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| September 13, 2016
The craft beer brewing industry has exploded, leaving beer lovers with more high-quality choices than ever before and tempting entrepreneurs to turn their favorite recipes into business success.
Rockland Trust’s “Talking Business Advice Series” asked Rob Martin, president of both the Ipswich Ale Brewery in Ipswich and the Massachusetts Brewers Guild, to put this growth in context and offer his insight on where the market is going. He explains why being ‘Dad’s Beer’ is not cool, laments the lack of beer loyalty in Boston, and predicts that sharp elbows will soon be flying in the business. His beverage of choice may surprise you.
With 25 years of history, Ipswich Ale has been in existence longer than nearly every other craft brewer in New England—so you’ve seen this market develop from almost the beginning. Today, the craft beer market seems to be exploding. How did we get here?
Take a step back and look at the big picture: Post World War II, the emphasis was on mass produced products—basically one-size-fits-all. Whether it was bread at the grocery store, cars, or beer, there was not a lot of variety. Today, consumers want choice and that’s what you’re seeing everywhere. Now, in our market, the sky’s the limit as far as what people will buy.
How many craft brewers are there today?
There are 4,700 brewers in the U.S. that fit that description today and they account for 16 percent to 17 percent of beer sales by volume. Our goal is 20 percent by 2020, when we expect to see about 6,000 brewers. This compares to fewer than 100 when Ipswich Ale was started in 1991.
Please translate that to volume. How much beer do craft brewers produce?
Ipswich Ale last year produced 26,000 barrels last year, making us at 99th in size of the 4,700 craft brewers in the U.S. Boston Beer Company and Yuengling are the largest craft brewers, and they combined for about 2 million barrels. Mass-market brewer Anheuser-Busch produced over 400 million barrels. To put the growth in context, when we first started we produced a couple of hundred barrels in our first year. When I bought the brewery in 1999 we did about 2,500 barrels, and this year we expect to brew 28,000 barrels.
When did the craft beer growth in the Boston area really begin?
Jim Koch started in 1985 (with Sam Adams), Harpoon was ’86 and Ipswich Ale was 1991. People were not conditioned to craft beers in those days, so we had to educate, inform, and sell our products at a time when there was no market yet. It was hard work to build breweries, get the products distributed, and get beer drinkers to try it and return. In the early days we had to change consumers’ minds about what good beer is, which through hard work we did creating the landscape we have today.
Contrast that to today.
Young beer drinkers today are committed to craft beers. The big difference is that they’ve grown up with it, they are accepting of it, and, quite frankly, they are demanding in a good way. They demand excellence and continued innovation. We have to be careful we’re not just, “Dad’s beer.” We need to keep reinvesting and innovating because being someone’s “Dad’s beer” is not cool.
If you had to pick one reason for the popularity and growth of craft beer, what is it?
Flavor. People like the flavor of craft beers.
What are your greatest challenges at Ipswich Ale and across the industry?
Brand loyalty is one of them. It’s gone. We have an issue with that in Massachusetts and I think it’s really a function of all our universities and the fact that everyone is from somewhere else. They are just as likely to drink the beer produced back where they come from as a local beer here, or a West Coast beer because it’s cool and hip. We don’t sell in Vermont and Maine, for example, because they’re very provincial and there is great brand loyalty to local products. We don’t have that here.
Also, there is no barrier to entry. Anyone with some money can buy the equipment needed to brew, pay someone to build it, and get started. They think it’s a fun, cool industry, they get to make and drink beer with their friends, they think they’re going to make a lot of money and get famous. They have no idea how hard it is, how you’ve got to be able to do everything that’s involved. After a few years in, they realize they’re not making any money. Then you start to see some winnowing.
How intense is the competition in this area?
It’s a battle here and it will continue. Elbows are going to get sharp.
What’s the hardest part of making good ale?
Consistency. Making a high-quality, consistent product is what separates the truly professional brewers from the rest.
As you build volume, is it hard to maintain consistency?
Yes and no. It is, naturally, because you brew so many more batches that there is more opportunity for error. That being said, as you grow you have more resources to put toward quality control and lab work, which should eliminate the chances of a quality issue.
How much time do you spend making the beer versus marketing it? How hard is it to carve a customer niche?
We spend equal time doing each. Carving out a customer niche is hard work that needs to be ongoing. Taste preferences seem to change yearly in our industry and that is something that we work hard to stay on top of. Ultimately, the best thing that you can do to carve out your niche is to be known for high-quality, interesting, drinkable beers. That will keep the consumer coming back.
How many people are employed in the craft beer business now in Massachusetts? How difficult is it to hire employees for your brewery, and in this industry overall?
There are about 1,600 people employed by brewers in Massachusetts. It’s not hard to hire someone who wants to work in a brewery. There is, at best, a romantic notion that surrounds breweries and, at worst, the concept that all we do is drink beer all day. What is difficult is to find qualified brewery professionals. With the number of breweries out there, the pool has been severely depleted.
What can state and local governments do to promote this growing industry in Massachusetts?
Without going too far into the weeds, laws that take some of the bureaucratic burden off the brewers would go a long way. Most of the laws that we work under are from just after Prohibition—which ended 83 years ago. These laws have nothing to do with the landscape of the brewing industry today, and they become a hindrance in both time and resources to navigate with no real benefit to the public.
Can you give a good example of an antiquated law?
I can pick a couple to give you a sense of things. As brewers, we cannot transport beer in a container larger than 63 gallons, which is not helpful for distribution in this era; brewers cannot easily donate beer to charities. Apparently, that was considered a bad mix in the post-Prohibition world.
What can consumers expect to see next?
Consumers really focus on hops—sometimes “the more the better.” Your palette then becomes conditioned to hops and I think it’s fairly limiting, so I hope that’s cyclical. One of the things we are seeing more of is sour beer. That could be the next big thing, but then again…who knows? It’s interesting that we don’t see a strong demographic trend with any one particular product as you might expect. It’s all about what’s new. Ultimately, I think that the consumer will continue to see innovation in styles. This innovation brings in new consumers and that’s what will help continue the growth of the industry.
We have to ask this question: are you a big beer drinker?
I like beer, but I don’t drink a lot of it—probably three or four beers a week. I probably wouldn’t eat much ice cream if I made that. Being around it all day may just do that to you.
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