Upstart brewers set their own rules

16:00, Dec 31 2012

It has been a great year for craft beer lovers - not only has the number of outlets slinging boutique ales multiplied as cafes and restaurants joined the trend, but the number of locally produced brews on tap has also increased substantially.

And while much of this growth has been driven by the likes of now medium-sized brewers such as Tuatara and Renaissance, who have rapidly become household names for many whose palates were previously limited to the likes of Tui and Speight's, the real beer story of 2012 has been the rise of the next generation of brewers.

In just 12 short months the New Zealand beer market has seen exotically named offerings from the likes of Garage Project, Funk Estate, ParrotDog, The Black Dog Brewery and Revolution burst from the taps of fine beer establishments.

What's noteworthy is that the charge is for the most part being led by a brash bunch of upstarts, whose no-rules sensibilities are producing a mammoth range of beers.

Dominic Kelly, co-owner of Hashigo Zake, a Wellington-based craft beer bar and national distributor for many local and international boutique brands, says this shift in mindset has seen the new entrants skip the steady-as-she-goes approach taken by the now-established breweries.

"It used to be that brewers were like the nerds of the computer scene back in the 70s, when you had the likes of Bill Gates and Steve Jobs coming up," he said. "They were in their 20s and bringing their efforts to home-brew clubs. Very few people had the nerve to start a brewery right away."


However, the entrance of Yeastie Boys and Epic showed craft brewing was something that anyone could have a go at without needing a personal fortune.

Indeed, the Brewers Guild of New Zealand now has 46 members, many of whom rank as new beer start-ups.

Perhaps the best example of the "have a go" attitude is at ParrotDog, a brewery which started producing in-house beers from a former panelbeater's garage at the beginning of this year.

Now the brewery, headed by Matt Stevens, Matt Warner and Matt Kristofski, who are all in their 20s, is starting bottling operations and already exporting keg beer to Australia.

Warner believes much of their growth has been driven by the distinctive characteristics of Kiwi beer, with high demand for the bold, boozy, hoppy beers being produced by the brash new brewers.

ParrotDog launched with Bitter Bitch, an Indian pale ale with 6.3 per cent alcohol that scooped the People's Choice Awards at Beervana last year, when the trio were contract brewing at another location. The new entrants are also making names for themselves by continually tinkering with their product ranges, with limited-run batch beers fuelling the craft scene's trainspotter aspect.

Rob Owen, the former president of the Society of Beer Advocates (cheekily acroynmed Soba), labelled the rise of the next generation of brewers a classic response to consumer demand.

Besides the on-premises brewers, "a lot of people involved in beer are starting up contract brewing. There's been quite a groundswell".

The owners of the former Mac's ales, one of the earliest craft beer ranges which was established in Nelson, are on a comeback with their new Stoke brand, after being released from their restraint of trade.

They sold the Mac's brand to Lion Breweries in 1999.

Pioneer craft brewer and founder Terry McCashin has passed the baton to his son Dean, who launched the family's second brewing business in 2009.

The Stoke brand is proving popular. McCashin Brewery made the 2012 Deloitte Fast 50 for 1826 per cent growth in three years.

Yet all the variety available to publicans means there's also more competition than ever for tap space - and that's where the dark side of the still-collegiate craft beer market is starting to emerge.

The practice of "buying taps" was introduced by the big brewers. A bar was locked into a supply agreement in return for installing taps, fridges and signage, or possibly all three.

It was a practice that appeared to be waning as customers voted with their feet and flocked to independent bars, but it seems it is starting to pick up among the craft community.

Everyone interviewed for this article conceded that the practice was on the rise, denied doing it themselves and demurred on naming the brewers or the bars that do.

Ron Trigg, owner of Mike's Organic Brewery in Taranaki, laid some of the blame at the feet of bar owners, saying they were demanding some form of compensation.

"Brewers achieve the least margin in the whole supply chain, and having to front up and compensate pubs to have their beer on tap is not that attractive," Trigg said.

"The publicans are the ones getting the greatest part of the margin, and the distributor is in there somewhere."

Trigg admits his perspective is somewhat muddied by the fact that Mike's issues its own distillers to bars. That machine allows bars to pour pints without the use of more expensive tap equipment, but use a 10-litre keg as opposed to the 50-litre industry standard.

That potentially locks publicans into only serving Mike's beers on the machines, or beers the brewery has decanted into the smaller kegs.

But Trigg says it's not the same as buying taps, as he charges a rental for the machines and will decant free of charge.

The other threat stalking fledgling brewers is that the explosive growth of the craft market has brought in the big breweries.

Six months ago Independent Liquor introduced its Boundary Road and The Resident range of craft beers and it recently bought out Nelson-based Founders Brewery.

DB has overhauled its West Coast brewery to produce limited batch runs under its Monteith's brand.

Liquor giant Lion has also been highly active, introducing its Crafty Beggars range to the market (and appears to take pains to avoid it being associated with its parent). It also bought out Dunedin-based Emerson's, a pioneer of craft brewing which has been operating independently for 20 years, in November.

The Brewers Association in the United States, where similar market shifts are occurring, labels this process "faux craft".

It's a development that has many within the local scene concerned, firstly because they fear it will block new breweries from taps and supermarket shelves.

Their scale means they can easily offer lower prices - a fact that can be observed in shops today.

While it certainly looks like the new and corporate brewers are set for an ugly confrontation, David Cryer, the proprietor of Crymalt, which supplies malt to many craft breweries in the country, says it's probably still many years down the track.

He notes that craft beer probably accounts for 3 per cent of the total market in New Zealand, but has the potential to match US levels, which currently stand at about 15 per cent.

Cryer personally has seen his sales increase every year at his malt business, and at the annual non-profit Beervana festival.

Much of that potential exists outside Wellington - which consumes about a third to a half of the country's craft output - with Auckland regarded as the "sleeping giant" and Christchurch not far behind.

For Cryer, as long as Kiwis have a thirst for craft beer, there'll be room for new entrants into the market.

It's a bet he's staking his reputation and businesses on.