Craft beer boom continues amid increasing competition

BizNews

If you lost track of which new brewery, brewpub or taproom was opening when and where in the Milwaukee area over the past few years, you’re not alone.

For a long time, southeastern Wisconsin’s craft brewing scene was dominated by the likes of Lakefront Brewery Inc., Milwaukee Brewing Co., Sprecher Brewing Co. Inc. and other state brewers like New Glarus Brewing Co.

David Dupee discusses the craft beer scene at an event previewing Good City’s new rooftop patio before construction was finished.

The past few years, though, have seen the emergence of new breweries like Waukesha-based Raised Grain Brewing Co. LLC, which spent $2.7 million in June on a new facility to increase production; Good City Brewing LLC on Milwaukee’s East Side; Third Space Brewing LLC and City Lights Brewing Co. in the Menomonee Valley; and MobCraft Beer Inc., which relocated from Madison to Walker’s Point.

While those five have drawn plenty of attention of late, their combined production over the first four months of the year doesn’t equal a single month of Lakefront’s sales in the state, according to Wisconsin Department of Revenue data.

There are also smaller operations, including Westallion Brewing Co. LLC, which opened this spring in West Allis; Brookfield-based Biloba Brewing LLC, which moved into a larger space last year; SwitchGear Brewing Co. LLC in Elkhart Lake; and baseball-themed Broken Bat Brewing Co. LLC in the Third Ward, to name a few.

Even Mequon-based pet food maker Fromm Family Foods LLC proposed a brewery with its office expansion. And MillerCoors LLC is investing $50 million in its Leinenkugel’s brewery just north of downtown Milwaukee.

The Milwaukee area hit what felt like peak craft beer in 2016, a year when national beer production was flat after years of double-digit growth. The drop was largely driven by a decline in production by larger regional brewers, while microbreweries and brewpubs continued to grow, according to the Brewers Association.

“The main driver right now within the overall craft beer space is local, so in that sense Milwaukee is behind as far as number of local options out there,” said David Dupee, a co-founder of Good City.

Department of Revenue data backs up the emphasis on local, as production by Wisconsin breweries for Wisconsin consumption is up 10.3 percent in the first four months of the year, while beer shipped in is up 5.1 percent.

Dupee pointed to cities like Portland, Oregon; Grand Rapids, Michigan; and Asheville, North Carolina as similar markets that Milwaukee trails despite a long brewing heritage.

“There’s no reason for that, unless Milwaukee is an anomaly and we are not a craft beer market, which I don’t believe is the case … I think it’s more of an entrepreneurship issue,” he said, pointing to oft-cited Ewing Marion Kauffman Foundation statistics ranking Wisconsin last for startups. “I think breweries are just a subset of that overall trend.”

Asheville claims the most breweries per capita of any city in the country, but as a state, Wisconsin is actually slightly ahead of North Carolina with 3.3 breweries per 100,000 residents, compared to 2.8 for the Tar Heel State, according to Brewers Association data. Michigan has 3.1 and Oregon has 8.1.

Good City has found enough success in its first year for Dupee and his co-owners to expand. The brewery took over the former Crank Daddy’s Bicycle Works space next to its North Farwell Avenue taproom for a private event space, additional room for production and a rooftop patio.

While the extra space opens up more room for Good City’s taproom, it also allows the brewery to more fully take advantage of the capacity of its brewhouse, an important factor in the expansion. Good City signed a distribution deal with Beechwood Sales & Service this spring and is looking to sell its product statewide at some point.

Those larger ambitions highlight an important distinction in Milwaukee’s craft beer boom. There are those who want to distribute their product more widely and those who are content to stay hyperlocal.

“I think a lot of the new ones are more brewpub,” Dupee said. “If that’s your ambition, every neighborhood can support that.”

Breweries seeking broader distribution face a lot more competition, not only from their fellow new entrants, but also from established craft brewers, and even regional and national competitors.

“If that’s your aspiration, that’s tougher; I still think there’s room, but that’s a lot smaller window,” Dupee said.

Grant Pauly, founder and brewmaster at Sheboygan-based Three Sheeps Brewing Co. LLC, agreed, noting he would be a lot more scared to open a production brewery now than when he started in 2012. In particular, he said the quality and consistency of the product has become increasingly important.

“That six pack of beer had better taste like that same six pack every single time,” he said.

Craft breweries also have to manage their growth and production to avoid getting overextended and not being able to fill empty shelf space.

“It isn’t going to stay empty waiting for us for very long,” he said.

Pauly expanded Three Sheeps into a larger production space last year, allowing the company to better take advantage of potential growth opportunities.

“We had to stop growth for a year,” he said. “We are able to produce a lot more beer, so now we’re back out there pushing a little harder.”

If you lost track of which new brewery, brewpub or taproom was opening when and where in the Milwaukee area over the past few years, you’re not alone.

For a long time, southeastern Wisconsin’s craft brewing scene was dominated by the likes of Lakefront Brewery Inc., Milwaukee Brewing Co., Sprecher Brewing Co. Inc. and other state brewers like New Glarus Brewing Co.

David Dupee discusses the craft beer scene at an event previewing Good City’s new rooftop patio before construction was finished.

The past few years, though, have seen the emergence of new breweries like Waukesha-based Raised Grain Brewing Co. LLC, which spent $2.7 million in June on a new facility to increase production; Good City Brewing LLC on Milwaukee’s East Side; Third Space Brewing LLC and City Lights Brewing Co. in the Menomonee Valley; and MobCraft Beer Inc., which relocated from Madison to Walker’s Point.

While those five have drawn plenty of attention of late, their combined production over the first four months of the year doesn’t equal a single month of Lakefront’s sales in the state, according to Wisconsin Department of Revenue data.

There are also smaller operations, including Westallion Brewing Co. LLC, which opened this spring in West Allis; Brookfield-based Biloba Brewing LLC, which moved into a larger space last year; SwitchGear Brewing Co. LLC in Elkhart Lake; and baseball-themed Broken Bat Brewing Co. LLC in the Third Ward, to name a few.

Even Mequon-based pet food maker Fromm Family Foods LLC proposed a brewery with its office expansion. And MillerCoors LLC is investing $50 million in its Leinenkugel’s brewery just north of downtown Milwaukee.

The Milwaukee area hit what felt like peak craft beer in 2016, a year when national beer production was flat after years of double-digit growth. The drop was largely driven by a decline in production by larger regional brewers, while microbreweries and brewpubs continued to grow, according to the Brewers Association.

“The main driver right now within the overall craft beer space is local, so in that sense Milwaukee is behind as far as number of local options out there,” said David Dupee, a co-founder of Good City.

Department of Revenue data backs up the emphasis on local, as production by Wisconsin breweries for Wisconsin consumption is up 10.3 percent in the first four months of the year, while beer shipped in is up 5.1 percent.

Dupee pointed to cities like Portland, Oregon; Grand Rapids, Michigan; and Asheville, North Carolina as similar markets that Milwaukee trails despite a long brewing heritage.

“There’s no reason for that, unless Milwaukee is an anomaly and we are not a craft beer market, which I don’t believe is the case … I think it’s more of an entrepreneurship issue,” he said, pointing to oft-cited Ewing Marion Kauffman Foundation statistics ranking Wisconsin last for startups. “I think breweries are just a subset of that overall trend.”

Asheville claims the most breweries per capita of any city in the country, but as a state, Wisconsin is actually slightly ahead of North Carolina with 3.3 breweries per 100,000 residents, compared to 2.8 for the Tar Heel State, according to Brewers Association data. Michigan has 3.1 and Oregon has 8.1.

Good City has found enough success in its first year for Dupee and his co-owners to expand. The brewery took over the former Crank Daddy’s Bicycle Works space next to its North Farwell Avenue taproom for a private event space, additional room for production and a rooftop patio.

While the extra space opens up more room for Good City’s taproom, it also allows the brewery to more fully take advantage of the capacity of its brewhouse, an important factor in the expansion. Good City signed a distribution deal with Beechwood Sales & Service this spring and is looking to sell its product statewide at some point.

Those larger ambitions highlight an important distinction in Milwaukee’s craft beer boom. There are those who want to distribute their product more widely and those who are content to stay hyperlocal.

“I think a lot of the new ones are more brewpub,” Dupee said. “If that’s your ambition, every neighborhood can support that.”

Breweries seeking broader distribution face a lot more competition, not only from their fellow new entrants, but also from established craft brewers, and even regional and national competitors.

“If that’s your aspiration, that’s tougher; I still think there’s room, but that’s a lot smaller window,” Dupee said.

Grant Pauly, founder and brewmaster at Sheboygan-based Three Sheeps Brewing Co. LLC, agreed, noting he would be a lot more scared to open a production brewery now than when he started in 2012. In particular, he said the quality and consistency of the product has become increasingly important.

“That six pack of beer had better taste like that same six pack every single time,” he said.

Craft breweries also have to manage their growth and production to avoid getting overextended and not being able to fill empty shelf space.

“It isn’t going to stay empty waiting for us for very long,” he said.

Pauly expanded Three Sheeps into a larger production space last year, allowing the company to better take advantage of potential growth opportunities.

“We had to stop growth for a year,” he said. “We are able to produce a lot more beer, so now we’re back out there pushing a little harder.”

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