Craft Beer and the Business of Brewing
Hello, and welcome to talking points I'm. Dave Kelly director of advanced, media production at, Cal State Long Beach today. We're going to talk about the business of craft beer, and why, craft, beer has become such a popular product, my. Guest today is Bill, çiçek. Bill. Is, a certified, Cicerone he. Is also the, co-founder of, wild, barrel, Brewing Company in San Marcos and additionally. He happens to be on the advisory board for the San Diego State University's. Business. Of craft, beer certificate. Program, welcome. Bill and thank you for joining us on talking points, thank you pleasure, to be here I just. Introduced, you as a certified Cicerone some, of our members, in the audience are wondering. What is a cicerone so, Cicerone. Is the, craft, beer or beer equivalent, to a wine sommelier. There are different levels there's, a certified beer server which is the initial level. That you'll find a lot of craft. Beer, tasting. Room and restaurant, servers. And bartenders hold, certified. Cicerone is closer to the advanced Somali a level and then, there is an advanced cicerone that has just been developed and also a master. Cicerone program where there's about a half dozen people in. The, country, actually the world that actually hold that title ok. Well let's move on to a beer and let's talk specifically. About, the, history of beer for a moment before we focus, in on craft beer so if we look at the history of beer it's been with us a very long time in, fact a, lot of archaeologists, now say that beer was with us at, the beginning of our agricultural. Transformation. From the hunter-gatherer. Phase, of human development which happened somewhere, between seven, to ten thousand, years ago so, why did beer, become an important, part of the. Human development process. As we started to settle in with agriculture, well. Many. Anthropologists and, archaeologists, actually believed that beer, is. The, reason why we went from hunter-gatherer. To, this, stasis. Position. Of being, agricultural. Society. They. Believed that accidentally. Grains. And, seeds as they were picked were fermented. Through. Being left out in the rain and they. Started, to make, kind of a porridge or mash with. This and they, realized. They enjoyed it not just for the nutritional, value but for, the fact that it was kind of a happy juice for them and if you look throughout the history of. Civilization. Every great society, actually had, some form of alcoholic, beverage that they enjoyed whether it was at their feasts when they were celebrating. Victories. Against. Other tribes or, a, great, hunt where they had, pulled, down a woolly, mammoth for, example or just any. Type of celebration. Through marriage birth of a child something like that we, find that beverages, have been around and beer was one of those progenitor. 's for that all. Right and you talked about the. Fact that beer, was kind of a happy juice and it was a little chunkier, and in the beginning that it was today, it's all liquid, but it wasn't always like that and there, are stories about the Egyptians when they were building the pyramids those. Workers that were putting. The stones together were, given, litres. Of beer, as part, of their compensation which. Provided, them nourishment, and refreshment, and that's. How, the pyramids were built apparently, so it's been with us a long time so. When, we talk about the. Distinctions, of the different kinds of beer, some people wonder what's the difference between a nail and a logger but you have a very good analogy. You can use that involves cooking so, all beer is beer but it's broken down into two main categories sales, or lagers and those are based off of the yeast strains that are used ales, have a tendency, to be. A top. Fermenting, yeast strain that, works on the beer creating. Alcohol. And, co2, by. Eating, the starches, that are converted, to sugars in the cooking process and, those. Top. Fermenting yeasts are happened. Very fast the, beer is made much, shorter, period of time it has much more aggressive, flavors where a lager is a bottom, fermenting yeast, that was. Identified. Much, later on probably, around, 14th. 15th century. From, cool storage where the top fermenting yeast didn't survive in caverns, and the lager or, bottom fermenting yeast started to they go much slow, and the, way I equate, that for non vers is if you look at cooking, and you take, stir-fry. Where you're very fast aggressive high heat big, dominant. Flavours of things like garlic, ginger. Lemongrass. And it's done very quickly and very aromatic, that is more what an ale is they're much more aggressive, in aroma and flavor profile, where a lager is more, you, can equate it to a crock pot taking, a pot, roast and some onions potatoes and, carrots going, off to work and coming back home sure the aroma is still great it tastes great but it's much more subtle and melded.
So Lagers. Are much. Longer, to brew. They take not too brewed to ferment they, take more, than anywhere. From two weeks to three. Four months and as. We talk about the history of beer continue, that conversation into. The United States of course we had prohibition, here in the 1920s, into the early 30s but, after the prohibition, was lifted and the, Great Depression was over the, major brewing. Companies in the United States such as anheuser-busch, and, coolers which is now Miller Coors and papst. Blue-ribbon, which is right here in Los Angeles those, big companies started, to consolidate. And beer became a very, industrial, kind, of process, as opposed. To the smaller. Much. More what we would call craft type Brewers. That existed before that time and that was part of the whole mobilization. During World War Two and a couple. Of decades after, but then, in. The 1970s, there, was this movement, afoot, in the United States where a small, number of fellows, decided, we're gonna start doing our own brewing, and they, became the original craft, brewers, how, did that trend eventually, catch on so, in you're. Right it was a wasteland, prior, to Prohibition there, were 17 breweries. After. Prohibition was repealed in 1933. 700. Breweries opened but by the time 1965. Rolled around there was only about a hundred these. Mega breweries, these big factory, run breweries a gentleman, named Fritz Maytag in, 1965. Who had just graduated from Stanford. Discovered. That his local, brewery anchor, Brewing Company out of San Francisco was going out of business and he. Went and ended up buying a controlling interest and, eventually all of it he, was what we mark as the beginning of the craft beer revolution over. The next 13, or so years, he, developed, a bunch of English styles, that were became. Quite famous including, the very first modern, IPA, made in America, and then. By. 1980. It had slowly started, to catch on a couple of things happened before that Alan. Cranston one of our US senators in California, wrote. A law because when they repealed prohibition they. Had forgot to legalize, home brewing so he, actually had. Jimmy Carter sign a bill where they legalized home brewing. Homebrew. Clubs started, up and it. Became well known that the, beer could taste something different, than the fizzy yellow beer, that, our fathers had tasted before that and then, by the 1980s, it started up with Sierra Nevada and many, other breweries and now.
We Have over 7,200, craft, breweries in America well, let's talk about Sierra, Nevada for a moment because they are located in Chico which is north, of Sacramento I've, actually seen that brewery and, it. Was started by a gentleman, by the name of Ken Grossman in, the 1970s. And, he. Did something rather radical. In the, brewing. Industry he, decided to utilize wet, hops, so he went to Oregon and found these wet hops and started using those, in the brewing process. What exactly are hops. Wire. And why and how are they used in the brewing process and, what are wet, hops so, there are four, main ingredients found, in beer whether it's an ale or lager a water, of course yeast. Which we already talked about activates. And creates co2 and, alcohol, and then, there's grain or barley primarily. Is used by Brewers and that, kind of acts as the, body of the beer giving, off a lot of great flavors and aromas and then hops are kind of the spice of beer if you think of them hops. Have been around for a very long time even. In Egypt as we were talking about there were over 250, different apothecary. Recipes, that had hops involved, they weren't first used in beer till about the, 1100. AD. But what we know about hops now are, they. Were originally, used as an antimicrobial to. Stop, infections. Happening, in beer but as modern, Brewers we use them for, bitterness. Flavor, and aroma, so early on in the brewing process you use them as a bittering, agent but, what was, unique about what what Ken did, was. He, went and took fresh, hops which, are what we determine is wet hops and he used them in a dry hopping, process which, is where you add them after, the, fermentation has, taken place and he's. Put put in wet hops and those were the Cascade, hops which, basically, are the most famous hops in the craft beer revolution. So. To speak and those, wet hops, allow. It to give off these wonderful, pungent, aroma Xand flavors of pine. And grapefruit, that made his. Preeminent. Beer Sierra, Nevada Pale Ale that. Probably one of the most important beers in the craft beer industry history. And, it's. Significant. That we're talking about Sierra, Nevada because they are one of the top craft, beer companies, along, with Samuel. Adams beer, from the Boston, Beer Company so. When we talk about craft, beer maybe we should define what that means, in terms of production and style and size of the brewery and all of that so, traditionally. The terms craft. Or the term craft beer means that the. Brewing Company has to be small it, has to be independent and it has to be traditional, in. The way it conducts operations. So what do those terms mean and how, big is too big to, be considered, a small brewing company so let's talk about small first small, is less than six, million, barrels. Produced, a year what is a barrel of beer a barrel, of beer if you remember those keg stands that used, to be at those parties, when you're in high school in college that's a half barrel of beer so two of those kegs 31, gallons, equals, a barrel, of beer so you have to make less than six million barrels of beer to be considered. A small brewery, to, be independent, you have to be owned by or have, no, ownership by a major, non, craft brewery of more. Than 25 percent so if a, be in Bev but 20 percent of a brewery they'd still be considered, independent but the 25 percent, mark, we hold over and traditional. Simply, means you, use those ingredients I mentioned, before to. Improve. And enhance flavor, as opposed. To a lot of the macrobrewery. Giants where, they use those in they substitute, ingredients like rice corn, syrup and sugar to, decrease the flavor of beer craft, brewers want, to enhance the flavor of beer alright we just have a minute, or two before the break but I wanted to talk a little bit about the growth of the craft beer, industry and. Just the last ten years or so I know that there was a huge, jump. In the number of barrels, produced between. 2009. And 2014. In, 2009, there are about 9 million barrels, of craft beer produced, in the country and then, in 2014 it had jumped all the way up to like 22, to 23 million. Barrels, annually, so, that was almost a 250 percent growth. Rate however, it started to level off as all things do nothing, can grow that fast forever, right and so Fortune magazine came out with some information recently. Where they said well the era of big growth for. Craft, beer is over, what's, your assessment, of that I would, say volumetrically. That's probably, close to true like. I said earlier there's, 7200, craft breweries there's another 2,500. In planning, so I foresee, a day when there's 10,000, craft breweries in America but most of those will be hyperlocal. Where, they have a tasting, room where they serve in a smaller area just. Like there, were most. Breweries were two, centuries, ago so, I foresee. It. Being a mature industry, where. We'll continue to have single-digit. Growth but we'll continue to, take more market, share from, the beer industry as a whole as people, want that higher, quality, better flavor and aroma and.
On That note we're gonna have to go to the break and, when. We come back from the break we'll talk about craft. Breweries, in Southern, California and. How the industry, is thriving right, here stay. Tuned. Did. You know that you can study climate, change or, find fuel and rocks or, even, produce synthetic, flavors. Using, chemistry. Chemist. Eddie chemical, reactions, and compounds, and how they work in our bodies and the world around us, the. Opportunities, are endless with. A degree from Cal State Long Beach. Welcome. Back to talking points I'm, Dave Kelly and my guest today is Bill, Tsai sack a certified, Cicerone, now. Bill before we went to the break I said we were going to talk about the west coast and the, craft brewing industry here, which is pretty. Dynamic but, before we go to that I want to talk a little bit about another, trend that's going on in the, craft beer industry and that's the fact that the. Big players in the, beverage, industry we're, talking about anheuser-busch, we're. Talking about, Miller. Coors or talking about paps those kinds of companies they're, looking very hard at these craft beers, because that seems to be where there's a lot of growth and a lot of interest and so, these companies are starting, to get. Into the business of buying out some, of these small craft. Breweries, and so. The question is what. Will that do to the actual craft beer, the product line that they're buying out you know corporations, have, a little, bit different mission, statement, or a business, plan I should say then, the smaller, independent Brewers, the, independent, Brewers are focused on quality quality, quality at, least they should be and the. Corporate Brewers are interested in profits, shaving. Costs, and returning dividends, to stockholders, so, let's, talk about that for a moment what do you think that's gonna do to the craft beers that are purchased, by the big guys well, I think there's, a couple, dynamics, involved one is they, realized, early, on in the last 12 or 13 years that they couldn't compete, as far as devoting. The effort it wasn't worth their effort to make these, high-quality. Flavorful. Beers they it. Just didn't make sense to them fiscally, but, what we're seeing now is they. Started to buy up these breweries slow down the growth of craft beer and the. Problem is when they buy these breweries, they, don't necessarily keep, the same quality, of the product, a lot of times it could be as simple as making the cardboard, box that the case of beer comes from, thinner.
Less Material, but, sometimes, it's taking, that same beer and taking. It away from that little brewery and brewing it at one of their mega facilities. So, the quality isn't always, there and that can be an issue they. Have a lot of problems, when they're making these beers, as, far, as keeping the historical, value, around and the customers, so what they're doing is going into new markets with the beer and maintaining, the same level of growth, for these little breweries that they're buying up well, that's an interesting point, about quality. And cost, because, a lot of people when they go. To a restaurant or they go out and decide. To take. Their friends to a craft brewery they notice that the cost of craft, beer is more than. The traditional, Brewers and. People. May say well why am I paying more for beer isn't beer beer why am i paying more for a craft beer, so. It's it's an artisanal, product, and with any artisanal, product whether it's, a cut of meat or a type of cheese Kraft singles versus. Stilton. Bassett. Colson. Bassett Stilton blue cheese for example from England you're gonna pay a premium the, other factor, that's involved, is anheuser-busch. Has, 11 major factories, Stone, Brewing which is I believe the ninth largest, craft, brewery in America. At, 360,000. Barrels and Heiser Busch in all their plant spills, more of that beer in a, month than, they then stone produces, so they, have the, economy, of scale right so they can charge a lot less for their beers and once. Again, besides the factor, that we use better quality, ingredients in many cases, when it comes to craft beer so let me get your opinion if you are gonna buy a craft beer would you buy one that's been recently purchased by a big, brewer or would you buy one that's independent, well other than the fact that I'm as an independent crapper, and support, them I would, always go independent, and that's not just with beer it's with anything, because I want to support that artisanal. Producer, and keep, them in business as opposed, to buying something that's, made. Industrially. Yeah exactly so, it's it's just the better, win-win. For us if we have more of these artisanal, producers in, any aspect, of business all right well let's talk about the west coast and in, particular, the San Diego area as I understand it you grew up actually in the LA Orange County area but. Your business has been in the San Diego area we've, been very involved in that scene and San. Diego is well known for, craft breweries it's a very dynamic. Kit for that talk about that a little bit why, did, San Diego become such a dynamic market for a craft beer so, San, Diego is known as the capital of craft, they. Have 200, breweries and brewery tasting, rooms just in San Diego County alone, they, were not in the early, periods. The very first, brewery. That was produced in San Diego, County, was, a, brewery, called bolt Brewing in Fallbrook in, 1987. Karl Strauss opened, in 1989, and it, grew from there I think a lot of the dynamics that made San Diego so competitive, and great is you, had these bigger breweries, Ballast, Point which, unfortunately is no longer an independent brewery, Al. Smith, stone. Pete. Support Karl, Strauss in the, mid 90s that came along and they decided to rely. On just quality, beer that, bred a lot of other Brewers, from their training, programs, from, home, brewing that they brought on and they built. This whole. Cultural. Shift there where people started, to appreciate craft beer and that, allows San Diego to continue, to be a dynamic market, even with that many breweries in place. Where. Is the market going for, craft beer in San Diego and elsewhere, so it will continue to grow it will stay hyper local. Regional. Breweries considered, a brewery that makes fifteen thousand, barrels a year for. Example my brewery were at our first year anniversary coming, up we're just going to make a thousand, barrels this first year right so there. Will be a lot of these little breweries, that stay under 5,000, barrels that, support. Themselves locally, by. Having customers, and followers we're. Finding that the Millennials are really driving this hyper local ISM, and quality, of products. And and that's helping the craft beer industry as a whole and an important, part of that as you were mentioning millenials driving the market is local. Sourcing, and, we talked about, Ken. Grossman going, into Oregon because he lives in Northern California so Oregon wasn't too far away to get the wet hops so, are we seeing that kind of thing here too we're, seeing it on a smaller, scale there are some hop growers, starting, up in San Diego County it's, more, driven, by the. Climb maduk area, that they're at with. Breweries as opposed to wineries, wineries, will normally, place. Themselves right next to where they're gonna grow their grapes breweries.
Will Have a tendency to just go with the best quality ingredients so, it could be malt from the Midwest but it malted, grain but, it could also be from Germany, or Austria, or. The. Czech. Republic. For example so it's, not as concerning, as that it's about the quality of the products who has the best quality products and when, we talk about craft. Beer most, of the craft beers seem to be in the category, of what's called IPA. Or India. Pale Ale, what. Is India, Pale Ale and why is it so, popular among, aficionados. And also customers, so, there, are hundreds. Of different variations. On beer styles I would, say IPA, makes up the largest commercial. Segment, as far as, on-premise. And off-premise sales. And that's why we look at that and they've, led that for the last ten years IPA means India Pale Ale it, was never produced in India it was produced for English troops, back. In the days when they used to say the Sun never set on the English Empire because it was so large an area, so, they'd have to ship a beer that was potent. Enough and resilient. Enough to survive. Pre-industrial. Refrigeration. And things like that so the, IPA, became, a very popular beer, style in America it started up in the 1770s. Going, into the 80s with anchor Brewing and Sierra Nevada and it's, really, just a big, flavorful. Aromatic. Beer because hops derive, a lot of characteristics, that can be anything from tropical, fruits to, citrus, to, pine, to earthiness floral. And those, are really fun beers, to make so people. Really like them and there's been a huge following there's been a lot of variations. Of these. IPAs, coming, out there are now hazy IPAs, there's low alcohol IPAs, there's a PhDs in Belgian yeast and that's, trend, is going to continue to move on the next trend after IPAs, is IPAs, well, since we're in California and, we're talking about the west coast what, about the wine industry versus. The craft beer, industry we. Know that we have a lot of wineries and a lot of wine tasting, and it's a huge, draw. Here in California, can, craft beer become like that I think, it can and we're seeing that in a lot of small areas where we're seeing 20.
Breweries, That are within a very short, area. So people we have beer tourism, just like wine tourism when you go up to say, Napa or Sonoma or, the Central Coast we're, seeing that same kind of effect. And with these local breweries, where the small production, they rely primarily on, people, coming in to their tasting, rooms so, by making high quality products, and beer the growth potential, is there as I said 7,200, craft breweries there's almost right, around 900, craft breweries in California. That's the largest State as far as burries but, there's 7,000. Wineries, in California. So we have room to grow well. If we're talking about, craft. Breweries. Not all of them succeed there are some that end up going out of business just like with any business, why. Is that what are the craft, brewing. Companies, that are not making it what are they doing wrong and what do they need to do to turn things around well. It could be multiple factors. From not, having enough financing. To poor quality product, which is probably the main factor, to, growing. Up into a regional, brewery and and constantly. Having to chase your tail to, continue to grow and not being able to sustain, that with, the macro Brewers above them and all the local little craft breweries, below, but. Really it's all about like you said earlier quality, quality quality if you're not making a dynamic, product if you're not making a great guest experience both. In your tasting room and have well-informed staff, to teach, these guests, about what you're serving you're not going to succeed you. Talked earlier about, economy. Of scale and whereas the big brewing, companies the, major like. Anheuser-busch and so on if they have a bad batch they can throw it out and it's not a big deal what, do you tell small. Brewers if they come up with a batch that isn't, 100% the, way it should be same, exact thing dump, it if you make a beer and it's not the way it's supposed to be don't, call it something else dump it if you make a beer, and it, tastes like something else don't. Do. That and don't throw another wine or bourbon barrel and think it's going to get better you, only have one chance to build a reputation with each of your customers, and you want to make stayin the highest standards, of quality when, you're doing that so it's very important.
Do Not rely, on that take, the loss and brew it again, the right way let's. Talk for, just a moment about your, program. In Sandy at San Diego State University and, the extended education, program that folks, can take in the business of craft, beer, what, kinds of courses do you offer there, and what do people learn so. The business craft beer has been around for the program has been around for five. Years. And we've. Had over 1500. People come through and and more, than half of those have graduated, from the course I teach two courses I teach the entry-level course, which has, a broad spectrum of, everything, to do with beer, and then, I also teach the secrets exceptional. Beer and food pairing which. Is a six-week course where you're basically getting to eat and drink the whole time but. There's beer styles, and then there's also a scope. Driven towards. Opening. A business so there's building, a business plan how to effectively. Use distribution, as a key, front-of-the-house. Service, so there's a whole spectrum for, it doesn't matter whether you want to start it start. Your own craft beer business, whether it's a bar or a brewery or whether, you're in the industry and just want to learn more or you're just a hobbyist and enjoy talking, and drinking about talking. And drinking beer that leads to my last question we only have about 30 seconds, so. How, would you assess the educational. Level of folks in Southern, California in terms of their knowledge of craft beer, I think. There's. About 15. Percent of, the whole population that. Understands. What craft beer is and they're at many levels from advanced, to intermediary, to beginner and the, broad spectrum of people, in across, the world is about 80 to 90 percent of people that just, aren't informed, about craft beer so it's really important that we continue to. Inform. Them through shows, like yours and, educational. Programs like SDSU, and, on that note we do have to close the program thank, you for sharing. Your expertise with us today thank you it was great time and thank. You for joining us on this edition of talking points be. Sure to join us again soon for the next episode until then I'm. Dave Kelly have. A nice day. You.