Craft beer: Flavor of the month or growth industry?

DRINK LOCAL: Josh Roy, driver for Rhode Island Brew Bus, looks to drum up business at the recent Ocean State Beer Festival. The bus offers weekend tours of local breweries. / PBN PHOTO/MICHAEL SALERNO
DRINK LOCAL: Josh Roy, driver for Rhode Island Brew Bus, looks to drum up business at the recent Ocean State Beer Festival. The bus offers weekend tours of local breweries. / PBN PHOTO/MICHAEL SALERNO

“MORE TOYS,” Armando DeDona observed, as he cut open the shrink-wrapped hoses and heat exchanger delivered one September evening to Long Live Beerworks, the newest among a small but growing list of packaging craft breweries in the state.

The New Haven, Conn., native borrowed most of the $80,000 in startup costs for the venture at 425 West Fountain St. in Providence.

“It’s been over a year in the making for this space: the lease agreement, permitting and buildout,” DeDona said. “I love beer, and I love the state and city. And I’m happy to be a part of this.”

Three years ago, the state had just one such brewery, Newport Storm. Long Live Beerworks will be the ninth such brewery to open since then, hoping to build local and regional brands with funky beer names like ‘Nuff Said IPA and Heck Hound.

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Besides the packaging craft breweries, five brewpubs where beer is both brewed and consumed also call the Ocean State home. And two contract breweries, Revival Brewing Co., and Narragansett Beer, have offices in Providence.

Narragansett, once a Boston Red Sox brand that died out and then re-emerged in 2005, today offers its reinvented lager, several craft ales and a Del’s Shandy, among other brews.

“Everybody used to drink the same beer and didn’t really experiment, but today people will experience more of the brands that are out there,” said ‘Gansett CEO Mark Hellendrung, explaining both his company’s revival and the national surge in craft-beer consumption.

While Rhode Island-based brewers and craft-beer enthusiasts are excited about the recent growth of the industry locally, including several popular festivals, the state still lags the rest of New England in production by a wide margin. In order to catch up, industry insiders and observers say, state regulations need to become more beer-friendly to help create a level playing field with neighboring states.

But there’s no denying the enthusiasm in the local industry, especially at the grass-roots level among home brewers and beer aficionados.

Market Potential

Rhode Island brew festivals attract thousands each year, including the 7-year-old Beervana Fest held Oct. 16 in Cranston that was expecting 1,300 attendees and 50 breweries and importers.

The Rhode Island Brewers Guild sold out its Ocean State Beer Festival on Sept. 20. And the 22nd annual Great International Beer Festival, which attracted 4,500 enthusiasts last year, is expecting 5,000 on Oct. 24 at the Rhode Island Convention Center.

Beervana had to expand to a second floor at Rhodes on the Pawtuxet this year, co-founder Brian Oakley said.

“With the influx of all the new local breweries, that was definitely the impetus for us to grow to the second floor,” Oakley said. “I’m hoping next year we’ll be able to add another 15 tables and fill the entire second floor.”

The international show has a 10-year-old spring complement, and founder Maury Ryan has introduced competitions at both that have drawn more than 800 entries in 15 categories from breweries from across the country who “want the medals” from some 91 judges, Ryan said.

An independent promoter but a lawyer by trade, Ryan sensed the market potential two decades ago, but has been surprised by the recent surge, he said. In 1993, the festival drew about 1,200 people, compared to 5,000 today.

“I like beer, but I’m not a major consumer of it,” he said. “It just seemed like it had good possibilities and it was more fun than practicing law.”

Bill Nangle noticed the surge of interest in craft brews and in 2014 launched his Rhode Island Brew Bus tours out of North Smithfield. He operates four distinct tours of local breweries on weekends of up to 13 people each.

“Every month we’re seeing more participation,” Nangle said.

As a manufacturing industry in Rhode Island, brewpubs and breweries employ about 150 people, said Brent Ryan (no relation to Maury), president of the Rhode Island Brewers Guild and president and founder of Newport Storm, the oldest packaging brewery in the state. Sean Larkin of Revival and the brewery Brutopia and Maury Ryan are guild co-founders, and Larkin is a former president.

Together, 14 breweries and brewpubs produced more than 12,300 barrels in 2014, Brent Ryan estimated. That doesn’t include Revival, Narragansett or the brewpub Mohegan Café & Brewery on Block Island, which did not provide statistics. The total compares with less than 6,000 barrels before 2012, when Newport Storm was the only packaging brewery around, Brent Ryan said.

By comparison, the national Brewers Association reports Massachusetts produced 372,883 barrels in 2014; Maine, 289,646; Vermont, 243,905; New Hampshire, 79,952; and Connecticut manufactured 72,682. It defines craft brewers as those that are small and use traditional ingredients but innovate, brewing distinctly varied beers.

One of the bigger players in the craft-brew field, Boston-based Sam Adams, produced most of its 2.5 million barrels in 2014 in Pennsylvania and Ohio, the association said.

Ready to Expand

Some of Rhode Island’s popular brews include Westerly-based Grey Sail Brewing’s Captain’s Daughter, an Imperial India Pale Ale brewed with pilsner malt and flaked oats, and Kickback, a wheat beer brewed by Crooked Current Brewery in Pawtucket.

Tiny by national standards, Grey Sail, Crooked Current and the Tilted Barn Brewery in Exeter are all expanding.

Jennifer Brinton, Grey Sail owner and operator, says she and her husband are adding capacity to go from 5,000 to 8,000 barrels annually within the next year. They sold about 2,100 barrels in 2014, but this year are projected to nearly double that, she said.

“We are out of capacity to brew,” she said. “We’re out of stock right now on three different products. We just can’t brew fast enough. And that’s with only Rhode Island and Connecticut as our markets.”

Foolproof Brewing Co. in Pawtucket recently chose National Distributors Inc. of South Portland, Maine, to retail its beer in that location.

“I don’t want to take on every brand; I want to take on just the right ones,” said Josh Blackadar, the distributor’s craft/import brand manager.

Unlike some of the smaller brewers in Rhode Island, Foolproof founder and President Nick Garrison, who also uses Rhode Island Distributing Co. LLC of West Greenwich to distribute his products, has ambitions for Foolproof to become a national brand. It’s a tall order for any brewer.

“Making your beer stand out is a challenge,” he said. “You have to have competitive pricing. You have to have great beer.”

Gregg Glaser, editor in chief of Yankee Brew News, which covers New England and New York, notes the dominance in the United States of lager and light beer sales, led by Anheuser Busch InBev, which has recently announced plans to buy SABMiller.

Across the country, Glaser said, “craft beer sales without a doubt every year are growing in volume share and market share. [But], they’re still very small compared to the big brewers in the world.

“For INBev to buy SABMiller, [the new company] would be huge,” he said. “The biggest concern for craft brewers with such a deal like this would be for one company to be so large, to have maybe 75 percent of all U.S. beer sales, the question is, would craft brewers lose presence in distributorships. … The distributorship is the middle ground between the retailers and brewers. … I think it’s a legitimate worry,” he said.

For 2014, the Brewers Association ranked Rhode Island 23rd per capita, but only lists 11 instead of the 14 current breweries and brew pubs. When it comes to volume produced by the barrel, the state ranks 47th, and in terms of economic impact, at $160 million a year, ranks 48th. The association will update its data next year, Chief Economist Bart Watson said.

Self-distribution

One impediment to a rapid expansion of the local market is that Rhode Island regulations don’t allow self-distributing of beer the way other states, including Massachusetts, do, says Jennifer Pereira, associate professor, beer expert and faculty adviser to the student brewing club JbreW at Johnson & Wales University in Providence.

The national growth trend in craft breweries shows “no sign of slowing,” but the local law is “not really beer friendly,” she said.

According to the R.I. Department of Business Regulation, which licenses brewpubs and breweries, as well as retailers and wholesalers, packaging breweries as of 2013 are only allowed to sell up to 72 ounces, equivalent to about a six-pack, per person at their site. To sell in bulk to retailers or wholesalers, they need distributors.

In contrast, in Massachusetts, Rob Martin, president of the Massachusetts Brewers Guild and president of Ipswich Ale Brewery in Ipswich, Mass., said, the vast majority of the state’s industry are “farm breweries,” which get their ingredients from or have relationships with farms in the state and are licensed to sell their beer without having to hire a distributor.

Matt Richardson, co-owner and head brewer of the Tilted Barn Brewery, which grows its own hops, noted: “We get people from Massachusetts or Connecticut coming with a whole armful of growlers – glass or ceramic containers that can hold up to 64 ounces – and we’ve got to tell them we can only fill one.”

Self-distribution to retailers “certainly can be an advantage depending on your scale,” said Martin, whose guild has 70 members. “You are your own best salesperson, usually.”

There’s hope among Rhode Island brewers that the state will look to match Massachusetts’ regulations on self-distribution.

DBR Director Sidney “Macky” McCleary said he and his staff are not just regulators but as a division of the Executive Office of Commerce have a “responsibility to create the playing field for growth” and eliminate “regulatory hurdles” where possible.

“We are looking at all regulatory hurdles,” McCleary said, without specifically identifying the self-distribution law. “We want to create a fertile environment for all levels of businesses to grow. It always helps when there’s a neighbor state like Massachusetts that’s done something similar. There’s a greater rationale for us to try to catch up.”

Unlike the breweries, brewpubs like Trinity Brewhouse in Providence, one of the oldest and owned by Sen. Joshua Miller, D-Cranston, can serve their product on-site. Miller attributes Trinity’s success to a diversity of out-of-state and downtown customers ranging from librarians to Trinity Rep theatergoers from across the street.

All five brewpubs thrive because they are not located too close to one another, Miller said.

“Downtown, there’s definitely room for more than one brewpub, and the other brewpubs are farther away and they all have different approaches,” he said. “We’re more casual. We look to be accommodating to a diverse market.”

As all brewers try to stand out, Miller says Trinity’s IPA has been its most popular beer because its extra “hoppiness” is something “you don’t see in national brands. It’s got a distinct flavor and aroma, and people are curious and enjoy it once they try it.”

Future growth

By next summer, Narragansett Brewing Co. plans to move some operations to Rhode Island, either on its own or potentially by partnering with someone.

Besides its light beer and lager, Narragansett will have 12 varieties this year, including a seasonal mash-up series and Lovecraft series. Some of its craft beers are produced at Brutopia, Hellendrung said.

He brought back the dead brand, which had been the official beer of the Boston Red Sox for close to 40 years, after a conversation struck in 2004 with one man in a bar led to everyone at the bar talking about it, and subsequent conversations with beer drinkers continued to stoke the idea of a comeback.

“There was just this really great affinity for what Narragansett stood for and [an interest in] bringing back a local legend,” he said.

This year, Narragansett will produce 93,000 barrels of beer (nearly all out of state), about 70 percent of which is lager and 30 percent is “everything else,” including the craft products, Hellendrung said. He projects a 12 percent sales increase from 2014 to $14 million by the end of 2015. He could not say whether the industry will continue to thrive, but that he wants to be in his home state.

“I want to be here because I’m from here and I love the state,” he said. “I’m not driven by the industry or anything else going on. We’ve got a great brand, a great history.”

Jason Laurenco, who with Nichole Pelletier launched Crooked Current a year ago, says the growth potential of the local industry is tangible. The brewery this summer was voted Rhode Island Monthly readers’ local favorite.

“It’s almost cliché, but I see only positives in the future,” Laurenco said. “The breweries all pump out great beers. We all even watch to make sure we don’t step on each other’s toes in terms of creativity. It’s a great time to be a craft-beer drinker here.” •

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