It’s safe to say the term “contract brewing” no longer scares off a true craft beer lover. There was a time when Big Beer used this term to cast doubt on breweries getting help to brew their products, but we’ve reached a time where people care more about what’s in their glass than how it may have gotten there.
Today, a reformed version of contract brewing, partner brewing, has begun to emerge as a beneficial method for breweries that have already established themselves, but need a little something to help them over the next hurdle: expansion.
When it comes to the size of production of a brewery, size matters. Many breweries start out brewing on a small system, usually 10 bbl or less, within a small building. This setup can work for the first few years but as demand for the brewery’s beer begins to grow, the brewery is faced with a difficult choice.
One option is to expand their brew system, which could potentially involve a physical expansion of the brewery, and either way cost a small fortune. Another option is to look for a new location. Again, not very cheap. Finally, there is a third option: brew on somebody else’s equipment in somebody else’s brewery.
Contract brewing is nothing new, it’s been around practically as long as the craft beer industry, as we know it today. However, the term contract brewing took some heat around the turn of the century for a couple of reasons, most notably when Anheuser-Busch called out Boston Beer Co. founder and CEO Jim Koch on national television for not being transparent about brewing Samuel Adams Boston Lager outside of Boston.
Contract brewing continued despite the bad PR, though it left an impression on some that it was the wrong way to do business and that it could never actually yield good beer. However, as time moves on many consumers have changed their minds, while some never even knew it was an issue in the first place.
The practice continues today, but under a different term meant to acknowledge the craft behind the beer. While conducting research within the craft beer market in the early 90’s, Tim Schoen, former vice president and brand manager at Anheuser-Busch, realized the demand for craft was on the rise across the country. He also understood that as more breweries would enter the market, they would inevitably need larger infrastructure to keep up with demand. That’s where he came up with the idea behind Brew Hub.
“I’m here to build a platform for these brewers to get to the next level,” Schoen said.
Brew Hub opened its Lakeland, FL location in 2015 and has attracted some of the most sought after brewers in the nation, including Cigar City Brewing and Toppling Goliath, as well as other smaller local breweries. Brew Hub also produces its own beer with the help of some local homebrewers.
Drive up Interstate 95 North (or just take the three-hour flight) to Boston, MA and you’ll find a similar model of partner brewing at Dorchester Brewing Company. Co-founder and CEO Matt Malloy knows a little something about the “share economy” with his background as a marketing and public relations executive with car-sharing service Zipcar. He said Dorchester Brewing is essentially “share economy meets beer.”
Open for a little more than a year, Dorchester is home to several local breweries such as Bad Martha, Down the Road Beer Co., Entitled Brewing Co. and Barrel House Z as well as nationally recognized Evil Twin Brewing.
“This is a facility to allow people to explore and grow – both brewers and customers,” Malloy said.
Partnering with these facilities means more than just a place to turn water into beer.
Small breweries pay top-dollar for raw ingredients since they are forced to purchase them in small quantities. Partner facilities can offer saving for ingredients since they can buy in larger quantities and set up brewers with beneficial contracts for hops, grain and whatever else they may need.
“By having more control of our costs we are able to put more money towards producing more high quality and diverse beers,” said Jacobi Reid, head brewer for Bad Martha.
Onsite laboratories help ensure quality control and consistency while brewing. Both facilities offer these services, which can make a huge impact on a brand’s reputation for good beer.
Packaging is also a major benefit of partnering with larger facilities. Brew Hub and Dorchester Brewing Co. offer a wide variety of packaging options, including canning, bottling and kegging. Breweries have more flexibility to compete in their market with the kinds of packaging consumers want.
Brew Hub’s Schoen said everyone behind the bar in the Lakeland taproom serves as a brand ambassador for every brand brewing there and undergo continuous training on all brands. Along with serving up brews and educating customers about what they’re drinking, the taproom also serves as a consumer testing facility. As the company grows to other locations (it’s currently working on opening facilities in Georgia and St. Louis) it allows brands to test out those new markets before fully committing to distribution contracts.
Dorchester Brewing’s taproom is much like Brew Hub’s, where each brewery in the building can be found on tap and the servers are ready to educate people on the beers they sample. You will also find Dorchester Brewing beer on tap, but that’s the only way you’ll get some. Malloy said there are no plans to distribute the in-house beer, since it would take market shares away from their partner breweries working side by side in the building.
As mentioned above, partner brewing can free up a lot of time and money for a small- or mid-size brewer while they find their footing in the marketplace. Traditional contract brewing still exists, such as at Two Roads Brewing Company’s Stratford, CT location, where breweries make use of equipment they can’t otherwise get their hands on. However, the “newer” model of partner brewing seems to be on the rise.
A short drive south of Dorchester Brewing you’ll find yourself in Pawtucket, RI, where Narragansett Brewing has returned to its home state to brew for the first time in over 30 years. Many factors led to the homecoming of the regionally iconic beer company, though partner brewing will play an important role.
The Isle Brewers Guild, led by Devin Kelly and Jeremy Duffy, has converted an old mill complex in historic downtown Pawtucket into a 60,000-barrel brewery with the potential to grow into a 175,000 barrels in years to come. The facility will also offer packaging options, a full laboratory and space for barrel aging.
Speaking with Duffy, the complex will be renamed The Guild once operations begin in Spring 2017, but it will be hard to find the name anywhere other than on staff shirts or a few signs. The taproom will be focused on the breweries partnering with IBG including Narragansett, Newburyport Brewing Co., four other breweries and even a distillery that will all be brewing in the Guild’s 10,000 sq. ft. brewhouse. Duffy said the plan is to “flip the contract model on its head.”
The Guild also plans to make the complex a destination with plenty of unique events such as tap takeovers, special releases and festivals featuring the four pillars of entertainment: beer, food, music and art. Folks can also hang out inside the 4,000 sq. ft. tasting room or even enroll in classes about brewing and fermentation sciences.
Today, most brewers that do contract brew don’t keep it hidden as if it’s a dark, nasty secret. Many craft beer drinkers understand the constraints on smaller breweries and only care about the quality of the final product. I recently asked the good people of the World Wide Web their thoughts on contract brewing. While some did express some dislike for a brewery not brewing out of its own location, many just didn’t care. The most common response was some version of “With the cost of business today, how else are they expected to get up and running?”
As a consumer myself, I appreciate a brewery doing all they can to put out their beer. Some have made the argument that these contract brewers don’t have enough “skin in the game,” meaning they haven’t taken as big of a risk since they didn’t invest in all of their equipment, physical space, etc. If a brewery is turning out good, consistent beer, who cares where they’re brewing it?
My only gripe with contract brewing is there isn’t always a place to visit. However, with this model of partner brewing offers taprooms with diverse offerings. There is still plenty to try and experience and if it gets tasty beer out into the world, that’s all that matters.