29 May Offsite Taprooms vs. New Breweries: Which Is Better for Indiana Craft Beer?
There is a growing trend in Indiana craft beer. It may have started slow, but in the last year or two it has gained considerable steam. This movement has contributed to a reduction in some of the beer deserts (see this article) or under-represented areas of the state, but I’m not referring to the opening of new breweries, like Raintree Brewing in New Harmony, Kopacetic Beer Factory in Monticello, or the soon to be open Branch Water Brewing in Anderson.
The trend of which I speak is the opening of offsite taprooms (with or without food) by existing Indiana breweries. It all began about two-three years ago with both Upland (Broad Ripple, Carmel, Columbus) and Chapman’s (Fort Wayne, Wabash, Columbia City, Angola) opening multiple taprooms in towns separated from where their breweries are located. Lately, the pace has quickened noticeably.
In the past year or so, no fewer than sixteen Indiana craft breweries have opened offsite locations to drink/buy their beer (including Danny Boy, Sun King, Thr3e Wise Men, Grand Junction, Books And Brews, Wooden Bear, Tin Man, People’s, Bare Hands, Taxman, Noble Order, Mashcraft, Quaff On, The Tap – and one more I can’t mention just yet). If you include the breweries that expanded slightly earlier (Triton, Mad Anthony, Chapman’s, Upland, New Albanian), then fully 16.5% of Indiana craft breweries now have offsite taprooms.
On the surface (and perhaps more deeply), this seems like a wonderful thing. These breweries are having enough success that they are willing to risk the additional cost outlay to expand their reach and sell more of their beer (in a more personal way than just distributing beer to stores and bars). But before we simply give our blessing to this business model as good for craft beer fans and for Indiana, let’s consider the following: will offsite taprooms hamper the opening of new breweries? And if they will, won’t this be more likely to cause a slowing in Indiana craft beer innovation and variety? In order to develop an informed opinion, let’s take a look at the state of Indiana beer and the merits of each side of the argument.
Is there a ceiling to Indiana craft beer consumption? Indiana is ranked just ahead of its population in terms of number of breweries (17th in population and 15th in number of breweries), but we lag behind in terms of per capita production (32nd, according to the Brewers Association). This suggests that we have some room to grow, but regardless of the numbers, there is undoubtedly some maximum number of craft beer establishments that the state can support – a saturation point.
People can argue about how close we are to saturation; I personally don’t think we are near it yet. There are still many people in Indiana that are craft beer hold-outs and who will, over time, come to learn of the wonders of independent, artisan-produced beer. Yet, there will be that point in time when we have reached our limit and breweries start to fall by the way side. More breweries have been closing or have gone up for sale in the recent past (Tin Man, Heady Hollow, Outliers, Rock Bottom-86th Street, and Twisted Crew for instance), but I don’t think they represent a shift in the environment. Tin Man might has continued with a new owner, and Twisted Crew had a very limited business model that didn’t foster confidence for their long-term success, and Heady Hollow is now MashCraft-Fishers.
As we approach a ceiling in Indiana craft brewery number or consumption, the question then becomes: how do we want to reach that point, and what should Indiana craft beer look like when we get there? I wrote a piece not too long ago extolling the virtues of the neighborhood brewpub, arguing that when and if the bubble comes, neighborhood brewpubs will come out as survivors in part because they ultra-local and connected to their neighborhood. But this too, needs more examination.
Will Indiana craft beer drinkers be better served by the expansion of well-run and successful breweries, or by the creation of new breweries/brewpubs? Both sides of the equation have merit, and I was surprised at where I ended up when I thought about it for a while. By the way, most of this piece took place in my head, so Walter was reduced to the role of just looking at me wondering what I was brooding about. But don’t worry she’s fine and asking me to go out and have a beer. She’s used to that look – I brood a lot.
The merits of the new breweries argument. It’s pretty easy to see the upside to opening more breweries, whether they be in beer deserts or in already served areas. More breweries means more different beers for us to drink and to fall in love with. Innovation is served best by the creation of new breweries.
A new brewery means a new brewer, or a brewer with new opportunities. This usually means a chance to create beers that they love and that they hope we will love too. As more beers are placed in the marketplace, the need to be innovative in producing a better version of a particular style or a beer no one has thought of before is increased. This is usually good for craft beer drinkers, as the experiments that succeed will be repeated and those that fail will fall by the way side.
Furthermore, the innovation that new breweries offer is something that many expanding breweries can’t afford. When opening an offsite taproom without increasing capacity, a brewery begins to tax their brewing system in ways they had not done to that point. In most cases, this means that they need to produce more volume of their flagship beers, those that are proven sellers.
If a brewery is using their system to make more of a few beers, it means they have less capacity to make new beers (happened for a while with TwoDeep when they started canning). In essence, there are beers that fall by the wayside and never get made because they need to produce more of a known seller. That reduces innovation. So definitely that is a point in favor of new breweries instead of offsite taprooms.
In addition to the above argument, Walter and I like new breweries because we like to drink where the beer is made. They have a connection to the local community that an expansion establishment will find it harder to create, and having the brewer(s) there offers more opportunities to learn. Plus, more breweries offer us more options – it’s just a numbers issue. Finally, I would argue that more local jobs are created by breweries than by offsite taprooms, so this is another mark in the column advocating for new breweries.
While not every new brewery is going to make great beer, some will. For those that do, they will survive and flourish. For those that don’t, they will eventually close, but the upside is that there will then be more brewers who have had some commercial experience and will be able to find a position with another brewery. That may be a small consolation to a closing brewery, but it’s something.
Merits of the offsite taproom argument. On the other side of the fence, there are also many arguments that tell me that offsite taprooms are the way to go. If long-term stability is a sign of Indiana craft beer health, then breweries that have already proven themselves to be successful would be the way to go. If a brewery has had success in one location and has sold beer by distributor, then it is more likely they will continue to be prosperous – nothing succeeds like success.
The same feeling can be indicated from the brewery’s end of the continuum. If a brewery owner is willing to expand, it’s a great sign that they are stable and confident, and that they will continue to be durable and add to the Indiana craft beer economy. In some cases, the chances of success are even increased. Take Taxman’s expansion to Fortville. Walter and I do much more drinking at taprooms and breweries than at bars or from beer store purchases, so having Leah and the guys in Fortville has meant that we visit bi-weekly instead of bi-monthly. By expanding close to a large population center, Taxman is seeing sales rise. The trend is there – MashCraft on Delaware (in Indianapolis proper versus Greenwood) is blowing up and the opening in Fishers was also very promising.
OK….. I hesitate to bring up these next merits of offsite taprooms because they can get messy, but it leads us into a crux of the philosophical argument….. so here we go. On the one hand, who am I, or who is anyone, to tell these brewery owners and brewers that they should limit their chances at building their business and making more money? But on the other hand, by arguing for fewer, bigger breweries with more reach, is this not a tacit approval of the AB-InBev model of growing to swallow the entire market? Should we vote for limiting a brewery’s success in favor of creating more small businesses? It’s not an easy question to answer.
I see the theoretical parallel between expanding to offsite taprooms and AB-InBev practices, although in the end I think it is a false analogy. Local craft beer simply doesn’t compete in the same manner that big beer does. In fact, I would argue that expanding small, independent breweries to offsite taprooms and increasing their revenue streams will help them be more prepared to survive the tactics that big beer uses to stifle independent craft beer. By being successful at more than one location, these breweries have more capital that they can use to lobby, advertise the truth of independent beer, connect to the community (the strongest weapon true craft beer has), and educate the drinking community.
Conclusion – Honest competition can only help Indiana craft beer. I am a capitalist at heart, I think the market will provide what the patron with what they want. Of course, this requires that the competition that drives openings, successes, and closings be honest. This is exactly the competition that small craft breweries demonstrate and is the antithesis of what big beer is about.
If an offsite taproom for an established brewery can produce a better product, build a better relationship with the locals, or offer a more enjoyable experience for the patron, then they should win out over locally-owned, locally-produced brew. In opposition to this fair competition is the AB-InBev model, that uses money to squeeze supply chains dry, lower prices so that well made beer can’t compete, and actively reduce shelf space and taps of local, independent beer. Local breweries that expand to one or a few more localities couldn’t, and more importantly wouldn’t, do that.
When the saturation point comes (as logic says it must, and seen in examples like the higher number of brewery closings in advanced craft beer states like Colorado), then the educated patron will decide who survives and who folds. This ensures that breweries will be at the top of their game. Innovation will be necessary to survive, and only those breweries that match service, relationship building, style, and skill with their innovation will flourish. Everyone will be pushed to be the best they can be, and that translates into the best beer and experience for us. No one is more surprised than me to discover that my opinion is to welcome the offsite taprooms and the new breweries, and see who does it best. I didn’t think I would come to that conclusion a few days ago.
Whether it is new breweries or an offsite taprooms, these establishments will give patrons the things that big beer can’t. AB-InBev is attempting to open 10 Barrel taprooms in some of the best beer cities in America, but I predict that with proper education and a vigilant eye to personal relationships, these will fail utterly. An expansion won’t succeed nationally or locally without a bond to the drinker at that location, so go ahead – try to put a 10 Barrel taproom in Indy. I bet that any new Indiana brewery or any offsite taproom will put them to shame. Whether it be the neighborhood brewpub or the second taproom for a good brewery, they will ultimately will win out over a corporation because in the end, craft beer is about people, not just business.
Walter’s Words of Wisdom: It doesn’t matter if it is Turner Classic Movies or at the movie theater – shorts suck. Bring back the cartoons!