Brewing a recipe for growth

Kerry Feltner//September 11, 2015//

Listen to this article

Rohrbach Brewing Co. owner John Urlaub, center, began craft brewing in Rochester decades ago and remains a driver in the industry here. (Photo by Kimberly McKinzie)

A mix of legislation, gen-Xers and millennials, and optimal timing has helped give rise to strong craft brewery growth in New York.

The two N.Y. regions seeing the most growth are the Finger Lakes Region and Long Island, the New York State Brewers Association reports. Indeed, in four years the Finger Lakes Beer Trail—which spans some 210 miles and runs from Rochester to Syracuse and Corning to Binghamton—has grown from 24 members to 82, as of June.

Last year the U.S. craft beer industry generated close to $55.7 billion and over 424,000 jobs for the country’s economy, according to the Colorado-based Brewers Association. More than 115,000 of those jobs were directly at breweries and brewpubs.

A Brewers Association study ranked New York fourth in the nation for craft beer sales with $2.9 billion in total impact to the economy: The state boasts 181 craft breweries and a production rate of 948,228 barrels a year.

Two years ago the state had 207 craft breweries, which added a total of 11,366 full-time jobs and $450 million in craft beer tourism. The industry in New York saw $554 million in wages and craft breweries produced 1 million barrels, according to the New York State Brewers Association’s 2013 economic impact study.

Today, a brewery opens about every 10 days in the state. The growth is here to stay, area experts say.

“It’s definitely not a fad,” said Paul Leone, Webster-based head of the New York State Brewers Association. “I don’t see the bubble bursting anytime soon. I don’t see the bubble bursting at all, as a matter of fact. I do see a leveling out at some point, but I still think that’s several years away.”

The industry contributed $2.9 billion to New York’s overall economy in 2014, the study states.

Craft Act spurs business
The recent growth has been due in part to the passage of legislation such as the 2014 Craft Act. The law allows craft brewers to sell on- or off-premises any beer they manufacture and any New York labeled beer, among other benefits.

Gov. Andrew Cuomo has helped to usher in the statewide growth in the industry, officials say.

“Regardless of your politics, this governor has done a tremendous amount of work for the craft beverage industry in general in New York State to make sure that it continues to grow,” Leone said.

Entering the market requires dedication. The massive growth does not imply an easy path to success, area experts say.

“Very few people in this industry are getting rich,” Leone said. “They’re doing it because they want to brew beer for a living and there’s this perception that the industry is growing at this tremendous rate—which it is—but it’s not an industry that you’re really going to get rich in. They do it because they love it every day.”

CB Craft Brewers in Honeoye Falls has been operating for nearly two decades. Owner Michael Alcorn, an Eastman Kodak Co. veteran, has enjoyed the steady growth of the industry.

Last year the company produced 8,500 barrels and this year he plans to ramp up production to 10,500 barrels.

“I guess in my mind I had foreseen this happening, but it was sort of the pie in the sky: Will this happen?” Alcorn said. “My growth has been where I’d hoped it would be. I’m going to end up expanding past the size I had anticipated when I opened, and I’ll probably double what I had decided back in ’97 to do.”

Prior to Prohibition, New York had roughly 350 breweries for its population of 5 million, Leone said. Today there are some 220 breweries in the state with a population of 20 million people.

Millennials are the right target for craft breweries; the generation is used to a variety of choices and applies the same expectation to beer.

“I think what’s driving craft beer right now are millennials and gen-Xers,” Leone said. “Millennials are very conscious of their surroundings. They want to know where their beer comes from, they want to know where their food comes from and they like the idea of craft.”

Early leader
Rohrbach Brewing Co. has set the tone for craft brewing in the area, Leone said.

“When you look at craft brewing in Rochester you really have to look at Rohrbach’s specifically,” he said. “John Urlaub started Rohrbach’s in the early ’90s when craft beer was not even really on people’s radar yet. He really was kind of the innovator in Rochester or the beginning brewery of the craft movement.”

Rohrbach’s owner John Urlaub said he has been committed to the region and plans to continue that trend.

“As a company we’ve had really outstanding recent sales,” Urlaub said. “So the challenge is trying to keep up with demand and everybody says, well that’s a good problem to have—well it is and it isn’t. You can stay out of stock for so long; people won’t trust you. We’ve increased our production and we didn’t expand geographically—we didn’t want to—we wanted to focus on the local market.”

Dean Jones, brew master of the Pilot Batch System in the Genesee Brew House, has seen the growth firsthand, he said.

“My production numbers have doubled in the past two years,” Jones said. “I am basically maxed out for tank space, and we are looking at expanding my fermentation space.”

Quality is the most important factor in predicting a craft brewery’s success, officials said.

“Because you brew a home brew that your family loves and your friends love doesn’t mean that everybody is going to love it,” Leone said. “Beer is very technically challenging to brew on a larger scale. A lot of things can go wrong in beer, so it takes quite a bit of skill to brew a good beer consistently.”

A differentiator in the craft brewery industry is a feeling of community, Leone said. The camaraderie can help steady the growth for years to come.

“I think that nobody should get into this business thinking that everybody is just going to buy the beer because craft beer is hot right now,” Leone said. “It’s got to be unique and the quality has to be there. Otherwise, you’ll fail.

“The margins are very thin on a small scale, but what’s also great about our industry and why it continues to grow is that everybody gets along,” he added. “As long as we all work together, it will continue to rise.”

Industry start
The roots of the craft beer industry trace back four decades.

President Jimmy Carter signed H.R. 1337 on Oct.14, 1978, which contained an amendment sponsored by Sen. Alan Cranston, D-Calif., that provided for an exemption from taxation of beer brewed at home for personal or family use.

With that initiative, home brewing was made legal on Feb. 1, 1979, and people began to get creative with beer in homes across the country.

“People started home brewing by the early ’80s and there were a few pioneers at that point,” Leone said. “Some of these brands just started and by the ’90s it was happening fast, but the problem is the quality wasn’t good. And the timing was bad so you saw a lot of closings in the early ’90s and only the strong survived.”

The West Coast laws and craft beer industry are 10 years ahead of the east.

“Generally, it’s still all about the West Coast,” Leone said. “They’re still much further ahead than us. There’s a perception that beers from Oregon and Washington and California and Colorado are the best beers in the country—and they are fantastic beers, but New York is quickly catching up to them.”

The Brewers Association defines a craft brewery as a small, independent and traditional operation. A craft brewery has:

An annual production of 6 million barrels of beer or less;
Less than 25 percent of the operation is owned or controlled by an alcoholic beverage industry member that is not a craft brewer; and
A total beverage alcohol volume in beers whose flavor derives from traditional or innovative brewing ingredients and their fermentation.

This is the first of three articles on the craft brewery industry. Next: the economics and laws of craft brewing.