At the 2015 Craft Brewers Conference, stainless steel was the order of the day for brewing tanks, bottling machines and tap systems that were on display at the trade expo. Exhibitors came from the United States, Germany, Canada, Chile, China, Italy, the Czech Republic, France, Belgium, the United Kingdom, Denmark and Spain. Photo by Patty Mamula
By Patty Mamula
For the Oregon Beer Growler
If the size of and attendance at the 32nd annual Craft Brewers Conference indicate the health of the industry, it’s thriving. The largest-ever event drew more than 11,000 brewing professionals and 600 exhibitors to Beervana in April for discussion, education, off-site events and tours.
Craft brewing continues its impressive surge. Benj Steinman, president of Beer Marketer’s INSIGHTS, said that 2014 was the fifth straight year of double-digit growth.
Craft breweries opened at a rate of 1.7 per day -- 615 for the year — with 2,051 breweries in planning stages, according to Bart Watson, chief economist for the Brewers Association. He and Paul Gatza, the association’s director, presented an optimistic outlook at the opening session.
Total sales of craft beer were at 22.2 million barrels last year. Growth of 18 percent from the previous year continues to build as does pricing, which increased 3 percent. In fact, last year was the first where case sales increased by more than $1.
To further segment the market, brewpubs are leading the growth at 20 percent with incredible diversity in the brewpub model.
Steinman in his seminar “Halfway Home? Craft Continues Climbing, but Ascent Gets Complicated” said the hottest trend in craft right now is hyper local.
As examples he mentioned GoodLife Brewing Company and Worthy Brewing Company in Bend.
There are marked regional differences across the country, with Portland being the most developed (craft is nearly half of the market here), San Diego being the hottest (craft gained five shares for a total of 30 market shares) and Florida coming in as the most underdeveloped.
The consumers’ love affair with IPA continues. Half of craft growth was IPA and 20 of the top 50 brands are IPAs.
Storm clouds are brewing. Steinman noted that the first big shifts in the craft industry happened last year with several deals and acquisitions. “Growth is still turning the industry upside down. Big brewers and big money see this,” he said.
He counted 12 deals in the past 15 months with Anheuser-Busch InBev buying up Seattle-based Elysian Brewing Company, Blue Point Brewing Company out of Patchogue, N.Y. and, of course, Oregon’s own 10 Barrel Brewing. Steinman projected himself inside the mind of A-B InBev, a $47 billion dollar company, and figured their logic was pretty simple — something along the lines of, “if you can’t beat ‘em, buy them” or even more transparent, “drop the price.”
Private equity groups accounted for six of the deals over the past year with several notable breweries selling part of their company -- Founders Brewing Co., Sweetwater Brewing Company, Oskar Blues Brewery and Southern Tier Brewing Company.
“Many crafts are starting to make real money. They can project future earning streams. They might potentially even go public. Craft is cool and investors see this and the prospect of outsized returns,” he said.
“Eventually, this could change the meaning of craft,” Steinman said.
He feels big brewers and big money are a disruptive force in the craft segment and wonders if the “soul of craft” is starting to erode.
Other concerns, said Watson, are overexpansion with the consequent issue of keeping beer in stock and distribution problems with more reports of wholesale difficulties. The U.S. Food and Drug Administration created a fuss over spent grain last year that fizzled out and mostly went away, but the big issue now is menu labeling, which is required for all chain restaurants with 20 or more outlets. The concern is that small breweries will be responsible for providing the required nutritional components of their beers.
Long-term environmental conditions, like climate change and water availability, are a concern for brewers and all food producers. “The movement of hop breeding from public to private” is another red flag, said Watson.
Although Gatza said craft brewers are the “belle of the ball” with state legislators, Steinman cautioned that craft brewers still don’t rule politics, especially not the feds, and he does not think the Small BREW Act, which seeks to reduce the federal excise tax rate on the first 60,000 barrels by 50 percent, is likely to pass.
Still, craft is well on its way to putting up another year of strong double-digit growth.
Steinman proposed a couple of things to watch. First, it’s possible that those who sell a share to private equity could, because of the infusion of cash, do even better. Second, there’s also a chance the small, independent craft brewer retains an image advantage.
Watson noted some promising trends, including an overall growth of off-premise sales at places like sporting events, growing production of sessionable beers, convenience stores starting to figure out craft and a prevailing emphasis on quality.
By Patty Mamula
For the Oregon Beer Growler
The barley research at Oregon State University is attracting worldwide and local attention from brewers, researchers and scientific institutions.
Department head Pat Hayes suggested two women researchers as subjects for this issue.
Tanya Filichkin heads up the tissue lab that pioneered the double haploid genetic process for barley about two years ago. A 15-year veteran of the department from Russia, Filichkin patiently explained the entire process to me, step-by-step. Although I generally understood it, I would not pretend to be an expert when explaining it.
The process, which uses spores from barley tillers to grow green regenerates in lab cultures, cuts the time to breed a pure barley line from 12 years or more to one or two. Significantly, Filichkin and her assistants are not manipulating genes or doing any genetic modification to develop this pure line. “We’re using natural processes,” she said.
“We collaborate with many industries. Our main goal in the lab right now is to get a pure line for malting quality.”
One of their clients is Anheuser-Busch. The mega-brewery tried unsuccessfully to produce its own double haploids. Now they have a contract with OSU to buy 1,000 plants for $19 each. Filichkin said OSU has customers from around the globe, including the U.S. Food and Drug Administration and several universities.
Laura Helgerson oversees the barley greenhouse and cares for the experimental plants, both indoors and in the fields. She started as a temporary worker three years ago after graduating with a degree in environmental studies. Soon she was a full-time, permanent faculty research assistant.
She said that the industry standard has changed from 6-row to 2-row barley, partly because that’s what brewers want. Craft brewers, especially those in the Northwest, are interested in having a locally grown and malted barley to complement the local hops for a true Northwest beer. Great Western in Vancouver has been the only malting name in town until recently. Now there are three craft malting operations.
Tanya Filichkin, the head of the barley tissue lab at Oregon State University, holds a cultured container of rooting plantlets. The OSU barley research group pioneered the genetic process of producing double haploids out of anther culture, reducing the time to develop pure lines from 12 years to two.
Seth Klann has been growing one of OSU’s barley varieties called Full Pint. His family runs a large farm outside of Madras in Central Oregon. Klann malts their barley under the Mecca Grade Estate malt name.
Tom Hutchison, out of Baker City, owns Gold Rush Malt. He contracts with a local farmer to grow Full Pint barley.
And Rogue Brewing is leasing a 200-acre barley farm in the Tygh Valley. Rogue is growing winter and spring malting barley and has trademarked the varieties as Dare and Risk. Rogue has used both types for brewing and distilling. Other Northwest craft malting operations are in development.
Does barley matter for beer flavor? That’s one of the main questions OSU’s barley researchers are seeking to answer. One of the school’s grad students is currently involved in a flavor project. Besides breeding barley for flavors specifically requested by craft and microbrewers, other desirable traits include cold tolerance and disease resistance.
As craft brewing continues to grow, barley production is rising in Oregon to meet the increasing demand for local ingredients. With the influx of some new funding, OSU will soon have a lab for malting small, experimental varieties.
The recent FDA approval of barley as a healthy, outstanding source of fiber with a unique profile that fights cholesterol has opened up a whole new line of interest in the grain that was once primarily grown as feed for livestock, said Filichkin.
To keep up with all the OSU research activity, follow them on http://barleyworld.org.
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