Sizing up 

Comparing nano- to micro- to large-scale breweries

A micro-brewery produces 15,000 beer barrels a year maximum, like Dayton’s Warped Wing; photo: Jim Witmer

By Jim Witmer

Does size really matter? When it comes to brewery size, it’s a subject everyone seems to wonder about: Is a big brewery better than a small one, or vice versa? Is this something you should care about?

There is a perception that a small craft brewery is superior in many ways to an industrial mega brewery, although the cost per six-pack, pint, or growler will be on the higher side depending on how limited the product is. On the other hand, some prefer a large-scale operation that provides bargain-priced and readily available product. But this column is focused on the growing craft market. It’s fair to say smaller craft and regional breweries are committed to creative flexibility in the use of ingredients, techniques, styles, and limited releases despite all the challenges in everything from distribution to advertising.

Nano, micro, contract, regional craft, and large production breweries as well as brewpubs are all defined by the amount of barrels of beer produced in a year. The Brewers Association (BA) makes distinctions among the various segments within the craft beer industry.

What defines a craft brewer, anyway? According to the BA, an American craft brewer is small, independent, and traditional. “Small” means an annual production of six million barrels or less. “Independent” signifies less than 25 percent of the craft brewery is owned or controlled by an alcohol industry member that is not a craft brewer. “Traditional” means that a majority of the brewer’s volume is derived from traditional or innovative brewing ingredients and fermentation. So flavored malt beverages are not considered beers, as in Not Your Father’s, Not Your Mom’s, etc., though you will sometimes see them stacked next to a Madtree or Jackie O’s (the unaware might wonder if they are some kind of small-batch brewery release).

At the bottom of the brewery barrel is the nano. While there is no production minimum, a nano brewery is typically understood to be a three-barrel (93-gallon) system or smaller. There is no BA accounting of nano breweries, so it’s anyone’s guess how many are out there. These are typically thought of as a hobby-gone-wild or as an add-on to an existing restaurant or pub. The profitability of such a size is a slim margin, and there are none in the immediate area. This is the type of brewery I could manage, and have fun doing it, but probably only break even if I were lucky.

A micro-brewery is classified by the number of beer barrels it produces in a year, limited to 15,000 a year, or 465,000 U.S. gallons, and at least 75 percent of that beer must be sold outside of the brewery. Microbreweries sell to the public by one or more of the following methods: the traditional three-tier system (wholesale distributor to retailer to consumer), directly to the consumer through an on-site taproom, and/or directly to a restaurant and carry-outs. Local micro-breweries include Crooked Handle, Dayton Beer Company, Eudora, Figleaf, Hairless Hare, Star City, Warped Wing, Yellow Springs, and Mother Stewart’s.

A contract brewery is hired by another brewery to produce its beer, or to produce additional beer in the case of a brewer with insufficient space or equipment with an unexpected order to fill. The local example is Nowhere in Particular (if the name wasn’t a give-away).

A brewpub is a restaurant-brewery that sells 25 percent or more of its beer on site. The beer produced is mainly for sale in-house or to-go, but might be distributed to other establishments, as well. Local brewpubs are Carillion, Fifth Street, Lock 27, Lucky Star, and Toxic.

A regional craft brewery is one with an annual beer production between 15,000 and 6 million barrels. Madtree, Rhinegeist, and Great Lakes are our regional breweries.

A large brewery is one that has an annual production over 6 million barrels. The closest example is MillerCoors in Trenton, Ohio.

Have I lost you in all the terminology? Well, this won’t help: the designation of craft breweries is a fluid term. As a brewery’s production changes, so does it BA category. So does any of this really matter as long as the beer is a good price, readily available at your local Circle K, and you enjoy it?

As far as loyalists to small independent craft and local breweries are concerned, it does matter. There is an alarming trend of successful independent craft breweries selling out to the likes of billion-dollar corporations such as AB Inbev, MillerCoors, Constellation Brands, and Heineken, after being offered huge sums of money. But once the corporate brewers have purchased a craft brewery, it doesn’t end there. It’s just the beginning of streams of distribution, which they largely control for retail product placement, advertising, malt and hop producers, etc., so they can battle the rising competition of small independent brewery growth.

Now, of course, there is no disclosure to alert you, the consumer of this. When shopping for craft beer at your local grocery store, you aren’t thinking that the independent craft brewery you’ve become accustomed to supporting has quietly been swallowed up by big money.

Why not just check Ratebeer on your mobile device for an unbiased review? Think again. Anheuser-Busch InBev recently bought stake in that company, too. It was so disturbing that independent brewery Dogfish Head quickly requested to be removed from the site.

Due to recent buyouts or heavy investments in brands such as Elysian, Golden Road, Terrapin, Ballast Point, Lagunitas, Devil’s Backbone, 10 Barrel, and Goose Island, many “independents” are no longer very independent. Will being controlled by a large conglomerate make it easier for such brands to concentrate on saturating the market but consequently eliminate the creative fire they once had as hungry independents? Will their popularity wane to the point where they are just another ho-hum package taking up space on the shelf?

When news of these buyouts hits Facebook and Twitter, they are blown up by dissenters. It’s predictable that they will be boycotted by dogmatic beer geeks, but other, not-so-committed consumers will still buy the beer, all the while oblivious. That’s what the future of the buyout model is based upon, the assumption that mainstream consumers can be duped into thinking they are buying independent craft beer—yes, the one that brought them to the dance to begin with.

On what will you spend your hard-earned, craft beer dollars? Here’s something you might want to consider: sometimes size does matter.

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Jim Witmer
Reach DCP beer writer Jim Witmer at JimWitmer@DaytonCityPaper.com

One Response to “Sizing up ” Subscribe

  1. Josh June 21, 2017 at 3:29 pm #

    Nice explanation of the industry, Jim. Me and a buddy made a website where you can see who owns what brewery. We’re still working out the kinks, but we think it works pretty well. isitbigbeer.com We’re not associated with any brewery or association. Just a public service.

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