Alternating proprietorship: new creativity in craft beer

Badger Hill logo from
www.badgerhillingbrewing.com

Not being a professional brewers, it seems to me that those of us who are mainly drinkers miss the finer points of the business side of beer.  An article on Minnesota Beer Activists discusses in detail the relationship between Lucid Brewing and another upstart brewery called Badger Hill Brewing Co.  It's a business partnership known as alternating proprietorship (AP) in which two breweries exist side by side in the same facility.  In this case, in addition to sharing space and equipment, Lucid head brewer Eric Biermann will be the Badger Hill brewer until they get to a point that they can hire their own head brewer.  Interesting idea, and sounds like a great way to make more beer.

Pretty much every start up history I've read or heard on a brewery tour, begins with the milk tank or other franken-brewery story that was their way to control costs to get beer flowing.  For a larger, successful brewery, the next part of the story is how they needed to re-invest to build the next larger brewery.  This pattern always seemed wasteful to me, but there didn't seem to be much of an alternative.

AP sounds like a great idea that can mitigate the perceived negatives of contract brewing or the real costs of starting a brewery from scratch.  A quick search turned up this entry on a legal blog that gives a bit of history to the idea.  According to the article, AP gained traction in 2005 when the TTB (Alcohol and Tobacco Tax and Trade Bureau) issued a circular to highlight this less expensive idea to start a brewery.  Brewing is still a lot of hard work and not without risk, as attested by this blog of a budding professional brewer who found the idea interesting but has put the brewery on hold.  This recent post on the San Diego beer blog highlights interest in using AP as way to increase production for local breweries.  Since my research wasn't exhaustive, I'm guessing other beer geeks turning hopeful brewer or brewery owner are exploring AP as a path to their beer dreams. At the heart of all great craft beer is creativity, and it clearly goes beyond clever names and hop additions.

Too much beer in Minnesota?

Yesterday on Minnesota Public Radio, an article explored whether or not our Minnesota beer scene has become too saturated with new breweries.  I'll admit, when Surly and Flat Earth started up, I had the same thought.  How much beer can Minnesota support?  Also, I used to be able to keep the local beer bars in my head, and now there's so many places to get good beer today--often unexpected--that even with research the choices can be dizzying.  So, the big question.  Is the Minnesota beer market saturated?  The US market?  Predictably, I say no.

Reason number one:  Minnesota is becoming a beer friendly location.  The oft cited example is that Portland, Oregon has a much denser beer to drinker ratio.  Can we become a Portland?  In discussion with other beer geeks and local beer purveyors, the restrictive legal environment of Minnesota compared to Oregon stands in our way.  However, recent changes to Minnesota beer laws plus discussion of more changes on the horizon this legislative session bode well for the future.  Assuming legislative support in the future, I think we have the growing tide to be the next Portland, Seattle or Denver.

Reason number two:  It's only up from here.  In 2010, craft beer sales were 4.3% by volume according to Brewer's Association statistics.  At the same time, total beer sales went down 1%.  From my perspective, I think the writing is on the wall.  Craft beer is the new standard, and I can imagine a world where craft beer is not only a double digit market share, but the majority share of beer drinkers. If market share doubles, quadruple or more, the amount of good beer will be staggering compared to today.

Reason number three:  Craft beer per capita favors cold or wet northern climates.  The fabled lands of beervana Oregon (#2) and Colorado (#4) are predictably high on the list, and the remaining top ten states in 2010, in order from top to bottom according to Brewer's Association's rankings, are Vermont, Montana, Maine, Wyoming, Alaska, Washington, Wisconsin and Delaware.  Minnesota not only fits well into the above paradigm, a recent visit to number one Vermont convinced me that the Green Mountain State is a lot like Minnesota: bitterly cold winters, big mosquito jokes and a serious independent spirit.

Viva la beer revolution!

Free the Beer!

Harriet Brewing tasting room from Beer Trip Crew
@ beer-trip.com.  

Some recent changes in Minnesota beer laws is leading to some nice effects.   The passing last May of the so called "Surly Bill" and Surly's plans for their own destination brewery has opened up the industry to truly innovate.  An article in Thursday Star Tribune that says Harriet Brewing is on the path to being approved to serve pints in their downtown Minneapolis location.  While the committee vote in only an initial hurdle, I see it as a good sign for our future drinking choices.  Hopefully, the planned vote next Friday goes through for them.

But, that reminded me of another recent article I read about Minneapolis Town Hall Brewery.  Owner Pete Rifakes wants to "aggressively" distribute THB beer.  It has to be frustrating for Pete to be contacted monthly from distributors who want to sell his product, and his hands are tied by short-sighted Minnesota laws.  While I'm happy for Surly, Harriet and others that will probably be following suit, Town Hall and other brewpubs that want to distribute should be allowed to do so. The only fair situation would be to give every brewer equal rights to sell locally and further afield, and food or not food as they are able.  While I'm not a raging capitalist, these laws seem to be more related to puritanical restrictions rather than the real concerns of selling beer.

Downstairs taps at Town Hall Brewery.  To drink
from these taps, sign up for the monthly tour. 

And, secretly, the thought of Masala Mama going regional or national, and the rest of the world being able to drink "our" beer gave me a sense of pride. I know--I'm just a pint club member, and a semi-regular.  But, in my last discussion with brewer Mike Hoops, I was telling him of a summer beer trip that was a series of mediocre brewpubs and that it just made me appreciate Town Hall all the more.  It doesn't take too many brewpub visits to realize that we have it pretty good in Minnesota, and, hopefully, when the stars and laws align, it will get even better.

If you want to read a history of how we got into this situation, a nice book is The Prohibition Hangover by Garrett Peck.  It gives a relatively coherent history of prohibition and its aftermath before ending with a more personal analysis of how American needs to get to a better relationship with alcohol.