CRAFT BEER

What is Beer?

Federal law defines beer as a beverage made by the alcohol fermentation of an infusion or decoction, or combination of both, in potable brewing water, [of] malted barley with hops, or their parts, or their products, and with or without other malted cereals, and with or without the addition of unmalted or prepared therefrom, and with or without the addition of carbon dioxide, and with or without other wholesome products suitable for human food consumption. In other words, beer is any beer, ale, porter, stout, and other similar fermented beverages (including sake and other similar products) of any name or description containing one-half of one percent or more of alcohol by volume, brewed or produced from malt, wholly or in part, or from any substitute for malt. According to federal law, beer must contain malt or malt substitutes (such as rice, grain of any kind, bran, glucose, sugar, and molasses) but may also include fermentable and non-fermentable adjuncts like honey, fruit, fruit juice, fruit concentrate, herbs, spices, and other food materials.

In the broadest terms, there are two general categories of beer, ales and lagers. Within these categories there are numerous types of beer. Ales are the older of the two dating back at least 5,000 years. Lagers are more modern, dating back only a couple hundred years. Whether a beer is an ale or a lager depends on the type of yeast used in fermenting the beer. There is both an ale yeast and a lager yeast. The temperature a beer is fermented at depends on the type of yeast used. Lagers are usually fermented at lower temperatures such as 38-50 degrees Fahrenheit. Whereas, ales are usually fermented at a higher temperature, such as 55-70 degrees Fahrenheit. 

Lagers require a longer maturation time because the cooler temperatures slow down the lager yeast’s activity. This process aids in distinguishing the lager’s flavor. The cooler temperatures keep fruity aromas (esters) from forming, as well as other characteristics that identify ales. 

Distinguishing an ale from a lager may be difficult because of many overlapping characteristics. However, in general ales differ from lagers in the following ways:

Ales: Ales are robust beers that are fruity and aroma filled. Ales are also often bitter beers with complex aromas and taste. Ales are typically served at warmer temperatures than lagers. 

Lagers: Lagers often taste lighter and are often crisp or have a lot of carbonation. Lagers are often smooth and mellow with balanced taste and aroma. Lagers are also usually served at cooler temperatures than ales.

What is a Craft Brewer?

American craft brewers have several defining characteristics. Craft brewers are small, producing six million or fewer barrels annually. They are independent, meaning less than 25 percent of the craft brewery is owned or controlled by an alcoholic beverage industry member who is not a craft brewer. Craft brewers are also traditional. They have either an all malt flagship beer representing the greatest volume within that brewer’s brand, or has at least 50 percent of its volume in either all malt beers or in beers that use adjuncts to enhance, rather than lighten, flavor. Traditional ingredients such as malted barley are often used in craft beer, but a craft brewer often uses non-traditional ingredients for distinctiveness or development of new styles. 

What is Craft Brewing?

Craft brewing is a growing industry. In 2013 the industry grew 18% by volume and 20% by dollars. This is up from the growth in 2012, which was 15% by volume and 17% by dollars. In 2013, about 15.6 million barrels were produced, which equates to about 483.6 million gallons of beer. This is an increase of about 2.4 million barrels of beer from 2012. Also, according to the Brewers Association, about 413 breweries opened in 2013, with only 44 breweries closing.  Small and independent breweries account for about 98% of the 2,500 breweries in the United States. The craft brewery industry is also booming in Minnesota specifically. During the year 2012, Minnesota ranked number 18 for the highest capita per craft brewery. Currently, there is about one craft brewery for every 112,849 people.

The Craft Beer Market:

There are many markets within the craft beer industry. The most popular being microbreweries, brewpubs, nano-breweries, contract brewing companies/alternating proprietorships, and regional craft breweries.

Microbrewery

Microbreweries brew less than 15,000 barrels of beer per year. At least 75% of their beer is sold off site and may be sold through a distributor, through a taproom, or in some situations, the microbrewery may act as a wholesaler selling directly to the retailer.

Brewpub

A brewpub is a restaurant that is operated on the premises of a brewery. With at least 25% of a brewpub’s beer being sold onsite, the primary purpose of brewing beer at a brewpub is to sell the beer in the restaurant or bar. However, with the approval of the commissioner, a brewpub may be issued an off-sale intoxicating liquor license or 3.2 percent malt liquor license to sell growlers.

Nano-Brewery

A nano-brewery is a very small brewery that usually only brews beer one batch at a time. Distribution is very limited and usually only very small quantities are distributed to a very limited area.

Contract Brewing Company

A contract brewing company is hired by another brewery to produce the brewery’s beer for them. The contract brewing company then provides the resources and equipment necessary to produce the beer. A contract brewing company also is often responsible for marketing, sales, and distribution of the beer. This is often used when a craft brewer does not own their own brewery location. The term contract brewing company can also refer to a brewery that hires another brewery to produce additional beer for them, often because the brewery does not have the resources to produce enough beer at their current facility.

Alternating Proprietorship

An alternating proprietorship occurs when there are two or more people using the physical premises of a brewery at different times. The host brewery is the proprietor of an already existing brewery and a new tenant brewer is a proprietor who will use the host brewery’s space and equipment to brew beer. The host brewery rents the space and equipment to the tenant brewer. Breweries use this set-up in order to maximize capacity, as well as provide an opportunity for new brewers to start brewing on a small-scale with little investment. 

Regional Brewery

A regional brewery produces between 15,000 and 6,000,000 barrels of beer annually. Also, a regional brewery usually has a malt flagship or in the alternative, malt beers or beers with adjuncts that enhance flavor make up at least 50% of its total volume.

Small-Scale Brewing v. Large-Scale Brewing

Small-scale Brewing

There are both advantages and disadvantages to small-scale brewing. Advantages include lower start-up costs, a quick start-up period, ease of finding an appropriate location due to the minimum space required, and little need for additional employees. 

Some disadvantages are that it can be very labor-intensive with no additional employees, there is a limit on the amount of beer you can brew, and it is difficult to make large amounts of money, which leads to the last disadvantage, that it is unlikely that someone would make a living off of small-scale brewing.

Large-scale Brewing

Large-scale brewing also has advantages and disadvantages. The advantages are that you are able to produce large quantities of beer, large quantities of beer open the door to making an impact in the beer market, and large-scale brewing might allow for an alternating proprietorship to maximize capacity and lessen costs.

Disadvantages are that a large-scale brewery start-up requires a lot of capital, you need to have experience or a strong understanding of the market to produce and distribute high quantities of beer, and if you choose to do an alternating proprietorship, there is a lot of administrative work involved.

Minnesota Craft Breweries

At one point in history, Minnesota had over 120 breweries. These numbers decreased due to the Prohibition, Great Depression, and national competition. Now breweries are increasing again, partly due to the popularity of craft breweries. Minnesota has about 64 craft breweries. According to the Brewers Association, in 2012, the craft beer industry added about $741.85 million to the Minnesota economy. In 2012, the craft beer industry in Minnesota also provided about $257 million in wages. In 2013, 14 breweries opened in Minnesota alone. 

Summit Brewing and Schell’s Brewing Co. account for more than half of Minnesota’s beer production. The remaining beer production comes from smaller breweries. In 2013, Summit Brewing Co. was named the 23rd top selling brewing company in the United States based on beer sales. Cold Spring Brewing Co./Third Street Brewhouse was named 32nd.