South Carolina embracing changing beer tastes

09/20/2013 8:36 PM

09/20/2013 8:54 PM

The days of the Budweiser as the default beer of choice in America aren’t coming to an end – but go into any number of restaurants, grocers or convenience stores and you’ll find that the king of beers no longer sits alone atop its lofty throne.

There is a craft beer movement afoot, one that cultivates a culture of independence and — at least for now — a spirit of bearded idealism.

However, this movement is no weekend homebrew garage experiment. It’s big business that is getting bigger. The industry this year crowned its first craft beer billionaire.

People are casting aside their day jobs in traditional, office-space careers and betting their futures — and in some cases millions of dollars — on the promise that the industry holds.

Today, there are more breweries in the United States than at any point in the country’s history. And this year, more than 1,600 are in the planning stages.

By the first part of next year, South Carolina is poised to nearly double the number of breweries currently operating in the state.

Meanwhile, here in Greenville, the specialty stores that bring in rare bottles and fill jugs of beer straight from the crafters’ kegs are popping up every day — to the point that some of them wonder how many more the market can sustain as they compete with one another and larger retailers who themselves see the opportunity.

Does any of this sound familiar?

The guy who quit his job in the I.T. department preparing his company for Y2K so that he could start his own dot-com business?

The contractor who bet his savings on cheap credit and skyrocketing home prices to flip some houses for a quick profit?

The hip coffee shop that turned out to be one or a dozen too many?

Could there be a craft beer bubble waiting to pop?

Those who are going all in say the concept does creep into their thoughts.

But, they say, the numbers all add up to keep the fears at bay.

“The bubble could come,” says Will McCameron, a 28-year-old former engineer who will open Greenville’s third production brewery, Brewery 85, in a brand new, 10,000-square-foot facility near ICAR at the end of this year. “It could. But I don’t think it would for a while. I’m embracing the risk.”

Betting big on future

The risk that McCameron is embracing is all-consuming, but the promise it holds is enough to bet his future on.

“It’s gotta work,” he says. “It’s going to work — or else. If it doesn’t, other families and people are depending on you.”

The same is true for other local craft beer entrepreneurs, whether they be producers or sellers.

The statistics and economics are pointing in his favor, along with Greenville’s other new brewery, Quest Brewing Co., which this summer opened to a crowd of nearly 1,800 craft beer enthusiasts.

The two join Thomas Creek Brewery, which celebrated its 15th anniversary on the same day of Quest’s opening. Later this year, the Swamp Rabbit Brewery will join the fold in Travelers Rest.

First, a look at the larger picture.

Through the first half of this year, American craft brewers accounted for about 6 percent of the beer produced in the United States, according to a recent report by the Brewers Association, a not-for-profit organization representing much of the U.S. beer industry.

The association defines a craft brewer as small (maximum 6 million barrels of beer produced) and independent (less than 25 percent owned by a non-craft brewer).

The rest of the share is held by the country’s two largest brewing companies — Anheuser-Busch InBev and Miller-Coors — the result of the consolidation of American brewing that began after Prohibition.

Sales are up 15 percent and nearly 1 million more barrels than last year were sold by small and independent craft brewers, from 6.4 million to 7.3 million barrels, the report says. The number for 2009 was 4.4 million.

This comes at a time when the association reports that the overall sale of beer in America is down 2 percent.

Currently, more than 2,500 breweries are operating in the U.S. — the most since 2,011 were recorded in 1887. All but about 100 of those are craft brewers.

The association says it knows of 1,605 breweries in the planning stages.

Just before Prohibition in 1920, there were 1,179 breweries. By 1935, two years after Prohibition ended, there were 703.

The number of breweries hit a low point — fewer than 100 — in 1980 before seeing a steady rise, with a sharp increase from 1990 to 2000 when more than 1,000 breweries were operating.

There isn’t a secret to the numbers, said Josh Beeby, who as owner of Barley’s Taproom and Pizzeria in downtown Greenville is known as the early pioneer of bringing craft beer into the area and travels the world to stay on top of what’s new.

“All we’re doing is turning people from bad beer to good beer,” Beeby says.

As he sees it, there is 94 percent of the American population ready to drink craft beer.

Brother’s legacy

A few years ago, Andrew Watts' brother, Sean, died in a freak accident and left his brother his inheritance.

Watts was patient in how he would spend the money. He and Sean had enjoyed good beer together. The path to keeping his brother’s legacy alive soon became clear.

At first, Watts said, he approached breweries and offered to become an investor. Looking young for his age, he says, they didn’t take him too seriously, so he decided to open his own brewery.

Last year, Don Richardson — a respected brewer in the Upstate with 20 years experience creating award-winning brews who himself wanted to start a brewery — met with Watts over a beer and Quest Brewing Co. was born.

The investment to start a production brewery with capacity to distribute outside of the local haunts requires excess of $1 million, Watts says, and it takes time to grow the business, unlike other industries subject to a popping bubble.

This year, Jim Koch, the founder of Boston Beer Co., maker of the pioneer Samuel Adams brand, became the first craft beer billionaire, according to data compiled by Bloomberg. Koch started in 1984.

“The return on investment is not something you’re going to get right away,” Watts says. “It’s not a get-rich-quick scheme. If you put in $1.5 million, maybe 10 years later you’re going to get that back.”

A new brewing system alone can cost $750,000, he says, though Quest used a “Franken-brewery” method, collecting pieces of used equipment from breweries that had expanded.

The two researched markets in Savannah, Asheville and various parts of South Carolina, but settled on Greenville, which up until today had only Thomas Creek with RJ Rockers nearby in Spartanburg.

“I was just surprised that nobody was jumping on it,” Richardson says.

Fertile ground?

If America is fertile ground for craft beer, South Carolina — with 12 production breweries compared to nearly 80 in North Carolina — is perhaps even more so.

The state currently ranks 40th in the number of breweries per capita, according to the Brewers Association.

The potential for South Carolina has long been held back by its laws, which only in the past few years have changed to make a legitimate brewing company possible, says Brook Bristow, a Greenville lawyer who represents breweries.

Last summer, Bristow wrote and lobbied for a new law that would allow breweries to sell a limited number of pints on site rather than just a few samples. The law’s passage opened the door for breweries to become destinations.

The movement dates back to 2007, when South Carolina brewers lobbied successfully for a law that allowed them to create beers with an alcohol content higher than 5 percent. The ABV limit would prohibit most of the beers brewed today.

North Carolina wasn’t subject to such a cap, and the breweries have flourished, along with larger craft brewers opening satellite operations in and around Asheville.

The same is true for craft beer havens in California, Oregon and Colorado.

“Their laws have been on the books for so long, it’s given people plenty of time to get rolling,” Bristow says. “It’s still the Wild Wild West over here. We’re just getting going. How many can South Carolina support? I’ll be interested to see.”

The craft industry is a unique collection of entrepreneurs who are competing but embrace a collective effort.

“It’s unlike most other industries in that respect,” Richardson says. “There’s not really that heavy competition. It’s more all of us working together to get to the next level.”

The tendency for craft enthusiasts to value local identity provides a foundation for breweries that aren’t looking to take over the world.

However, in the end, the beer must be good.

“You can’t rely on local alone,” Beeby says. “It comes down to who’s going to create that next style or next trend. If you’ve got that much competition out there, you have to come out with something to set yourself apart from those other guys. These are things the monks in Belgium have been doing for 200 years.”

For instance, Beeby says, Americans expect a brewery to make a bold India Pale Ale, so the breweries oblige. But, he says, there is a shortage of good, American brown ales, presenting an opportunity to innovate.

The national craft explosion has put a squeeze on supplies, particularly the hop flowers that give IPAs their boldness.

Five years ago, Richardson says, a pound of hops would cost $2 to $3 a pound. Today, he says, they cost as much as $18. Suppliers often report that they’ve run out, leaving Richardson to worry that he won’t have the specific types of hops he needs to follow his recipe.

‘Bottle shops’ part of boom

The craft beer boom is clear, too, in the number of specialty stores — known as “bottle shops” — around Greenville that carry local and hard-to-get beers from across the world.

The question is how many is enough?

John Richards, owner of What’s On Tap? on Woodruff Road says that if he had the idea to open a bottle shop today, he might not do it because of the market saturation.

“I’ve often wondered how many more of these you can have?” says Richards. “The wheels are always turning on a way to keep yourself fresh and interesting, to kind of re-invent yourself.”

Richards opened his store in 2011, seeing a need for a bottle shop that could serve those who didn’t want to drive downtown.

The Community Tap was a bottle shop pioneer when it opened in 2010 in the North Main area, filling glass jugs — known as “growlers” — with beer straight from the keg.

A host of beer stores soon followed. More small shops opened, like What’s On Tap?, Greenville Beer Exchange, Greenville Growler Station and Crafted, The Beer Store in Simpsonville. Larger retailers have taken notice and are getting into the game.

Today, another bottle shop, the Greenville Hop House, will celebrate its opening on East North Street, though it will focus much of its mission on catering to home brewers.

The bottle shops often advertise the same beers that are fresh in town, with some stores getting more than others, but the owners say their value is in serving each individual community.

The key to success for a bottle shop is knowledge, being able to help customers understand what they are drinking and why they might like it, says Mike Okupinski, co-owner of The Community Tap, which last spring put on a ticketed beer festival for 400 people.

“There’s some stores out there who just saw opportunity and they know nothing about beer and you can tell when you walk in,” Okupinski says. “When you ask a question, it’s pretty evident. It’s not to say they’re not making money or going to go out of business.”

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