How Craft Beer is Changing the Industry

BY Stephanie Ott

Craft beer attracts a unique target audience. Photo: Corey Gargiulo.

Starbucks has its seasonal pumpkin latte, and craft beers have their alcoholic equivalent, limited-edition pumpkin beers that are popular in part because they won’t be around forever. Consumers looking for the latest thing have contributed to three years of healthy growth for the craft beer segment of the beer market, drawn as well by unique flavors and brewers’ commitment to local ingredients. You can get your william hill bonus codes here. New York City has become more beer savvy. People are seeking out unique beers, said Tom Smolka, brew master at Chelsea Brewing Company, Manhattan’s largest microbrewery, which opened at Chelsea Pier 59 in 1995. “People don’t go for Budweiser anymore, because it’s mainstream and pasteurized, whereas our beer is individually and locally produced and we explore different flavors.”

Craft beer is brewed by small, independent brewers like Chelsea Brewery, crafted rather than mass-produced. The microbrewery produces 3,000 barrels a year, although the facilities allow a capacity production of up to 7,000 barrels.

“There has been a shift from mass domestic products to local products,” said Julia Herz, spokesperson for the Brewers Association, which represents the majority of U.S. brewing companies. Herz said this shift happened because people are increasingly eager to try out new flavors. She thinks the more exposure craft beer gets, the more popular it will become — and loyal customers are crucial to its success.

“It’s surprising to see the industry flourishing. Beer is an expensive product to produce because the business is highly taxed and regulated,” said Herz. “Microbreweries don’t have large advertising budgets to promote their products as big corporations do, so they rely on loyal customers to stay alive.”

The Chelsea Brewery offers 38 types of craft beer. Its top product is ‘Checker Cab Blonde,’ because “it’s light and you’re not drinking an entire meal,” said Smolka. Around 60 percent of the brewery’s beer sales are deliveries to around 50 bars and restaurants in Manhattan and Brooklyn, with the rest served at its in-house restaurant.

Craft beer sales grew 14 percent in the first half of 2012, as the demand for beer outside the mass market grew. Growth of the craft brewing industry in 2011 was 13 percent by volume and 15 percent by dollars. compared to growth in 2010 of 12 percent by volume and 15 percent by dollars. Domestic craft brewers sold about 11,468,152 barrels of beer in 2011, an increase from 10,133,571 in 2010, according to the Brewers Association. Last year, there were 1,989 breweries operating in the U.S., the highest number in 125 years.

The Ginger Man, a craft beer bar, is one of Chelsea Brewery’s clients. “Craft beer is having an enormous impact on the beer industry as a whole,” said Corey Gargiulo, manager at The Ginger Man on East 36th Street.  The bar has 70 draught and 150 bottle offerings, all of which are rotated frequently to offer variety.

“The craft beer scene is much like the artisanal food movement in my mind,” said Gargiulo. “Consumers are more conscious of what they’re drinking and where it’s coming from.” Ginger Man Ale, a top-selling product for The Ginger Man, is the only craft beer kept on tap constantly.

Like the locavore food movement, brewers try to use locally grown hops, malts and other ingredients, such as honey, in their beers. “Beer consumers are becoming more conscious of where their beer is coming from and just like a chef cares about food from the farm all the way to the table, brewers are doing the same with their beers and the ingredients used to produce them,” said Gargiulo.

Craft brewers get more creative in their beer production than do mass producers, trying to balance new flavors while still preserving classic styles. According to Gargiulo, some craft beers can be compared to wines with their tartness and crispness, while smoked beers might be reminiscent of bacon, and others taste like chocolate.

The demographics of craft beer drinkers are difficult to define, as the market continues to change and expand. Beer industry experts agree that younger drinkers tend to be more inclined to enjoy beer, and are more likely to experiment and try out new drinks. “Older generations tend to be more wine focused, but there has been a shift in their beverage preferences towards craft beer as the industry has seen growth,” said Gargiulo.

Aside from the taste, price is what differentiates craft beer from domestic mainstream beer. A pint of craft beer is around $11, while a Budweiser is $4. However, the higher price point doesn’t stop people who can afford it from trying out craft beer flavors. “Americans in particular are into bold and adventurous things, and craft beer with its enormous range of styles and flavors has become yet another way to satisfy that urge,” said Gargiulo.

Customers at the Chelsea Brewery say that they enjoy craft beer in part because of its uniqueness. “The most attractive thing about craft beer is that I can’t get it all the time,” said Julia Sandy, visiting from Cleveland, Ohio, for a weekend, “It’s rare and special and in a way more upper-class.” She occasionally drinks Guinness, Budweiser and other mainstream beers, but prefers craft beer.

However, some local pub staffers say that mainstream beer still sells best. At McKenna’s Pub on West 14^th Street, 40 different beers are available, but only one craft beer called Bomb. “Craft beer doesn’t sell that much. Most people go for mainstream beer like Budweiser, because they know what they’re getting,” said employee Andrew Rhodes.

At another bar further uptown, craft beer is selling well, but doesn’t make up the majority. “About a quarter of our beer sales is craft beer,” said Sabrina Purtill, bartender at The Mean Fiddler at 266 West 47th Street. The pub sells six different types of craft beer. “People look at the price before anything else,” she said. “Most people still go for domestic beer like Heineken and Budweiser, because it’s cheaper.”

Despite this, Gargiulo envisions a time when craft beer will be a serious part of the culinary world. “New York is a wine town, and as craft beer garners more respect it will be as much in demand at the dinner table,” he said.

One mass beer distributor remains skeptical. “Craft beer is definitely a part of the beer business, but not a main factor,” said Lenny Hernandez, who works in sales for Beehive Beer Distributor. “Craft beer has had a good run lately, but domestic mainstream beer still dominates.” He said craft beer has reached its limit for now and demand is starting to decrease.  “People like to try new things,” he said, “but in the end, they always go back home.”

This entry was posted on Wednesday, December 5th, 2012 at 1:52 pm. It is filed under Uncategorized and tagged with beer industry, beer sales, Chelsea Brewery, craft beer, The Ginger Man. You can follow any responses to this entry through the RSS 2.0 feed.