Gary Nicholas of Bell’s and Surly: “There is no craft brewery bubble.”

Last week, I attended “It’s Just Beer…Or Is It?” as part of the Urban Currents events series put on by the Cuningham Group. The speakers were:

  • Gary Nicholas, craft brewing consultant, former Project Manager at Surly Brewing Co., and former Quality Manager at Bell’s Brewery
  • Sarah Bonvallet, Co-Owner and Creative Director at Dangerous Man Brewing Co.
  • Adelheid Koski, 17-year Northeast Minneapolis resident and community organizer
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Photo credit: Cuningham Group

The subject of the panel was the booming craft beer/taproom trend and its effect on local communities. Below is a condensed and edited version of the conversation that took place:

“Why is craft beer so popular?”

Gary Nicholas: Beer tastes have changed. Craft brewing began as a counter-culture movement that became mainstream. It took a long time since the [beginning of the craft brewing movement in] 1970s for the concept of, say, a porter to filter through. A lot of the early craft beer scene was built around home brewing. IPAs are popular now, but the industry was actually built on browns and ambers like Sam Adams. And it’s still a relatively small industry. Right now, craft beer makes up 12% of the beer market in the United States. In Minnesota, 50% of the craft beer is produced by two breweries, and two-thirds is produced by three or four. But it’s growing. Now that it’s popular, craft beer is hooking people earlier and earlier in their beer-drinking life.

Sarah Bonvallet: In the 90s, there was the rise of big craft breweries. Then in the 2000s you had regulation change at the state level. Regulation on the state level, by the way, will make or break small business, and the craft beer industry is a good example of that. It’s an industry driven by need and want to support local. Among Dangerous Man’s 24 employees, 77% live within 2.5 miles of the brewery. They can walk or bike to work, live and thrive right in the community.

Adelheid Koski: An evolution has taken place in society – 50/60 years ago, you knew where your community was. We have shifted away from that. But now with taprooms for all ages, you have a place to gather and be social in your community. At HeadFlyer the other day, I saw a table full of women with their babies. It’s sort of like a version of coffee shop where you can be loud. You can also get great beer, there are food trucks outside. It’s a place where you can be a human being.

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HeadFlyer Brewing

“What’s the difference between a bar and a taproom?”

GN: Bars are all about the alcohol. The focus is more on drinking, and you see smaller, more nucleated groups of people there. Taprooms are more about the community, a gathering space.

AK: There’s a different vibe with taprooms. There’s bike parking, they’re walkable. Craft breweries are also a selling point for a neighborhood as they close by 11pm. You don’t come home sloshed from a brewery.

SB: Craft breweries are independently owned, and their main focus often isn’t economic domination. In 2017, craft beer counted for 12.2% of the beer market; in 2016, it counted for 12.1%. It has not grown. When you go to the store or bar, know where that beer is from. Beer isn’t always independently owned or produced when it looks like it.

GN: Ask yourself: do you care where your beer comes from? There are different typologies of craft beer operations:

How big or small a taproom can become is dictated by the size of the community it’s in, too. There are lots of small Chicago breweries you’ve never heard of because they have the population to support it. Places like Milwaukee, not so much. Breweries in areas with less of a population are forced to distribute.

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The Freehouse

SB: Here’s a fun fact: 83% of people 21 and older live within 10 miles of a brewery. So they are there if you want to seek them out. As far as production levels go, Dangerous Man produces about 2,000 barrels of beer a year. Indeed Brewing is about 15,000. Compare that to Surly, which puts out 90,000 barrels a year. Distribution just does not make sense until you get to a certain level. It’s expensive to go into distribution. There are lots of logistics. Take kegs, for example. Kegs are very expensive. Then you need canning and bottling lines, guaranteed retail space. And you get 1/5 less profit on top of that.

That’s why Dangerous Man focuses more on the taproom experience. When we wrote our business plan, we talked about what the full experience would feel like: smell, staff, music, everything. Each one of our beers gets tasted three times before it ever sees a menu, and we as a staff have a rule that we never put anything on tap that we wouldn’t drink a lot of. If we went into distribution, we would have to give up some of that quality.

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Dangerous Man Brewing Co.

“Which came first, the brewery or the community?”

AK: Something to remember here is that the community (Northeast) was changing before the breweries ever arrived. If craft brewing taprooms had tried to come about 12 years earlier, it wouldn’t have worked. Fair State is an interesting case because they are actually a co-op. When they went up on Central, they fulfilled a need for that neighborhood. And they are not just in it for the socializing, but for fundraising and volunteer opportunities as well. Fair State is actually going to be partnering with Water Bar (a public benefit corporation focused on art and ecology), just another example of how they are bringing awareness into the community of bigger, broader social issues.

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Fair State Brewing Co-op

“Can you describe how taprooms are handling some of the regulatory issues like zoning?”

GN: The biggest thing right now in south Minneapolis is zoning. And SAC charges. It makes change difficult. Consider The Herkimer. It has been there a long time, it’s not pulling in any beer aficionados. You look at everything around it, and it hasn’t changed with the times or the neighborhood. As a brewery, have to ask yourself: “Why you?” How do you differentiate yourself? When it comes down to it, taprooms are the only model that actually works. Distribution is a hard market; there are only so many feet of shelf space. At the liquor store, you have 500 brands competing for 35 shelf slots.

“Is there a production threshold over which a brewery is no longer considered to be a ‘craft’ brewery?”

GN: There’s actually no legal definition of “craft.” Sam Adams calls themselves a craft brewer, and they produce 2.5 million barrels a year. The term “craft” refers more to how the beer is made, not who it is made by or how much of it is made.

“Is craft beer a bubble?”

GN: It’s a bubble for people in distribution, but not taprooms. And even then, it’s not so much a bubble as a shakedown. But taprooms are like coffee shops. As long as your operations can be supported by your neighborhood, there’s lots of room for many.

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Clockwerks Brewing

“What about gentrification? How do you address pre-existing communities in a neighborhood?”

AK: You have to be aware on a city level of how to make it a vibrant community for everybody. Many taprooms have gone into old industrial warehouses, recycling those spaces. In many ways, taprooms are a model of how not to become gentrified as a community. Look at the Holland neighborhood: in recent years, it has gone from 80% to 40% white and increased its multi-family housing. And yet, taprooms are not the business that’s going to solve gentrification. When it comes down to it, it’s hard for taprooms to break into communities that don’t want the product.

GN: As a taproom, there are things you can do to help out your neighborhood. Hosting volunteer events, loaning out space. You have to ask yourself: are you serving your community, or just existing in your community?

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