The Observer June 6, 1988

The Brewpub Phenomenon- A Complex New Beer Marketplace… Now It's Come to Pennsylvania

By Rich Wagner

Walk into many Portland, OR pubs and you'll be greeted to tap knobs across the wall behind the bar, spigots which dispense fresh British-style ales you've never heard of since they are only distributed locally. For that matter, you can find more micro-brewed beer in package stores in the state of Washington than you ever dreamed possible.

Here in the east, the beer distributors in Pennsylvania are just beginning to handle contract beers which have only recently made their appearance. It's only been in the past two years that labels such as Sam Adams, Penn Pils, Dock Street and the like were readily available here. There are other contract labels on the way as well as some that are not marketed here.

Why the difference between the east and west coasts? Is there a difference between beer brewed in a brew-pub, a microbrewery, and brewed under contract by a regional brewer?

Brewpubs and Microbreweries

A brewpub is a facility that combines a brewery and bar/restaurant. Brewpubs originated in England where most beer is sold in pubs, with less than 10% packaged for take-out. Brewpubs tend to appeal to the upscale crowd, or at least a crowd that's willing to pay a premium price for a draft beer. One thing for sure is, you can't get beer any fresher!

The first brewpub on the east coast was patterned after those in England. The Manhattan Brewing Company of New York opened in 1985 with an imported British brewmaster who brews ales, stouts, and porters that rival the best the British Isles have to offer.

Frequently, the establishment of brewpubs and microbreweries is dependent on changing state laws. Prior to Prohibition, many breweries had "tied houses," venues they owned for exclusive distribution of their product. When Prohibition was repealed the tied house was legislated out of existence. Fifty years later, some states are beginning to see the value of these small-scale brewing establishments, in improving local economies and creating jobs, in renovating historic buildings, and promoting tourism. Pennsylvania recently rewrote liquor legislation permitting brewpubs here.

Brewpubs have at least one advantage over microbreweries; they cater to people who are seeking a different kind of beer. If this week's batch of beer is different from last month's it's no big deal, since that's exactly what the clientele is after. Experimentation with formulation is expected.

If the same thing happens to a microbrewer, many customers will switch to a brand they can depend on for consistency. "Quality control" will be the downfall of such small scale breweries say experts in the industry. They know from experience that the American consumer has been conditioned to expect a standardized product.

A microbrewery is defined as a facility which brews no more than 10,000 barrels of beer annually. The difference between a microbrewery and brewpub is that the microbrewer confines his headaches to making and marketing the product, not operating a restaurant. Microbreweries are renowned for their thick, robust brews, similar to those served prior to Prohibition in some cases more like those served at the turn of the century.

The microbrewer generally sells beer which is priced competitively with the imports. The main drawback with this setup is that the micros competing with every other brand on the floor at the distributor, package store, or for that matter, one of three tap handles in a bar or restaurant.

One of the first such operations in this part of the country was the Chesbay Brewing Company of Virginia Beach, VA. Jim Kollar, a Pittsburgh native, started this brewery and imported a brewmaster from Germany to brew according to the Reinheitsgebot, the law governing the quality of beer sold in the homeland of lagers. Chesbay introduced an American lager that was light bodied enough to enjoy in the summer heat of Virginia Beach. Within two years their golden lager came out to try and capture the taste of tourists and locals alike who were more accustomed to a golden hue in their brew.

There are even combinations microbrewery/brewpubs. These businesses produce small quantities of beer for on-premise consumption, but also retail beer by the case. The new Stoudt Brewing Company in Adamstown, PA has this type of arrangement.

Gentlemen Brewers

Contract beers on the other hand, are brewed by a regional brewer for a businessman who chooses a recipe, designs a label, and pays the freight. He then markets the beer on his own. The biggest advantage to this type of operation is that you never have to clean a brew kettle, much less purchase one! You can get a premium price for your beer, without the headache of producing it yourself. Many contract brewers do this with the idea of raising capital for starting their own brewing facility. Others are content to market a label with no intention of ever brewing beer themselves.

Matthew Reich contracted with the F.X. Matt Brewing Company of Utica, NY beginning in 1982 and successfully marketed his New Amsterdam label. He was, in fact, the first contract brewer on the east coast (possibly in the country) to take the plunge, and establish a combination microbrewery and brewpub in New York City. Unfortunately, a number of problems plagued the facility, none the least of which was the attempt by New Amsterdam to supply a market that had been served by a large, more experienced, well established regional brewery. The brewpub has been closed, and it is reported that F.X. Matt is currently producing New Amsterdam as a contract brand.

Jim Koch's Boston Beer Company markets the Sam Adams label brewed by the Pittsburgh Brewing Company which has won "Best Beer" awards two years in a row at the Great American Beer Festival in Denver, Colorado. When Koch goes on line with his own facility in Boston, he will be the third microbrewer there.

Of course, you may find a brewpub which offers its own beer on premises and contracts with a regional brewery for its bottled beer. This strategy enables the small brewpub to establish a wider regional market. The Manhattan Brewing Company recently contracted with the Lion Inc. in Wilkes-Barre to brew their Manhattan Gold brand. Believe it or not, there are brewpubs which contract with other brewpubs to produce and sell their label elsewhere, and there are contract brews produced by microbreweries. As you can see, there are no hard-and -fast categories.

It's doubtful that this trend is going to change the taste of a nation. But it is possible that we're witnessing more than just a blip on the chart. When the big boys start advertising how dark their beer is, and start coming out with their own "boutique" labels, something must be happening!

Diversity in the number of styles of beer available is probably the biggest impact on the consumer. The increase in the sale of imported beer, now pushing a 5% market share, has alerted the brewer, wholesaler, and retailer that people are willing to pay a premium price for something that's different. There is always a segment of consumers who will seek out alternative brews, whether they are produced locally, or by regional brewers under contract, or even by the large national brewers.

American light lager has evolved since the mid-nineteenth century when lager beer was first brewed in Philadelphia. The biggest difference between the American product and its European counterpart was the use of corn, rice or other grains used as adjuncts to produce beer more cheaply. The rebirth of continental-style beers may indicate that the pendulum is swinging away from light beer, and has begun to move back toward richer, fuller bodied brews.

The biggest difference between mass-produced beer and "boutique beer" is that the smaller brewers can boast that their beer are all natural, containing only water, malt, hops and yeast. No matter who is making these brands, it's refreshing to see that they are being made!

It is said that trends begin on the west coast and take several years to make it "back east." Will Pennsylvania ever see the number of brewpubs and microbreweries found in the Pacific northwest? Doubtful. But the opening of Stoudt's brewery in Adamstown last year marked the first time in decades that the number of breweries in the Commonwealth increased. Tom Pastorius is in the process of renovating the old Eberhardt & Ober brewing complex in Pittsburgh and plans to go on line with a brewpub soon.

The only thing new about microbrewing in Pennsylvania is the term. The state was home to literally hundreds of brewers who produced less than 10,000 barrels yearly at the turn of the century. Each had a unique, characteristic brew. We may never see quite that many, but we will be able to enjoy a local flavor in beer again.