Structural Innovations
After an incredibly bubbly period in the beer industry, from pastry beers, IPA subtypes, N/A, hop waters, and seltzers/FMBs, and more, product innovation has finally stalled in the beer industry. It was bound to happen—too much choice dilutes the market. Since Covid started, we’ve had really no new styles, and ingredient and technique innovation has been more a process of refinement than invention. Honestly, a pause that allows a bit of re-focusing is probbably a good thing.
When volume growth and experimentation went explosive, no one had a reason to question business models, nor the time or creative bandwidth. But now that things are quieting down and shelves and taplists are more stable, it has created opportunities to tinker with those old models. In the oscillating cycle of innovation and retrenchment, down periods give companies a chance to experiment with new models. I thought I’d highlight some of what I’m seeing in Oregon and monitor them to see if they’re just a blip, or something more.
What Brewery?
Launching beer brands without a brewery is an old practice—it’s how Jim Koch started Boston Beer. Contract brewing has always carried a stigma, though—if someone else makes your beer, how interesting can it be? “Contract brewing” spans a lot of arrangements, though. On the one end, a company might approach a contract brewery and ask for, say, a pale ale, giving some guidance but ultimately leaving the design and execution up to the brewer. On the other, a company might be looking for a place to brew their beer, providing recipes, ingredients, and participating in decisions about techniques and approaches, possibly even overseeing the brewing.
Leaving aside the question of consumer perception, the differences definitely affect the outcome. Think of a grocery store-brand “craft beer,” a good example of one kind of contract brewing, and how inevitably insipid they are. For all you might say against Jim Koch’s secretive launch of Sam Adams, there’s no doubt he had precise goals and parameters for his beer. Here in Portland, Rosenstadt has followed the latter approach. They have bounced around a bunch of breweries, always focused on ensuring s Kölsch or Helles stayed the same no matter where it was brewed. They added another unusual element when they convinced a local restaurant, Olympia Provisions, to serve their beer, creating something like an outsourced brewpub.
With so much excess capacity in the industry, contract brewing is an attractive way to launch a brand cheaply. A slightly different model gaining traction is the alternating proprietorship—basically, a shared brewery. The two or more separate companies schedule time on one brewhouse and then have devoted tanks on the cold side. I’d never heard of this until Ruse launched their brand that way at Culmination. Some time later, Pono did the same with Zoiglhaus. Both Ruse and Pono had their eyes set on using these arrangements to bootstrap up to their own breweries and taprooms, and both have since done so.
But you don’t need to. More recently, a collective working out of a site in Clackamas have a more complex arrangement. Wayfinder’s co-founder Charlie Devereux started a side project called Via that will remain a side project, with batches hitting the market with no physical space. Also on board is Kyle Larsen, who worked at Devereux’s first brewery, Double Mountain. He and his wife recently returned from the UK to start Kings and Daughters. (Micro Beer Sherpa recommendation: K&D Queens and Sons, a “soft IPA,” is an exceptional out-of-style hoppy ale.) Unlike Via, however, Larsen recently appeared on Adam Robbings’ podcast Sightglass and mentioned his plan to start a pub eventually. It won’t be a brewpub, though, just a home for his beer. In their discussion, Kyle mentioned being risk-averse, and appreciating the slow-roll opportunity the alternating proprietorship offered.
Side Brands
The other interesting trend is also old, but seems to be having a moment: breweries starting side brands. They allow a brewery to launch a separate line that won’t dilute their core brand. Increasingly, it seems like a way for specialist breweries to reach out to a wider audiences, but it might work in the reverse, too, allowing generalist breweries to have a focused, streamlined brand.
The most explicit example of this is Further, a brand that will allow German/lager brewery Occidental get into hoppy American ales. Since its inception in 2011, Occidental has stuck steadfastly to its German- and lager-only identity. “Further Beers’ mission is to create styles unrelated to Occidental’s branding, giving the company’s brewers the freedom to experiment with new ingredients and brewing techniques,” they wrote in a press release. First out of the gate—an Azacca and Strata-hopped IPA.
Kevin Davey recently joined Lisa Allen at Heater Allen, another lager brewery. But Kevin invented cold IPA. Solution? Gold Dot, a side brand Lisa and Kevin use to dabble in beers that wouldn’t fit in with the Heater Allen line—including cold IPAs. Finally, Gavin Lord is one of three founders of Living Häus, a company that also does contract brewing. Gavin, who heads that contract brewing component, has his own side brand, Hetty Alice. It’s not sold at Living Häus, so it won’t compete directly, but gives Gavin an outlet for his passions.
Bart Watson, the Brewers Association economist, announced this week that the craft segment is flat. Beer overall is similarly stalled. People don’t seem to be clamoring for the newest, most exotic beer anymore, and breweries will contend with this new normal by training their creativity on their business rather than waves of new products. We should see more and more of these arrangements, and possibly even wholly new ones. It’s an interesting time, if you know where to look.
PHOTOS: Kings and Daughters, Occidental Brewing