volume in a bar," he explains. "So you're talking about dividing up the other 20%. We figured that potentially we could capture a quarter of that"--which comes to 5%, or 1,500 cases a month in Atlanta, worth about $21,000 in monthly sales. To estimate the total sales of beer at gay bars nationwide, the partners assigned each major urban area a multiple based on the number of gay bars and the city's population compared with Atlanta. Thus, New York City, with about three times as many bars and more than triple Atlanta's population density, got a multiple of three. Using that admittedly rough method, Verzello and Goodwin estimated the size of the national gay market to be about $240 million. Their 5% would be $12 million. And when they added the beer that gays and lesbians purchase at restaurants and retail stores, the total U.S. market looked to be about $1 billion, of which 5% is a very big number. While the partners weren't out to make Black Sheep the gay beer, the gay market sure looked to them like a good place to start.

As for their chances of capturing their share of that market, the founders saw a numb factors in their favor. They thought gays would at least try the product of a gay-owned company, creating early demand for the beer. Gay bars and restaurants would be likely to carry the beer out of solidarity, which they figured would help them clear the distribution bottleneck. And since gays and lesbians inhabit every major city in the United States, Verzello and Goodwin theorized that they could take the brand national by initially hitting the gay bars in a city and then expanding into mainstream establishments.

First, though, they needed a beer to sell. Verzello hired his University of California at Davis brewing professor to develop a recipe. After a year and a half of testing various brews in focus groups consisting of friends and potential investors, the pair had what Verzello calls "a really great-tasting light beer."

Instead of building a brewery, the partners contracted with an existing beer maker to make a product from their recipe. The decision cut their start-up dramatically--from an estimated $1.5 million to $240,000. Contract brewing also put Black Sheep in the company of some of the most successful riders of the microbrew wave, including the makers of Sam Adams and Pete's Wicked Ale.

"We figured they must know something," says Verzello. He and Goodwin raised $200,000 from 18 investoprivate equity offering and poured in $40,000 of their own.

Microbrews typically compete not on price but on taste. Since most microbrews that are sold in bars and restaurants (as opposed to retail) cost roughly the same, the new brewers felt they didn't need to beat that price. "We knew we had the flexibility to set the price where we needed it to be," says Verzello. They aimed for the middle of the wholesale price range. At $22.20 a case, Black Sheep costs about the same as Amstel Light. The partners need to sell about 1,500 cases a month to cover their fixed costs. "So far, we've hit that only once," says Verzello.

Financial viability aside, isn't it asking for trouble to start a gay-owned company in an old-boy industry? Verzello and Goodwin did have to look hard for a brewery to produce the beer: 23 brewers turned them down, although only one actually said it had no interest in pursuing that market. The Lion Brewery, in Wilkes-Barre, Pa., agreed to take Black Sheep on. "The management was brand-new," says Verzello, and it was hungry for customers. The couple expected wholesalers to have reservations as well, but they didn't. Here the partners' target market may have actually worked in their favor. "Distributors are closer to the customer than brewers are," says Verzello. "They know how lucrative the gay market is." The Armory, a gay bar in Atlanta, is one of the largest liquor-selling venues in the state of Georgia.

The founders knew of at least three earlier attempts to create a beer for the gay market, and they saw much that they could improve upon. The earlier products were private-label brands (basically, someone else's beer with the brand's label pasted on). "They had crappy packaging, and the beer wasn't very good," Verzello says. Someone might try a gay-produced beer as a novelty or out of community loyalty, he says, but that only opens the door. "People won't continue to buy a beer that they don't like."

Besides, the brand names of those earlier beers--one was called Pink Triangle, and another Pride--smacked of patronization. Black Sheep Light Lager, in contrast, makes only a sly reference to the owners' sexuality and that of the drinkers they've initially targeted. Verzello and Goodwin intend Black Sheep's ads and promotional materials to appeal to gays and straights alike. The beer's label reads, "Our taste runs counter to the traditional. Apart from the crowd. Proudly unique ... a beer...as out of the ordinary as the people who drink it." That's a message the founders hope will appeal to anyone harboring even the slightest rebel complex. Recent marketing campaigns for Dewar's White Label Scotch, Midori Melon Liqueur, and Skyy Vodka have all used similarly ambiguous language to market to straights and gays.

Verzello and Goodwin budgeted $2,000 a month per market for advertising. If the amount seems low, it's because ads placed in gay publications are considerably cheaper than the same ads in mainstream publications. A full-page four-color ad in The Southern Voice, a newspaper directed toward Atlanta's gay population, ran them $450, as opposed to $4,000 for a comparable ad in Creative Loafing, an alternative paper serving the same geographic market but not specifically targeted toward gays. The duo also scored a lot of free publicity in Atlanta by playing up the "local boys make good" angle of their story as well as the idea of a gay couple starting a company together. They amassed 57 local media mentions in the first month in their home city, including numerous mentions in The Atlanta Constitution-Journal, as well as local TV and radio interviews. In August 1994 the David Mark Brewing Co. introduced Black Sheep at the Atlanta premiere of Tony Kushner's play Angels in America, the first of numerous on-site marketing events. Verzello and Goodwin invited the local media and 150 restaurant and bar owners to the opening-night party, offering them the chance to be among the first to taste the beer. "It got a lot of people talking about the new `gay' beer," says Verzello. For a month after the event, bar owners and managers called him, and when he did start knocking on doors, he reports, people knew who he was, which made for easier sales.

Based on Atlanta experience, the founders developed a marketing formula that they thought would apply elsewhere. They would get the attention of the local gay market through ads and stories run in local gay newspapers and magazines and through their support of social and fund-raising events to which gays would normally be attracted. Concurrently, they would make sales calls on local gay bars and restaurants, just as they had in Atlanta. Then, once they had some distribution in a city, they would capitalize on the fact that many of the managers and staff of mainstream establishments are gay and would happily help them move Black Sheep into nongay venues. The cultural events they had sponsored and would sponsor didn't attract an exclusively gay crowd, and thus would aid the founders in their mainstream push. Black Sheep had already cracked numerous mainstream venues in Atlanta: only half of the more than 100 local bars and restaurants that were carrying Black Sheep a year after its debut served a predominantly gay clientele. The founders figured that with the correct positioning, their beer could continue to appeal to all drinkers.

But Verzello and Goodwin have run into trouble trying to bring the beer to other cities. In Washington, D.C;, the founders' first foray away from home, "we expected the Atlanta experience all over again," says Verzello. But in Atlanta they were the hometown boys, and in D.C. they were not. The local press was not impressed and did not deliver much free publicity. After four months of trying, the company managed to get its beer into just 20 outlets in the Washington area before backing away. "We went too fast. We didn't have a full-time rep," says Verzello. "We were still too focused on Atlanta."

Hoping to fare better in Manhattan, Verzello hired a full-time New York sales rep before the beer's Big Apple launch, in September 1995. The rep had experience in generating publicity. "We know how much PR helped in Atlanta," says Verzello. "And we know how much it hurt not to have it in D.C." The New York papers did publish some stories, and the rep was able to get the beer into some of the city's most popular gay clubs--but not enough of them. After three months New York hadn't welcomed Black Sheep any more than Washington had, and Verzello and Goodwin put the Big Apple on hold as well. This time, Verzello says, it was because the sales rep didn't work out--that and the fact that the company ran short of cash. With its seed capital long since spent business wasn't generating enough cash to support growth efforts outside Atlanta.

Beer start-ups, according to Henry King of the Beer Association of America, typically fail for one (or both) of two reasons: they're undercapitalized, or they're not making consistent beer. and Goodwin don't worry much about consistency, since the Lion Brewery, their contract brewer, enjoys a good reputation in the industry. But they have always been anxious about capital. Verzello's preoccupation with it borders on obsession. "If I could, Id spend all my time trying to find more investors," he says. But ask Verzello about Black Sheep's monthly sales figures and he's momentarily stumped. "Oh, I need to get that out of the computer. I don't know all that off the top of my head," he says. Maybe his innocence about the numbers masks his disappointment in them: the company's original sales projection of $691,440 in its first 12 months of operation was a little optimistic; its actual sales for that period were $155,610. The founders, however, remain upbeat and hold firm to their. plans to take the beer national. All they need, they say, is additional capital.

Finding capital has been a problem from the start. When Verzello and Goodwin were seeking seed funding, they calculated that they would need at least $300,000. Unable to raise that amount, they rethought a few expenses. Verzello's planned $30,000 salary was the first item to go. Legal fees were paid with company shares instead of cash. And they pushed out their schedule for expanding sales to additional cities. "Since we went slower, we didn't need as much inventory," says Verzello. Eventually, the founders got their estimated start-up needs down to $150,000. Actual costs have exceeded the $200,000 they raised, and the founding duo have had to pump a total of nearly $100,000 of their own cash into the venture.

Starting a beer company on the cheap, they say, has been a sobering experience. "Mark and I are a little burnt out," concedes Verzello. "This definitely isn't the easiest way to grow a business." So they're considering another private offering to raise an additional $300,000, which they plan to use to develop a full lager, increase their sales staff, take another crack at D.C. and New York City, and expand farther along the East Coast. They're also considering bringing on a third partner by selling a 10% equity stake. The person they have in mind has experience in evaluating companies for mergers and acquisitions, and he would bring an expertise that Verzello and Goodwin admit they lack: making the bottom line work. The potential partner would help the company secure a $200,000 line of credit, and his equity purchase would bring in another $200,000 or so in capital. And as apart-time chief financial Officer, he would oversee the management of the business. "I'm not proud," Verzello says. "I want the money.

"Besides, between the two of them, the founders would still own most of the company--they currently own 75%. "That 75% will allow us to dilute down and still stay in control. We always want to be in control," says Verzello. But after a pause he adds, "Unless there's a big enough offer." Offer?

Within five years, the founders see themselves in a possible joint venture with a large brewery, similar to a recent deal in which Anheuser-Busch acquired a 25% interest in microbrewer Redhook Ale. "There's a beer boom right now, but not everyone's going to make it," says Verzello. "You have to have good distribution, technical know-how, and advertising capabilities. And capital. All of that we could get from a big brewery."

But what would the David & Mark Brewing Co. contribute to the partnership? "The big breweries want to capture the microbrewery market," says Verzello. Craft brews made up only 1.3% of total U.S. beer production in 1994, but that percentage is expected to grow--by at least 40% annually over the next five years, according to some industry estimates. By then the micro-breweries could capture as much as 5% or 10% of production. And 10% of a $50-billion market is a lot of money. Huge brewers have spent millions to compete with craft brews. Some have produced "stealth micros" marketed to look like microbrews, such as Miller Brewing Co.'s Red Dog. "But the consumer can see through that," says Verzello.

Verzello and Goodwin think they can deliver something says a big brewery "can never get on its own": the gay market. He mentions Coors and Miller as companies anxious for a foothold in the market. Both have been the objects of gay boycotts, Coors for its past support of antigay causes and Miller for parent company Philip Morris's political donations to conservative senator Jesse Heims. "You can't buy Coors in Atlanta's gay bars. And Miller got kicked out seven years ago," he says. "Those companies are spending fortunes to gain that loyalty. Eventually, we can deliver it to them." Verzello has received at least three buyout inquiries, he claims, including one from one of the big three breweries. He won't name names. For the moment, Black Sheep is still predominantly an Atlanta phenomenon, available at both Burkhart's Pub, a local gay watering hole, and the World Trade Club, a decidedly ungay, private men's club. "Beer appeals to everyone," observes Verzello. "Why limit yourself?

RELATED ARTICLE: The Founders

David Verzello, age 31, president and Mark Goodwin, age 33, treasurer

BREWING BACKGROUNDS: Verzello, with a degree in economics from the University of San Francisco, completed certificate courses in Microbrewery Operations and Management and in Intensive Brewing through the University of California at Davis. Goodwin, whose Davidson College degree is also in economics, brewed beer at home for five years.

FAMILY: Themselves and two dogs, Blizzard and Caliban PERSONAL FUNDS INVESTED: About $100,000 EQUITY HELD: 37.5% each SALARIES: None for now LAST JOBS HELD: Verzello managed large commercial insurance accounts for a California agency; Goodwin worked as an insurance-company systems analyst.

RELATED ARTICLE: What the Experts Say

Tom Potter Cofounder and CEO, the Brooklyn Brewery, in Brooklyn, N. Y.The best light beers are made by the big brewers because they are fundamentally technical, not artistic, achievements. They are consistent, flawless, and mediocre. I'd like David Mark's chances better if it were selling something unique.

Verzello and Goodwin's home marketing was textbook: imaginative promotions; local publicity; starting with core accounts, and then building from there. The market is very kind to local beers for the moment. The founders' difficulties away from home, unfortunately, are also textbook. As Black Sheep found, a hometown hero is a nobody across the river. Those micros that have succeeded in a broader region have been of excellent quality--unique interpretations or original inventions. It's hard to do that with a light beer. Over the past few years we've seen a number of "theme" microbeers. Tun Tavern was supposed to appeal to former Marines, Harley-Davidson to bikers, Pink Triangle to gays. None of them worked inside their interest group, let alone in the mainstream. The themes varied, but the beer didn't; it was always ordinary. Even the hometown 5tory bets fired if it's not in the bottle.

While it's possible that Verzello and Goodwin might reach $5 million in soles in their third year, that would 6e a brilliant performance. In 1995 there were only 5 contract craft brewing companies (of about 100 in operation) that large, and all of them had been in business longer than three years. Verzello and Goodwin should be prepared to grow more slowly. Richard Mukamal Group marketing director, Hiram Walker & Sons Inc., in Southfield, Mich.

You've got to build a brand slowly, especially when you're short on money. Forget the dreams of selling out to a big brewery in three years. First, show you can make money. Verzello and Goodwin should test their assumption that they can bring the brand into the mainstream by doing it in Atlanta first. Microbrews are mostly unadvertised products, selling on word of mouth. Verzello and Goodwin should seed the market slowly and inexpensively, working the brand bottle by bottle. They should also choose their markets and move carefully. I didn't see any rationale for going into Washington, D.C.

And New York City is too expensive and very tough. Their next market should be a gay destination place, like the Florida Keys or South Beach. Tourists will go home interested in the product, and when you enter their home market, the demand will be there.

As for taking the beer mainstream, one can simultaneously market to both the gay and the straight communities, as we have with our Tuaca liqueur. You're just targeting one aspect of the straight community, the "crossover," gay-friendly straights, who tend to be young and hip.

Will Rosenfeld Managing director, Rosenfeld Co., a private investment-banking firm in Portland, Oreg. "Anyone can get distribution, but whether you can actually get share is another question. Verzello and Goodwin need to put more dollars into sales and marketing. One brewing company I've worked with spends 22[cnts.] of every sales dollar on marketing, but most microbrewers spend even more. The company needs a national sales manager and people on the ground selling, supplementing the distributors' efforts. And nobody's going to lend money for sales and marketing. it's the ultimate risk capital. The partners will have to sell more equity.

Contract brewing avoids a lobricks-and-mortar costs. But $240,000 in seed capital is nothing, even for a microbrewer. Verzello and Goodwin made some pretty good progress for what they had to start with, but they need more capital.

Bill Svetz General manager of Fritz, a gay bar in Boston "The gay affinity will make a difference only if people like the product and think it's equal to what they've been drinking. They won't support a product just because the company that makes it is gay-owned. It's a light beer, soverzello and Goodwin have an advantage there, because light beers sell better. But beer is a taste product. People will try it, and if they like it, they'll switch. Black Sheep's price isn't bad, but at $22 a case, we'd sell it for $3.50, $1 more a bottle than Miller Lite. Most of your bar clientele don't have that kind of money for a beer. Will people pay an extra buck just for community loyalty?"


Six brewing experts name their favorites

Source: Consumers Digest, March-April 1996 v35 n2 p69(3).

Title: America's best microbrews. (beer)(includes related articles)

Author: Mike Michaelson

Abstract: Six brewing experts name their favorites, which include Sierra Nevada pale ales, Pilsener Urquell, Old 38 Stout, Pavichevich's Baderbrau, and Grant's Perfect Porter. The microbrewery trend has spawned beer-of-the-month clubs, brew-it-yourself breweries, and home brewing.

Subjects: Beer - Public opinion Microbreweries - Products Brewing - Associations and societies

Magazine Collection: 82L2734Electronic Collection: A18099800 RN: A18099800 Full Text COPYRIGHT Consumers Digest Inc. 1996

Who would have guessed that beer would develop a coterie of connoisseurs? It did, and microbreweries are booming, with nearly 300 offering unique quaffs from coast to coast. Here's your guide to the best of the "gourmet" brews.

Two of America's founding father's George Washington and Samuel Adams, sometimes turned their hands to brewing beer. George Washington had a prized recipe rich with molasses. Sam Adams, some will argue, is still at work producing notable brews.

Since the Pilgrims arrived on these shores with their British love of beer--and a treasured hoard of it--beer production in America has had more ups and downs than a tankard of ale. By 1860 there already were more than 1,200 breweries doubled over the next 20 years. By 1890 there were more than 77 in New York city alone. But by 1910, decline had begun--the number of New York breweries had dwindled to 37.

In the following 70 years or so, the number of independent local breweries shrank drastically as conglomerates swallowed them up or drove them out of business. By the late 1970s America had just 40 operating breweries. Today, beer is back on the lips--and down the throats--of increasing numbers of Americans. In little more than a decade, the total of American "craft" breweries has mushroomed to more than 800, and the boom continues. One estimate is that a new "microbrewery" or "brewpub" opens virtually every week. It's predicted that the number could hit 4,000 by the turn of the century.

It is the microbrewery, fueled by American beer drinkers' thirst for a better product, that is responsible for the renaissance of the brewer's craft. "Consumer tastes are changing"' notes Doug Doretti, president of The Great American Beer Club, which supplies each of its 17,000 members with a monthly 12-pack of microbrewed beer. "They probably are drinking less, but they want to drink better. That's why microbreweries are succeeding. They make a natural product with no preservatives and chemicals. They use barley, hops, yeast and water to make beer the way it was produced in the 1800s. Beer from microbreweries has more body, more taste, more flavor and complements fine food."

Microbreweries are growing faster than you can say "cheers." In 1990, there were 84 microbreweries (breweries that produce fewer than 15,000 barrels per year) sprinkled across the United States. By 1994 their ranks had grown to 193. Today, that number is approaching 300. Together, they sell around 3 million barrels a year. While this represents only a minuscule market share of less than 2 percent--not much more than big breweries spill on their massive production lines--it does represent an amazing growth. By definition, brewpubs are bars/ restaurants that brew beer strictly for consumption on premises. Manufacture beer for retail distribution (often limited to the local region). There is some crossover, with some brewpubs distributing to local retailers and some microbreweries operating pubs/restaurants. Other major developments that are producing healthy signs for the continued growth of the craftbrewing industry:

* Beer-of-the-month clubs. These ventures, which select and ship out monthly selections of microbrews, are popping up all over. Leading the way, Beer Across America, founded in 1991, already has grown to 300,000 members. Other clubs have followed suit (see accompanying list), all with impressive quick-spurt growth numbers. "The country is in the midst of a true beer renaissance," says Todd Holmes, cofounder of Beer Across America.

* Home brewing. A big boost to the beer renaissance came in 1979 when federal restrictions were eased to permit home brewing of up to 200 gallons a year. As a result, sales of home-brewing equipment now total about $200 million annually. "There is a tremendous amount of synergy between home brewing and the micro-beer market," notes Carl Landau, publisher of the monthly hobbyist magazine, Brew.

* Brew-it-yourself breweries. Among the newest trends are breweries that provide the ingredients, equipment and a selection of more than 100 recipes that allow the consumer to brew a batch of beer on site. Customers grind grains and do the cooking, returning in a couple of weeks to design labels and bottle the brew. The cost for 8.5 gallons (nearly four cases) ranges from $85 to $124.

This concept spread to the United States from Canada, where U-brew outlets provide a lower-cost alternative to highly taxed beer. Already, there are more than 50 outlets in this country.

Who drinks true brew? A study showed that of the approximately 49 percent of beer drinkers who imbibe craft beers, more men (about 29 percent total) than women (about the remaining 20 percent) regularly drink it. But women are big buyers--especially via mail order. Today, women represent an important market for microbreweries, as they buy not only for their own consumption but for gift-giving. "I'd say 75 percent of our customers right now are women," says Todd Holmes of Beer Across America.

Every year more than 24,000 beer enthusiasts make what has become an annual pilgrimage to the mecca of beer, the Great American Beer Festival in Denver, Colo. (this year's 15th annual festival is Sept. 26-28). Among the sea of suds at last year's festival were 1,345 different beers produced by 335 breweries from 46 states.

Confused about the seemingly endless varieties of beer? In fact, there are only two types of beer-ale (which is top-fermented) and lager (which is bottom-fermented). Within these two types are 38 different styles of beer recognized by the Association of Brewers. Ales include such popular styles as mild, bitter, pale ale, brown ale, porter, stout, barley wine and wheat beer. Lagers include the widely popular pilsner, as well as bock, Dortmunder, Munchner and Vienna.

A couple of rogue beers fit neither category: Belgium's famous lambic beer with its champagne-like bubbles, and America's own steam beer, the only brew developed in this country (in California in the 19th century). Anchor Brewing of San Francisco, which produces steam beer, actually dates back to 1896, but was resuscitated in 1965 by a Stanford graduate student, Fritz Maytag of the appliance family.

You can discover many of America's world-class beers by joining Michael Jackson (the British beer connoisseur, not the moonwalker) on a CD-ROM, The Peer Hunter Using video segments, audio And text, it explores the long history of humanity's enjoyment of beer, the art and science of the brew, and the rich character and heritage of nearly 200 American microbrews, from New Mexico's Green Chili Ale to Alaskan Smoked Porter.

Cross-referencing helps you make a computer search for brews by region, style and other characteristics such as fermentation, color and taste. In this ode to brews, the irrepressible critic reveals his Top 24 beers and ales.

Another critic, Bob Klein, ranks 1,298 brews in his book, The Beer Lover's Rating Guide. His top picks, by style, based on a rating system of 0-5, include: Rogue Red Ale, Newport, Ore. (ale, 4.4), Cold Spring Select Stock, Cold Spring, Minn. (lager, 4.0), Allegheny Penn Pilsener, Pittsburgh (pilsner, 3.7--"pilsner" is the preferred spelling, but "pilsener" is also correct), Rio Bravo Eastern Dark Porter, Albuquerque, N.M. (porter, 4.1), Rogue Shakespeare Stout, Newport, Ore. (stout, 4.8), and Samuel Adams Triple Bock, Ceres, Calif. (bock, 4.7).

It's not just the United States that has discovered the joys of microbrewing. In Britain, long a bastion of brews, where an advocacy campaign for "real ale" has been fermenting for years, a small brewery rocked the beer world by winning the coveted title, "Supreme Champion Beer of Britain." Produced by Chris Norman, an airline pilot who took early retirement to parlay his hobby of home brewing into a new career, the aptly named Norman's Conquest is a powerful barley wine that beat out the conventional bitters.

Perhaps the ultimate compliment for the renaissance of American beers, albeit a grudgingly left-handed one, comes from England's respected newspaper, The Observer. "The United States, a byword for decades for the blandest, coldest and fuzziest of pale lagers, now has hundreds of characterful and flavourful beers to offer."

Mike Michaelson is an award-winning writer on food and travel subjects. He is author of the Best-kept Secrets travel-book series (Passport Books).

RELATED ARTICLE: THE EXPERTS' FAVORITE MICROBREWS

What is the best beer? What is a great beer? With 38 recognized styles of beer and hundreds of different labels, there may be as many answers to these questions as there are beer drinkers. The rating game is highly subjective. But each of us knows what we personally like, so we went to some of the people in the business--brewmeisters and entrepreneurs who run beer-by-mail companies and taste hundreds of different kinds of beer. We asked ir personal favorites. Here's what they said:

Greg Hall, brewmaster, Goose island Brewery, Chicago: "I can't wait to get back to Belgium for mussels and a Duvel, a strong gold ale with a predominant hop flavor." Hall also is partial to pale ales from Sierra Nevada brewery in Chico, Calif., and Pike Place brewery in Seattle--along with Goose island's own Honker's Ale (gold medalist in the 1994 and 1995 World Beer Championships).

Ken Pavichevich, president, Pavichevich Brewing Company, Elmhurst, III. (producer of Baderbrau Pilsener, described by British beer authority Michael Jackson as 'the best pilsner I've ever tasted in America" : Pavichevich chooses two beers from the Czech Republic--Pilsener Urquell and Budweiser Budvar. He prefers these beers because they are 'so smooth, so clean, so balanced and have great drinkability."

Louis Amoroso and Todd Holmes, cofounders of Beer Across America, collaborate on their personal favorites: Goose Island's Honker's Ale, "because it has a spicy hop aroma with a rich malt middle, making this an exceptionally drinkable beer"; Wild Boar Pilsner from Dubuque (Iowa) Brewing--"very well-balanced pilsner that provides a clean, crisp finish"; Dock Street Bock from Philadelphia--"medium-bodied, complex beer with fruity character"; and Rogue Red of Newport, Ore.--"with a very rich malt flavor."

Doug Doretti of The Great American Beer Club: "I like the assertive bitterness, but also the smoothness, of Harpoon India Pale Ale from the Massachusetts Bay Brewery in Boston and the full-bodied sweetness of Old 38 Stout (North Coast Brewery, Fort Bragg, Calif. ." Doretti also enjoys the hot, spicy flavor of Crazy Ed's Chili Beer from Black Mountain Brewery, Cave Creek, Ariz.

Robert Mittleman, president, Beers To You!, North Miami, Fla.: This beer-club chief opts for Pavichevich's Baderbrau, "a phenomenal, very smooth pilsner that received an unbelievably high response as a club selection." Other choices: Winterfest, Capital Brewery, Middleton, Wis., and Sweet Georgia Nut Brown Ale, produced in Atlanta, Ga.

Eric Lituchy, president, Ale In The Mail: Favorites are Grant's Perfect Porter produced by Grant's Brewpub, Yakima, Wash., "dark, flavorful, and full of chocolate and coffee flavors." Also Rogue Amber Ale brewed in Newport, Ore.

RELATED ARTICLE: MEMBERS' PICKS: TOP-10 MICROBREWS

Every month, the Great American Beer Club sends out rating cards to its 17,000 members and enjoys a 40 percent response. Here are the members' top-10 favorites:

1. Raspberry Wheat, Wasatch Brewery, Park City, Utah

2. PumpkiBuffalo Bill's Brewery, Hayward, Calif.3. Authentic Amber Ale, Johnson's Brewery, Charlotte, N.C.

4. Holiday Salute, Winter Spiced Ale, Brewski's Brewery, San Diego, Calif.

5. Market Street Pilsner, Bohannon Brewery, Nashville, Tenn.

6. New York Porter, Old World Brewery, Staten Island, N.Y.

7. Blonde Ale, Rikenjacks Brewery, Jackson, La.

8. Red Sky Ale, St. Stan's Brewery, Modesto, Calif.

9. Gold Lager, Sun Valley Brewery, Sun Valley, idaho

10. Edel Pilsner, New Glarus Brewery, New Glarus, Wis.

RELATED ARTICLE: SERVING TIPS FOR CONNOISSEURS

* Serve lagers between 38 and 46 [degrees] Fahrenheit, ales between 42 and 50[degrees]. Rule of thumb: The darker the beer, the warmer it should be served.

* Use a glass large enough to hold the entire bottle, with space for the head.

* No matter how tempting on a hot day, avoid frosted mugs. They can cause thermal shock that detracts from flavor.

* When pouring, strive for a balance between a glass full of foam and a full head. Dribbling the brew down the side of an angled glass helps achieve this effect.

* Match glass with brew to enhance flavor and bouquet. Use tulip-shaped glasses for ales, hefty tankards for stouts and thick glasses to keep lagers cold. Consult the guides (see accompanying list) for further recommendations.

Educate your taste as you learn about "hoppy" ales and "malty" bocks, and attempt to sample beers close to their source--microbrewery or brewpub--to ensure they are in peak condition.

RELATED ARTICLE: REFERENCES AND RESOURCES BEER-OF-THE-MONTH CLUBS:

Beer Across America, 800/854-BEER; two monthly six-packs, one each from two different microbreweries, newsletter, $15.95/month plus shipping and handling. Also operates wine-of-the-month and coffee-of-the-month clubs. The Great American Beer Club, 800-TRY-A-SIP; monthly 12-pack of three types of microbrewed beer, newsletter, $24.95/month (including shipping and handling). Also operates a cigar club.

* Ale In The Mail, 800/573-6325; four monthly twin-packs of four types of microbrewed beer, plus newsletter, $20.95/month (including shipping and handling); four three-packs of four different packages, such as "Beer in a Basket" and "Ale in a Paul."

Note: Certain restrictions apply to shipping into some states; local taxes must be added.

REFERENCE WORKS:

From additives (frowned upon) and "Brussels lace" (desirable wisps of foam on a glass) to yeast and zymurgy (the chemistry of fermentation), check out these resources:

* The Beer Hunter, Michael Jackson, CD-ROM from Discovery Channel Multimedia (available for Windows and Mac), $39.95.

* America's Best Beers, Christopher Finch and W. Scott Griffiths, Little, Brown, $14.95.

* The Beer Lover's Rating Guide, Bob Klein, Workman Publishing, $9.95.


Oregon microbrewing takes off

Source: Country Living, April 1996 v19 n4 p88(2).

Title: Oregon microbrewing takes off.(All About Beer)

Author: Christopher Brooks

Abstract: A variety of beer brews await beer drinkers in Oregon, as the number of microbrewers in the state increase. The wide range of flavored beer is beginning to overtake the popularity of beer from large breweries.

Subjects: Oregon - Business and industry Microbreweries - Products Beer - Innovations

Electronic Collection: A18285694 RN: A18285694

Full Text COPYRIGHT Hearst Corporation 1996

Beer lovers have much to sample in the Beaver State.

The voice crackled sharply over the telephone wire. Conjecture that some of his colleagues, in an effort to woo greater numbers of customers, were starting to release homogeneous beers was not what this Oregon microbrewer wanted to hear. "We have educated drinkers here," he retorted with the authority of a finger jab to the chest. "Try to find a Sam Adams or a Heineken tap handle in this state - you're going to be searching." Not one to duck a challenge, the following day I shot like a setter after a wounded mallard out to Portland, a city with more beer producers - 15 at last count - than any other in North America.

Five years ago, when Oregon micros made drinking a hop-ful experience, a keg of Sam Adams or Heineken might have been easy to overlook. That today this may no longer be the case, that some of the larger brewers may be sweetening their beers, and their sales, clearly called for on-the-scene snooping and sipping.

My first stop, at B. Moloch Heathman Pub - a sleek, modern bistro known as much for its good food and great bread as for housing Widmer Brewing's pilot brewery - produced ambiguous results. Now brewing for 11 years, Widmer's top seller is its Hefeweizen, a saccharine brew that seems more Hefe than Weizen and a bit under conditioned, as well. For more poise in your pint, though, Widmer offers some fine ale-ternatives: Especially recommended are its cocoa-palated Special Amber and the garner-colored Ur-Alt, fruity, lightly nutty, and exceedingly dry. Similarly, to judge by its advertising efforts, the decade-old Portland

Brewing is most committed to double-barreled sweetness, in the form of MacTarnahan's Ale and Oregon Honey Beer. Yet while purists may despair of is pair, great complexity is reflected in its slightly yeasty, refreshingly dry Mt. Hood Beer and in its Portland Stout, long on roast, with a chewy, chocolate character to its finish. And if the latter makes your Irish eyes smile, then BridgePort Brewing's XX Stout, smoky and mildly sweet, may set your lips to whistling. Equally praiseworthy are St. John's Golden Ale, a creamy textured ale redolent of Saaz hops, and the estery Nut Brown Ale. On the downside, BridgePort's top-selling trio of amber ales is somewhat overwhelming.

Brewers are quick to point out that they're only giving the public what it wants. "I learned right off the bat that the things I really like don't mean a thing in the marketplace," says Scott Wenzel, owner of Star Brewing. Though Star features such high-flying comets as an Alt, I.P.A., and an Imperial Stout, it is the Raspberry Ale that puts ink on an account ledger. "It's an abomination to mankind," Wenzel overstates, "but it represents 44 percent of our sales." Star has just added a Pineapple Ale to its line. "More and more drinkers are coming on board to micros now, and for them a fruit beer may be nirvana," observes John Harris, brewmaster at Full Sail Brewing's Portland location in McCormick & Schmick's Harborside. That Full Sail, which also operates a far larger facility east of Portland in Hood River, makes no fruit beers is hardly the pits, though. At the core of it unequivocally outstanding portfolio are its well-hopped (Saaz) Pilsner, the fruity, flavorful Extra Special Bitter, a big, burly India Pale Ale, and a smoky cappuccino of a Stout.

One might think twice before sampling something from a brewery called Hair of the Dog, especially when its premier product, the smooth, rich-palated Adambier, has the alcohol bite (eight percent) of a pit bull. Lighter only by a hair is Dog's most recent puppy, Golden Rose, based loosely on a Belgian Triple. To deem it discordantly dulcified would be to prejudge this flower before it blooms: President Alan Sprints has designed both beers with cellaring in mind. "We encourage people to age them for as long as their patience will allow," he says. Thus, in time such sugariness should attenuate.

Living very much in the here and now is another Portland thoroughbred, the Lucky Labrador brewpub. Most fetching are its Best Bitter, dry, with a big floral , and the Stout, mocha-chocolaty, with lots of chew. And while the results tend to be uneven, the efforts of Portland's Tugboat Brewing deserve credit, too. In direct contrast to its snug coffeehouse dimensions, Tugboat offers a score of house beers, each selling at bargain prices. Its sharply bitter I.P.A. highlights the hop-friendly attitude of the resident brewer.

A large number of brewpubs in and around Portland are owned by brothers Brian and Mike McMenamin. For my tankard, though, the best of the lot is the High Street Brewery, housed in a renovated residence south of Portland by some 100 miles in Eugene.

Such McMenamin staples as Hammerhead, Brown Ale, and Terminator Stout never tasted better than under the breeze-caressed branches of alder and apple trees in High Street's backyard beer garden. Eugene also boasts the Steelhead Brewery & Cafe and Oregon Fields Brewing. At the former, brewster Teri Fahrendorf's solid assortment reaches the pinnacle in the bitter, fruity Bombay Bomber I.P.A. And the latter has carved out a niche with a rye ale using organic brewing ingredients. How dopesticide-free raw materials affect beer's flavor? "You don't really notice the difference," concedes head brewer David Sohigian, "in the same way you do with an organic tomato." Even so, his Hefe-Ryezen, grainy, dry, with fruity undercurrents, is first-ryet.

Scenic Bend is home to Deschutes Brewing, which runs a cozy brewpub downtown and a large packaging plant in the outskirts. From the start Deschutes earned high praise for its flavorful family of unfiltered beers. Surprisingly, the company has managed to maintain that draft-fresh taste in its bottles. "Anytime you filter you're going to strip out a certain amount of flavor and body." explains Gary Fish, president. "So we coarsely filter and then go the extra step and create a secondary fermentation in the bottle." At the top of a can't-go-wrong lineup are Deschutes's estery, bitter Mirror Pond Pale Ale, Bachelor Bitter, aromatically fruity, Black Butte Porter, roasty and smoky, and the rich and meaty Hell's Canyon HarleyWine.

Rogue Ales Brewery in Newport has also made the transition from brewpub to micro with its credibility intact. "We were still operating like a brewpub, even when we hit 10,000 barrels a year," comments brewmaster John Maier. Now, "with better equipment, we can reduce the work intensity and streamline things so that mistakes aren't made." The most obvious mistake for drinkers to avoid is a failure to sample such palate pleasers as Smoke Ale, St. Rogue Red, Old Crustacean Barley-wine, Mogul Ale, and Maierbock. Traditionalist Hubert Smith, head brewer at Wild River Brewing, with locations in Grants Pass and Cave Junction, has several sensational suds to his credit, too. Perhaps most noteworthy is his Hefeweizen, brewed with a German wheat-beer yeast.

Most North American brewers avoid the Weizen yeast, not only because of the clovelike esters it imparts to beer, but for fear that its assertiveness will come to dominate their other yeasts. Not so, Smith. "Initially, you believe those stories, especially with a yeast that produces wild flavors," he says. "So far, though, we haven't crossed strains."

Clearly, the real strain comes in trying to sample all of the flavorful brews of the Beaver State. True, some lack finesse and complexity, seemingly churned out with mass sales in mind. But those are easily overlooked alongside such high pints as Cascade Lakes' Bandit's Best Bitter, hoppy and fruity, with a hint of tannin; Oregon Trails' nutty, milk-chocolaty Brown Ale; the well-balanced, nicely dry Nor'Wester Best Bitter; The Old Market Pub's dry-hopped Mr. Toad's Wild Red Ale, with a green hop flavor; the hugely dry Cloudcap Amber Ale from Mt. Hood Brewing; Multnomah's Figurehead Ale, with a tasty interplay of nuts and caramel malt; Golden Valley's Red Thistle Ale, likewise nutty, though with an edge of chocolate and hops; and Saxer's Liberator Doppelbock, dense, dark, and sticky.

As to those elusive spigots of Sam Adams and Heineken - no luck this time around. Which isn't to suggest they're not available. They may well be, but for committed suds lovers the search in Oregon leads in a far different direction.


Brewpubs and microbrews are strong in 1996

Source: ID: The Voice of Foodservice Distribution, Oct 1996 v32 n11 p39(2).

Title: A strong segment is brewing. (brew pubs, taverns and microbreweries)(includes related article on Goose Island Brewing Co.)

Author: Michelle Dorfman

Abstract: Brew pubs, taverns, microbreweries and other food-and-drink operations are mushrooming all over the nation. These bar-and-grill establishments offer not only traditional fare such as hamburgers, chicken wings and chips-and-dips but also specialty items including gourmet pizzas, seafood, ethnic delicacies and comfort foods. These combo restaurants/breweries can achieve long-term success by constantly evaluating their menus and offering food items that reflect local tastes.


Contract brewing is seen as a negative

Source: Nation's Restaurant News, Nov 25, 1996 v30 n46 p29(1).

Title: There's a contract out on America's craft-brewed beers.(On Beverages)(Column)

Author: Gary Regan

Abstract: An NBC 'Dateline' program that suggested that some micro-brewers were misleading the public by implying that their beers were special had both its detractors and defenders. At the heart of the matter was contract brewing, under which micro-breweries give their recipes to established breweries to produce beer for them. While Red Hook Brewery official Nelson Jay says that contract brewing is deceptive, Boston Beer Co Pres Jim Koch argues that the practice was perfectly acceptable.

Subjects: Microbreweries - Management Brewing industry - Management SIC code: 2082Business Collection: 98R5050Electronic Collection: A18940884RN: A18940884

Full Text COPYRIGHT 1996 Lebhar-Friedman Inc.

The teaser for a recent segment on NBC's "Dateline" told viewers not to drink micro-brewed beers until they saw the upcoming Sunday night program, and some people took note.

"Business was certainly down that week," says Steven Koch, general manager of the Bullfrog Brewery in Williamsport, Pa., "and some of our customers asked whether there were any health concerns they should know about." When the program finally aired, the segment implied that some of the nation's craft brewers were misleading the public.

True or false? Let's take a look;the issue at hand is contract brewing. What is contract brewing? Let's say that I wanted to make a beer using my grandfather's recipe. I could call "Brewery X," give it the recipe and the brewery would make the beer for me. Furthermore, I could supervise production at the brewery in order to make sure that the beer was brewed exactly to my grandfather's specifications. It's a fairly simple process and one that allows small companies to produce traditional beers without having to build their own breweries. Contract brewing is slightly deceptive," says Nelson Jay, marketing manager for the Red Hook Brewery in Seattle, "in that the consumer is made to think that he is buying a product more special than it actually is.

"Jim Koch, president of the Boston Beer Co. in Boston, disagrees: "If Julia Child cooks dinner in your kitchen, bringing her own ingredients and using her own recipes, who cooked dinner? You or Julia Child?

"Jay counters: "When you pass out a recipe from home and send it to someone else, it sometimes gets poorly translated. Koch's analogy is a wishful scenario." However, Koch disagrees. "We employ eight full-time professional brewmasters to supervise production of all our beers," he says.

For the past 12 years, the Boston Beer Co.'s labels have included the location of the brewery at which each beer is brewed, but not the name of the host brewery. "A representative from one of our host breweries says that he would object to using its name," Koch says. "After all, our beer is totally different product from theirs. It's brewed to our specifications, using our ingredients." Steve Hindi, president of the Brooklyn Brewery, a craft brewery that brews some beers at its own brewery and contracts the FXMatt brewery in Utica, N.Y., to make others, holds similar views. "The larger breweries are in a dilemma," he says. "Our company goes to tremendous expense and trouble to make sure our beers are brewed to our exacting high standards, and we have become a threat to a very small percentage of the large breweries' business. They don't know what to do about it, so they decided to attack, and these companies have a tremendous amount of political influence and cash." All Brooklyn Brewery beers made in Utica state that fact on their label.

In 1982 New Amsterdam beer became the first micro-brew on the East Coast, and Joe Magliocco, managing director of the New Amsterdam Beer Co., maintains pride in all of his contract-brewed beers. "We have three people who oversee our formulas and production," he says, "and I believe that consumers are intelligent enough to continue buying high-quality products such as ours -- no matter what appears on the label." All the labels on New Amsterdam beers state that the beer was made in Utica.

Here's my opinion: I think that today's beer drinkers have become very passionate about big-bodied, flavorful beers -- most of which come from small craft breweries -- and their passion will not disappear. What I would love to see, however, is this: All breweries, large, medium and small, will include the following facts on every label: The geographical location which the beer is brewed plus a list of every ingredient used to make it.

Each person interviewed for this article said that he would have no objection to displaying his ingredients on his labels. Go to it, brewers of America. Let's see where you're made and what you're made of.


Microbrewers see slower growth, shakeout

Source: The Business Journal-Milwaukee, Jan 4, 1997 v14 n14 p1(2).

Title: Microbrewers see slower growth, shakeout.

Author: Robert Mullins

Subjects: Wisconsin - Business and industry Microbreweries - Economic aspects Brewing industry - Economic aspects SIC code: 2082 Electronic Collection: A19177140 RN: A19177140

Full Text COPYRIGHT 1997 City Business/USA Inc.

When microbrewer Mike Gerend says he sells his beer "all along the east coast," he doesn't mean the eastern seaboard of the United States, but the eastern counties of Wisconsin.

In 1997, when microbrewing is expected to grow at a slower rate, Gerend, president of Wisconsin Brewing Co., Wauwatosa, said he'll keep his expansion close to home.

Wisconsin Brewing, with a market that reaches north to Door County, south to Kenosha and west to Madison, may venture into Chicago and Minneapolis, but will stay primarily in its Wisconsin base, he said.

To borrow an advertising slogan from one of the big brewers, Gerend doesn't plan to sell the most beer, only the best. Gerend thinks a true microbrew will be most successful in its hometown market and will survive on consumer loyalty.

"In a very competitive industry, you're going to have a small group of(microbrewers) who have local appeal," he said.

Other microbrews will be done in by the coming thinning of micro-brewery ranks, he said.

"It's inevitable that you're going to see some shakeout," Gerend said. There is already evidence that microbrewing's double-digit growth may be on the wane. Through the first nine months of 1996, beer shipments by the craft brewing segment grew by 10.5 percent from a year earlier, according to Beer Marketer's Insights, a West Nyack, N.Y., industry publication.

But the growth rates of some major microbrews within that segment slipped in the third quarter.

Boston Beer Co., the Boston-based firm that sells Samuel Adams beer, posted a disappointing 20 percent increase over the year-earlier quarter.

Its growth rates had been higher earlier in the year, said Benj Steinman, associate publisher of Beer Marketer's Insights. Sales by Pete's Brewing Co., Palo Alto, Calif., makers of Pete's Wicked Ale, increased only by 13 percent. The stock price of both those companies declined on news of lower earnings.

TOO MANY MICROBREWERS

The microbrewery segment is expected to grow to a 6 percent domestic market share by 2000 from 2.5 percent now, but not every brewer in business today will be around by then, Gerend said. So many companies have tried to cash in on the microbrewing craze that there may be too many.

Likely to fall by the wayside will be microbreweries started by marketing graduates rather than true brewmasters, Gerend said.

A lot of beer companies have been started by people who think all they need to succeed is someone to brew a hearty beer for them, a catchy name and a clever ad campaign, he said. But microbrew fans will drop a brand they feel is phony.

"The secret of microbrewing success is the small local guys doing well," Gerend said. "I think the microbrew market will continue to stay small and segmented.

"Wisconsin Brewing, which began last April, finished 1996 with annualized production of 1,800 barrels. Gerend said his goal in 1997 is to increase that to 2,500 barrels by introducing three new beers on top of the three he already makes.

DISTRIBUTION DILEMMA

A similar measured growth strategy is being pursued by Glendale's Sprecher Brewing Co.

"We plan to maintain the product integrity and not change the recipe," said Randy Sprecher, president of the firm he founded in 1985. "Doing a quality job is where it's at.

"In 1997, Sprecher has an important decision to make. He wants to introduce his beer in Colorado and Indiana, but to ship it that far would require that he pasteurize his product, something Sprecher doesn't now do.

"It would be prudent for us to do that to extend the shelf life," he said.

But pasteurization isn't Sprecher's only concern. It's difficult for a small brewer like Sprecher - whose Glendale brewery has an annual beer-making capacity of 25,000 barrels - to get service from distributors, which do the bulk of their business with high volume national brands.

Working with one distributor in Indianapolis, "they stuck our beer in a huge Miller house," Sprecher complained. "If you're not known, or not local, it is going to be a real challenge for a microbrewer to expand into new markets. "Sprecher is exploring relationships with smaller distributors that specialize in microbrews, which he said would give Sprecher Beer the attention it deserves.

MARKETING MUSCLE

While big distributors may not cater to microbrewers' needs, Wisconsin Brewing's Gerend said he would rather deal with them than smaller distributors without as much marketing and distribution muscle.

"The potential is still with the bigger distributors, who have greater reach and a better distribution system," he said. "We represent a marginal but high revenue market for them.

"Wisconsin Brewing's distributor is Miller Brands Inc., Milwaukee, which distributes Miller beer in the metro area. The volume of his beer distributed by Miller Brands pales in comparison to that of Miller Brewing Co., Gerend said, but his products generate more profit for distributors than the lower-priced Miller.

But small brewers like Wisconsin Brewing don't just compete with Miller for the attentions of distributors. The big brewers are also coming up with microbrews of their own. Miller, for instance, owns a share of specialty brewers like Celis Brewery in Austin, Texas, and Shipyard Brewery in Portland, Maine. The Milwaukee brewery also bought Jacob Leinenkugel Brewing Co. in Stevens Point and launched its own specialty beers, like Ice House and Lite Ice, through its mythical Plank Road Brewery.

Still, the big brewers are having trouble latching onto the microbrewing fad.

Miller launched a specialty beer called Red Dog in 1995 but the novelty soon wore off. Through September of this year, Red Dog sales were down 31 percent from a year earlier, according to Information Resources Inc. During the same period, sales of St. Louis-based Anheuser-Busch Cos. Inc.'s craft beer entry - Red Wolf - were down 36 percent.

Even so, the big breweries are still trying to buy into the microbrewing phenomenon. Sprecher Brewing's Randy Sprecher said he has been approached by larger brewers with acquisition offers but turned them down. "I have been kind of cantankerous with them, and so they haven't come around much lately," he said, declining to identify a specific suitor.

Like Gerend, who believes microbrewers should be small, locally owned and insistent on quality, Sprecher doesn't think he'd do well as a small part of a big brewery.

"I want to maintain ownership and control," he said.


A-B opens microbrewer in Busch Gardens

Source: St. Louis, Jan 13, 1997 v17 n18 p7A(1).

Title: A-B could open microbrewery at Busch Gardens.


Star Brewing goes flat and folds; success tapped out in Portland

Source: Business Journal-Portland, Jan 17, 1997 v13 n47 p5(1).

Title: Star Brewing's success tapped out in Portland, Phoenix. (fierce competition forces microbrewery to stop operations)

Author: Michael Rose

Subjects: Microbreweries - Management Companies: Star Brewing Inc. - ManagementSIC code: 2082 Electronic Collection: A19184944 RN: A19184944

Full Text COPYRIGHT 1997 Business Journal Serving Greater Portland

Star Brewing Inc.'s plans to move its business to Phoenix have gone flat, and it's last call for the Portland brewer. "Shut down. Out of business is the appropriate way to describe the current situation," said Conrad Myers, a director for Star Brewing. The company has abandoned plans to move its brewery to Arizona, laid off its few remaining employees and is selling its equipment to pay debts, he said.

In August, Star Brewing made its last barrel of beer and closed its plant on 5231 N.E. Martin Luther King Jr. Blvd. Company officials, who blamed fierce competition in the local microbrewing industry for Star Brewing's exodus, predicted its lackluster business would shine again as Phoenix Ale and Lagering Co. By February, people in the Southwest city were supposed to be tossing back mugs of its beers, Unfortunately, Star Brewing ran out of time and money.

The Portland brewery's strategy called for investors to step forward with cash in hand to help finance its proposed $3 million Phoenix brewery. The company did find some interested parties, although it was not enough to support a viable operation, Myers said.

Myers, a Tigard business consultant, is overseeing the final details of the Star Brewing demise. He was quick to distance himself from Star Brewing's operations. Describing himself as a passive investor in the brewery, Myers said he is only involved now because he has expertise in shutting down companies. "Somebody has to pull the plug," Myers added.

Myers declined to elaborate on the company's finances, although he said Star was in the hole and some people will lose money.

"They're aren't sufficient assets to pay anybody, except the secured creditors," Myers said. Star Brewing will liquidate its assets but does not intend to file bankruptcy, he said.

This was Myers' first experience with the microbrewing industry. In 1995, he and others invested a total of $750,000 for a private placement in Star Brewing that was raised by Arcadia Investment Corp. of Portland.

Zak Gordon, a director of Star Brewing and chief executive officer of Arcadia Investment, said the microbrewing industry looked like it had plenty of potential when Arcadia agreed to raise money for the venture. The industry seemed robust two years ago, led by public companies such as RedHook Ale Brewery. Arcadia was not involved in raising funds for the proposed Phoenix brewery, he said.

Star Brewing, founded in 1992 and named after the old Star Brewery in Vancouver, built a small customer following with its blackberry stout, pineapple, ale and other fruit-flavored beers. The company fought a losing battle to win market share, and its annual production was far below its 10,000-barrel capacity.

With Star Brewing's products getting shoved aside by better-established brands here, the up-and-coming market for microbrews in the Southwest looked like an untapped opportunity.

Wayne Anderson, the former general manager of BridgePort Brewing, was recruited by Star Brewing to be its president and chief executive officer and given a mandate to revive Star's ailing business. He joined Star Brewing shortly after the October 1995 purchase of BridgePort by The Gambrinus Co. of San Antonio.

Anderson headed up the proposed relocation to Phoenix and now lives there.

He declined to discuss Star Brewing's failed move to Arizona. But his dreams of establishing a brewery in the Phoenix area might still be alive, even though Star Brewing is fading away. Anderson said he was in negotiations on another deal and couldn't comment further.

Meanwhile, the original founder of Star Brewing has a new venture fermenting: a hard cider company.

Scott Wenzel, forced out of Star Brewing by the Arcadia investors a year ago, said his Oregon Ciderworks Inc. in Tigard should soon start making apple and pear cider. His Rose City Cider will be distributed in both kegs and bottles. Wenzel has set up a 4,500-square-foot winery in leased space on 9442 S.W. Tigard St. All that's holding up production of the first batch of cider is licensing from federal regulators, which Wenzel said is forthcoming.

"We'll do real well in kegs because very few ciders are available on draft, "Wenzel said. To avoid the battle for tap handles at bars, he said Rose City Cider will be in a self-contained, dispensing keg.

The startup company plans to produce about 10,000 cases of cider this year and will handle its own distribution. Ken Hunter, a longtime associate at Star Brewing, serves as its marketing director. Wenzel is content to grow slowly and finance the cider company's expansion from cash flow.

"We had a pretty sour experience with investors," Wenzel said of his unhappy parting with Star Brewing.


Redhook survives

Source: Forbes, Jan 27, 1997 v159 n2 p120(1).

Title: Hooked on Redhook. (Piper Jaffray analyst Allan Hickock believes Redhook Ale Brewery could survive a likely shakeout in the microbrewery industry)(Brief Article)

Author: Caroline Waxler

Subjects: Microbreweries - Securities Stocks - EvaluationCompanies: Redhook Ale Brewery Inc. - Securities SIC code: 2082 Magazine Collection: 87C2155Business Collection: 98Y3429 Electronic Collection: A19038196 RN: A19038196

Full Text COPYRIGHT 1997 Forbes Inc.

MICROBREWERS, those hip makers of specialty beers, had a run the past two years. But the last quarter of 1996 saw a sharp decline as competition decimated margins.

Picking a winner is risky still, but we think we know who'll be left after last call. Allan Hickok of Piper Jaffray thinks it will be Washington-based Redhook Ale Brewery (HOOK), even though its strongest markets, Washington and California, reported an earnings decline of 22% in the third quarter amid heavy competitor promotions. That's why Redhook shares are down 11 from their 1996 high of 27 3/8 and the company's 1995 IPO price of 17.

Hickok thinks the stock could reach 18 within 12 to 15 months, almost a 50% gain from today. Although the stock looks dear at 25 times earnings, Hickok predicts Redhook's sales will grow 20% this year, to $47 million. He thinks the microbrew fad will experience a shakeout; Redhook will survive because it's 25% owned by Anheuser-Busch, with whom it has exclusive distribution rights.

Important when crowded supermarket shelves limit microbrews' exposure.

Analysts say Anheuser may buy the remainder of Redhook. Redhook's new $30 million Portsmouth, N.H. brewery is coming on-line.

Portsmouth Brewery will bring Redhook to East Coast drinkers, who now comprise an estimated 25% of sales.

Hickok thinks Redhook has weathered the worst. He expects per-share profits to grow 18% in 1997, to 40 cents. Another strong Redhook fan is Gabelli & Co.


20-30 tap beers a product of contract brewing

Source: Restaurants & Institutions, Feb 15, 1997 v107 n4 p79(2).

Title: Microbrew mania.(includes related article on the contract brewing of microbrewed beers)

Author: Donna Hood Crecca

Abstract: The microbrewing trend has resulted in a proliferation in the number of beer brands offered by restaurants and bars. It is no longer unusual for an establishment to offer as many as 30 different draft beers. Staff training and beer menu organization are two of the keys to successful microbrew marketing. The Office, a six-unit 'Beer Bar & Grill' chain gives its customers extensive microbrew descriptions that include recommendations on food pairing.

Subjects: Microbreweries - Products Beer - Marketing Restaurants - Marketing Bars, saloons, etc. - Marketing industry - Contracts SIC code: 5813; 5812; 2082 Business Collection: 99U2830Electronic Collection: A19142833 RN: A19142833Full Text COPYRIGHT 1997 Reed Publishing USA

Check the bar at almost any restaurant today and you'll notice more beer taps than just five years ago. In some cases, you might see as many as 20 or 30 taps of different designs, colors and shapes bearing some rather interesting -- even quirky -- brand names. The reason for this eclectic crowding behind the bar is simple: microbrews.

The advent of all-malt beers brewed in much smaller batches than those made by the well-known brewers, and also without the rice or corn they often use as fillers, has reinvigorated beer business at many eateries.

In the first half of 1996 alone, 349 microbreweries opened, according to the Institute for Brewing Studies in Boulder, Colo. Today, more than 1,000 brewers produce in excess of 4 million barrels of all-malt beer. While that's just over 2% of the total U.S. beer market, microbrews might be the biggest news in beer since low-calorie brews debuted in the 1970s.

Menu matters.

In restaurants, variety is part and parcel with microbrewed-beer selections, which range in price from about $3 to $5 a pint. Boodle's Restaurant & Barin the Boston Back Bay Hilton offers patrons a selection of 90 microbrews. Bennigan's Copper Clover International Beer Quest, a frequent-customer program coming to all of the chain's 220 units this year, features 100 beers from around the world, including 25 microbrews. And The Office, a six-unit Restaurant Associates chain that recently changed its name to add "Beer Bar & Grill," now lists more than 60 microbrews and imports. Given all the choices out there, how do operators draft their beer menus? A team of six from The Office spent several months evaluating brews, basing their selections on quality, determined through tastings, and availability. "We had to make sure it would be available to us, which can be a problem with microbrews," says Alan Jay, senior manager of promotions and public relations for the Mountainside, N.J.-based concept. Customer opinions count, too. For Copper Clover, Bennigan's surveyed 5,000 guests about their beer preferences, and then evaluated brands based on product quality, says Rod Downey, senior vice president of marketing and business development for Metromedia Restaurant Group, parent of the Dallas-based chain. About 85% of the list is mandatory; local brews complete the selection.

Information on tap.

Organizing the beer menu and training staff are also key to serving microbrews successfully. The Office menu lists its beers by style and provides extensive descriptions that include food-pairing recommendations.

"People will try different beers in a style that they recognize, so we resent the menu that way," Hilowitz explains.

In addition, there are extensive training programs for managers as well as bartenders and servers, who must take a written beer exam before they can go on the floor. The Copper Clover menu is organized by country, in keeping with its international motif. However, Bennigan's relies on its bartenders and waitstaff to provide customers with descriptions of the beers. "Our training program is intense," says Downey, noting that it involves CD-ROM training on beer styles and video modules on sales, service and food pairings. Brewed on premises. Some restaurants don't just sell microbrews; they make them, too. "Brewing beer adds entertainment and excitement," says Thomas Moxcey, president-COO of Rock Bottom Restaurants Inc., Boulder, Colo. "It's a direct linkage in the consumer's mind that fresh is quality product." Rock Bottom, parent company of the 35-unit Old Chicago dinner-house chain (which has its own 110-beer menu), also operates 13 Rock Bottom Restaurant k Breweries nationally and the Walnut Brewery and Chop House restaurants in Denver. It recently purchased Big River Grille & Brewing Works, a four-unit chain based Chattanooga, Tenn. The lodging segment, in particular, is showing interest in brewpubs, which offer an attractive solution to the challenge of finding or developing a casual concept that will lure hotel guests as well as locals. One example is The Eldorado Hotel A Casino, Reno, Nev., which opened its Brews Brothers brewpub this summer. It features seven brews, live entertainment and a complementary noshing menu.

Roll out the barrels.

Many operators, expecting the trend to continue, are making major commitments to microbrews. Bennigan's, for example, invests from $5,000 to $55,000 equipment for each unit involved in the Copper Clover program. Brewpub equipment can cost $500,000 per unit, according to Jim Parker, administrator of the Institute for Brewing Studies. But optimism is warranted, says Parker. He projects that while the microbrew market should max out at 4% of U.S. beer sales by 2000, it shouldn't decline once it matures. "These beers complement food very well and are very flavorful," Parker said. "Once consumers have developed a taste for them, it will be difficult to turn away."

Where Exactly Is That Brew Brewed?

Part of microbrewed beers' mystique lies in their local, hand-crafted image. But some microbrews are brewed under contract by other brewers, which is putting a bad taste in some people's mouths. Recently, a group of brewers appealed to the Bureau of Alcohol, Tobacco and Firearms to require that all brewers include the actual place of origin on every beer label. The group charges that consumers are deceived when microbrewers name one location of origin on the label when in reality the beers are brewed to another location by another brewing company.

Dateline NBC aired a segment on this topic in October, and the issue has been hotly debated in newspapers and bars across the country. Defenders of the practice insist that the location of the brewery is irrelevant if the recipe, including the yeast strain, is consistent. Opponents contend that consumers purchase microbrews with the idea that they are hand-crafted by the brewer named on the label, at the point of origin listed. While some consumers can't be bothered with such details if the product is good, others demand authenticity. "Our clientele is very educated -- they're hop-heads," said Guy Hemond, F&B director at the Boston Back Bay Hilton, home of Boodle's Restaurant & Bar. "They will reject something that is contract brewed or made by a major brewer because it's not really a microbrew. We've actually moved beers off of our list because they become so in demand that the brewer contracted them out. "Some microbrewers are now voluntarily including the brewing location and brewer on labels. But until the controversy is officially addressed, restaurateurs will do well to stay abreast of where the beers offered customers are brewed and by whom.


Micros losing ground

Source: The New York Times, May 7, 1997 v146 pC1(L) col 1 (35 col in).

Title: 3,100 gallons of good beer down a drain: microbrews are giving way to cans of beer.

(microbreweries now losing popularity to cheaper beer)

Author: Helene Stapinski

Subjects: Brewpubs - Finance Microbreweries - Public opinion Brewing industry - Prices and rates Beer - Prices and rates


Sales flat in Washington State

Source: Puget Sound Business Journal, March 7, 1997 v17 n43 p1(2).

Title: State's microbrew sales ail; 4th-quarter mugging suggests market may be reaching peak. (Washington)(Industry Overview)

Author: M. Sharon BakerSubjects: Washington (State) - Business and industry Microbreweries - Finance SIC code: 2082Electronic Collection: A19301029 RN: A19301029

Full Text COPYRIGHT 1997 Seattle Business Journal Inc.

Washington's microbrew industry has gone suddenly flat, and the industry is warily watching to see what its stale sales mean for the upscale beer business. What's more, the decline in West Coast sales could be a gloomy harbinger for the rest of the country's microbrewers.

The sudden slump has scared investors in the handful of public microbrewers, and spurred talk of inevitable consolidation as the industry goes through a shakeout. 'This moment has been prophesied for years and it happened pretty quickly,' said Mike Hale, founder and owner of Hale's Ales in Fremont.

"It looks like there's a saturation going on. Existing players are very aggressive about getting quite a bit more than everything they can get, and lots of new players are nibbling around the edges to survive, so there's pressure from both sides."

"The big question is: Is this a temporary plateau or something bigger?" said Paul Shipman, chief executive officer at Redhook Ale Brewery Inc. "We're still analyzing it.

"In Washington state, the growth started to tank in September, according to statistics recently released by the state liquor control board. After posting healthy growth rates of 20 percent to 40 percent a month in early 1996, overall microbrew shipments inched up less than 1 percent in September, rebounded in October to 10 percent growth and then plummeted to negative 2.5 percent in November, the latest date for which state statistics are available. Last month, publicly traded Redhook Ale Brewery and Pyramid Breweries Inc. both revealed that West Coast sales declined in the fourth quarter. Pyramid's total sales slipped 24 percent for the fourth quarter to $5.3 million, mostly due to softness in the Puget Sound region. Redhook, which now distributes beer nationally, saw its fourth quarter grow 17 percent, but overall growth was slowed due to a 5 percent decline in West Coast sales.

The microbrewery industry's other publicly traded players, Sam Adams and Pete's Wicked Ales, haven't fared any better. Percentage sales growth a teach company declined to 10 percent or less in the most recent quarter. As a result, investors are fleeing, and stocks are hovering near their all-time lows. The recent decline is blamed on increasing competition from new players and from new brews offered by established players.

Several industry watchers are also worried about increased price cutting, which could hurt an industry that has built its growth on the expectation that consumers will spend top dollar for premium hand-crafted brews.

Microbrews have grabbed 8 percent to 10 percent of the overall beer market in Washington, which may be its limit, said Scott McAdams, an analyst with Ragen MacKenzie in Seattle. "That may be the size of the category," he said. "We just don't know. But it's not just a local phenomena. It's happening in Oregon and California as well. Pete's and Sam - everyone had a horrible December quarter.

"Washington has seen a proliferation of new players in the past year. The state now boasts 59 breweries and brew pubs, up at least 10 over last year. Many of the players are small operations that make less than 100 barrels a month, compared to Redhook, which makes nearly 4,800 barrels a month and Pyramid, which makes 2,700 barrels a month.

Larry Baush, editor and publisher of the Pint Post, a Seattle magazine that tracks the industry, said increased competition has dented sales, but some players are discounting another possible reason: "1996 was the first time in 12 years that the spirits market has increased. The resurgence of the martini and other cocktails over the last year has attracted the fad drinker. If they've left the microbrew camp, the craft brews might not be as trendy anymore."

Baush said he expects the industry will get a good handle on what's happening by midsummer, as the early winter months are typically slow. George Hancock, chief executive officer of Seattle-based Pyramid Breweries, said the growth has slowed in Washington because of the saturated draft-beer market, and the increased competition for tap handles.

"It's starting to reach a peak at 25 percent of the total segment," he said.

"That may be the ceiling. There are only so many tap handles and we're probably maxing out on that side of the business.

"Partly as a hedge against the beer industry, and partly for sentimental reasons, Pyramid bought back Thomas Kemper Soda Co. earlier this week. The soda maker had sales of about $3.6 million last year, a figure that would have been about 10 percent of Pyramid's total sales. "It's back where it belongs," Hancock said. "We have sales and production synergies which means we can make the sodas more viable. It also ends confusion in the marketplace as to whose it is."

All industry watchers and players agreed that the slowing growth will lead to consolidation.

One of the first to go could be Portland-based Widmer Brewing Co., which has been rumored to be in some sort of deal for years. Both Redhook and Pyramid would love to buy someone, McAdams said. "But the pain isn't great enough yet for some people to throw the towel in. They aren't bleeding enough. Public stocks are at terrible multiples, but others are still (unrealistically) thinking they are in the high-flying mode."

"The stage is set for consolidation," Shipman said. "Redhook is very open to exploring potential deals that enhance our competitive position and result in a stronger business."

Cheers

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