The Brewers Association recently released its annual top-50 list of member breweries ranked by sales volume, highlighting a continued schism within beer. The first half of the list, which doesn't typically see drastic change, was loaded with large regional and national companies, from Yuengling and Deschutes to Harpoon and Summit. Because rankings are only based on barrels of beer sold, the "smaller" of these 50 businesses have the opportunity to move around the most.
These movements typically occur because breweries add more capacity, whether through their own physical expansions and additions of tanks, or by pursuing opportunities in the contract market, as so many are doing these days. But beyond straightforward expansion and growth, the list represents other cultural and industry forces at play.
It's not how big your capacity is, but how you use it. Making “good” beer—whether objective to style or subjective to tastes—is just one way of finding and keeping drinkers. In a crowded market, getting bigger means more than simply filling more kegs, cans, or bottles.
“Package sales in cans has driven almost all our growth,” says Roger Bialous, co-founder of Seattle’s Georgetown Brewing Company. “It was a pleasant surprise that we still managed to grow a couple percentage points on draft last year, but we’ve only been in the package game for coming up on two years now.”
“No pun intended,” he adds, “but it was an untapped market for us.”
Georgetown made 82,192 BBLs of beer in 2018—a 35% jump from 2017—and cans were a big reason the brewery moved up nine spots in the BA's top producers list to #41.
Since selling its first keg to the Latona Pub in February 2003, Georgetown remained draft-only for 13 years. Even if you visited its production facility, located in an industrial part of Seattle, you couldn’t buy a beer to drink—it was sold to-go in growlers or nothing. As of a couple years ago, Georgetown was the largest draft-only brewery in the country, and its 30,000-odd kegs occupied a small, Pacific-Northwest footprint—most stayed within Washington State.
But in 2017, Bialous and co-founder Manny Chao opted to can their Lucille IPA and Bodhizafa IPA (the latter of which won gold in the American IPA category at the 2016 Great American Beer Festival). Today, both are sold in 12oz six-packs. Along with a smaller run of Roger’s Pilsner, the trio of offerings sold about 3,100 BBLs in IRI-tracked grocery, convenience, and other stores in their first year. In 2018, that IRI figure ballooned to about 19,200 BBLs, plus another roughly 10,000 through independent stores. In the span of two years, one of the most distinctive breweries in the country—draft-only and selling in just four states—found a new approach.
At the moment, around 35% of Georgetown’s total production goes into cans that are shipped to about 2,000 off-premise accounts. As has always been the case, the brewery can’t keep up. In 2018, the business added six new, 150-BBL tanks for dedicated IPA production to help accommodate demand, but 2019 is shaping up to be more of the same.
“Retailers have been very accommodating and understanding that out-of-stock issues are going to happen with us right now, but we’ve told everybody that if getting out of stock with our beer is going to be a problem, please don’t bring it on board right now,” Bialous says.
Not all of the big movers on the Brewers Association list are climbing the ranks through fast-growing package sales. Like Georgetown, Modern Times Beer leapt into the top 50 in 2018, moving up 11 spots to #45. It did so not by pushing its product widely into the market, but by doubling down on the increasingly important roles that hospitality and own-premise sales play for a brewery.
From 2017 to 2018, production for the business shot up 37%, and the brewery turned out an estimated 68,000 BBLs last year. The growth has been fueled by Modern Times’ brewpub model, which has so far spread to five locations across San Diego, Los Angeles, and Encinitas in California, plus Portland, Oregon. Additional locations are reportedly planned for California in Santa Barbara and Anaheim. It's a far cry from where Modern Times started barely six years ago, back when it produced just 2,300 BBLs in 2013 at its original San Diego location.
In an interview with CompanyWeek.com, Modern Times COO Chris Sarette noted how sales through a traditional route via distributors and own-premise, direct-to-consumer transactions "are very complementary.”
“[Beer drinkers are] more likely to buy a brewery's beer after visiting a physical tasting room," he told the outlet. "Being able to go to a flagship where you can taste 30 or 40 beers and find out which one you gravitate to, that's going to drive decision-making."
To thrive in places like California and Oregon—two of the states with the highest total number of craft breweries in the country—the impact of maintaining physical retail spaces can’t be overstated. Brewery taprooms have already eaten into sales that used to go to neighborhood bars (a recent topic covered in a two-part GBH podcast series) but also play a big role in building interest in locally produced beer. Modern Times may have already been on the radar of many West-Coast beer lovers, but an almost 20,000-BBL jump in production from 2017–2018 doesn’t just happen without deliberate and careful consideration of how you can actually pull that off.
Founder and CEO Jacob McKean tells GBH seeing that kind of success starts at his company's business model. As a brewery that functions with an Employee Stock Ownership Plan, McKean says that every employee, from dishwasher to beer server and brewer, becomes a part of the business' hospitality efforts.
"When fans interact with people who are literally and figuratively invested in the business, it brings a commitment, attention to detail, and a passion for the work that wouldn't be there otherwise," he says. "That often turns first-time visitors or casual customers into dedicated fans."
That dedication is also setting up Modern Times for the future.
"We are at a point where we need additional real estate,” Sarette told CompanyWeek. Across its locations, the brewery aims to create enough capacity for 120,000 BBLs. While it would be a rare deviation from the norm for that volume to flow exclusively through own-premise sales, Modern Times’ clear commitment to growth through direct customer interaction can be seen as a big reason for its success. It’s a move that could also push the brewery even further up the list of top, Brewers Association-defined “craft beer” producers.
Georgetown and Modern Times show a sliding scale of age on the BA’s top producer list, representing a more tenured business (Georgetown opened in 2003) and a newer one (Modern Times in 2013). Even if time flies in Beer Years, that’s nothing compared to Allagash Brewing Company, which is celebrating its 25th anniversary in 2019, and which also moved from #35 to #30 among BA-defined craft companies.
The factors underlying Allagash’s growth are also interesting. The brewery’s production numbers stayed flat in 2017 and 2018—it produced right around 95,000 BBLs both years. But its 2018 approach certainly looked different. Brewmaster Jason Perkins and his team made around 90 different beers in 2018, which isn’t too out of the ordinary—Allagash regularly sells one-off brews in its Portland, Maine taproom. But last year, 66 total recipes were packaged, many for the first time, including the first time in cans. Perkins called it a “significant increase” over previous years.
“We’ve always had this pool of beers to choose from, and now we’re pulling from it more frequently than we have in the past,” he adds.
Allagash's first-ever can release took place in July, when it shipped 16oz four-packs of Hoppy Table Beer around its Maine distribution footprint. Tiny House, a 3.2% ABV, dry-hopped version of the company's House beer, followed in August. Haunted House came in September and Florette in November. Two additional can releases ended the year, with The Stranger and the Crane (a Saison with dark malt and cranberries) and Starling Wit both launching in December. The momentum carried over into the new year, with White and a new beer, River Trip (a Belgian Session Ale), getting packaged and sent across a multi-state footprint.
“It’s a more competitive marketplace than it ever was before out there,” Perkins says. “Being able to reach a wider range of consumers always interests us, but we may think about it a little more now. We recognize that not everybody out there is going to want to drink our Coolship series, which is why we have Darling Ruby, a Grisette.”
There’s plenty more to come. Perkins and his team recently canned a run of Moselle, a 70/30 Lager-and-Saison blend, to sell at the brewery from the first week of April, with hope for wider release later. They also bottled True Penny Pilsner, a Pilsner fermented with Brettanomyces. The latter was released once in 2018 as a draft-only offering, but will expand to Allagash’s full distribution area in 2019.
“Instead of saying, ‘Let’s create something because we’re missing it in our portfolio,’ this is coming from a wonderful range of ideas available to us that can come from drinking with others in the breakroom a couple months ago,” Perkins says. “Craft beer has grown so much beyond the ‘beer geek’ mold, so it’s kind of natural that we’re selling a wider range of beer to a wider range of people than we were 10 years ago.”