2010 State of the Six Pack

My fellow Hoosier Beer Geeks, we have seen a lot of changes over the past year and there are a lot of exciting things to come. But you don’t have to take our word for it. I mean, we are just a bunch of know-nothing hacks. That’s why we sent a Six Pack of Questions to Indiana’s brewers, distributors, and others in the craft beer industry. And we have collected these answers and packaged them together into our second annual State of the Six Pack address.

The Craft Beer Scene In Indiana
Unfortunately, Indiana lost a brewery with the closing of Warbird in Ft. Wayne. But we’ve gained six breweries: Brickworks in Hobart; People’s in Lafayette; Sun King in Indianapolis; Wilbur in Martinsville; Big Woods in Nashville; and Lil’ Charlies in Batesville. Not to mention that breweries have expanded (i.e. New Albanian, Barley Island) and there are more places than before selling craft beer in Indiana. We find it encouraging that not only is the industry growing, but is spreading out as small towns are getting breweries again.

“We estimate the [craft beer] market share has grown in Indiana by .3 percent this year to a 1.3% share…the national average is 4.2%, so we have a long way to go. Most of that Indiana growth has come from the introduction of New Belgium. . . . [T]hat’s a lot of exposure for the [craft beer industry] and it is still a good segment to be in. I think that the reflection of craft brewers opening up in smaller communities is both because of passion as well as the economy. When the economy is tough and unemployment is high, people start to think of ways to create work in case they are unemployed.”
–Jim Schembre, World Class Beverages, Indianapolis

“These drinkers are 'enlightened' as to what the core values of craft beer offer: more variety, better and more flavorful beers, and solid traditional and experimental brewing techniques. The percentage of craft beer drinkers in Indiana is simply increasing, but still has a long way to go. As for the newest hometown/next door breweries, these are revealing the sense of pride and feasibility in having a local beer produced less than 50 miles away. Local, more flavor, exciting varieties: these are all appealing attributes of Hoosier beers for the steadfast and newest generation of Hoosier craft beer drinkers.”
-Caleb Staton, Head Brewer, Upland Brewing Co., Bloomington

“Once [consumers] are exposed to craft beer they realize that beer can taste so much better. I think it's just a matter of more exposure for these breweries to get more and more Hoosiers hooked. As far as the little towns, I think that if you already have a restaurant that works then it's not too difficult to brew fresh beer to serve to the public. The brewery in Nashville uses a very simple and small set up to produce good beer.”
-Skip DuVall, Assistant Brewer, Alcatraz Brewing Company, Indianapolis

“Consumers are recognizing and seeking out locally brewed, quality products. The question is: Can these breweries remain viable in these small markets?”
-Greg Emig, President/Brewer, Lafayette Brewing Co., Lafayette

“The beer drinking mentality of Hoosiers changes slowly, but there’s some traction. . . . Increasingly, folks like the idea of local products and services. Sustainability starts at home, as with NABC partnering with fledgling hops growers in the Knobs, and serving locally-made wines at the Bank Street Brewhouse. Anything is possible at this level.”
-Roger A. Baylor, Carnival Barker and Sometimes Owner, New Albanian Brewing Co., New Albany.

“[L]oving craft beer and believing one can make a living brewing it are two very different matters. The fact that both are growing is very positive.”
-Charles Stanley, Marketing Operations Manager, Upland Brewing Co.

The Craft Beer Scene In America
Beer sales in the United States are down. But the craft beer segment continued to grow (5% by volume and 9% by dollars according to the Brewers Association). The craft beer industry continues to grow despite a poor economy. Imagine how much the industry could have grown if the economy had improved.

“The consumer’s tastes are definitely changing and they are either going up to craft or down to economy beers. The import category is especially getting hurt. I think consumers cannot resonate well with the imports and the craft side has taken their drinkers.”
–Jim Schembre, World Class Beverages, Indianapolis

“These numbers definitely show that more Americans are drinking craft beer. The 9% dollars vs. 5% volume was due to beer price increases in 2009 due to brewers' reaction to malt and hops pricing increase.”
-Caleb Staton, Head Brewer, Upland Brewing Co., Bloomington

“This surge in craft beer sales is just proof that people want a better beer and you even see this from the big breweries who are attempting to brew better beers. Liquor stores are carrying more and more selections than they ever have as well.”
-Skip DuVall, Assistant Brewer, Alcatraz Brewing Company, Indianapolis

“If our beer tastes weren’t changing in some way, it’s hard to imagine the trending up during lean times.”
-Roger A. Baylor, Carnival Barker and Sometimes Owner, New Albanian Brewing Co., New Albany.

“America's beer tastes are definitely changing. The growth in micros has been primarily in at-home consumption.”
-Mike DeWeese, Partner, brewery to be named later

“Some people who would otherwise buy imported beer may be making an effort to support their local economies or the US economy in general (this mentality may also be hurting major "domestic" brands, none which are fully American-owned anymore).”
-Charles Stanley, Marketing Operations Manager, Upland Brewing Co.

Sunday Sales
The sale of carryout beverages in Indiana on Sundays is like a boomerang: it just keeps coming back. Many Hoosiers apparently still hold Puritan fears of alcohol. But one aspect looks promising. Senate Bill 75 would allow the carryout of beer from microbreweries on Sundays. This would allow microbreweries to be on the same level as Indiana’s farm wineries, who have been allowed to sell their wine for carryout on Sundays. SB 75 passed the Senate 41 votes to 9. As long as no one tries to apply amendments to the bill, it looks promising that this bill could pass the House too.

“This will be perceived as being more important for some brewers than others. Obviously, those brewers located in towns with major college campuses would likely benefit the most; however, all brewers will benefit from being able to sell their craft beers on Sunday. Being able to attract and sell to the tourist market on Sunday will go a long way in helping expand awareness of Indiana craft beer.”
-Greg Emig, President/Brewer, Lafayette Brewing Co., Lafayette

“Those of us in border territories know instinctively how important it is for craft breweries to have Sunday carryout sales – but not for the reason you might think. Yes, Indiana loses revenue to surrounding states on Sunday. More importantly, craft breweries are exactly like small wineries in the sense that we are tourist attractions, and the closer to neighboring states we are, the more visitors we’re likely to see on days like Sunday. Craft brewing will survive either way, but if the legislature is interested in providing a level playing field for artisanal producers, and serious about encouraging tourism and bringing money from elsewhere into this state, it will take the measure seriously.”
-Roger A. Baylor, Carnival Barker and Sometimes Owner, New Albanian Brewing Co., New Albany.

“Indiana breweries will probably see some increase in profit if they are allowed to sell packaged beer on Sundays, but it is difficult to gauge how much. Much of that will determine how much of the consumer population becomes aware of change in legislation. Breweries should also consider that their relationships with retailers may suffer if they work hard to advertise this opportunity to consumers. If Indiana retailers are allowed to sell alcohol on Sundays, stores near the state borders will stop losing business to our neighboring states on Sundays. This can benefit Indiana breweries whose distributors' territories correspond with the state's borders. If consumers are shopping at stores where Indiana beer is not available, Indiana breweries obviously suffer. If they shop at stores that sell Indiana beer, Indiana breweries clearly benefit.”
-Charles Stanley, Marketing Operations Manager, Upland Brewing Co.

“If you can buy wine on Sundays at the winery then you should be able to buy beer at the brewery. Also, the taps should be open like normal on election day as well!”
-Mat Gerdenich, Cavalier Distributing, Indianapolis

Excise Taxes
A couple of Congressional bills might make a positive impact on the craft beer industries. Thanks to the House Small Brewers Caucus, HR 836 and HR 4278 would reduce the excise tax paid by small breweries. It is questionable if this would have a noticeable impact on consumers and the prices paid for beer at retailers. But it would certainly have an impact on the breweries and anything that will help our favorite breweries with continued success is a good thing.

“More important to us is keeping the excise tax at an non-prohibitive level to doing business. We are, as smaller brewers, nowhere as efficient and a lower margin business than the larger breweries. One positive side effect of reducing the excise tax, with the additional benefit of stabilizing malt and hops pricing, is the potential for small breweries to keep pricing the same (or possibly even lowering!) in the future years. We will never be a $13 a 30-pack type shelf item, but keeping a constant price is good for core line craft beers.”
-Caleb Staton, Head Brewer, Upland Brewing Co., Bloomington

“I think it would be great for craft brewers because they are fighting hard enough to get their beers on shelves at a reasonable price. If they pay less then hopefully we all will pay less.”
-Skip DuVall, Assistant Brewer, Alcatraz Brewing Company, Indianapolis

“It would certainly lend a much-needed boost to a heavily-taxed industry. In addition to federal and state excise taxes, Indiana brewers currently face dramatic increases in property taxes, as well. Unfortunately, I don't think it will have a great impact on bringing down prices at the consumer level as most of the savings would be absorbed between the brewers, distributors and retailers.”
-Greg Emig, President/Brewer, Lafayette Brewing Co., Lafayette

“Money spent at locally-owned businesses stays in the community. Excise tax decreases would help the bottom line of a locally-owned craft brewer, and by extension, keep more money in the community of origin. Sounds like something I can get behind.”
-Roger A. Baylor, Carnival Barker and Sometimes Owner, New Albanian Brewing Co., New Albany.

“Any drop in taxes is good for business. The little guys benefit the most since we pay more in raw materials costs.”
-Mike DeWeese, Partner, brewery to be named later

“It would help to the bottom line of breweries for sure.”
-Mat Gerdenich, Cavalier Distributing, Indianapolis

Brewing Trends
Bigger and bigger hopped beers continue to be popular. We’re seeing more and more beers aged in barrels. And sour styles continue to grow. Extreme beers are always fun and are a great way for breweries to make a name for themselves. But we’re also seeing more sessionable, to-style beers coming out as well. This is good for all craft beer fans, not to mention a good gateway to bring macro-drinkers into the fold.

“As consumers become more educated to the taste profiles of good beer, you will see growth in some of those segments [like sours]. . . . [W]e also think that the consumer will better understand the traditional styles like lagers and session ales.”
–Jim Schembre, World Class Beverages, Indianapolis

“Other than maintaining a consistent, quality sessionable core lineup of beers, there's going to be a bunch of new brews out there. Seasonals are another big growing faction of the craft beer segment, whether they be Octoberfests, Bocks, pumpkin beers, etc. Bourbon barrel beers are a nice Midwestern trend as well, with breweries able to source true Kentucky Bourbon barrels with more ease than East/West coast locations. I see experimentation and style blurring also as a continuing future trend. Black IPAs are a newer trendy blur style that will be popping up more in 2010. Sours are everywhere now as well; this is evident by the growing number of entries into the Wild and Sour categories at the GABF over the past two years. Oh, and of course, Imperial-style everything! Good article in the recent New Brewer concerning spiced beers, maybe a small resurgence of them will be seen as well. Makes me wonder, maybe Upland Bumblebee Saison was too ahead of its time and a potential fad trailblazer that we gave up on? Maybe we'll bring it back like Kangaroos.”
-Caleb Staton, Head Brewer, Upland Brewing Co., Bloomington

“Hops are where it's at in my opinion. One trend that we have talked about at The Alcatraz is making our beers even more clear and smooth. It's almost a friendly competition amongst the downtown brewers to make clear, smooth and fresh beers as possible.”
-Skip DuVall, Assistant Brewer, Alcatraz Brewing Company, Indianapolis

“I also believe we're going to continue to see spice- and herb-infused brews as well as certified organic beers. [We’ll hopefully see more] estate beers. Sierra Nevada opened the door this year with the release of their Chico Estate Ale. The practice of harvesting, malting and kilning brewery-grown ingredients is sure to catch on. Let's also hope for a bit more recognition for quality session beers.
-Greg Emig, President/Brewer, Lafayette Brewing Co., Lafayette

“The great thing is that it’s not an either-or equation. The exuberant creativity of craft beer can hold its militant core market through crazed experimentation even as we reach for the center of the American beer market as a whole through session beers. It’s something that we’re trying to do at NABC, and we can see the results already.”
-Roger A. Baylor, Carnival Barker and Sometimes Owner, New Albanian Brewing Co., New Albany.

“The sky's the limit when it comes to US brewers. Different spices are the next big thing as well as Belgian styles. Barrel aging will become commonplace within 2 years.”
-Mike DeWeese, Partner, brewery to be named later

“Though big beers aren't going away anytime soon (and with good reason--many are quite delicious) I expect we will start seeing fewer beers brewed with the attitude "just because we can." Now that brewers have spent time experimenting and really pushing the envelope, many will take the lessons they've learned and focus more on creating better beer, rather than just big beer.”
-Charles Stanley, Marketing Operations Manager, Upland Brewing Co.

“Indiana still seems to be big on IBUs and ABVs!”
-Mat Gerdenich, Cavalier Distributing, Indianapolis

Coming in 2010
Hoosier Beer Geek will continue to be the quirky, eccentric site for craft beer nonsense. But you’ll see us organizing more beer events in and around Indianapolis and around the state. You’ll see more drinking guides that will appeal to long time Hoosiers, new residents, and visitors. And we’ll likely drink a ridiculous amount of beer.

“The big concern for the year 2010 for the wholesaler is the continued development of more and more brewers; there are now over 1,500 craft beers in America and the craft brewers are wondering if the category has so many brands that the brewers will lose their identity. Something like the wine industry: you know that you like Zinfandels but name one? So some of the major craft brewers are pressing the ideal to slow down the development of other brands. Brewers like Magic Hat even suggest that as wholesalers we do not need to even carry anything but the top four, as they currently represent over 70% of the grand total. So the big thing for 2010 for wholesalers will be access to market and who gets it. Remember there is only a small shelf at retail and how many brands and packages can you even put on it. So the list of brewers that want to come in the state and the number that can actually get to market are two different things. We as wholesalers and you as consumers, because of this aggressive growth of new brewers, must be concerned about quality and we are seeing people get in the craft side and have no beer skills at all. That is a problem.”
–Jim Schembre, World Class Beverages, Indianapolis

“2010 for Upland means 22 oz. bottles of Ard Ri Imperial Red, Double Dragonfly IIPA, Badder Elmer's Baltic Porter, Teddy Bear Kisses Imperial Stout, and Winter Warmer, more bourbon-barrel-aged beers, a bigger launch of lambics, a dark wild launch, two releases of Komodo Dragonfly Black IPA, Banshee Scotch Ale, possibly a collaboration brew, possibly bottled Preservation Pilsner in returnable cartons and the continued supply of our excellent core line up. Those are things we are pretty sure will happen, but some mystery brews will surely pop up somewhere in the meantime (I have a real hankering to brew a beer called Pirate vs. Ninja involving darkness and rum barrels; that is probably something to be brutally wary of). We also look forward to Shoreline picking up our old bottling line and buying some six packs of their tasty brews next year. We look forward to more Indiana breweries and the continued success of our Hoosier brew community. As to the larger craft brewing industry, we look forward to another year of growth as a beer segment, and the beers that have yet to be brewed.”
-Caleb Staton, Head Brewer, Upland Brewing Co., Bloomington

“I think that we need to continue doing what we are doing to expose people to better beer. Tappings, brewfests and great groups like the Geeks are helping tremendously. As a matter of fact I am starting a blog that the three Indy downtown breweries (The Ram, The Rock and The Alcatraz) have come up with to keep people more informed as to what we are doing.”
-Skip DuVall, Assistant Brewer, Alcatraz Brewing Company, Indianapolis

“Our focus for the new year is to expand our bottle sales both locally and in the Indianapolis market and to increase the number of in-house beer-centered events, i.e. brewers dinners; hop variety experiences; and offering more cask-conditioned selections. Things to be wary of in the craft beer industry: Too much focus on extreme beers and the resulting extreme beer prices.”
-Greg Emig, President/Brewer, Lafayette Brewing Co., Lafayette

“Individually, NABC hopes to have a greater draft presence statewide, and to make up our minds about whether to can or bottle. Increased numbers of draft handles will lead to a faster resolution of the packaging issue for us. As for the craft business in general, I see further growth, because I see most of us working hard at the grassroots, local level, which is where sustainability begins.”
-Roger A. Baylor, Carnival Barker and Sometimes Owner, New Albanian Brewing Co., New Albany.

“A rise in gas prices could be an issue again. I think we will see more craft beer in cans as well!”
-Mat Gerdenich, Cavalier Distributing, Indianapolis