Brewed for distinction
By Joyce Pellino Crane, Globe Correspondent | July 24, 2005
If beer went the way of coffee, there'd be a brew pub on every corner, and ordering a brewski would be just as commonplace as asking for a medium Sumatra with a shot of vanilla.
But even with July being American Beer Month, it's going to take a cultural revolution to turn Americans into Bavarians, at least in terms of beer drinking, said Jim Koch, founder of the Boston Beer Co., whose Samuel Adams beer makes up an infinitesimal part of the $77 billion-a-year industry.
''In southern Germany beer is part of their diet. It's viewed as food," Koch said. ''The same way we sit at lunch and eat out of the bread basket, they sip liquid bread."
For local craft brewers like David Asadoorian of the Concord Brewery in Lowell, greater demand for his product would turn a business that's just breaking even today into a profitable one.
Asadoorian belongs to a small but passionate breed of microbrew owners, producers, and distributors of specialty beers in batches (15,000 barrels or less) that are minuscule compared with the mass marketers. The brewery owner, whose day job is still accounting, has a long way to go before his prospects grow brighter.
As much as he hopes to make money, Asadoorian said he's in the business for the love of it.
''The coolest thing about it is I own a brewery," he said. ''It's fun."
Ray Daniels, director of craft beer marketing for the Boulder, Colo.-based Brewers Association, sees a promising future for craft brewers like Asadoorian.
''There's never been a better time to be a small brewer. Business is booming for the craft beer maker," he said.
Daniels defines a craft beer as one, such as Samuel Adams, whose brewer focuses on flavor and not ''drinkability," a promotional word used for the mass-produced Budweiser.
Still, despite Daniels's optimism, boosting sales requires advertising, and revenues at the Concord Brewery, for example, don't support that expense. It's a vicious cycle that Asadoorian said he'll overcome in time as sales increase.
This is the plight of the microbrewer, a business that mixes economics with artistry and yields a product that requires a following.
Beer drinkers are a loyal breed that returns to the same brand, say industry analysts. Despite its association with pleasure and fun, beer drinking requires some knowledge of the different styles, types, and characteristics that fall under the beer umbrella.
Though all beer starts out with water, yeast, malt, and hops, variations in bitterness, density, and color yield hundreds of different flavored beverages.
Smitty's Liquors in Tewksbury, for example, says it sells 85 beers, including ports, stouts, lagers, ales, and wheat beers. There are beers that taste bitter, those that taste fruity, and beers that are spicy. Some beer drinkers go for only imported beers such as Heineken and Labatt. Others prefer the regional beers of Samuel Adams and Boston-based Harpoon Brewery, while the bulk of Americans go for the nationally distributed brands like Budweiser or Miller.
Within Massachusetts, there are about three dozen microbreweries and brewpubs, which are restaurants that serve beer made on site. The only ones within the Globe NorthWest coverage area are the Concord Brewery and Martha's Exchange in Nashua, though avid beer drinkers can find small brewers in nearby communities such as Manchester, N.H., Haverhill, Waltham, and Cambridge.
Underscoring the challenges of the business, microbreweries in Wilmington and Derry, N.H., have gone out of business in recent years.
Asadoorian bought his business in November 2003 from master brewer Michael Labbe, who continues to work at Concord Brewery as an employee. Asadoorian, who was Labbe's accountant, said he relishes the business challenges, while Labbe prefers the artistry of beer crafting, opting to shed the operational headaches.
Now it's up to Asadoorian to figure out how to sell more beer.
One of the fastest ways to gain recognition for a brand, say industry experts, is by selling it at a professional sports team's ballpark. Unfortunately, that's one of the most difficult venues to break into, said Koch, who waited 15 years sell his brew at Fenway Park.
''We had to change people's fundamental perception about American beer and create a whole new category of beer in people's minds," he said. ''When we started, nobody knew what a craft beer or microbrew was and the whole idea of quality American beer was an oxymoron."
Koch got a few breaks, however. He won a spot at the Patriots' Foxboro Stadium in the mid-1990s because of a connection to the Kraft family, and by the late '90s, he was advertising at Celtics games.
Asadoorian has his sights set on the Lowell Spinners games, but Budweiser is a sponsor of the Red Sox-affiliated team, which he believes leaves little room for other beer vendors.
"Opportunities for Concord or some of the other brewers around do exist," said Brian Lindsay, the Spinners' vice president of business operations. "It's just that we have a relationship with [Tewksbury distributor] D.J. Reardon right now -- which does not leave out anybody else. Things are the way they are, and next year they may be something else."
''Being in those parks is one of the ways we would have the opportunity to have people try our beer because we have a captive audience . . . ," said Asadoorian. ''Something like that would be a huge public relations benefit to us."
Anheuser-Busch of St. Louis is the largest beer distributor in the country, claiming 50 percent of the US market, according to a company spokesman. Miller, Coors, and Pabst are distant competitors. Even after 20 years, Koch has only one-half of 1 percent of the market, underscoring the difficulty of branding such a specialty item.
US beer drinkers consumed 206 million barrels in 2004, with 6.6 million of those craft beers, according to Beer Marketer's Insights of Nanuet, N.Y., a beer industry informational website. Though liquor sales have been flat in recent years, the Brewers Association claims the craft beer segment of the industry grew by 7.2 percent in volume from 2003 to 2004.
Nonetheless, Anheuser-Busch is in no danger of losing a significant market share to a microbrewer anytime soon, Daniels said.
''It's a challenging business," he said of craft beer. ''I liken it to something like the music business because there's a tremendous amount of romantic appeal . . . there's a lot of people who will work for not a lot of money or put their own money into it."
That's where Asadoorian finds himself. With a payroll of three full-time and two part-time employees and annual production of about 3,500 barrels (each containing 31 gallons), he says he's breaking even. If the company can increase sales, Asadoorian plans to put the profits into advertising. Within a few years, he hopes to double production, and at that point, the business would yield a profit.
But Daniels has got his eye on the big picture, imagining increased demand for quality brews at higher prices.
''What Starbucks did is make coffee into an affordable luxury," he said, ''and that, indeed, is what craft beer is."