Small breweries, big beer

FSB gets a taste of why business is booming at craft breweries.

By Christopher S. Stewart, FSB Magazine

Denver (FSB Magazine) -- Normally, I don't drink beer before 5 on a workday. But it's Tuesday at 3:30, and I'm making an exception. Not because the world is too much - isn't it always? - but because FSB has tasked me with most Americans' dream job: to explore the booming business of American craft brewing.

I've come to Colorado, the second-largest beer-producing state in the Union. Colorado may be home to Coors (Charts), but connoisseurs of inspired microbrews also know that with 92 small breweries - second to California's 224 and ahead of Washington's 80 - it's a fine place to hop off the slope and hit the tasting rooms.

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Golden brews
Every fall the nation's best beer-tasting room is at Denver's Great American Beer Festival, where 450 breweries recently competed in dozens of categories. Here are three little guys who won gold medals.
Bison Brewing
Bison Brewing's Organic Farmhouse Ale, available in eight states, beat out 43 other French-Belgian saison-style beers (rustic and cloudy with aromas of citrus and clove) for the gold. Based in Berkeley, Bison was one of the original California brew pubs when it opened in 1989, but it switched to brewing - only in 2003.
Lakefront Brewery
in Milwaukee took top honors in the experimental category with its New Grist gluten-free brew, developed after the head brewer's father was diagnosed with a wheat intolerance. Made from sorghum, rice, hops, and gluten-free yeast, New Grist is sold in 21 states.
Pelican Pub & Brewery
lucked out when its owners advertised at a conference for a brewmaster. Darron Welch won 2006 Brewer of the Year for the Pacific City, Ore., establishment, as well as a gold medal for his Kiwanda Cream ale, which is available in Oregon only.

This is a heady time for boutique beer producers all over the country. After an Internet-style rise and fall in the late 1990s, craft beers are on the climb again, with $4.3 billion in U.S. sales in 2005, a 13 percent lift from a year earlier. (By comparison, mass-market beer sales slipped 1.5 percent over the same period.)

In September the industry held the 25th anniversary of the Great American Beer Festival, the trade's equivalent of the Oscars, and attendance jumped from 29,000 in 2005 to a record 41,000.

'Big' brewing

I begin my crawl at Great Divide, a brewery in downtown Denver that slouches along the oblong shadow of Coors Field. Brian Dunn, Great Divide's 43-year-old owner, asks a question that sounds more like an order: "How about some beer?" Out of habit, I start to say, "It's a little early," but catch myself. "Pour it," I venture, nudging up to the long stainless-steel bar where the brewery's six beers are on tap.

Great Divide (greatdivide.com) started as Dunn's grad-school hobby. While everyone else at the University of Denver's program for environmental policy was pitching in for six-packs of Coors, Dunn was home-brewing pale ales and wheat beers in five-gallon pots on his kitchen stove.

In 1994 he borrowed $260,000 and opened a brewery in an old brick dairy. In 1996 his one-man business produced 400 barrels of two beers and was just barely scraping by. (A barrel holds 31 gallons.) Ten years later Great Divide's 13 employees are producing 7,000 barrels of 11 beers that ship to 14 states and bring in $1.8 million.

Great Divide is known for "big" beers, which is to say they're rich with hops and boatloads of alcohol. (Craft brewers almost universally refer to mass-produced suds as "water"; Great Divide's strongest beer, Old Ruffian Barley Wine, weighs in at 10.2 percent alcohol, compared with 5 percent for a can of Bud.)

Hops are grown on autumn-harvested vines and used to impart flavor and aroma to beer. They're measured by the International Bittering Unit, or IBU; hoppier, more bitter beers generally run between 65 and 100 IBUs, while those familiar cans of "water" rate ten to 20 IBUs.

When Dunn and his fellow craft brewers get going on how they blend their beers with improbable quantities of hops - a hot trend - it's like a beach muscle contest. I mention that to Chris Black, who owns Falling Rock, the largest tap house in Denver, where many brewers in the state field-test their new beers, and he agrees. "It's guys being guys," he says.

Dunn recently created the beer equivalent of Arnold Schwarzenegger in his Terminator prime: Oak Aged Yeti, an imperial stout - a thick, tar-dark beer - with 9.5 percent alcohol and 75 IBUs.

Aging beer is another fad for craft brewers looking to stand out. Instead of using wine or whiskey barrels, as others are starting to do, Dunn stuffs a mummy-sized sack with oak chips and soaks it in the beer for five to seven weeks. When he pours one for me, I can see the motor-oily darkness of the stout, but the oak aging imbues it with a surprising taste of roasted vanilla. Dunn sold 175 barrels in 2005 and 250 in 2006.

Canned microbrew

The following day I meet up with Paul Gatza, director of the Brewers Association, who also judges beer festivals and pens a column for the trade publication The New Brewer. Gatza agreed to tag along for my next two stops. We drive north along a dusty highway that skirts the foothills of the Rockies to our destination, Oskar Blues Brewery, which is in Lyons (pop. 1,500).

"These guys are fun," Gatza says as we pull in. Later, while giving me a tour of the brew house, Marty Jones, the company's self-proclaimed "lead singer/idea man," starts finger-spooning into his mouth spent grain from the beer kettle. "It's like really fresh cereal," he says, not at all embarrassed. What Marty doesn't eat ends up as lunch for local cows.

Oskar Blues (oskarblues.com) launched as a Cajun restaurant in 1997, with a blues bar downstairs that today sees some of the region's most popular acts. The fun really started when founder Dale Katechis took his home brew, Dale's Pale Ale (6.5 percent alcohol, 65 IBUs), and started selling it in the restaurant. Then, in 2002, he did the unfathomable - he canned it.

The idea of canning a huge, flavorful beer was anathema in the bottle-fetish craft-brewing world, where cans were associated with mass-produced plonk. "We laughed at the idea at first," recalls Jones. "We thought, 'That's completely absurd, putting our beer in a can.' But that's why we did it - because it was funny."

Oskar Blues dubbed its revolution the "Canned Beer Apocalypse" and drove the cans around to local retailers in a nearly dead refrigerator truck it bought for $3,500 and three cases of beer.

Last year Oskar sold 5,000 barrels' worth, and in 2006 that number will climb to more than 9,000, thanks to two additional canned brews - Old Chubb, a Scottish ale (dark and smoky), and Gordon, a double IPA (big and red, with a piny flavor) - and distribution to 13 states. Revenue for its beer and restaurant hit $2.4 million in 2005 and nearly doubled in 2006.

After a burger and a small glass of Old Chubb - I drank sparingly on the trip to prevent a DUI - we head out to Avery Brewing in Boulder. "You'd better have a cot ready when you're done there," Jones quips. Avery doesn't make just big beers, Gatza adds. "They're gigantic!"

'Monster' beer

Not far from the Flatiron Mountains, we pull into an industrial park and look for Avery. The paved road has no evident name, winding through nondescript rows of closed-up garages. As it turns out, four of the 2,500-square-foot spaces are home to a brewery with a cult following for its self-described "monster" brews.

Founder Adam Avery, 40, opened his business in 1993 and produces 19 beers, 11 of which range from 8 percent to 15 percent alcohol. (Wine, by comparison, is typically 12 percent.) The monster of all monsters was unveiled in January 2004 - a sinister beer named the Beast.

At one point, the Beast was the tenth-most-alcoholic beer in the world, with a head-spinning 18.1 percent alcohol. (It's since been scaled back to 14.9 percent for a better taste.) Almost as insane were the brew's six sugar ingredients - alfalfa honey, Belgian candi sugar, blackstrap molasses, dates, raisins and brown turbinado sugar.

"No one uses sugars like that," says Avery, whom fans nicknamed the "mad scientist." Fermenting all that sugar makes the beer more alcoholic, but also sweeter. Nearly all other craft beers, by comparison, use malt as their sugar, with the exception of some Belgian beers, which may add several more. But never six.

After the Beast, two more ominous-sounding concoctions followed - Mephistopheles' Stout and Samael's Ale - which together form the Demons of Ale Series. Later he invented the Dictator Series, which includes the Czar (Russian stout), the Maharaja (India pale ale), and the Kaiser (Oktoberfest lager), "all imperial," which generally means twice the alcohol. Ranging from 9.1 percent to 11.1 percent alcohol, they are available in 22-ounce bottles.

Avery's monster empire has monster ambitions. In 2006 he invested $900,000 borrowed from the bank in new brewing equipment, a 4,000-square-foot cold-storage space, and a tasting room triple the size of the old one.

In 2007 he'll evolve to a 10,000-barrel operation, up from around 7,000, with the potential to grow to 17,000 barrels. "It's more money than I've spent in my 12 years in the business," he says with pleasure. And besides the 27 states that get his beer, Denmark and Sweden just received their first shipment.

I try a sip of the Beast. At first there are outward signs of normalcy - the dark color, the unctuous texture and the fizzle when it's poured into a glass. But when the smell of molasses gets in your nose, and the first thick drop hits the tongue, and you taste the myriad dark fruits and this buzz goes on in your head, it's just not normal. But I like it. I think.

On the car ride back to Gatza's office, I wonder, "Don't you think some of those beers should have warning labels?" Gatza laughs. "You should probably only drink that stuff at home," he says. "And not during the day."

Noah Rothbaum contributed to this article.

Have you tried enterprise resource planning software to streamline your business? Please send comments to fsb_mail@timeinc.com.

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.