If They Build It, Who Will Come? National Brewpubs with Neighborhood Aspirations

Feature by | Dec 2016 | Issue #119
The roof deck at the Portland, Ore., location of 10 Barrel Brewing. | Photo by Rebecca Kirkman

“Drink local.” Surely, it’s easier than ever to satisfy this simple command, considering there are more than 4,000 breweries operating in the United States. For many, the best way to access local beer is to take a short walk to a neighborhood taproom or brewpub. But what if the neighborhood taproom is an offshoot of a huge company? It’s a growing trend confusing the drink-local mantra.

For better or worse, urban centers are once again popular, with young professionals foregoing outskirts for inner city apartments and powerful companies horning in on the action created by scrappy local businesses. Big box stores are rediscovering the value of small storefronts and foot traffic visibility. What does this mean for the biggest breweries, whose sprawling production spaces typically benefit from ample square footage at low prices? How do they capitalize on the energy and excitement attracting more and more beer drinkers to smaller downtown taprooms?

Certainly, beer companies aren’t abandoning large facilities. Anheuser-Busch operates a dozen breweries throughout the United States, while MillerCoors, has eight main locations. Slightly lower on the food chain, Lagunitas, which sold a 50-percent stake to Heineken in 2015, is currently building its third large-scale brewing operation in Azusa, Calif. Many of its craft brewing peers—like Colorado’s New Belgium and Oskar Blues, and California’s Sierra Nevada, Stone, and Green Flash—made their national ambitions known by opening East Coast factories. Such leaps allow companies like these to better control the flow of their beer along established distribution channels, potentially delivering a fresher beer to market.

But increasingly, big brewers, with their big bankrolls, are insinuating themselves into the public’s awareness with their version of a small storefront: a branded brewpub or an experimental brewery and taproom in a heavily-trafficked neighborhood. For 2017, on the heels of opening a 10 Barrel brewpub in Denver, AB InBev is planning another 10 Barrel brewpub in San Diego and a Goose Island Brewpub in Philadelphia. Lagunitas is launching small offshoots in South Carolina and Seattle; and this summer, 21 years after The Sandlot Brewery opened in Denver’s Coors Field baseball stadium (where the Blue Moon brand was launched), MillerCoors opened the first Blue Moon brewery, taproom, and restaurant in Denver’s busy River North Arts District, better known as RiNo. Half of the 30,000-foot space is dedicated to beer production; the rest seats around 400 and includes a private events area surrounded on three sides by glass for views of the tanks and other equipment. Blue Moon’s flagship Belgian-style Wit pours alongside two dozen of the brewery’s other beers, most made in-house on 2- and 20-barrel pilot systems.

Colleen Weber, who handles marketing communications for Blue Moon, says the new brewpub is a more robust experience than the company has had in the past, emphasizing how customers can get a closer look at the operation. “[The RiNo location] follows a cultural shift,” she explains, “whether it’s chef-driven, brewers, wine—basically everything—people are more curious than they have been before, so we want to help bring them into what we’re about.”

Blue Moon, of course, was one of the earliest mass-produced beers that some consumers tagged with the derisive term “crafty,” referring to its misleading packaging that mimicked craft brewing’s style. In 2012, the Brewers Association, representing smaller, independent breweries, accused conglomerates like MillerCoors of “deliberately attempting to blur” these lines. The company even faced a lawsuit from a disgruntled drinker who felt MillerCoors’ connection should be disclosed on the label. Plenty of fans of this white ale still don’t realize (or necessarily care) that there’s a global giant behind the curtain. But somebody, somewhere does make the beer. And Weber is correct that people are more eager than ever for a bit of transparency. In 2013, The Sandlot Brewery finally began welcoming the public to its taproom even on non-game days. And now, Blue Moon can also point to its new brewpub as evidence of its beers’ origins, and be telling a partial truth. Will this be enough to satisfy fans, let alone detractors?

New Belgium, Oskar Blues, and more recently, the AB InBev-owned 10 Barrel Brewing have made similar incursions into RiNo, which was already well-stocked with homegrown breweries like River North Brewery, which helped put its namesake neighborhood on the map when it opened in 2012 but fell victim to the area’s success when its building was sold to an apartment developer. Facing low vacancy rates and high real estate costs, River North Brewery had to move its operation out of RiNo last year, but hopes to return to the original neighborhood with a taproom eventually.

Whether or not new arrivals like Blue Moon are causing a rise in rents, they can certainly afford to plunk a “destination” outpost into an already happening beer scene, hoping to benefit from the buzz. According to Weber, Blue Moon chose RiNo for its creative vibe. “Maybe after [customers have] gone to the brewery they can explore the rest of what that district has to offer, which fits nicely into Blue Moon’s brand values of ‘artfully crafted,’” she says.

Steve Kurowski, operations director at the Colorado Brewers Guild, isn’t so optimistic. “We are concerned about these sort of brewery openings, not only for Denver, but for craft brewers everywhere,” he says. “If this model works in markets like this, I can see this spreading to other parts of the country. These breweries are trying to look like they are independent and locally owned by placing themselves in a hip and thriving craft beer neighborhood and capitalizing on the work and reputation independent breweries worked so hard to build. So basically, small business does all the work and these [big] businesses come in and reap the benefits.”

Joe Bisacca, one-third of the founding team behind Seattle’s Elysian Brewing Company, which was bought by AB InBev in 2015, agrees that having an experimental brewpub presence is a good way to stand out in a crowded market. But he admits that in the past, many of them opened purely out of desperation. “I think a lot of craft breweries forget the reason we all had pubs when we opened was [because] we were broke. Those pubs were a critical factor in just keeping the doors open,” he explains. “We were in panic mode.” Eventually, Bisacca realized the power of having something interesting and tactile for customers to experience. “There’s gotta be something authentic about the brand somewhere for us to feel good about it,” he insists. “Having a destination you can go to, it gives people a sense it’s a real brand.”

Lagunitas gets that—it now has an in-house division devoted to exploring new ways of spreading its brand throughout the United States. The separate LLC is behind at least five recent deals, including a developing partnership with Austin, Texas-based Independence Brewing Company, an investment in Moonlight Brewing in Santa Rosa, Calif., a nonprofit-only event space in Portland, Ore., and soon another in San Diego, plus two experimental brewing operations in South Carolina and Washington. The first Lagunitas Taproom and Beer Sanctuary launched in Charleston, S.C., in October, and the second is slated to open in Seattle’s brewery-rich Ballard neighborhood before the end of the year.

Founder Tony Magee is careful to clarify that Lagunitas U.S. Holdings (L.U.S.H.?), the division in charge of this nationwide push, is followed by a question mark. He says that’s because he doesn’t have answers so much as questions about how the satellites will fit into the larger brand strategy. “It’s a process of inquiry,” he offers repeatedly.

In Charleston, where Lagunitas replaced the Southend Brewery and Smokehouse (a brewpub “that really had no brewing identity of its own,” Magee claims), one part of the approach involves a forthcoming promotional program with bars and restaurants around town—an attempt to help bring attention to the whole scene, Magee says. Another piece of the puzzle involves providing free space, beer, and staffing to nonprofits at a Community Room in Portland, Ore. “You don’t really want to pull business from those people who’ve been your tacit partners all along,” he says. “So the idea, the hard part, it requires a very delicate hand, is to find ways to participate without interfering.” But Magee, returning to his mantra of inquiry, admits he isn’t sure how to participate constructively rather than disruptively. Still, he’s eager to forge ahead and hopes for a successful outcome.

As Magee describes it, the Seattle Taproom has the most potential to be accidentally disruptive. While his goals include both amplification and community building, he doesn’t offer concrete plans for what this signal boost of the existing community involves, other than the draw of the Lagunitas name. Instead, he talks about how Lagunitas’ various partners will get to visit Seattle to experiment on the 14-barrel system. He praises Ballard’s energy, but hedges his bets, downplaying the popularity of the street his space will be on, noting that it has just one or two other breweries (Peddler and NW Peaks) while the other half-dozen producers in the neighborhood are several long blocks away. It almost feels like intentionally splitting hairs to avoid potential blame.

“Yes, there’ll be, I suppose, competition for dollars, but the hope is that if we earned 3 percent of the dollars [spent in Ballard] but built the scene by 5 percent, it’s a net gain for everybody,” Magee says. “My hope is that even if there is backlash, or skepticism about our motives, over time people will figure out what we’re really there doing, and what we’re not there doing, and hopefully if we’ve done our work, and this inquiry leads to insight, we’ll find ways to be seamless within the community, not be an intruder but become part of the community. That’s the goal, right, because craft brewing’s going to become increasingly local.”

Elysian co-founder Dick Cantwell, who was opposed to the AB InBev sale and left the brewery shortly thereafter, says he hates to see these major players appropriating anything pioneered by small, artisanal businesses, but he understands why the trend is hot. “[Big brewers have] seen a lot of success with what craft breweries and brewpubs have been able to do and they want to appropriate that,” he says. “It’s clearly working.”

Like the Colorado Brewers Guild, the San Diego Brewer’s Guild has spoken out against 10 Barrel’s plan to open a San Diego brewpub, repeating longstanding industry concerns about the obfuscation of heritage that may lead beer drinkers to think they’re supporting the local community when their dollars are actually going to international titans. Others have also attempted to stem the tide through legal channels, unsuccessfully. In December 2014, a distributor challenged AB InBev’s right to own and operate a 10 Barrel brewpub in Idaho (it already has locations in Portland and Bend, Ore., in addition to Denver). Per Alcohol Law Review, an online discussion board moderated by Paul Pisano, general counsel and senior vice president of industry affairs at the National Beer Wholesalers Association, “The declaratory action [sought] a ruling to confirm Idaho’s statute that a brewer producing more than 30,000 barrels cannot hold a retail, brew pub, or wholesale license.” Just this fall, a state district court in Idaho ruled against the challenge, despite the fact that AB InBev produces close to 200 million barrels of beer per year—essentially concluding that a subsidiary operated separately from its owner can be considered separate by the law.

Cantwell is surprisingly sanguine about the prospect of Goliath utilizing David’s tools. “Once an idea’s out there it can be good for anyone. You can only cry so much about that,” he says. And if dynamic players force macrobreweries to up their game and provide a more intimate experience for consumers, that’s not necessarily a bad thing. But what comes next for independent companies when big conglomerates with powerful funding are trying to offer a similar experience?

The challenge for craft brewers, as ever, is tapping into the creativity, ingenuity, and local roots that set them apart from the big guys and their resources—and the desperation they felt in earlier days can be a powerful motivator. Magee, whose company no longer meets the Brewers Association’s qualifications for a craft brewery, says to expect plenty of change in the beer landscape over the next five years. “I think during this time, though, brewers who are doing really interesting things will have a chance to be found,” he says. “Only what’s really special is going to be attractive to people. It’s the best time in the last thousand years to be a beer lover.”