Inside craft beer’s controversial contract-brewing debate

Fresh and local. These are ideas that everyone, in some way or another, can get behind. It feels good to go into a store and, in my case, buy a six pack or two that was brewed right here in Pittsburgh. It makes me feel like I’m supporting my adoptive community, putting the few dollars I have back into our economy and helping to give Penn Brewery, Full Pint, East End or Church Brew Works a piece of the pie. It was not always that way. Perhaps growing up in my hometown of Washington, D.C., a city without much of an identity and precious little to call its own, made me that way — but I digress. My journey to becoming a beer enthusiast led me to appreciate locality, particularly as it relates to the brewing industry. The idea of drinking something that was brewed only weeks before and just miles from my apartment was a titillating one. Titillating but not always realistic. Not always realistic and not always necessary or even beneficial. 

Though Pittsburgh’s prized microbrews have yet to be touched by it, the practice of contract brewing has recently gained attention in brewing circles. Contract brewing is exactly what it sounds like: A brewery does not have enough space, manpower or money to brew its own beer, so it contracts another brewery to do it for them. It reads like cheating and, in a certain sense, it sort of is. If a brewery does not make its own beer, a process that is nothing short of art when done correctly, how can it justify putting its label on the bottle? This one fundamental flaw aside, contract brewing has taken on a negative stigma within the beer community — one that it does not deserve. 

Breweries are expensive to build. Breweries are expensive to maintain. Breweries are expensive to staff. Breweries, if they want any hope of success, have to pay for distribution. Providing the drinking public with a quality beer is not an easy process for those on a tight budget. And although contract brewing might not be the most honorable solution in the eyes of some, it works. Matt Katase of Pittsburgh’s newest beer outfit — The Brew Gentlemen Beer Co. — said, “I see [contract brewing’s] value … I’ve seen it work and I’ve seen a lot of people do it successfully.” 

One such example of a contract brewing success story is none other than The Boston Beer Company, better known to you and me as Samuel Adams. Sam Adams — which, according to NPR’s Bill Chappell, reported net earnings of $181.3 million in the second quarter of this year — started out contracting the brewing rights for its legendary Boston Lager to none other than The Pittsburgh Brewing Company, famous (infamous?) purveyors of Iron City.

Right or wrong, Sam Adams is seen by many as the quintessential success story of the American microbrew. Today, though, the debate over whether or not Sam Adams is still a “microbrew” rages in the craft brewing community. Those earnings are definitely not emblematic of craft finances, but who are we to throw stones at a good business plan? No matter which side of the debate one comes down on, Sam Adams has played and continues to play a crucial role in the world of American beer. No Sam Adams would almost certainly mean no Stone Brewing, no Sierra Nevada Brewing, no Three Floyds Brewing, nor any of our other national beer treasures. In this context, one comes to see contract brewing in a different light. Without it, American beer might still be very dull and, furthermore, a national shame.

Though uncommon, contract brewing is still practiced today. This is out of necessity, however, not laziness. Space, or a lack thereof, seems to be a common denominator in the need for contract brewing. Having been on too many brewery tours to count, I can say with confidence that breweries are not exactly space-efficient enterprises. Thus, it is completely understandable that a small brewery still finding its feet would turn to contract brewing. 

The finances of opening a brewery can take years to amass, so if an upstart brewery does not have to wait to get its product on the market and make a name for themselves, why would they? 

It’s important to remember that contract brewing isn’t ubiquitous. Thanks to a kickstarter campaign, The Brew Gentlemen never had to contract out their recipes. “We had the plan to build our own brewery from the start,” says Katase. “Also, we’re going for a very small system, so we’re not looking to pump out giant amounts of volume.” Would contracting its brews have helped The Brew Gentlemen break into a crowded beer market? It’s certainly possible. Either way, it is still too early to say for certain, because the brewery will not officially open until later this year.

In today’s craft beer market, image is everything. Generally an astute bunch, craft brew consumers can smell a macro. Thanks in large part to Anheuser-Busch’s numerous attempts to break into the craft scene, a new microbrew has to look the part in order to gain respect. They have to look homespun — not too polished and not too professional.

For a startup trying to break into the expensive and competitive world of microbrewed beer, contract brewing can be the perfect way to cultivate an identity and test the water before having to fork over the cash for their own space. Ashley Routson of CraftBeer.com wrote, “Rather than having the usual revenue expenses associated with owning a business — rent, lease on forklift, loans on brewing machinery, payroll for a large staff — contract brewers use their capital for additional brand building and marketing activities to yield a higher return on investment.” 

The Boston Beer Company is a perfect example of this. Jim Koch needed to show people a product that would make them believe his company’s proud, honest, Bostonian image. But without the money to brew his beer and market, the task was a tall one. So, by contracting The Pittsburgh Brewing Company to brew the first batches of Boston Lager, he freed up both his time and money to convince Boston that its namesake beer was worth drinking. 28 years later, we’re all glad that he did.

Though it’s often spun as a brewery’s dirty little secret, contract brewing does far more good for the industry than it has done harm. Sure, it might muddy the idea of local beer being local but, really, as long as good beer is readily available, what’s the big deal? When asked whether or not contracting is cheating, as so many beer purists have made it out to be, Katase responded emphatically, saying “No! It’s a different route.” Contract brewing allows for more people to get into the beer industry, and — living in the golden age of American beer — I say, “the more, the merrier.”