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Thursday, May 31, 2012

Is Craft Beer Leaving the Brewpub Model Behind?

A (seemingly) long time ago in a (beer) galaxy not far from home, the craft beer revolution was born. There are arguments over the specific place. Some would argue Fritz Maytag's Anchor Steam was the first craft brewery...the counter argument being that Maytag merely retooled an existing brewery to produce something better than what it made before. I don't want to get into a controversy about that and, anyway, the question of who was first isn't on my mind today.

In our galaxy, the brewpub started here
What I am thinking about is the brewpub...and how it was crucial to the development of the craft beer business here (and everywhere). Brewpubs are a big reason we have such a healthy beer culture in Portland today. More on why in a second. There isn't even an argument over who opened the first brewpub in Portland. McMenamin's Hillsdale Brewery and Public House was the first. It opened in 1985. Others soon followed.

Why was the brewpub a crucial cog in the spinning wheel of craft beer? I once held the view that the 21-34 demographic made craft beer a success here in the early days. My logic: They drink a lot of beer and they got interested in craft beer. Fine. Unfortunately, wrong. The craft beer movement did not grow into something formidable simply because young adults drink more beer than their parents. Nope.

Not in Portland, but there's no food here
The fact is, craft beer needed the brewpub to spread its wings. It would most certainly not be what it is today if it had been confined to taverns, bars and tasting rooms. No question about it. In that scenario, it never would have gotten the wide exposure it got through the brewpub. Craft became what it is because the brewpub opened its doors to all ages. That includes the young adult drinkers I mentioned, but it also includes adults of all ages, some who have kids.

From a business standpoint, the brewpub helped craft brewers build their business. It provided a place where people could go to eat a reasonable lunch or dinner and have a quality beer. Most owners will tell you their gross revenue leans in favor of food. The owner of my "home" pub recently told me his revenue is 60-40 food to beer. I suspect that's pretty standard. Of course, there's more profit in beer than in food, so you have to be careful about these numbers.

My point is this: A lot of people come to brewpubs because they are essentially restaurants where you can get good beer. The genius of the brewpub is that it dramatically expanded the available demographic of craft beer consumers. The founders of the craft beer industry in Oregon knew what they were doing when they lobbied to make brewpubs legal. People of all ages came in for the food. The beer flowed...making money for the business in the process. A perfect match.

A tasting flight at The Commons
If I sound like Captain Obvious, hang on. The reason I'm bringing up the brewpub concept is that a growing number of breweries are choosing a different path...a path that doesn't include food. Here's a quick list of nearby breweries that have no food: The Commons, Occidental, Gigantic, Mt. Tabor, Natian (no tasting room, to my knowledge), Upright, and Harvester. These are essentially production breweries that intend to make their money through distribution by keg and (especially) bottle (or can).

I can't help but wonder how this is going to work out. There's growing competition for shelf space in stores and tap space in pubs. Remember, these breweries typically have limited tasting room hours. If you want to try their their beers at the brewery, you better check the calendar and plan ahead. It's hard to imagine all of the players in this sandbox succeeding, even with the ongoing growth of craft beer as a sail.

Sprints (right) launched the specialty sales model
In the end, I suspect the ones that succeed will be the ones that are able to sell a unique product, likely barrel-aged or limited release beer, directly to customers. This model is already being used by Upright and The Commons. Alan Sprints (Hair of the Dog) is the godfather of this model in Portland, having perfected it over many years. He effectively sells limited edition beers directly to customers for high dollar.

The brewpub model is the foundation of craft beer revolution in Portland and beyond. Is it possible that we've moved on? Are these production/specialty breweries the next step in the evolution? Only time will tell. My guess is not everyone trying this is going to be able to pull it off. We shall see.


  1. While it's nice to see that people are able to succeed with production breweries and not just pubs, I think you're flat wrong about the brewpub era being over.

    It's funny you mention Alan, because he has gone the other direction. After years of being a production brewery, he now has a pub. Word came out yesterday that Oakshire is opening a pub in Eugene. And let's not forget that one front in 10 Barrel's world domination strategy is a brewpub in Boise. That makes three examples of places that started off as production breweries, but have recently added pubs.

    Long live the brewpub!

  2. Oh, I don't think the brewpub era is over. Not even close. The point of the post is that there are brewers out there who think they can make it on beer alone. They may be right. But I think it's going to depend on the beer and the plan.

    As for Alan, he was well-established and successful long before he opened the pub. I'm sure having it is getting his beers in front of a larger audience than would have been possible at the grubby old tasting room. Did he need the pub to survive? I doubt it. Some of these newer places may find out they need a pub to survive. We shall see.


Keep it civil, please.