Worcester Business Journal

wbjournal.com | February 19, 2024 | Worcester Business Journal 11 Local ownership is key to craft beer culture Wachusett Brewing, the oldest craft brewery in Central Massachusetts, was purchased in January by the ownership behind Smuttynose Brewing in New Hampshire. This parent company, FinestKind Brewing, took over Smuttynose after a bank auction in 2018 and has since gone on a bit of an acquisition spree, buying Brooklyn-based craft brewery Five Boroughs Brewing in November. This ownership model, where one company owns multiple brands, is unusual in the regional craft beer sector, with most breweries running as owner-operator businesses. When polled online, nearly three out of four WBJ readers said they prefer to buy from locally owned craft breweries. Do you prefer to buy beer from craft breweries with local ownership? I don't drink beer. 9% chasing cra brands," said Rob Day, vice president of marketing at Jack's Abby in Framingham. "It's fair to say the average consumer outside of our little bubble has a harder time understanding the exact definition [of cra]." Anheuser-Busch InBev, the largest brewer in the world, has purchased multiple cra breweries, including its September 2020 purchase of Cra Brew Alliance, an Oregon company that itself had purchased smaller breweries in its 11 years of existence, including Kona Brewing in Hawaii. Even large businesses with zero prior beer experience have jumped into the fray. In 2020, Aphria, a Canadian company solely focused on the cannabis industry, diversified its portfolio by purchasing Atlanta's SweetWater Brewing for $250 million in cash and $50 million in company stock. Aphira would later be absorbed by Tilray Brands, a multinational company based in New York previously focused on cannabis, with Tilray going on to make additional purchases of cra breweries. e compa- ny holds 5% of the U.S. cra beer market and is the fih largest cra brewer in the country, according to a Tilray press release issued in October. "Larger corporations buy these brands for a reason. ey're not buying just to throw money out of the window," said Kim Golinski, president and general manager of Wormtown Brewery in Worcester. "To say 'I can't drink this because Anheuser-Busch made it,' that's a pretty small mindset to have." Corporate players have yet to con- vince any Mass. breweries to cash out, but mergers and acquisitions between small to midsize players like Wachusett and Smuttynose are more common; RiverWalk Brewing in Newburyport and Ipswich Ale Brewery announced a merger in November, with Dorches- ter Brewing and Aeronaut Brewing in Somerville following suit in December. "We are seeing a little bit of a trend of people looking to pool resources and have more buying power by joining forces," said Stinchon. Courthouse session At the opposite end of the spectrum from beer behemoths like Anheus- er-Busch sits places like Courthouse Brew, Worcester's newest cra beer spot. Co-founded by Mark Gawlak and Danny Whalen, two practicing attorneys who are Central Massachusetts natives, the business brews its beers in a taproom in a brick building located in the former Whittall Mills complex, adjacent to Mrs. Moriconi's Ice Cream shop and a num- ber of other small businesses. In addition to being available at its modest-yet-trendy taproom, Court- house's brews are on the beer list of a handful of local restaurants. Gawlak and Whalen started brainstorming an entry into the space while enjoying the wide selection of dras at Brew City, a bar and grill on Worcester's Shrewsbury Street. "Being able to sample a lot of different beers, you get a general understanding of the flavor profiles of every sort of beer and then ask what we could do different- ly," said Whalen. Even with their legal backgrounds, the maze of regulations at the federal, state, and local levels was a lot to handle. "You have to have your lease signed and some other stuff squared away to start your federal paperwork," said Gawlak. "Until you get your federal paperwork, you can't start the process at the state level. Until you get your state permit, you can't start the process at the local level. It really ham- strings potential small busi- ness owners from starting." e brewery opened more than a year later than Whalen and Gawlak's initial plan. Now, Courthouse has attempted to be a bit of a trendsetter, producing less common brews. e more common variations of India pale ales are still present, but the busi- ness makes Strict Scrutiny, an Irish red ale, and Attractive Nuisance, a fruited IPA with notes of cinnamon sugar and milk, which was the first beer Gawlak and Whalen produced, inspired by a dish at Worcester's Pampas Churrascar- ia, a Brazilian steakhouse. e brewery's selection is the latest confirmation the days of cra breweries sticking to three or four beer types are a thing of the past, one of the many ways operators have had to adapt to changing consumer preferences and trends. Changing preferences Customers looking to branch out from IPAs have more choices than ever, ranging from alcohol-infused sodas and seltzers, to cannabis-based beverages, to non-alcoholic beers and mocktails. Beyond changes in preferences, the industry is dealing with more worrying trends. Bustling taprooms play a key role in the business plans of breweries, par- ticularly smaller ones, but breweries are among the entertainment venues report- ing smaller crowds since the COVID-19 pandemic, said Day from Jack's Abby. "On-premise keg volume has not recovered to 2019 and prior numbers, even though a lot of indicators might have shown that it should have," he said. Perhaps most alarmingly for brewers of all types, the generation reaching adulthood near or during the pandem- ic doesn't seem nearly as interested Katie Stinchon, executive director of the Massachusetts Brewers Guild 6% 1% Yes, I like to support local businesses. 34% Yes, local ownership is part of the craft beer culture. 40% 10% No, the quality of the beer is the most important thing. No, I have no idea who owns my favorite craft brewery. I enjoy beer, but I generally don't drink craft beer. in alcohol. A 2020 study published in JAMA Pediatrics, a monthly peer-re- viewed medical journal published by the American Medical Association, found 28% of college students in 2018 reported they abstained from alcohol, up from 20% in 2002. "Anyone who turned 21 just before, during, or right aer COVID is just not coming out," Golinski said. "ey are still drinking beer, but it's a lot less and a lot less socially." Craft comradery While it's clear the producers are fac- ing some headwinds, the cra industry does have a wildcard: a friendly and helpful spirit between competitors. "It's like big brother or big sister helping out little brother or little sister," Golinski said. "e industry is about relationships, and there's all sorts of friends in the industry. I know that Wormtown has been a big proponent for helping the small guy out." e sharing of ideas and resources between companies outsiders might assume are arch-rivals is common- place, especially with companies new to the space. "Everybody is extremely welcoming, willing to help out if you have any ques- tions," said Whalen. "No one is trying to gain an advantage in any way. ey are more apt to hand you a four pack and say 'Here, try this,' which makes it a great scene to be a part of." Kim Golinski, president and general manager of Wormtown Brewery in Worcester, says operators in the craft space tend to help one another. PHOTO | EDD COTE W

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