Saturday, April 4, 2009

Contract Brewing

At their initial stages, some brewers do not have the necessary funds to establish, staff and open a fully functioning craft brewery. Other brewers, having established themselves in the market for years, can have excess capacity or at least equipment that is idle to some degree. The solution? Contract brewing.

The concept of contract brewing—literally, brewing under contract—is similar to outsourcing any other skill or trade. An outside client pays to have their products brewed by a traditional brewery that has the free capacity for hire, or at least is looking for another stream of revenue. Sometimes these may be special projects with single batches, and other times this is de rigueur for a virtual brewery.

As a practice, contract brewing spans the spectrum of both operations and opinions. Some companies called beer marketing companies are not breweries at all but contract out all their brewing operations. They have no formal corporate facilities beyond an office, if that, but present themselves as a traditional brewery like any other. Examples of these marketing companies are Pete’s Wicked and Pabst Brewing; there are no longer any physical breweries for these companies.

For many brewers, contract brewing is a means to establish a brand and actually generate revenue before embarking on a fundraising and building program for a new brewery. With a larger brewery handling the brewing labor as a fee service, the brewery-to-be can better test the market and attract investors before committing hundreds of thousands of dollars to a new building or renovation program.

For some brewers, it is simply a logistical necessity. Hawaii’s Kona Brewing finds it more cost-effective to contract their U.S. beers on the West Coast rather than ship everything produced from the islands. For others, it is a legal requirement: Due to a hindrance of Texas state law, Houston’s Saint Arnold Brewing brews all the beers for the Texas locations of California’s brewpub chain BJ’s Restaurant & Brewhouse.

However, contract brewing has caught somewhat of a negative connotation with craft beer consumers. For many, it is seen as cheating because there is no physical brewery behind the name, or that the beers may as well be considered products of the contracted brewer. This negative aspect may be a result of the practice being abused by the national corporate breweries, who often create virtual companies as a means of marketing while actively hiding a connection to their own house brands. For example, Blue Moon Brewing is a Coors company, the same way Green Valley Brewing (makers of a line of certified organic beers) is an Anheuser-Busch company.

Contract brewing arrangements should be judged by the consumer on a case by case basis. Some brewers (Stampede Brewing) have little to no brewing expertise, and even less interest in ever establishing an independent facility. Others (BJ’s Restaurant & Brewhouse) have professional brewers at the national level who actually office at the contracted brewery, and are as hands-on with their products as any other employee. It may be a shortcut, but contract brewing is not always a lesser status for a brewer.


Anonymous said...

Interesting view points. We are in the planning stages on a craft beer brewery in the Northeast USA called Nor'easter Brewing Company LLC. We will most likely start by contract brewing and than erect a facility.

Manic Organik said...

Any idea what the average cost of contract brewing is?

Anonymous said...

check out - new brewery opening soon in the DC area to brew exclusively on contract

Anonymous said...

Beltway Brewing Company

Anonymous said...

Hey anonymous, how 'bout I check out your mom, instead?