12 April 2012

Eastward Ho!

We are currently situated in an interesting slice of American brewing history.  All breweries start small, even Adolphus Busch and Frederick Miller started with modest breweries before becoming the global mega powers they are today.  The key advantage that AB-InBev and MillerCoors currently have in the market, is time.  These brewery empires were built over more than a century of brewing and brand recognition.  American craft brewing as we know it today, is roughly 25-30 years old.  You don't tackle a giant overnight, but you also don't become a fixture in the industry without growing.

Sierra Nevada, New Belgium and Lagunitas have all recently realized that to meet the demand of their products, they have to grow.  Not simply grow the size of their brewhouse, but grow the size of their companies.  This happens in two ways, through contract brewing or through building new breweries.  Contract brewing is cheaper, and has historically been the most popular option with craft brewers up to this point.  Building new breweries is expensive, but it increases the size of the business while still ensuring full control of the end product.  Opening a new brewery is clearly the ideal scenario, but its prohibitive cost makes it difficult.  The Boston Brewing Company, the largest American craft brewery, has done both with a long history of contract brewing and a more recently emphasis on opening new breweries as seen in Cincinnati.

Sierra Nevada

The first brewery to make the announcement of an expansion this year was Sierra Nevada in January.  A location 12 miles south of Asheville, North Carolina was chosen for its water quality and thriving beer culture.  The brewery will initially produce 300,000 barrels with room for expansion.  For reference, Sierra Nevada is currently brewing somewhere in the ballpark of 1 million barrels per year in Chico.  Both flagship beers and seasonal releases will be brewed at the new facility.  The new brewery is scheduled to open in 2014.

Does this affect Indiana?  Probably not.  There's a chance there will be a perceivable difference in the quality of the beer, but it's unlikely.  It's possible they might pass the transportation savings on to us, but that's also unlikely.

New Belgium

Hot on the heels of Sierra Nevada, New Belgium announced last week that they were also planning on building an additional facility in Asheville.  Instead of building outside of the city, New Belgium is developing a brownfield site in the River Arts district of Asheville.  While Sierra Nevada mentioned water quality as a major factor in the location choice, New Belgium cited the city's sustainability, bike paths and greenways.  Of course they were also drawn by the outstanding beer culture.  New Belgium's expansion is planned to have a capacity of 400,000 barrels, exceeding the plans of Sierra Nevada, though it should be noted that Sierra Nevada's primary brewery is larger than New Belgium's.  The new brewery is scheduled to open in 2015.

Does this affect Indiana?  Probably not.  Much like Sierra Nevada, there's a chance that the quality of the beer might change, but it's doubtful.  The bigger impact would be New Belgium's ability to distribute into more states east of the Mississippi River.  Currently 17 of the 22 states New Belgium does not distribute to are east of the Mississippi River.  Of the 5 remaining, 2 are Hawaii and Alaska.


In a completely surprising move, Lagunitas announced via Twitter earlier this week that they would be building an expansion in Chicago.  Lagunitas' expansion will be built in an existing film sound stage in the Douglas Park neighborhood, just west of Pilsen and a few blocks north of the California-Cermak Pink stop.  The decision to build a brewery in Chicago instead of another city (because Asheville is probably looking for a trifecta) seems to be more of an emotional one.  Tony Magee, founder of Lagunitas, is a Chicago native.  The Lagunitas expansion is the biggest of the 3, weighing in at 600,000 barrels, equivalent to their existing brewery.  The schedule is also more aggressive, with a planned opening of 2013.

Does this affect Indiana?  Most likely yes.  It's hard to imagine a brewery producing 1.2 million barrels of beer annually with a brewery in Illinois wouldn't distribute to Indiana.  Lagunitas is typically priced at the same entry point as Sierra Nevada is grocery and liquor stores, so you'll have one more low cost craft option.

What happens next?
That's a good question, and one up for speculation.  With these 3 expansions, 3 more craft breweries will be producing well in excess of 1 million barrels per year.  It seems like a new classification of brewery is in order.  A brewery producing that much beer can't claim to uphold the same beliefs and practices as smaller, local breweries, but that also doesn't mean that they should be automatically cast into the same pile as breweries that put profits above consumers.  Sam Adams faced the same issue a few years back when they grew outside of the definition of a "craft brewery." Their response was simply to continue brewing good beer and place a focus on their philanthropic efforts towards the craft beer community.  As a result, hardly anyone noticed that they outgrew the classification.

Perhaps more importantly, what happens to the craft beer community in Asheville.  In a community with 10 breweries (give or take), what happens when not one but two giants come to town.  Will the community help each other and develop into one of the country's top beer destinations?  Or will the new breweries cannibalize the existing breweries' profits?

Share your thoughts about these new developments and the rapid growth of the industry in the comments!


  1. I'm a big fan of these moves. I'm moving to NJ in the near future, so I'm biased, but the ability to cut down on transportation costs and hopefully bring some of the smaller batch beers to other areas has be excited. I can't fault the breweries for going this direction either, I don't care if they brew one thousand or one million barrels, what matters is that the beer they do brew is great.

  2. Super excited for all this, and I can't wait to get Lagunitas here. It's outstanding!

  3. As a Chicago area native, I'm more excited about Lagunitas. Adds to Chicago's burgeoning beer scene (even Atlantic Monthly wrote about it), so there's plenty of room for growth (unlike Ashville which could be more of a grey area). Plus, putting the building in Douglas Park gives more reasons to visit the near south side. Pilsen and Brigeport are the Wicker Park and Bucktown of this era, Back of the Yards is getting a new brewery this year (New Chicago Co.) and now Lagunitas is moving into Douglas Park.

    Looks like the Pink and Orange lines are gonna be frequented by north siders more often in the near future.