Good Beer Hunting

On the Dotted Line, Pt. 1 — Contract Brewing Sheds its Negative Reputation


In the July 2012 pages of BeerAdvocate magazine, a controversy was born. When asked about the rapid growth of the American beer industry, Clipper City Brewing (now known as Heavy Seas) founder and owner Hugh Sisson expressed worry over a rush of entrepreneurs entering the category. Among several issues he raised, one caught particular ire: his suggestion that so-called "gypsy brewers"—those making beer on contract through production spaces they don’t own—weren't "real" brewers.

“But to me, you’re not legit until you’ve got skin in the game, which means capital at risk,” he told the publication. Three of the most prominent "gypsy" businesses immediately chimed in, with Evil Twin, Mikkeller, and Stillwater Artisanal trying to counter the claim. It led to an apology and explanation from Sisson, who clarified his reference to “opportunists and enthusiasts, rather than serious beer business folks” like the abovementioned beer makers.

Of course, two of the biggest names in American craft beer started with help from contract brewing. Brooklyn Brewery (via F.X. Matt Brewing) and Boston Beer (Pittsburgh Brewing Co.) produced their early volumes outside their namesake locales. Pete’s Brewing Co., now defunct but at one time one of the biggest craft breweries in the country thanks to Pete’s Wicked Ale, made its beer at the same location as Brooklyn Brewery. It wasn’t until 1996 that such a thing was presented as a dirty tactic of marketing thanks to a Dateline investigation that showed the world that Samuel Adams wasn’t actually made in Boston, the city it called home in advertisements.

Today, it all seems quaint, but even in the near-20-year timeframe between that NBC report and Sisson’s remarks, the perception of what it meant to be a Craft Beer Brewer, even if by a small number of people, clearly stemmed from the actual ownership of equipment, space, and debt.

“The language about property from critics is the velvet glove surrounding the iron fist that is these critics’ annoyance that gypsy brewers are running successful operations and brands without capital, or at least sufficient capital, and without facilities that one can walk in or around or sell or mortgage,” Jacob Berg wrote on the topic in 2013 for DC Beer. Not having the “skin in the game” was against the norms of the American Dream and business ownership, he added.

“These gypsy brewers have no roots, the argument goes. They are hardly brewers. They are marketing companies. They don't make anything, whereas ‘true’ craft brewers do. These arguments place gypsy brewers outside of the craft beer industry and into the nebulous service sector.”

Ironically enough, as with so many things in 2018, none of this seems to matter anymore.

“At the time, there were some bad examples that led some people to think there’s a big difference in terms of consumer perception with a contract brand,” says Jeremy Cowan, who founded Shmaltz Brewing in 1996. “But if they love a beer and like the people behind it, drinkers are obviously less worried about the day-to-day grind of who’s making the beer.”

It’s part of the opposing forces of modern consumer behavior: for all the talk about how we seek independence and want something local—and some certainly do—there’s as much research, if not more, that shows customers just want something good that makes them happy. The narrative that contract or "gypsy" brewers are incapable of creating quality products no longer exists, if only due to the array of high ratings regularly given to the likes of Stillwater or Lawson’s Finest Liquids or Grimm or Casita Cerveceria, which started out by making beer on the same equipment as globally-beloved Hill Farmstead.

Shmaltz went 17 years as a contract brand, producing at locations in California (Mendocino Brewing) and New York (Olde Saratoga Brewing) before Cowan opened his own space in Clifton Park, New York in 2013. From there, he produced Shmaltz and other brands, including Alphabet City and 518 Craft, and offered his own contract brewing services for others. After five years of operation, Cowan has sold that space to Singlecut Beersmiths and will return to contract brewing in 2019, which he said gives him more flexibility. Rather than focusing on the daily logistics and planning of running a operational manufacturing space, he can get back to meeting customers, telling his story and selling beer. As he’s done since his launch, he talks regularly with brewers who make his beer, offering ideas and taste profiles, but leaving the actual process to others.

Does that make Shmaltz any less of a brand? “No,” he plainly says.

“If you’re the owner of a brewery and pay rent and payroll, but you’re not the brewer, or you’re the brewer but don’t do graphic design or accounting or compliance, where is the line of what is or isn’t a ‘real’ brewery?” he asks. “We’re all paying somebody to do the stuff we don’t do.”

That’s why, he notes, focusing on a beer or brand instead of the physical location is what should matter. And now that he’ll be freed of one place to make beer again, traveling the country for contract brews and collaborations can lead to new beers and fresher product, he says. That’s something worth chasing—not stainless steel and debt.

In December 2009, for just $8,000, Gregg Berman started brewing beer professionally. That’s all he needed to make his first 30-barrel batch of Hoppy Feet Black IPA under his newly-formed company, Clown Shoes Beer. Inspired by other versions of the style made by Stone Brewing (Sublimely Self-Righteous Ale) and Southern Tier (Iniquity), he sold cases and kegs of the beer on merit and trusting friendships to bars and liquor stores just west of Boston. He loved beer, and with a family who had spent generations working in-and-around booze, taking a leap felt right. Especially since it wouldn’t bankrupt him if he failed.

“I didn’t want to let myself get too wrapped up in the concept this was something that could be sustainable,” says Berman, founder and general manager for Clown Shoes, which eventually sold to Mass Bay Brewing Co., the parent company of Harpoon, in 2017. “But in the back of my mind, I had the idea of going national, or at least growing enough to keep the whole thing alive.”

The biggest challenge Berman faced then isn’t far off from today, he says. Industry peers or beer enthusiasts might have scoffed at a brewing business that had no brewery, but most drinkers—the ones he was going after—just wanted something that caught their eye and tasted good.

“People are less sensitive to where and who makes their beer unless you get into that really hardcore industry base,” he says. “If the beer is supposed to be good and the price is right, it becomes about shopping on impulse.”

He also points out that a previous stigma that may have been attached to contract brewing was from a similar sliding scale that Sisson mentioned years ago. Yes, there have been entrepreneurs in the past who would seemingly do little more than slap a label on a Golden Ale, but there were far more "gypsy" brewers who had backgrounds or long standing passion for beer or making the product.

“I’ve never been a brewer, and to this day I know a decent amount about it, but I’ve never brewed a batch of beer at home,” he says.

In his case, Berman relied on his love for all things culinary and being a studious notetaker, jotting down ingredients or flavor profiles he could collaborate toward with Dan Lipke, who made Clown Shoes' beers at Mercury Brewing Co. in Ipswich, Massachusetts. Now under the same umbrella as Harpoon, Berman expressed excitement for a key capability that many contract brewers have taken advantage of in recent years: localized brands.

Whereas some breweries can host collaborations for special, one-off brews unique to a city, state, or region, Clown Shoes can use enhanced equipment and capacity to now expand its offerings on a per-state basis, something that differentiates the company beyond “contract brewer.” A barrel-aged Stout with coffee (Breakfast Exorcism) might have been only for Massachusetts, while a Double IPA with fruit (Josh the Guava King) can be made exclusively for Texas. It all comes back to creating ways people recognize something that excites their taste buds, but having them consider whether or not a brewery owns the equipment on which the beer was made.

“I wouldn’t be doing what I’m doing today if I tried to do a physical spot,” Berman says. “I didn’t have the financial resources, the desire to borrow money, a down payment, or a business plan. The ability to contract Clown Shoes was vital to being what it is today.”

Berman admits that he couldn’t begin to quantify how much money he was able to save over the years, not just allowing him to start his business, but allowing it to grow and thrive through increased production and staffing. He’s also quick to suggest others follow a similar route to avoid taking on debt and risk at a time when the record number of U.S. breweries increases every day.

And yet, there are still examples of companies looking to do just that, which we’ll consider in part two of this series.

—Bryan Roth

On the Dotted Line, Pt. 1 — Contract Brewing Sheds its Negative Reputation
On the Dotted Line, Pt. 2 — Contract Brewers Find Their Own Home
On the Dotted Line, Pt. 3 — Big Contract Breweries Grow as Industry Slows
On the Dotted Line, Pt. 4 — Details and Fine Print with a Former Contract Brewer