Revenge of the Gypsy Brewers

                                                                            by Paul Draket

If you can't afford to buy a brewery but still want to enter the industry you should consider contract brewing as
many other well-known brands have done.  It's a perfect for way for a start-up to go since it requires no expensive
infrastructure. After all, there’s nothing riskier than building a plant before the brand and the beers have been

Craft brewing’s decade-long global surge has been partly fueled by contract, or “gypsy,” brewers, rootless beer
makers whose recipes are realized on other breweries’ equipment. Early trendsetters like Evil Twin Brewing and
Mikkeller of Copenhagen and Stillwater Artisanal of Baltimore built themselves into international brands through
sales in bars, supermarkets and beer stores.

But now, consumers are increasingly seeking beer at the source: As sales at breweries and brew pubs rise
consumers routinely troop to breweries for releases of cans and bottles, and a sense of belonging to a particular
place has become as important as the beer itself.  That places contract brewers in a difficult spot. If they don’t
have a brewery, they don’t have anything to show people.  It's as if they were homeless.

As a result, many itinerant beer makers are dropping anchor, opening breweries with tasting rooms for thirsty
patrons. Evil Twin, in Queens, NY and Grimm Artisanal Ales, in Brooklyn, are building breweries and taprooms.
Stillwater will start its own beer production plant next spring in Greenpoint, Brooklyn.  Last month Almanac Beer
Company revealed plans to construct a brewery and taproom in Alameda, Calif.. Even the world's most famous
gypsy brewer  Mikkeller, will open a brewery at
Citi Field, home of the New York Mets.

For most contact brewers who are successful the question is do they spend  their money the old-fashioned way
with advertising and marketing, or do they spend big dollars on a facility where they can serve beer to
consumers? It’s a pretty easy decision considering the money to be made in a tap/tasting room.  Taprooms also
serve as consumer focus groups. Brewers can get immediate feedback from customers and sales which informs
management on their  next step.

Even more traditional brewers are planting roots. In February, the 127-year-old Narragansett Brewing Company,
which once produced New England’s top-selling beer (and one of its catchiest slogans: “Hi, neighbor! Have a ’
Gansett”), resumed brewing in Rhode Island for the first time in decades..

The beer was discontinued in 1983, but Mark Hellendrung, a former president of Nantucket Nectars, bought the
brand rights in 2005 and soon began contract-brewing its landmark lager in Rochester. Last year, he moved the
company into the cooperative Isle Brewers Guild in Pawtucket, R.I., and, in February, started making smaller
batch beers like It’s About Time I.P.A.

All the same, many of these beer companies still outsource much of their brewing.. Narragansett makes most of its
beer, including its lager, in Rochester, at North American Breweries, which also produces Genesee beer. That
brewery’s mix of lager-making expertise, speed and economies of scale is hard to beat, The Rochester brewery
can make 1,200 to 1,400 cans a minute, compared with 240 in Pawtucket.

Mikkeller beers are mostly contract-made in Europe, where he operates the Warpigs Brewpub in Copenhagen in
tandem with 3 Floyds Brewing Company of Munster, Ind

But that can exact a cost, in dollars and freshness, when you factor in tariffs, shipping costs and delivery times.
It's far better to. produce an I.P.A. and serve it to customers within a week or two weeks instead of two months.  
The brewer then can better adapt to fickle consumer tastes by making and selling popular brews directly from the
brewery. The customers get a better experience if the brewery is behind everything, instead of going to a
supermarket or some random bar.  Having said that it should be noted that Mikkeller and the other brewers still
sell most of their beers in bars and stores.

Despite the logic and success of contract brewing there is still a stigma attached to beer not brewed under its own
roof.  In addition, there is far more creative freedom when the brewing entity is calling the shots. Gypsy brewing,,
to many brewers means they are working with one hand tied behind their back. There are always limitations.  For
example, beers fermented with wild yeast are usually not allowed at the contract brewing facility for fears of
contamination. - SPECIAL REPORT
Contract brewers build their own facilities
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