For Payette Brewing Co., competition in the beer industry means opportunity
When Idaho beer production data for 2017 was released, the news was bittersweet for Sockeye Brewing.
It was the first time head brewer Josh King remembers the Boise brewery finishing No. 1. But Sockeye actually brewed 6 percent less beer than it did in 2016.
After years of steady growth, Sockeye moved into first place only because Payette Brewing Co. — Idaho’s largest brewery the three prior years — cut its output even more. Payette brewed 9,673 barrels, a 12 percent decline. Sockeye brewed 10,202.
If you’re a craft-beer drinker, the blame lies largely with you. Faced with an explosion of choices from grocery-store shelves to neighborhood taprooms, beer lovers are flirting with every new blonde ale that walks by. When their fling with one is finished, they move on to the next glittery thing. (Yes, glitter IPA is a thing.)
Their only loyalty? Localness. Even that is tenuous.
The keg is far from running dry for Boise’s best-known breweries. Overall, Idaho beer production increased again in 2017, according to the Brewers Association, a trade organization representing the craft beer industry.
But with 23 Treasure Valley breweries vying for attention — and a never-ending onslaught of out-of-state competition — breweries of all sizes are being forced to pump harder to keep those taps flowing.
“It’s a war out there, you know what I mean?” said Lance Chavez, head brewer at Boise Brewing, which increased its production from 1,500 to 2,000 barrels in 2017.
Growth has become particularly challenging for larger, established breweries like Payette and Sockeye. Ambitious plans hatched a few years ago seem almost like pipe dreams today.
“Things are changing at light speed,” Payette founder Mike Francis said.
When Sockeye ramped up production in 2013, the brewery set a five-year goal of hitting 17,000 barrels annually, King said. He chuckles at the idea of reaching that number in 2018. “Definitely not. We may be below 10,000 barrels.”
Sockeye tried to distribute outside Idaho but never invested significant resources in a strong, sustained push. King said the brewery sells about 96 percent of its beer in-state. “Our focus has never been out of state, really,” he said. “... We’ve never been on the ‘let’s get as big as we can’ train. Our focus has always been being Idaho’s top-selling brewery in the state.”
Payette’s production fell mainly because out-of-state distribution “really was hurt,” Francis said.
“With so many breweries and so many local breweries in every community, local is winning,” he said. “For us, our Idaho numbers are still pretty similar to what they have been. There’s competition going on in the Valley that is digging into it. But it’s a lot harder for us to sell beer the further away from Boise [we get]. It’s harder to sell beer outside your market.”
Founded in Garden City eight years ago, Payette expanded in 2016 into an impressive, $4.5 million Boise brewery and taproom at 733 S. Pioneer St. The plan: To distribute local favorites across the West.
“We built this facility to grow,” Francis said. “... When we built this new brewery, a lot of it was eyeing regional expansion, increasing our distribution outside of Idaho.”
After initial successes, sales slowed in key markets such as Spokane, Salt Lake City and Portland.
“We always want to grow more in Idaho. But Idaho, we’re not a huge state,” Francis said. “So our goal four years ago was really to grow within this Northwest, Intermountain region. At the same time, there’s been this huge influx of new breweries. So our ability to grow outside of our home market has been increasingly difficult.”
Sockeye and Payette are “in good company,” according to Bart Watson, chief economist at the Brewers Association, which released 2017 brewery production numbers this spring.
“There are lots of amazing breweries that are struggling to grow in this crowded market,” Watson said. “In general, the larger you were and more widely you were distributed, the more competitive things were.”
Nationwide, overall beer sales were down 1 percent by volume in 2017, while craft breweries were up 5 percent.
Production at craft breweries that opened in 2013 or earlier grew 1.3 percent last year, Watson said. Breweries that opened in 2014 or later? 52.6 percent. “A lot faster,” Watson said, “obviously on a much smaller base.”
Breweries are scrambling for shelf space at grocery stores and draft handles at restaurants and bars. Boise Brewing, which opened in Downtown Boise in 2014, is focused on increasing its packaged beer presence in Idaho while simultaneously chasing tap handles.
“Our salespeople are out there doing the best they can,” Chavez said, “but there’s so much choice out there, you’re just happy to be part of the rotation.”
“Local is the first question. The next one is ‘What’s new and different?’ Francis said, before correcting himself: “That’s probably the first question, is ‘What’s new and different?’ The second one is ‘What’s local?’ “
Customer loyalty has become harder to sustain, said Daniel Love, founder and president of Mother Earth Brew Co. in Nampa.
“You get ‘em for about six months, then you have to hope to grab somebody new, because they’ve moved on to somebody else,” Love said.
The larger a brewery becomes, the trickier it gets to stay nimble. Yet seeming new and different can be as simple as changing a beer’s packaging format.
This year, Mother Earth released its annual Big Mother triple IPA in four-packs of 16-ounce cans, instead of individual 22-ounce bottles. The packaging cost the brewery extra money, Love said, but it was worth it.
“In this business right now, if you’re not willing to reinvent yourself, you might just be happy staying the size you are, and there’s no growth in your future,” he said. “You have to be able to do different things to get people excited.”
Founded in San Diego County, California, in 2010, Mother Earth invested nearly $4 million into opening its Nampa brewery in 2016. In the next year or two, Mother Earth likely will become Idaho’s largest brewery. Mother Earth brewed 40,000 barrels in 2017. Only 7,500 of those were done in Idaho, but the company’s five-year plan is to transfer most of the operation to Nampa.
Mother Earth sells beer in 16 states. It will be 17 by the end of the year — possibly 18. “We just got Montana,” Love said. “I think we’re going to get Ohio, too.”
Mother Earth depends on its brewery vice-president to aggressively pursue distribution. But success boils down to beer quality, Love said. Mother Earth dry hops its IPAs with a minimum of 3 pounds per barrel, he said, and even 4 or 5 pounds in its rotating Resinator series — an extra-costly load of raw ingredients.
“That’s why they smell different,” he said. “When you’re out in front of a distributor trying to get them to pick your product up — and you know there’s 60 other small guys out there — when you open those cans up, they go, ‘Wow, what’s that smell?’ And you go, ‘That’s the hops.’ They get excited before you even drink it. That helps you sell the product.”
A bright spot: Taprooms
For breweries concentrating on hometown business, a renewed source of income has become important: Taprooms.
Payette Brewing’s taproom, which includes a large outdoor beer garden, bustles with customers and food trucks.
“While we’re seeing declines in other parts of the business,” Francis said, “the taproom continues to do well and grow.”
Recent site improvements include outdoor sun sails and a hop garden. A new merchandise trading post recently opened in a space that used to be Francis’ office.
“We’re really making the taproom awesome, which I think a lot of breweries are doing across the country,” said Paige Francis, Payette’s marketing director.
Sockeye Brewing, which was founded in 1996, was ahead of the curve from a customer perspective. Its original location at 3019 N. Cole Road includes a brewpub. So does its larger brewery at 12542 W. Fairview Ave., which opened in 2014.
Idaho newcomer Western Collective Beer debuted last month in the space that held Payette’s original Garden City brewery at 111 W. 33rd St. Its taproom is in the process of being moved to the other side of the building, enlarged and remodeled.
Western Collective’s best-selling product, Guns & Oil beer, is marketed in seven states. But owner Cary Prewitt, who recently relocated to Garden City from Austin, Texas, said he is all aboard the taproom train.
“I don’t believe we can count on distribution today,” he said. “There are too many people trying to get on the shelf at Albertsons.”
The future of Idaho beer
Are there too many craft breweries — in Idaho and beyond — for all to survive?
“It’ll be interesting to see how long some of these people can stay in business,” said Josh King, Sockeye’s head brewer, “because it’s not as lucrative as a lot of people think.”
Mother Earth owner Daniel Love agrees. As the newly appointed vice-president of the state’s brewers guild, Idaho Brewers United, it’s his job to know these things. “I think you’ll see attrition from the little guys,” Love said.
Opportunity still beckons newer, modest-sized operations like Boise Brewing, which is only brewing at about half capacity, Chavez said. “We’re still growing,” he said. “We haven’t been in the east part of the state, the north part of the state.”
Payette Brewing plans to stick to its out-of-state expansion strategy. “We’re trying to do it in a little more calculated, planned-out way,” Mike Francis said. Currently, the brewery’s in-state versus out-of-state sales are about 85 percent to 15 percent, he said. Ultimately, “the goal is to get probably 50-50.”
“Our focus is quality, consistency,” King said.
“For us, we don’t have any loans out on our equipment and stuff like that. Our ownership is solid, and we don’t owe anybody money. We’re good. We’re going to ride the storm.”