There's a brewing establishment in Oregon for about every 21K Oregonians, an economist from the Oregon Employment Department found, according to a recently published report. And about 47% of all draft beer consumed in the state was made in the state, the state craft guild reported recently. Wowee! Oreg was home to 188 brewing establishments as of last summer, employing about 5100 folks (multiple brewing facilities operated by one company were counted separately, employment information for all but 31 small companies was verified). Over 70% of these establishments were brewpubs, so lots of part-time restaurant employment bringing down average wages. A response to familiar questions like "have we reached a saturation point?" the report analyzes the density of these breweries across the state and concludes that "the answer seems to be no." Based on this report's count, 50 brewing establishments operated in the city of Portland alone, with another 18 in Bend and 10 in Eugene. Hood River County is home to one brewery for every 3226 residents, the highest concentration of breweries in the state. Clatsop and Deschutes Counties have a brewery for every 6-7000 residents. Brewing jobs only represent about ? of a percent of all private-sector jobs in Oregon, but it grew more than 10% between summer of 2012 and summer of 2013. Payroll grew by over 12%. While brewpubs (over 70% of state brewing establishments) contributed most of that employment growth, employment at manufacturing breweries jumped 15% in that time. About 1.3% of jobs in Central Oregon are in brewing biz.

It's important to note that this economist's report is simply measuring the employees and payroll of brewers in the state, not extrapolating economic impact of the industry by including sales of beer as it moves through the three-tier system or employees in other tiers and supportive industries. It also uses the summer of 2013 as its latest time period. This could be part of the reason these stats differ (tho not significantly) from recently-updated facts about Oregon beer posted to the state brewers guild's website at the end of last month. That source cites 165 brewing companies that operate just over 200 facilities in the state and employ 6400 full and part-time workers. The site claims 53 breweries in Portland and another 20 in Portland metro, plus 20 in Bend, 27 in Central Oregon, 11 in Eugene.  

Small brewers up, down and all 'round the town continue to plan major expansions in brewing capabilities. Another handful was announced just this week varying from modest to very ambitious. The 5 companies that announced expansions this week collectively shipped just 20K bbls in 2012, according to Brewers Assn stats. All in, they expect to expand capacity to somewhere around 100K bbls by 2015 and, one day, over 400K bbls.

AleSmith Spends $10 Mil to Hit 150K Bbls AleSmith Brewing started a $10 mil expansion project after leasing a 105K sq-ft building in San Diego with plans to "begin renovations on the existing building in order to build a brand new production facility, tasting room and gift shop," co announced. It expects to increase annual capacity "from 15,000 bbls projected in 2014 to 25,000 bbls in 2015," with goal of eventually reaching 150K bbls. Expansion is "expected to be completed by Jan 2015." AleSmith will add "up to 25 new positions in production, retail, sales and management," by 2015, and once the facility is complete, AleSmith will look to add "up to five new distribution areas."

Karbach to Break Ground on $15 Mil Expansion Then too, fast growing Karbach Brewing announced it will break ground on its $15 mil, 19K sq-ft, 2 story expansion facility this Tuesday, Mar 25, reported Houston Business Journal (HBJ). Recall, expansion will initially increase annual production capacity to 60K bbls with room to expand to over 200K bbls. Karbach grew 138% to 19K bbls in 2013 and plans to reach 29K bbls in 2014 before new facility is completed in early 2015 (see CBN vol 4 no 70). It already "invested heavily in 2013 towards its capacity…including addition of 23 120-barrel fermenters," noted HBJ.

Adirondack Plans to Triple Capacity in 5 Yrs, Adding Distilling; Tired Hands On the east coast, Adirondack Brewing announced purchase of a $1.2 mil, 4 acre lot connected to its current facility in Lake George, NY with plans to construct a "distillery and tasting room, an events space and additional brewing and bottling facilities." Expansion will triple bottling capacities to 35K bbls, sez owner John Carr. The new distillery will be called High Peaks, and expects to produce 5,000 cases of spirits a year. And in Pa, Tired Hands Brewing has landed a facility in Ardmore that will be capable of producing up to 10K bbls annually, "as well as a secondary brewcafé," co announced via its Facebook page.

Brouwerij West Wants "Largest" LA Brewery Lastly, another SoCal brewery, Brouwerij West, announced it's entered "the first phase of development for what will be the largest craft brewery in the city of Los Angeles, with 26,000 square feet of indoor space and 17,000 square feet of outdoor courtyard space." The brewery, located in LA harbor, San Pedro, hometown of founder & ceo, Brain Mercer, will be capable of producing over 6K bbls in year 1, using 2/3 of the building for production. Remaining space will be used as a visitor center and restaurant. Currently Brouwerij West is distributed nation-wide, as well as six export countries.  

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For another year, Sam Calagione of Dogfish Head and Garrett Oliver of Brooklyn Brewery were named finalists for Outstanding Wine, Beer and Spirits Professional from the James Beard Awards. They are once again the sole beer professionals to make it to this level of the awards, 2 of the 5 finalists in this category alongside 3 spirits professionals and no representatives from the wine world.  

Kansan senators approved a bill that doubles the production cap allowed under a state microbrewery license, from 15K bbls to 30K bbls, the AP wrote. Micros are allowed to sell beer on site as well as operate restaurants. According to the report, there are just 4 operations working under this license in Kansas. Elsewhere, a proposed Md bill would allow licensed farm breweries to become licensed wholesalers and distribute up to 3000 bbls/yr of their own beer, according to the Frederick News-Post.

Stone Expectedly Sides with Ala Brewers; Calif Homebrewer Fest Cancelled Due to Law Change As anticipated, Stone Brewing is not supportive of proposed Alabama bill that lifts restrictions for on-site sales only for brewers over 25K bbls, written to lure the co to build in the state. Stone coo Pat Tiernan sent a statement to an Ala House committee saying as much, encouraging "legislation that benefits all craft brewers," according to AL.com. Recall amendment to Calif law last year that surprised many industry members to allow nonprofit organizations to sell donated homebrew at events, further blurring lines between professional and hobby brewers. Interestingly, an amendment to the law bars nonprofits that primarily support the hobby from the allowance. So the Calif Homebrewers Assn (a nonprofit) has cancelled its annual Southern California Homebrewers Festival, originally scheduled for May, according to the OC Weekly. CHA is working to amend the law again to bring back the festival, but that may not happen in time for this year.  

A Houston Whole Foods is looking to hire a full-time experienced small-scale brewer for a May 1 start, according to Ronnie Crocker's Beer, TX column for the Houston Chronicle. Recall a new Whole Foods outlet in San Jose included plans for an on-site brewery (see our August 26, 2013 issue, vol 4 no 46).  

Interesting, well-researched article by Denver Post's Eric Gorski digs into just one in long line of trademark issues dogging craft brew industry as brewers running out of names and into each other's attempts to create unique equities. Left Hand has been trying to trademark word "Nitro," which appears in bigger letters than "Milk Stout" on label of its fast-growing brand. It filed for trademark in Sep following years of efforts to get Canadian brewery Steamworks to abandon the mark, which it did. The mark was cancelled in January, Gorski reports. But AB has apparently stepped in, asked for and has gotten an extension to file opposition to Left Hand's request at US Patent and Trademark Office. (Goose Island makes some draft beers using nitrogen.) Oskar Blues has also filed trademark application for Old Chub Nitro. And Utah Brewers Cooperative has gotten label approval for Polygamy Nitro Porter, but hasn't put it out yet. Left Hand's prexy Eric Wallace told paper that he's mostly concerned about bottled nitro beers and protecting his "pretty unique" bottle, and not worried so much about draft, but he wouldn't say whether he'd try to stop others from using the term. That's important because trademark owners need not only to obtain marks but also "police them," as atty Ross Appel told Gorski. Pursuing some folks for appropriating a trademark but not others can result in losing it, Appel pointed out. That's one reason why these disputes keep popping up in court even while they're costly, sometimes seemingly silly and make sense to be resolved informally.

Can "Nitro" even be trademarked? Another atty who has represented breweries on these issues, Michael Drumm, told the Post that "he considers Nitro merely descriptive and does not believe it should win approval." But Wallace points out that the govt has previously trademarked the term for beer. Indeed, he "spent a lot of money on attorneys" to get Steamworks to abandon the trademark. "Worse case," Eric told Eric, "we've done a great public service by getting squatters off the mark." Not clear at all how this can or will be resolved. "We shall see," said Eric Wallace. "So far, we have done this with very clear motives and talked to people (who have expressed concerns)" to address them, including folks at Oskar Blues who were "very straight up." But he sums up current name game issues pretty well: "We're not looking to take over the world and prevent people from doing certain things. But there is so much trademark activity going on right now in our business, it's not even funny."  

Economic impact of Colo craft brewing industry nearly doubled in just last 2 yrs to $826 mil from $446 mil, according to new study released by Colo Brewers Guild and reported in Denver Biz Jnl. (Study conducted by Univ of Colo's Leed's School of Business.) There were 232 operating breweries in Colo at the end of last yr and they are "springing up at the rate of more than one a week," according to CBG exec director John Carlson. He calls this the "Fourth Wave" of newcomers that are "largely taproom based" and not "reliant on being a restaurant."

Colo craft "is growing. And it's growing at a big rate," John said yesterday as brewers met at famed Falling Rock Tap House for study's release. "The craft beer we brew in the state of Coloardo enhances people's lives, makes people want to move here, makes people want to come here on that ski vacation," he said as reported in Biz Jnl. "It's important for the state, it's important for the local community, it's important for the country," he stressed, "because we make something."

Over 2/3 of brewers that responded to the survey weren't around 10 yrs ago. The industry paid $135.8 mil in wages in 2013 and produced 5014 jobs for an avg wage of $27,084 per worker, "a figure that is diminished by the large number of part-time employees," wrote Biz Jnl. Over half of respondents said that they grew more than 20% last yr. Recall, BA estimated that total craft sales nationwide jumped 20% last yr.

While some have "speculated that with such rapid growth… the industry is not sustainable," said Biz Jnl, "Carlson said that because so many of the new breweries have concentrated on selling over the bar to walk-in crowds, they are not competing for limited shelf-space at liquor stores and can continue to grow to serve local populations." This is a phenom to watch, also increasingly prevalent in such craft-centric communities as San Diego. There are so many tasting rooms along the way from Escondido (where Stone is located) to downtown that the road has been dubbed the "Hop Highway." There are 85 operational brewhouses in San Diego alone, over 420 brewers in Calif. Clearly, taproom/tasting room trend having significant impact on Colo and Calif mkts. John added: "That local brewery, that could go on in perpetuity because you're forming these micro markets. And that's not going to be competing with a micro market in an adjacent city or county, because that's unique." Colo/Calif have long been trendsetting markets in craft. Is this what's next elsewhere too?  

Driven by "insane growth" of micros, as Brewers Assn economist Bart Watson put it, craft volume jumped 2.4 mil bbls, 18% in 2013 to 15.63 mil bbls, he estimates. Micros are brewers of less than 15K bbls annually, and they're poppin' up all over. That's 4th straight double-digit volume gain - and an acceleration from bigger base in each of 3 previous yrs - and nearly a doubling of craft since 2007. Puts craft at 7.8 share of total volume, up from 4 share in 2008. Numbers are preliminary, sez Bart, with more complete analysis coming at Craft Brewers Conference.

At same time, retail craft $$ sales up 20% to $14.3 bil in 2013, Bart estimates, grabbing 14.3 share. Craft has just 6.3 share of off-premise $$ sales in IRI's multi-channel + convenience data. But it had almost 1/3 of $$ sales on-premise, according to GuestMetrics data for 2013. BA counts 119 regional craft brewers in 2013, (that's craft brewers over 15K bbls), 1,412 micros and 1,237 brewpubs.

Keep up with us between issues at our blog, and on Twitter: @BeerInsights, @CraftInsights and @ BevInsights

 

Not surprisingly, BA's latest alteration of its definition of craft brewer elicited plenty of response, some pro, some not so. Our guest editorialists, Diogenes and Nestor, rendered a split decision, with Dio a Yay and Nes a nay. Without seeing each other's comments, both hit on a couple of the same themes. We excerpt each here.

Diogenes welcomed the news:

The Brewers Association has amended its craft brewer definition in a way that brings several important heritage brewers into the craft brewer tent. This is a welcome development, and it is long overdue….

Some brewers will be uncomfortable with the idea that Grain Belt, or Yuengling Light, will be in the craft brewer tent. That does not bother me. The new definition is more inclusive and it puts the emphasis on the "small" and "independent" pillars. This is the way it should be. Small and independent is much more in line with the criteria of the old Brewers Association of America, which sprang to life in 1942 to represent small brewers in gaining access to raw materials like tin which were being rationed during World War II.

The new definition moves the craft brewer market share up close to 10% - the much ballyhooed goal set by New Belgium CEO Kim Jordan in 2003. The BA has set a new goal of 20% by 2020. Twenty by 20. That has a nice ring to it. The BA will need the volume of all small brewers to hit that goal.

To the dismay of some, the BA did not alter the 6 million barrel criteria for "small." I agree with that decision. Why should we penalize small brewers for their success? Even a six million barrels brewery is less than 3% of the total US volume. Isn't that small compared to ABInBev's 100 million barrels or MillerCoors's 60 million?

This is not to say that the six million is good for all purposes. I think it is an impediment to progress with the BA's legislative efforts. The large brewers are blocking the BA's tax bill by arguing that brewers like Yuengling and Boston do not need a tax break. I have heard Dick Yuengling agree that he doesn't need a break. A smaller number would make it much more difficult for the big guys to oppose the BA bill.

In the meantime, the BA deserves credit for bringing the heritage brewers into the tent and strengthening the base of the small brewers trade association.

Nestor, on the other hand, was amused:

I, for one, have been greatly entertained by the Brewers Association's latest adventure in semantics.

Waking up one morning and designating as craft brewers companies whose products cannot conceivably be classified as craft beers is an Orwellian stroke of genius. It gives Boston Beer volumetric company. It increases membership dues revenues. Perhaps small distillers will be next.

Until now, the BA struggled with the logic of contending that only a craft brewer could make a craft beer. But now they have moved to a much more easily defensible situation - small brewers make small-volume beers. Do the arithmetic.

So let's call them the SBA (I doubt the Small Business Administration will mind). Next issue, please.