Craft beer movement comes to a head

Eric Connor | The Greenville (S.C.) News

GREENVILLE, S.C. -- The days of 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 home brew 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.

South Carolina is poised to nearly double the number of breweries currently operating in the state.

Here in Greenville, 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 wonder how many more the market can sustain.

Greenville gaining ground in craft beer market Local craft beer entrepreneurs talk about the boom of local brewers. MYKAL McELDOWNEY/Staff, The Greenville News

Does any of this sound familiar?

The guy who quit his job in the IT 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 add up to keep their 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 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 statistics and economics are pointing in his favor.

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.

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, owner of Barley's Taproom and Pizzeria in Greenville.

"All we're doing is turning people from bad beer to good beer," Beeby says.

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 spent 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 South Carolina 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 in 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.

The two researched markets in Savannah, Asheville and various parts of South Carolina, but settled on Greenville.

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

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, 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."

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

A host of beer stores soon followed. Larger retailers have taken notice and are getting into the game.

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.

"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."