Craft beer: A local love story

Wisconsinites love their beer, and the explosion of craft beer, especially around Greater Madison, is a testament to that affection.

From the pages of In Business magazine.

You can’t really tell the story of the craft-beer industry in Greater Madison without venturing just a little further south to New Glarus, so that’s where we’ll start.

When Deb and Dan Carey started the New Glarus Brewing Co. 25-plus years ago, the craft brewing landscape was a much different place than it is today.

“I was trying to raise money, and nobody even knew what a craft brewer was,” says Deb. “Nobody understood it. They were like, ‘So, you’re going to make beer like they make at Huber Brewing Co. [in Monroe, Wisconsin; now Minhas Craft Brewery] or like they make at Budweiser?’ Simply trying to raise money was nearly impossible. And for the equipment, Dan had to jump through all kinds of hoops.”

Back in the early 1990s, in order to buy new equipment, a brewer almost had no choice but to look to Europe. However, state-of-the-art brewing equipment from Germany would have been prohibitively expensive for a startup craft brewery.

Set in the rolling hills just outside Dane County, New Glarus Brewing Co. is known for not selling its beers beyond Wisconsin’s borders. “Why would you be in more states?” reasons President Deb Carey.

“The biggest problem in the 1990s was the lack of funds,” recalls Dan. “Nowadays, investors have confidence in the market, so they’re willing to give new brewers money to buy equipment. I see brewers starting now with state-of-the-art equipment and it’s still somewhat shocking to me.”

What Dan had to work with in the late 1980s and early ’90s was mainly used dairy equipment. In the early ’90s, the Wisconsin dairy industry was imploding, so weekly auctions from small farms and dairies closing was what got New Glarus the equipment to get off the ground. “It was very much having to create as we went,” notes Dan. “We had to find ways to adapt.”

Those early days were anything but glamorous. In those days, Dan Carey was building breweries in Oregon and other parts of the country before moving his young family to Germany for a brewing apprenticeship, back to the States where he took a job at Anheuser-Busch, and eventually to southern Wisconsin.

“Part of our success is that Dan and I both approach what we’re going to do from very different perspectives,” says Deb. “You can hear him talking about the integrity of the beer and what it should taste like and a historically accurate beer style. And from my point of view, we had been in business for four or five years, maybe a little more even, and nothing was taking off. It’s hard to live in a house that you can barely afford. We didn’t have health insurance for a lot of years. For the first couple of years, together we took home $24,000. By 1997, I had a raise — as president of New Glarus Brewing Co. I made $27,000. So, we were just barely getting by and starting to feel kind of desperate about it. Not that we wanted to be big, but you’ve got to pay the rent.”

Meanwhile, Dan was working on a new beer that was inspired by a trip to Old World Wisconsin. He and Deb had been walking around when they stopped to look at a German homestead. In their root cellar, the settlers had a crock of beer that was fermenting away, says Dan. “I wondered, when these German immigrants came over in the 1850s and ’60s, what kind of beer did they brew in their homes and on their farms? How would they have brewed beer on the frontier?”

With the brewery still languishing, Deb felt like they needed to do something different, and as luck would have it, Dan had just won a big, international brewing award in England for his Belgian Red. The pair traveled there and back in just a few days, but while they were in England, they decided to make the most of the trip since they weren’t sure if they’d ever be back. It was spring, and they took a drive through the English countryside.

“We had a lot of resistance [to the name Spotted Cow] for a lot of years.” — Dan Carey, New Glarus Brewing Co.

“There were little baby sheep everywhere, just all these sheep all over the hillside, and I was thinking how weird it was,” chuckles Deb. “I’m from Wisconsin — you don’t see 300 sheep anywhere, much less mile after mile of them. And then it occurred to me that when people come to Wisconsin, I bet they say the same thing. You can drive a lot of miles through Wisconsin and see a lot of cows. I thought people must think the same thing about all of our cows like I was thinking about these sheep, like people must come to Wisconsin and think, ‘What is up with all these spotted cows?’ I just thought that was really funny and it stuck in my head.

“So, when we came back and Dan had this beer idea for a farmhouse ale, I thought I’d just name it Spotted Cow because nothing else was really working,” continues Deb.

What’s arguably Wisconsin’s best-known beer now was anything but an instant hit.

“It wasn’t met with bounds of enthusiasm at the time,” says Deb. “The wholesalers were not impressed and I got a lot of little private conversations about, ‘Come on, don’t make us sell this beer’ or ‘Come on, Deb, do you really think some college guy is going to walk up to a bar and order a Spotted Cow?’ One of my wholesalers said they would not put it on the invoice with the name Budweiser. They said it was insulting; they just couldn’t do it.”

“One time an older guy came in and yelled at me,” remarks Dan. “‘What the hell are you doing?’ he says. ‘I spent my life being a beer salesman and beer should have names like Coors and Miller and Schlitz. What the hell is a Spotted Cow?’ We had a lot of resistance for a lot of years.”

“Luckily, it worked out for us,” deadpans Deb.

Crafty endeavor

Since New Glarus began as one of just a handful of craft brewers in the state, let alone nationally, the industry has exploded.

Wisconsin currently has no fewer than 217 craft breweries and brewpubs, according to Beer Near, an online guide to the state’s craft brewery scene; more than 45 craft brewery locations reside in south-central Wisconsin alone. That’s an increase from the 190 the Badger State had in 2018, according to the Brewers Association, the national trade group representing craft brewers, and Wisconsin is just one state of 50.

At the end of 2018, there were 7,231 U.S. breweries operating — there were 7,450 that operated for all or part of 2018, with 219 closings. Ninety-nine percent of those (7,346) were small and independent craft brewers. An estimated 2,500 to 3,000 new breweries are also in planning, based on active Alcohol and Tobacco Tax and Trade Bureau (TTB) licenses.

Small and independent American craft brewers contributed $76.2 billion to the U.S. economy in 2017, notes the Brewers Association. The figure is derived from the total impact of beer brewed by craft brewers as it moves through the three tier system — breweries, wholesalers, and retailers — as well as all non-beer products like food and merchandise that brewpub restaurants and brewery taprooms sell.

The industry also provided more than 500,000 total jobs, with more than 135,000 jobs directly at breweries and brewpubs, including serving staff at brewpubs.

In Wisconsin, the craft beer industry supported 14,680 full-time employees in 2017, earning an average wage of $40,118. In total, craft beer had a $2.25 billion economic impact on the state.

The meteoric growth of the craft-brewing industry comes as no surprise to those who own and operate local breweries.

“You can’t just survive on making good beer anymore.” — Eric Peterson, Union Corners Brewery

“We delved into the craft beer world while living in Northern California for five years in the early 2000s,” says Erika Jones, who co-owns Giant Jones Brewing Co. with her wife, Jessica. “The craft beer scene was already huge out there. We recognized that Wisconsin’s beer scene, while historic, hadn’t yet experienced the craft beer resurgence that we were seeing on the West Coast. We moved back to our native state of Wisconsin with the dream to increase the concentration of high-quality, innovative, and community-focused breweries that we had experienced to this area. Our current craft beverage scene is finally achieving that kind of momentum that creates a draw for tourists and the immediate community to really have a ‘scene.’”

“The explosion of growth in breweries in the U.S. is in breweries our size — more like neighborhood taverns, like it used to be pre-prohibition,” notes Ryan Browne, CEO and co-owner of Working Draft Beer Co. “The number of breweries in the U.S. didn’t surpass that of pre-prohibition numbers until a few years ago.

“We opened with the goals to carve out space in our taproom for the community to gather and to enjoy a variety of top-notch beers,” Browne adds. “This is a direct reaction in the beer market to the ubiquity and homogeneity of macro lagers from the three big companies. Drinkers go to a brewery taproom to enjoy company and to try something they can’t find on store shelves. We — and more and more small breweries — are really well positioned to meet those desires.”

Changing challenges

While not operating in the early days of craft brewing has inherent advantages, it’s not without its obstacles, particularly for brewpubs.

“Maybe 10 years ago, opening a microbrewery in Madison was more of a novelty still, and you didn’t really have to worry about having a killer business that was firing on all cylinders in all regards,” says Eric Peterson, owner of Union Corners Brewery. “Now you absolutely have to.”

Peterson says the industry used to allow new breweries to get by on good beer and a cool location alone. “Now, you can’t just survive on making good beer anymore. There are four or five key things you need to focus on, and you’ve got to be rock solid on most of them in order to survive.

“One is good beer, two is good food, third is good location, fourth is an actual fun space where people actually want to hang out, and fifth, arguably, is a unique hook or angle that your business has compared to others.”

In Union Corners’ case, that hook comes in the form of community brew sessions, where roughly once a week Peterson and his head brewer, John Puchalski, pick a beer style that’s been suggested by a customer and turn it into a recipe which they brew during an open public session. In these sessions, Puchalski shows customers how Union Corners brews the beer and discusses various aspects of the batch being brewed.

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Some challenges are of the more mundane variety that other business owners face.

“We didn’t go into the brewing business because we wanted to build bathrooms, navigate governmental bureaucracies, and spend all of our (and other people’s) money,” says Jones. “Everything costs more than you think, takes longer, and then, when you get to the end — you are open. Which brings forth the reality of running a business and staying engaged and relevant in the community.”

Other challenges are more specific to the needs of a craft brewery.

Working Draft Beer Co.’s lounge is an inviting space for guests to gather and share a drink. As CEO and co-owner Ryan Browne notes, “Beer is a catalyst for community.”

Every alcohol producer has challenges related to licensing, whether it’s in navigating the three-tier system, prolonged delays in licensing, or municipal or neighborhood hesitancy, says Browne. “We were fortunate to have linked up with the University of Wisconsin’s Business and Law Entrepreneurship Clinics early on, and they helped us successfully navigate many legal issues. Other breweries, like Karben4, helped us by sharing insights into the tangled web of federal and state licensing. And the near-east-side neighborhood where we’re located was awesome and really greeted us with open arms.”

In order to have a microbrewery, you need enough space to brew and have enough space for customers, and have enough space for a kitchen, too, explains Peterson. That can be extremely problematic nowadays with rents as high as they are around Madison.

“If I’ve got to pay $12,000–$15,000 per month in rent, I need to make sure I’ve got 150–200 people coming in every single day, and that’s just not a guarantee,” notes Peterson. “You want to be in a nice area in Madison that’s convenient, so that the local neighborhood and everybody wants to come to you, but it’s so expensive now.”

Add to that problems with a lack of parking for many east-side operations, and finding the suitable location becomes very difficult.

That doesn’t even account for outside influences, adds Peterson. The Tavern League of Wisconsin has been notoriously opposed to the proliferation of brewpubs, and Peterson opines the city of Madison tends to be overzealous or short sighted with respect to the impacts of their actions on small business owners.

Collaborative crafts

That’s not to say it’s all bad for craft brewers. They are making beer for a living, after all.

The sense of collaboration between craft breweries is a big part of what makes the industry so strong as a whole.

“This industry is rife with the whole of us small players battling against the big boys,” states Otto Dilba, co-owner of Ale Asylum. “The camaraderie is real. We all work together yet do our own thing. If a fellow brewer needs hops and we have them, he/she gets them. If there is an element of the process that can assist our fellow craft brewer in developing their recipe, they get that, too.

“Trust me when I tell you this: there is no other industry — none — where there is this level of camaraderie,” Dilba continues. “I’ve worked in many industries. We all love what each other does and cheer when one of our brethren wins. Always. This has helped the industry immensely. We’ve received information and we’ve passed it along. When great beer is made, make no mistake: it’s made by a village, not a king.”

“We got into the craft-brewing industry because of the sense of collegiality and support,” explains Jones. “The sense that we’re all in it together. This culture is what is exciting and different in a world where every human tends to be for him or herself, and it seems that we celebrate the failures of others more than their successes. When our fellow breweries make amazing beer, it pushes us to make the best beer we can and celebrate each other and send business to each other. When you come to our neighborhood, there are five to 10 different amazing craft-beverage establishments that you can visit. We become a destination, and that’s better for everyone.”

Staying ‘small’

Craft breweries are small by definition, though small is relative.

In the Brewers Association 2018 list of the Top 50 U.S. craft breweries, New Glarus ranked 16th among craft breweries in sales. It ranked 25th among breweries overall, a list that includes such larger breweries like Anheuser-Busch and MillerCoors.

When tourists leave Wisconsin with their trunks full of Spotted Cow, it makes sense to wonder why New Glarus is so firm in its stance to only distribute in its home state. That answer, it turns out, is pretty simple.

“We got into the craft-brewing industry because of the sense of collegiality.” — Erika Jones, Giant Jones Brewing Co.

“Since day one, our focus has been to make world-class beer and take care of the people around us, and that is the beginning and end of our mission,” explains Deb Carey. “That puts a very fine point on day-to-day decision-making and is super helpful because when you look at things like should we add additional territory? What beers do we make? Do we give people raises? If you just always go back to that mission, then those decisions become very clear.

“For us, that’s the bottom line and it’s not about size or making money,” Deb continues. “Not that I’m opposed to those things — we’ve certainly been very successful — but it’s a very different mindset to go to work and think, ‘How can I make the very best beer?’”

The Careys are often asked, “Why are you only in Wisconsin?”

“I say, why would you be in more states?” explains Deb. The answer comes down to a cost-benefit analysis. “How does it benefit any brewery to have your beer be older and travel further?”

Dan Carey notes that staying small actually requires craft brewers to be more diligent in producing great beer because while the audience is smaller, the market share is higher.

“When you are a brewer that sells in 50 states and eight or 10 countries, you are more or less by definition just 0.0001 percent of the overall [global] market, which means that you can be more haphazard,” says Dan. “A lot of customers around the country like to hunt and peck, so they like to taste the beer du jour, check it off their list, and move on. That makes for a sale, but it doesn’t make for a business.

“But if we limit the amount of people that we sell to, which means we will have a larger percent of the sales in our market, it requires us to be more exact because we rely on people being repeat customers and not just hunting and pecking.”

Crafting something new

Years ago, a wholesaler asked Dan Carey, “Why aren’t you making an amber lager? That’s what craft brewers are supposed to make. And besides, the reason why craft brewers make strong, dark beers is because they don’t know how to make good quality light-tasting beers.”

“I said, ‘Oh yeah? Well, watch me,’” recalls Carey today. “And that’s where Totally Naked came from.” The popular summertime brew from New Glarus was Carey’s response to prove he is a good enough brewer that he could make a beer that’s light and easy drinking. “Believe me, it’s a hell of a lot easier to make a strong-flavored stout than it is a beer that’s only made with pale malt and a couple of different hop varieties and have it taste clean and good.”

Ale Asylum’s brewmaster, Dean Coffey, started in the craft brewing industry in 1989 when he met a guy at a party who made his own beer. Coffey bought a homebrew kit the next day and the rest is history.

If at one point craft brewers were known for making mostly amber beers, then today it’s IPAs. The hoppy India Pale Ale has been all the rage for a number of years now, and it’s not uncommon to find several or more on tap at craft breweries around town.

IPAs, though, have as many detractors as fans, and our brewers and brewery owners had different opinions on the ubiquitous brew, as well as what style of beer could replace it in the hearts and minds of beer drinkers moving forward.

“When IPAs are made well, they are incredibly satisfying,” says Browne. “There is such an intense flavor experience from the hop flavors and aromas, that many beers can seem less complex in comparison. For example, Pulp Culture, our best-selling hazy IPA, has huge citrus and tropical fruit notes and very low bitterness, with a subtle, biscuity malt character. There’s a lot going on in that beer.

“But our Hindsight Pilsner is as, if not more, complex of a drinking experience,” Browne continues. “And it’s arguably much harder to brew. This is why many think a craft lager trend is coming, because the beers can be flavorful and even hoppy like IPAs, but often they are crisp and refreshing, all while showing the skilled hand of the brewing staff.”

“In general, I think the industry has gone way overboard with IPAs,” remarks Peterson. “IPAs are a natural result of the mainstream introduction of hops into the industry when craft breweries hit the scenes in the late 1980s and ’90s. Once consumers tasted and smelled what significant wet and dry hopping can do to a beer, of course it blew up. I wouldn’t really call it a trend; it’s more of a natural result of more significant usage and focus on hops in beer, which is a regular part of the brewing process, combined with lesser focus on pasteurization, lagering, etc.

“Hops are an acquired taste, much like beer itself,” notes Dilba. “It was inevitable that this particular ingredient was going to dominate the landscape of the craft-beer experience. Once you’ve acquired a taste for hops, many people can’t go back to malt-forward beers. If you’re a self-proclaimed ‘hophead,’ you typically can’t go back to a Madtown Nutbrown or Kraznak Stout. You’ve fallen in love with hops and your palette won’t allow you to drift back to the dark side — malt. It’s neither good nor bad, it just … is.”

Dan Carey, who in some ways kickstarted the evolution of craft beer locally with the introduction of Spotted Cow all those years ago, is as good a place to wrap up this conversation as any.

“If you want to know the future, you have to look at people who are coming of age now,” muses Carey. “These people have come of age when IPAs existed and Budweiser was not really important, so you’ll probably see a reaction. One thing about IPAs in general is they’re very high in alcohol — six, seven, eight percent alcohol — and younger people are maybe more conscious of their health, so I would expect that the movement will be back toward more drinkability because beer should be something that you can easily drink and not feel satiated or drunk.

“I think a healthy, more drinkable complex beer will probably be where the pendulum will swing in the future,” Dan continues. “But it’s not going to be people in their late 30s and early 40s who will change. Those people will drink IPAs for the rest of their lives, but the next generation will pull the bell curve the other way. However, you look at some of these new alcoholic waters and this is obviously a move toward blandness, and for people who are interested in beer, it’s really an abomination. It’s totally removed the flavor and is only a vehicle for alcohol. All of us should be horrified by it because it’s the antithesis of everything that we stand for.”

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What’s a craft brewery?

The Brewers Association defines a craft brewer as a small and independent brewer. There are six distinct craft beer industry market segments: microbreweries, brewpubs, taproom breweries, regional breweries, contract brewing companies, and alternating proprietors.

Microbrewery

A brewery that produces less than 15,000 barrels of beer per year and sells 75 percent or more of its beer off site. Microbreweries sell to the public by one or more of the following methods: the traditional three-tier system (brewer to wholesaler to retailer to consumer); the two-tier system (brewer acting as wholesaler to retailer to consumer); and directly to the consumer through carry-outs and/or on-site taproom or restaurant sales.

Brewpub

A restaurant-brewery that sells 25 percent or more of its beer on site and operates significant food services. The beer is brewed primarily for sale in the restaurant and bar and is often dispensed directly from the brewery’s storage tanks. Where allowed by law, brewpubs often sell beer to-go and/or distribute to off-site accounts.

Taproom brewery

A professional brewery that sells 25 percent or more of its beer on site and does not operate significant food services. The beer is brewed primarily for sale in the taproom and is often dispensed directly from the brewery’s storage tanks. Where allowed by law, taproom breweries often sell beer to-go and/or distribute to off-site accounts.

Regional brewery

A brewery with an annual beer production of between 15,000 and 6 million barrels.

Contract brewing company

A business that hires another brewery to produce its beer. It can also be a brewery that hires another brewery to produce additional beer. The contract brewing company handles marketing, sales, and distribution of its beer, while generally leaving the brewing and packaging to its producer-brewery (which is also sometimes referred to as a contract brewery).

Alternating proprietor

A licensed tenant brewery that physically takes possession of a shared brewery while brewing. In contrast to contract brewers, alternating proprietors are the brewery of record for all of the obligations of a licensed brewery, including record keeping, tax payments, and label or formula approval.

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