Contract brewing: a great complement to brick-and-mortar breweries

Here’s something of a hot potato.  A storm is brewing (no pun intended) in the world of Craft Beer.  In Canada, at least, there are debates happening over the pros and cons of contract brewing, otherwise known as gypsy brewing or, in this case, ‘virtual beer’.  Certain Canadian provinces forbid a brick-and-mortar brewery from producing beer for a contract brewer unless it is marketed and sold under the brick-and-mortar brewery’s name.  The arguments against contract brewing suggest the consequences are consumers being fooled and an oversaturation of the marketplace.

The net result of too much in-fighting and the continual discrediting of either argument is that nobody wins, both sides of the argument lose, and the consumer suffers.  Nobody desires a future beer landscape dominated by handful of monopoly players that offer a limited choice, yet if contract brewers and brick-and-mortar breweries don’t work together and cooperate level-headedly in a rational, intelligent and business-like manner it will create the perfect storm, from out of which the large, corporate, industrialised beer-giants sail — bigger and stronger.

The argument against contract brewing that suggests consumers are being fooled is quite ridiculous, since most discerning, beer-loving consumers are savvy to what’s happening in the world of beer.  The most important consideration to most consumers is whether a beer is produced artisanally or industrially.  So long as it is artisanally produced, most consumers care little whether a great beer is from a contract brewer or brick-and-mortar brewery.  Great beer is great beer and artisanal is artisanal; neither is homogenous, industrialised commercialism.

The physical location of a beer’s production, too, is of little importance, except perhaps for a beer’s heritage and country of origin.

Oversaturation is a double-edged sword with conflicting advantages and consequences.  It’s an undeniable fact that most genuine beer-loving consumers always enjoy tasting new beers (or beers from new brewers), and yet a consumer will only reward an impressive beer with loyalty and ongoing patronage if its flavour (aroma, taste, mouthfeel) and overall effect is impressive.

The argument suggesting contract brewing leads to oversaturation of the marketplace assumes a consumer may always have too much choice to ever reward a brick-and-mortar brewery with loyalty and ongoing patronage.  Whilst this may be somewhat true in the short-term, it is not only a little overconfident on the part of the brick-and-mortar brewery that believes its beers wholly agreeable to consumers, but it is also an untenable situation in the long-term because there is neither enough outlets nor enough consumers to sustain an infinite number of beers and breweries.

A state of equilibrium is a certainty, and the balance of breweries and beers, outlets and consumers will favour the consumer’s most-popular beers.  If a beer sells well in the taproom it will continue to be stocked irrespective of whether it’s from a contract brewer or brick-and-mortar brewery.  The consumer generates the demand and the successful contract brewer or successful brick-and-mortar brewery ought to have the capacity to meet that demand.  This is an important point, since if a contact brewer — or even another brick-and-mortar brewery — needs short-term or immediate additional capacity, that capacity ought to be supplied by a brick-and-mortar brewery that has spare capacity.  Should a brick-and-mortar brewery that has spare capacity fail to support another contract brewer or another brick-and-mortar brewery in its time of need, then both endeavours are likely to fail.  The whole Craft Beer industry is likely to fail.

What is unclear in these arguments are the parameters that define either a brick-and-mortar brewery or contract brewer, especially when a contract brewer may be anything from a successful homebrewer to another brick-and-mortar brewery.  Neither capital investment nor size is a deciding factor, since a well-equipped homebrewer, for example, may sometimes have far superior brewing capability than a very small brick-and-mortar brewery; in fact, a brick-and-mortar brewery acting as a contract brewer may indeed be larger than the brick-and-mortar brewery it contracts to brew.

Furthermore, consumer perception may mistakenly presume brewing skills, knowledge and experience must always be superior at a brick-and-mortar brewery, which may be true in many cases but is nonsense when applied to every case.  An investment in infrastructure, equipment and premises is no guarantee of a proficient and skilful brewer, and consumers will not favour beer that doesn’t taste great, irrespective of whether it is produced by a brick-and-mortar brewery or not.  A brick-and-mortar brewery could produce both great beers and unpalatable beers; a contract brewer could produce both great beers and unpalatable beers.  It is possible for anybody with proficiency to produce an award-winning, classic beer — a homebrewer, a contract brewer, a brick-and-mortar brewery.

So, apart from niche, specialised and parochial beer-scenes, does it really matter whether a great beer is produced by a contract brewer or brick-and-mortar brewery?

There seems little genuine reason for a brick-and-mortar brewery to argue against contract brewing, unless it’s because of sour grapes (a disparaging attitude based on jealousy, protectiveness or fear of a superior product) or a misguided notion that a substantial monetary investment creates and coerces consumer demand.  A purist arguing against contract brewing is not only absurdly arguing that better beer is always produced by a brick-and-mortar brewery (irrespective of the brewer’s skills), but also arguing in favour of large, corporate, industrialised beer-giants — the archaic purist displays no leeway to allow new, young, exciting, innovative brewers (and consequently new breweries) to enter the marketplace.

Thankfully, these arguments are only happening in small segments of the beer world.  In the majority of cases, both contract brewers and brick-and-mortar breweries (and sometimes homebrewers) are able to create exceptional beers that keep consumers content and enthusiastic.  Contract brewers benefit from brick-and-mortar breweries, brick-and-mortar breweries benefit from contract brewers, and brick-and-mortar breweries benefit from other brick-and-mortar breweries who need extra contract brewing capacity.

Continuing to entertain the arguments for or against contract brewing, or even trying to determine if bricks-and-mortar brewery beers are purist, superior product compared with contract brewing beers, has only one goal: a Craft Beer scene with diminishing strength, with which it can no longer fight to support its current position, future role and long-term vision.

Let’s just enjoy the beers and let them speak for themselves about their quality and merit.