A Bit of Perspective
The playing field isn’t nearly as level today as it was in 1950. Then, the three largest brewing companies in the United States (Joseph Schlitz, Anheuser-Busch and Ballantine) produced 17 percent of the beer brewed in the country. Last year, the big three brewed almost 85 percent—and imports accounted for another 11 percent of domestic sales.
Should the members of the second tier today expect a better fate than Schaefer, Falstaff and Pfeiffer (all top 10 breweries in 1950)? Sierra Nevada vice president Steve Harrison offers a bit of perspective. “We’ll see in 100 years,” he said. “I can’t say when we’re going to stop (growing). We’re in a unique niche, and we don’t sell to everybody.”
When Ken Grossman and Paul Camusi founded Sierra Nevada in Chico, CA, the business plan called for production to max out at 3,000 barrels (a barrel is 31 gallons) per year, using a 10-barrel brew house. “We figured we could make money at that; we wouldn’t get rich but we’d get by,” said Grossman, now the company president.
“Jack McAuliffe (New Albion Brewing) had done a barrel and a half and that didn’t seem like enough. I was homebrewing that much.”
Sierra Nevada produced 1,500 barrels the first year (1980) and passed 3,000 in its fifth, 20,000 in its 10th and 150,000 in the 15th. This year the brewery will sell about 570,000 barrels. Today the main brewing kettle holds 200 barrels, another, 100 barrels. Grossman is in the process of putting in a 10-barrel pilot brewery that will be used to do everything from testing the quality of grain to making special beers for limited distribution.
“It will have more brewing capacity than we started with,” he said.
Grossman owns enough property in Chico to continue spreading out, so another expansion is always possible. Will it be necessary?
“We really don’t know. The marketplace is evolving so quickly,” he said. “The consolidation that is taking place at both the distribution and retail levels is affecting the ability of even players our size to get to market.”
What are hurdles for Sierra Nevada may be roadblocks for smaller breweries. “I think access to market is endangered now—and will worsen unless, as a segment, we grow our market share,” explained Tom McCormick, a former pioneering distributor who edits BEERWeek, a newsletter for the specialty beer industry. “Bigger distributors, through consolidation, tend to be less craft friendly and tend to carry fewer SKUs [brands]. The more we can increase market share collectively, the greater attention we will get both at the retail and distributor levels.”
