Pride and ProfitJanuary 1, 2009 By: Michael Harrelson Night Club and Bar Magazine
Local and Regional Brews Hit Home
No matter the direction you turn, every section of the country has regional beers to call their own. Mention Sierra Nevada in San Francisco, and locals might wonder whether you’re speaking of the mountain range or the iconic Western brew that recently celebrated its 25th anniversary. Call for a beer in a Philadelphia bar and you’ll automatically be handed a Yuengling. With its history dating back to the colonial era, what could say New England better than a beer by the name of Sam Adams?
They may be bottled or on tap, lagers, stouts or pale ales, but regional beers are the home brews that patrons drink with a special pride. In fact, imbibers were hoisting regional brews long before the drink local trend took hold. Invariably, these beers cause customers to wax nostalgic at the bar, remembering exactly when and where they were when they ordered their first one.
Such abiding loyalty is brand affinity that goes well beyond the devotion that many patrons feel for the domestic and imported beers available at any bar or corner tavern, which is why regional craft brews, local microbrews and other provincial favorites have been steadily gaining market share from the big domestic and imported brewers for the past few years.
In 2007, craft beer grew 12 percent by volume and 16 percent in dollars, with the overall craft share increasing to 5.9 percent of all beer sold in the United States, according to Brewer's Association spokesperson Julia Herz. In 2008, craft has posted an 11 percent growth rate in dollar share and 6.5 percent by volume, but the slight softening in sales may not be indicative of waning demand in the marketplace, Herz says.
"With the majority of craft brewers, there is a limit to their ability to increase production," she says. "In 2006 and 2007, 47 of the top 50 craft brewers grew to keep up with demand."
For brewers who have expanded one, two and three times already, Herz says the question is whether they have the desire or the ability to increase production as rapidly as in previous years. "It is a good problem to have to be required to expand to keep up with demand."
Capacity issues aside, with sales of domestics remaining relatively flat in terms of the beer growth dynamic, consumer preference in beer shifting toward more full-bodied flavor and some import sales suffering as a result of ill-timed price increases and the effects of a weaker dollar, there is now more reason than ever for operators to tap into the numerous advantages of offering regional beer.
Beer & Barbecue
At Redbones Barbecue, a 260-seat restaurant and beer tavern in Somerville, Mass., regional craft beers such as Mayflower IPA, Dogfish and Ipswich currently account for 50 percent of total beer sales. Like many other proprietors of better brew houses in the eastern part of the United States, Redbones co-owner Rob Gregory has seen his margins on beer from New England, New York and the Eastern seaboard rising steadily since the early 1990s, and he fully expects the trend to continue.
“They are a draw,” Gregory says. “They are great to sell because people know their names in our marketplace. And the regional brewers market them at the local level. People can go to these breweries and visit. If you don’t have regionals, you will have fewer people coming to your place.”
Along with Sam Adams and Harpoon, two New England-brewed beers that helped launch the regional subcategory more than 20 years ago, Redbones offers its upscale crowd of sophisticated beer drinkers such popular regional beers as Nantucket’s Cisco, Portland, Maine’s Allagash and Portsmouth, N.H.’s Smuttynose.
Small brewers are becoming more and more creative,” says Nick Gregory, Rob Gregory’s brother and the acting general manager of Redbones for the past 18 months. “And, there are more popping up as people see more opportunity.”
Of the dozen or so regional brewers from Maine to Delaware that Nick Gregory does business with throughout the year, three in particular have impressed him recently.
Right now, Sixpoint from Brooklyn is extremely popular,” he says. “They are making some of the best beer in the region.” Cambridge Brewing Co. of Cambridge, Mass., also is high on his list. “They’ve been around for a long time, and have been quite successful in crafting some very interesting beers. They have been fun to watch.” Yet another local brewer shaking up the craft beer world is Mayflower Brewing Co., Gregory says.
Their ales are exciting. People are raving. They went to England and competed in the cask competition, and won second place for U.S. cask ale.”
While the small-batch limitations of such suppliers means that availability is an issue Gregory must contend with on a regular basis, he says the scarcity of many of these specialty brews makes them all the more desirable to operators and customers alike.
Brewers like Sixpoint may offer some of its craft beer in 15-barrel batches,” Gregory says. “We may only get one or two, and we are glad to get them. And then it is gone for a while. Everyone knows that it is not constantly available.”
Customers at Redbones know precisely which beers are available by way of a big board positioned over the bar that is updated by the staff throughout the day, Rob Gregory says. Along with routine postings to the Redbones Web site, special draft beer menus also alert patrons to new beer offerings.
For all the limitations as to source and supply, however, both of the Gregory brothers say the often higher price points that can be charged for these regional craft beers make them well worth the extra leg work.
“Sure, people are willing to pay more for the higher quality,” Rob Gregory says.
The price range for most of the regional beer at Redbones is $5 to $6.50 for a 16-ounce serving, Nick Gregory notes, adding, “Some cost less. We do offer a 12-ounce pour for a lesser price, so that people can sample the different beers without breaking their wallet.”
The ultimate way to sample the suds at Redbones, however, may be one of the Beer Flights: three and four 5-ounce pours for $5.75 and $6.75, respectively.
Good Beer, Good Talk
Patrons who come to dine on the baby back ribs, pulled pork and chicken at The Shed in Ocean Springs, Miss., can choose from 70 different beers on the juke joint’s extensive brew menu. Yet the favorite by far at the 5,000-square-foot roadhouse is Lazy Magnolia, an award-winning regional craft beer made in nearby Kiln, Miss.
By the smell, look and taste of Lazy Magnolia’s flagship Southern Pecan, as well as its other craft brews –– Blue Heron, Indian Summer, Rebel Ale and Golden Eagle — co-owner Brad Orrison says his customers know instantly that the people who craft it are not just putting out another beer.
Although the beers are considerably more expensive to purchase, Orrison credits Lazy Magnolia as well as Abita, a regional favorite from Abita Springs, La., with generating at least 25 percent more profit per beer customer over the margins he earns on popular domestic beers that go for $4.25.
We sell most of them for $4.75 per 16-ounce pour,” Orrison says. “It is a good price, and because we know the people who make it, we price the beer so we can showcase the beer.”
Whether it’s the Turbo Dog, a heavy dark beer from Abita that is brewed for the true stout lover, or Lazy Magnolia’s Indian Summer, a lighter brew that is ideal for a day at the beach, Orrison says his regional craft beers also set him apart from any other beer and barbecue venue on the Mississippi Sound.
When people come in and see the beers we offer, they know they are coming to a place where their entire dining experience is being elevated.”In addition to the special ingredients and care that go into the brewing process of both Lazy Magnolia and Abita, Orrison says operators and customers can appreciate the fact that both brands now offer their beer on tap as well as in bottles.
At The Shed, we dedicate our taps to Lazy Magnolia, and we sell Abita in the bottles, but another operation could choose to do just the opposite or sell both by the bottle and on tap,” he says. “With Southern Pecan, which is our best-seller by far, you feel that it is your secret because you found it. It makes for good drinking and good talk. That is why we carry so many beers at The Shed. We want people to come in and find the beer they have not had in five years, because beer is a nostalgia item.”