Friday, October 29, 2010

A Tale of Two New Brewpubs

Yesterday, I met up with my friend Jeff for lunch and we strolled from his house to two new local Portland brewpubs: Coalition and Migration.

Ironically, John Foyston has an excellent profile of the two, and ten others, in today's Oregonian.

Coalition Brewing Company

Our first stop was Coalition.  It was a damp and cool Portland day so the roll up door was closed, but inside was cozy, warm and inviting.  I didn't take pictures so I had to troll the intertubes for photos but found no glamor shots - Coalition might want to get on that as the space is great.  Here is one photo that gives you a good idea of the very small, but very inviting, space that I got from this blog that has a nice write-up on the food (so I don't have to).  Just for the record. I had the Satchel which, it turned out, was named for the delightful and friendly dog that kept us company during our lunch.  It was good I was happy to report to the namesake that seemed to wish that I would prove it to him by providing a sample.  Sorry Satchel.

Jen Stevenson

What I came for was not the food but the beer and I decided to start with the prototypical Portland drink: the (Double Dog) IPA.  Foyston declares it his new favorite in his article, and I can see that it is designed for the Portland consumer's sweet spot.  Read: super hoppy.  It is an exceptionally crafted beer and I recommend it without reservation to the hopheads out there.  However, for me it was slightly out of balance, a bit more hops than the malt could adequately deal with.  It also nuked my palate so I had to recharge it with water and food.  Surprisingly, it was the King Kitty Red that Jeff ordered that hit my sweetspot.  Surprising because I am not generally a fan of the style, but with the intensely hop-forward brewing style of Coalition, I found the malt body the perfect balance to the hops which, at 59 IBUs, are not subtle.  It was excellent.

Given the weather it was the Maple Porter that was the real star of the day.  Despite the Maple Syrup it is actually a very dry porter, so the Maple balances it with barely detectable sweetness, but mostly adds a beautiful aroma and flavor to balance the roated malt notes.  Elan came in and, with Jeff throwing his weight around, gave us a sneak peak of the barrel aged Stout soon to be on offer.  It still needs a litte time, but the stout alone (their regular stout) is excellent and it was clear that in another week the bourbon barrel notes will come out from hiding and produce a wonderful (but very quaffable) barel-aged stout.  Look for it because it'll go fast.

Finally, we had a taste of their fresh hop offering which was definitely one of the better ones I have had this season.  It was right on the heels of the IPA so I couldn't taste all the fresh notes perfectly, but after a little palate cleansing they started to shine through.  Kudos as fresh hops are tough to deal with.  If I remember correctly, Kiley said that Coalition used Sterling hops, but don't quote me on that one.

Though new, I'd put Coalition right at the very top of Portland Brewpubs in term of the quality of the beer they are producing.  Hopefully, we'll start to see Coalition beers on tap around town because they are too good to stay confined to the Ankeny space.  Go and try it.

Oh and 16oz. cheater pints are $3.75.  Cheater pints = not nice.  Price = very nice.  On balance a good deal for exceptional beer.

Migration Brewing Company

Migration has a great location and a great space, minimally done, but with a nice low-key vibe typical of Portland.  Foyston says it is evocative of the Lucky Lab and I can see the comparison, but I didn't find Migraiton quite as welcoming.  Migration, with some gaffitti in the loo, interesting choices for wall decoration and slightly loud music feels a little more like a college bar than the LL.  Nonetheless it is a nice space.

Ross William Hamilton/The Oregonian

The beer, unfortunately, is another matter.  I will start with the good: the Terry's Porter.  Kind of the opposite of the Coalition version, Migration's porter is sweet and smoky and lovely, without an off note (the fact that they stole Jeff's and my name - we first brewed Terry Porter in Madison, Wisconsin in 1993 - notwithstanding).  It is a very good porter and I highly recommend it.

The Migration Pale Ale (presumably their flagship as it carries the brand name), hoewever, is a disaster.  This was my first taste of Migration and the very first thing I noticed was how cold the beer is served.  It is literally ice-cold.  Woah, thought I, someone needs to tell them they are doing themselves a disservice because no one can taste their beer.  Later, after I sacrificed my poor hands to warm up the beer, I realized that there may be a method to their madness: the aromas and flavors that came out were simply unpleasant and unwelcome.  This on top of the fact that the beer itself, as crafted, is a discchordant mess: out of balance, out of harmony and palate deadening.  But the off flavors that followed when the beer warmed suggests a bigger probelm than the recipe - they have a problem in the brewhouse.

The Old Ale revealed that the off-flavor issue is more than just isolated to a single beer unfortunately.  Flavors and aromas that are neither intended nor welcome are present and made finishing the beer a challenge.  I'd like to think this is a start-up issue, as I have experienced even in my new little five gallon system, how hard it is to nail it right off the bat. And maybe it is, but Migration has been serving its own beer for about six months now and it is time they get their ship on course.  They have managed to get some pretty prominent tap handles around town, so it'll be interesting to see just how the Portland beer consumer reacts.   

It is interesting to note that Foyson raves about, and highlights, Coalition beer, but never even mentions the beer at Migration.  Classy, but revealing.

It is also interesting to note that it took Kiley and Elan forever to get Coalition open, which gave them, and Bremaster Bruce McPhee, ample time to perfect their recipes.   The Migration boys had to convert their space with their own blood, sweat and tears which may have left them little time to perfect their beers or get used to their brewhouse.  I hope that they get it sorted soon because the competition in Portland is fierce, but their space and loaction is great and I'd like to see them thrive.

Onen final note: both Coalition and Migration have very good taste in music.

Thursday, October 28, 2010

Three Great Fall Beers

Been a bit dry in the Emerson hosehold lately, but I have had a chance to grab a few of the new arrivals on the shelves of my local New Seasons, two old familiar faves and one new one to me.

I'll start with the new one first.

Heater-Allen Bobtoberfest

Heater-Allen's Octoberfest beer is delightful.  I found it a wonderful medium-bodied and smooth Octoberfest with a subtle malt-forward note typical of the style and it finishes clean and crisp.  Light, creamy head and the perfect application of hops spice make this a new favorite for my fall beer line-up. It is a 5.4% beer with 22 IBUs - nice.

I am an economist, so I don't presume to pass judgment on beers on an objective level, but this hits my sweet-spot perfectly.

Ninkasi Oatis Oatmeal Stout

I know this is a year-round offering, but it generally disappears from the shelves of my locals during the summer, so I am always happy when Oatis arrives back on the shelves as the Fall weather gets cold and damp.  Oatmeal is the perfect way to smooth out the rought edges of dark roasted malts but can be overdone (too smooth and creamy is not a good thing either). Ninkasi nails the balance.

Hair of the Dog Blue Dot

Now, why this has shown up again in the Fall is a mystery to me.  Back in early June, if memory serves, it disappeared - just as the summer was finally warming up. I was devastated - it is one of my favorite summer beers.  But whatever the reason, the sight of Blue Dot on shelves was a welcome sight.

What I particularly love about this hop bomb is how light and creamy it is - I suspect with the careful addition of wheat in the grist. What you get is the smoothest mega-hop bomb you'll ever taste.  Again, you have to be careful not to make creaminess turn to soapiness especially with rye, which is also reportedly in the grist,  but HotD manages to pull this off with aplomb. 

So here are three very different beers now on shelves that are each entirely different form each other.  Buy all three and enjoy the wonderful world of craft beer.  Soon it will be cold, dark and wet enough to dive into the winter ales -- but not yet, for me at least.

Wednesday, October 27, 2010

Hops: The Natural Antibiotic


So I am about two years late on this, but I stumbled across this little tidbit about some interesting hops research:

Currently, poultry producers use sub-therapeutic amounts of antibiotics in poultry feed as growth promoters and to control bacterial pathogens or parasites. However, bacteria can become resistant to the antibiotics, so ARS scientists are looking for alternatives.

The hop plant (Humulus lupulus) contains bitter acids known to be potent antimicrobials. One of these compounds, lupulone, was thought to control levels of the disease-causing agent Clostridium perfringens in chickens.

ARS scientists, working under a cooperative research agreement with hops producer Hopsteiner in Yakima, Wash., examined the effect of feeding different concentrations of lupulone to broiler chickens to determine the compound's impact on Clostridium populations in the intestinal tracts of birds inoculated with C. perfringens.

A research team ... delivered different concentrations of lupulone via water to chickens inoculated with C. perfringens. After 22 days—the timeframe associated with clostridial disease in broiler chickens—C. perfringens counts were significantly reduced in the lupulone-treated group compared to another group of chickens that did not receive the lupulone treatment. The reductions ranged from 30 to 50 percent.

According to the team, the potential for lupulone as an antibiotic alternative in poultry rearing is feasible based on these results.

Hmmm..."delivered...lupulone via water"? Hey, I know another way to deliver lupulone via water and if it is effective in pathogens specific to chickens, it is not hard to believe it is effective in controlling microbes harmful to humans.

Fall is here, sickness is everywhere, I must drink beer to protect myself and keep myself healthy.

Tuesday, October 26, 2010

From the Archives: Distributors and Double Marginalization

Note: Now that Beeronomics is a stand-alone blog, and I am both busy and grief-stricken, I am choosing another sample from the archives to re-post.  This one is a little technical - more for the person interested in economics than beer, but both are good for you.  

From the Beervana blog, Jeff Alworth points us to an interesting article in Reason magazine. Forgetting the political angle, the article does a good job of describing a quirk in the market for beer - laws requiring a distributor in order for a bottling brewery to sell beer in retail outlets. I have blogged about distributors before, arguing that there may be an efficiency argument for them. Today, I simply want to describe the economics behind this statement:

"For decades wholesalers have quietly added 18-25 percent to every bottle of beer, glass of wine, and shot of liquor you pour down your gullet."

This makes intuitive sense undoubtedly, but what are the economics of it all? It turns out this is a classic case of "double marginalization." Double marginalization occurs when you have two imperfectly competitive firms in a 'vertical' relationship. Vertical refers to the producer/retailer relationship generally, and in this case it is the producer/distributor relationship. Clearly beer producers are not perfect competitors, they do not sell a homogenized product for one, and neither are distributors that have exclusive rights to sell to retailers particular beers. [Note that if they were perfectly competitive, then there would be no problem as price would always equal the marginal cost of providing the beer for sale]

So what happens? Well the basic story is that both firms want to extract their profits and in so doing end up creating a retail price that is significantly higher, and a quantity that is significantly lower, than it would be if they merged (or if breweries could distribute themselves). Here is (I know you were hoping for one!) the graph:

In this picture the demand curve for the downstream firm, or distributor, (denoted d) is given in blue. [In this case we make the simplifying assumption that both firms are simple monopolists - but any market power is enough for the analysis to follow] This is the demand for beer from retail establishments which (since they are highly competitive) closely resembles the demand for beer in the market. Since the distributor is a monopolist they make their price and quantity decision where their marginal revenue (denoted MRd) equals their marginal cost (denoted MCd). Their marginal cost is the price they have to pay the brewer. From this quantity (qu = qd ) they would charge their margin which is the difference between MCd and Pd. Thus the distributor gets a profit equal to the dark red shaded area.

So where does MCd come from? Well, note that depending on what the brewer (the upstream firm = u) charges, the quantity demanded will be read off of the downstream firm's MR curve. Thus the downstream firm's MR curve is the same as the upstream firm's demand curve, creating an upstream firm MR curve. The brewer's MC curve comes from the cost of making the beer and so they set MRu=MCu and lo and behold, the quantity demanded from the brewer is the same as a the quantity sold by the distributor, qu = qd. The brewer's profits are given by the light red shaded area. So consumers would pay pd (assuming competitive retailers) and consume qu = qd beer.

Now let's consider what would happen if the brewery distributed itself (getting rid of the middle person). They would now face the blue demand curve, set quantity at q* and the price would be at p* = pu. The brewer's profits would now be both the light red and the blue shaded areas. So consumers would pay less (p* instead of pd), consume more and brewers would earn more profits.

Interestingly, I once had the owner of an Oregon brewery tell me that he/she likes distributors and thinks that they should remain in place. The owner said that the distributors were their advocates in retail establishments far and wide that they otherwise would not have access to. Perhaps then distributors provide a service not accounted for by this analysis. But if this is efficient, then doing away with laws requiring distributors should leave them in place.

I, for one, would love to see that experiment.

NB: "Marginal" refers to the extra cost or extra revenue from making and selling one more bottle of beer. Marginal revenue is below demand because for a monopolist, making and selling one more bottle means that you have to charge just a little less to get the last person to buy it. But this means that you charge that slightly lower price on all your beer, which dampens total revenue. So the effect on marginal revenue is amplified and thus MR is below D.

Monday, October 25, 2010

Zooey: 1996-2010


We had to make the excruciatingly difficult decision to put our dog of almost 15 years down this weekend. If she had been stricken by an aggressive disease and was suffering visibly it would have been easier.  But she was mostly just old and was no longer able to get up on her own, was losing control of her bowels and had great difficulty walking.  How do you know when the time is right?  I have no answer.

What I know is that she was a great dog.  A Labrador through and through: she loved swimming and fetching (and the combination especially). A chance to swim would excite her more than anything else in the world.  The picture above is her about two or three years old in the Wildflower Preserve in Ithaca, New York at a popular dog swimming hole with rocks she could launch herself from.  I love this picture because I can't think of another one in which she looks as completely happy - dripping wet, big stick in mouth, tail wagging vigorously, ready to do it again...and again and again and again...

We got her as a puppy and had the choice of the litter.  How to make such a choice was answered (in typically social scientist fashion) by the puppy personality test from the wonderful book "The Art of Raising Your Puppy" by the Monks of New Skete. We wanted a moderate dog, not too dominant but self-confident, so we gave her and her sister the test (she had eight brothers, be we wanted a female) and she got mostly 3s.  Perfect.  And thus she was: wonderfully confident, a little willful but not too much - and, typical of Labs, the friendliest dog you could ever meet.

We got her the first summer we spent in Ithaca, between my first and second year in the economics PhD program at Cornell.  I had to study for the make-or-break exam in macroeconomics that summer and so little Zooey would sleep in her crate next to my desk and I would study and every hour or two we would take a break and go outside.  I passed the exam and the rest is history.  She was my constant companion ever since, was a gentle and proud caretaker of my sons and a constant reminder to get outside and enjoy nature.

I will miss her and I don't much feel like blogging...

Friday, October 22, 2010

A Brewpub in India


Via BeerNews I learn about this article on AnnArbor.com about Arbor brewing and their plans to franchise in India.

With business bubbling, Arbor Brewing Co. is accelerating plans to expand production and debut three new bottled beers in 2011 while undertaking an ambitious plan to overhaul its namesake Ann Arbor brewpub and Corner Brewery in Ypsilanti into green-energy showpieces.

The company, which recently marked its 15th birthday, is also working on a joint venture agreement to open its first franchise brewpub in Bangalore, India.

***

“The curve ball thrown in there is obviously the project in India,” Greff said. “We’ll just have to really work on the timing to make sure that these projects are complete, they’re well in hand before we head over to India for two months to get the brewery open over there.”

The deal with Gaurav Sikka, a University of Michigan graduate and former Arbor brewpub regular, will see the Greffs retain a 5 percent ownership stake in Arbor Brewing Co. India Ltd. The Greffs will also serve as consultants on the project, with audit controls for beer recipes and quality.

“It’s really their company, their project,” Greff said. “We’ve got very strong stipulations in the contract that all of our mores and business ethos need to be followed.”

If all goes well, the business could be franchised elsewhere in India.

“There’s a million different things going on for us in a lot of different directions but it all feels really natural, like it was a natural progression of things,” Greff said. “It feels great.”

Wow. Of all places to think a brewpub would work, India seems one of the most unlikely - Hindus generally eschew alcohol and when I studied there, alcohol consumption in public was rare. However, this was 20+ years ago now (can it really have been that long ago) and India has been completely transformed. Bangalore especially so - it was the most western of cities back then and remains so today.

But the American brewpub seems to be a good candidate for export elsewhere.  I travel overseas from time to time and am seeing more and more American style brewpubs in places as far off as Buenos Aires.  The Portland brewpub ethos of sourcing locally is great when you live in the epicenter of hops, barley and pure water, I wonder how it will translate to markets such as India where, one presumes, you will have to import all of your quality ingredients.  Also, Indian beer palates are not terribly sophisticated, as anyone who has had a Kingfisher can attest, so bringing along the consumer will be a challenge.  But I suspect that the clientele of this pub will be largely made up of Indians who have studied and worked in the US and already know the deal.  The danger is they also probably already know good beer. 

Wednesday, October 20, 2010

From the Archive: Fighting

Busy, busy, so here is a little tidbit from the Beeronomics archive


Time to return to the beeronomics gig. Perhaps you have heard of the new pint glass technology in the UK that prevents them from shattering. The idea being that this will reduce the incidence of serious injury from drunken fights. And if you have ever been in London (prior to the change in the law in 2006) at the 11pm closing time for bars, you know just how violent and ridiculous bedrunken Brits are as they spill on to the street with bellies full of beer and nothing to do for the remaining hours of the night. The new glassware technology may help avoid some of the more serious lacerations but will it help reduce drunken violence?

I am not sure. For many years I have had a theory about this which I first developed in a conversation with my British cousin. By cosmic chance we both happened to attend graduate school at Cornell at the same time and he was the absolutely stereotypical upper class Brit (he is Welsh he would want me to make clear), right down to his first in physics from Oxford and love of long walks in the woods. Anyway, he lamented the gun culture in the US and I said that it may be true that we have a problem with gun violence but based on personal observation, the US had a much smaller problem with casual violence than did the UK. My theory was that it was guns that made the difference.

The idea is essentially a game theory idea: the prevalence of guns in the US make the probability that any violent confrontation may turn lethal much greater in the US than in the UK - in other words the stakes are much higher in the US. So you don't engage in casual violence nearly as readily.

Here is a normal form game representation of what I am talking about:


In the UK, if drunken posturing occurs and the choices are to fight or walk away (run perhaps?), the payoffs might be something like the above. Walking away invites social opprobrium so it is particularly bad if you are the only one to do it: you get a payoff of negative 50 and the opponent gets 0. If both of you walk away then the stigma is attached to both but not so bad: negative 5 for each. If you fight I will assume you both get hurt, but nothing so bad that a little ice and time won't fix: negative 10 for each. Note that I have designed this as a prisoner's dilemma game where fighting will take place even though it is a second best.

Now let's consider what the game might look like in the US where guns are common.


The only difference here is that now the expected payoff to fighting is much worse because of the possibility of guns leading to hospitalization or death. Notice that the Nash equilibrium is now not to fight (and it is Pareto efficient). So the threat of death that guns provide actually prevents the engaging in violence in the first place.

A DISCLAIMER: This is all in fun - I know that this is a lot like gun advocates' claim that guns lower crime, a claim that has been shown to be false by serious study. But it is possible that in this context, the presence of lethal weapons lowers the incidence of minor violence between two willing parties.

So what will the new glassware do? It may in fact encourage more fighting by lowering the stakes. Now that you don't have to worry about getting seriously cut, why not engage in a little of the ultraviolence?

Time will tell...

Tuesday, October 19, 2010

Full Sail Expands Reach


Full Sail is pushing out on the East Coast. From the press release:

Full Sail Brewing Company, renown for their internationally award-winning beers, has announced that they have expanded distribution to additional markets in New York, New Jersey, Maryland, Massachusetts, Rhode Island and New Hampshire in partnership with L. Knife & Son Companies.
It's all about the economies of scale - growth is the rule.  Not clear if this will be beer brewed in Hood River and shipped or brewed closer to those markets.  If the former, then there is a serious transportation cost issue that could be a problem when it comes to competing with the local brands. 

Which is why ambitious breweries like Deschutes will almost inevitably end up with a brewery in the mid-atlantic region.  The market is just too big and dense to ignore. 

Monday, October 18, 2010

Fish and Chips and Beer

Perhaps growing up with an English mother has colored my perception, but I think nothing goes quite as good together with beer (and with Oregon's British-style climate) as fish and chips.  A nice porter or stout and a plate of F&C is mu idea of a match made in heaven. 

I have blogged extensively about my search for great fish and chips in Oregon in my other blog as too often F&C are botched and as good as the meal is done well, done badly it is almost inedible.  The standard here is pretty good, but I have had a few disasters.  By very happy accident, my very favorite fish and chips are those served by my local: the Oaks Bottom Public House. 

This is a Lompoc outlet and as I have never had them at the other places I cannot say anything about their quality elsewhere, but at the Oaks Bottom they are perfect: tender, moist and flaky fish in a medium batter fried to perfection.  I have been at both quiet and very busy times and the quality varies a little, but it goes from very good to excellent.

I was there on Saturday night and it was slammed, but the F&C was still of the very good variety.  Plus the little pub now has a TV (silent and unobtrusive) but perfect for me to keep an eye on my bloved Badgers as they defeated the evil Ohio State Buckeyes.  

Lompoc also always has their Sockeye Cream Sout on nitro available which is, to my mind, the perfect pairing.  And the Sockeye stout is a light and quaffable beer, perfect for a session in the gray and dank Portland winter. 

Though the beer and greasy food connection is, lamentably, laregly responsible for the distain of beer paired with finer food, there is no misktaking that the two do complement each other well.  Perhaps because of the proletarian roots of both there is more than just a regular connection - it is almost engrained in the very social fiber of beer. 

Here is a quick summary of my take on local F&C (i.e. Portland):

Great:

Oaks Bottom
Fish and Chip Shop

Decent and/or too fancy:


Deschutes Portland Pub
Laurelwood
Pilsner Room/McCormick and Schmicks
Rogue Ale House

Poor:

Kells
McMenamins (can be great but terribly inconsistent - don't risk it)
Thirsty Lion

The most glaring omission here is the Horse Brass where (stunningly, I admit) I have never sampled the fish and chips.

Friday, October 15, 2010

Another Thought re: Black Star

It occurs to me that the Black Star strategy is very similar to Full Sail's Session. Full Sail has created a stand alone brand for a single beer (well, now two) that is a direct assault on the macro market.  From what I have heard, Session has been very successful but I have no hard data.  It has been too long since I have had a Session to compare it to Black Star, but both are better alternatives than the typical macro lagers.

It is possible that the success of Session has served as a model for the Black Star strategy.   

Black Star Beer

I was, apparently, among many writers of all things beer in the Northwest who were hit with a marketing blitz surrounding Black Star beer.  I will give you my impressions of the beer of course, but as this is Beeronomics what I am most interested in is the economics of the whole endeavor to make Black Star a regional and maybe even national brand.

The Backstory

It took me a little digging to finally understand that Black Star is not the name of the brewery but of the particular beer (something I will return to shortly).  Black Star is the flagship brew of the Great Northern Brewing Company which has a local tie to Portland: its founder is Minott Wessinger, who is a fifth generation brewer and just so happens to be the great grandson of Henry Weinhard himself.  The brewery was founded in 1994 in Whitefish Montana and is a traditional gravity flow brewery.  The creation story from the Black Star website:

Minott grew up learning about beer from his father, Fred Wessinger, at the Blitz-Weinhard Brewery in Portland, Oregon. In 1979, the family sold Blitz-Weinhard. After 14 years away from the hustle and bustle of daily brewery life, Minott and Fred decided to build The Great Northern Brewing Company and began brewing Black Star Double Hopped Golden Lager.

I had not previously heard about Great Northern but I did a little digging and found that it has a history in the Northwest. Here is an interesting Weiden+Kennedy ad from the eighties apparently for the beer in a early Northwest push.

video


[The sound, for me at least doesn't seem to be working, to see the video on its host site, go here]

Which means, of course, the beer pre-dates the brewery.  I suspect it was contract brewed at the time, perhaps even by Blitz-Weinhard, but of this I know not. According to Wikipedia, Black Star disappeared for 7 years and is only now making a rebirth in 2010.

Now, quite evidently, they are making a very big push to make the beer a major regional brand, if not national. To do so they must have either major expansion plans or are ready to contract brew because their brewhouse is, apparently, only a 20 barrel system (another local tie: the brewhouse was designed, manufactured and installed by Oregon's very own JV Northwest).  And in fact they make reference to now also brewing in Milwaukee, Wisconsin which clearly means they have contracted with a major brewery to churn out the bulk of the beer.  Nothing wrong with this strategy, by the way, I only mention it as I am trying to dig into the business model.

And in fact a little more digging and we find that Wissinger's umbrella company is called the McKenzie River Corporation, based in SF, and responsible for St. Ides and other fine beverages like Le Tournament Vert absinthe.  So the beer-as-brand strategy makes more sense given the provenance of the beer. How much of the down-home, family ties to brewing, following his passion stuff is true or the stuff of Madison Avenue fiction remains a question, but to me it doesn't really matter, the beer is either good or not.

By the way, the Great Northern brew house itself is beautiful and they have lots of slick promotional videos that show it.  Drool.

The Beer

Before going on further about the company, the business model and the marketing we should discuss the beer itself.  This is but one of Great Northern's beers and so it is instructive that they have chosen this beer - a light lager similar to what Minott Wessinger's great grandpappy used to brew - as the beer to push.

I will state at the outset that this is not in my sweet-spot in terms of beer styles, but I do appreciate a nice pilsner.  I shall review it for style.

The first thing you notice when you pour it out is its color.  There can be no argument: this beer is gorgeous - clear with a beautiful golden hue that shines in the sun and a modest head. Beading and subdued lacing is nice as well.  In the presentation of the beer, then, it definitely does stand out from the macro lagers of the Bud, Coors and Miller kind and is a richer golden color than the German and Czech pilsners.

They proudly proclaim that it is double hops brewed using Bavarian Mittelfrüh and Czech Saaz both in the boil and as aroma hops.  This suggests two things: they are going after a traditional pilsner taste and they are trying to bring the hop not to the nose.  Both are very good ideas.  I had two samples, one from a can and another from a bottle.  Interestingly the can, which some say preserves beer better, was less aromatic than the bottle version.  The beer does have a nice and distinct pilsner taste, and is well balanced, the spicy Saaz hops complement the malt body well.  Sadly the hops aroma in the can I had was almost nonexistant, but the bottle did have a nice nose, not prominant by any means but there nontheless.  It is possible the bottle was served a bit warmer, but my enjoyment of the bottle was substantialy better than the can.

The beer is a clean a quaffable beer and a very respectable light lager and I have no problem proclaiming it a distinctly better than its American macro competition.  The color suggests high quality malts and, one hopes, the absence of rice adjuncts.  It has a nice mouthfeel and the hops do add a very nice, but subtle spice.  The weather here is turning cool, so not the ideal weather for the beer, this is a beer I would be very happy to have served to me on a hot summer day.  That said, given a choice my personal preference would be grab a Pilsner Urquell or a Trumer Pils first, but it would be a fine substitute and definitely a cut above the macro lagers.

In the end, this might not be a beer that I buy often, but it would certainly be a good beer to buy for someone who drinks only macro light lagers.  I think they will find that they enjoy it immensely but also will notice the difference in quality and flavor. 

The Strategy

This is what fascinates me for here in the Northwest we have a pretty standard SOP: brew a hoppy pale ale, generally an IPA, as the lead beer and build on the brewery brand by having a line-up that includes a porter or stout.  Ninkasi, Deschutes, Bridgeport, you name it, they all follow the same basic business plan.  Call it the craft brewery template. In another post I'll try and muse more about the reasons craft breweries focus on the brewery in branding not a beer, but my first take is that it is a signature of a craft brewery to brew many styles, not just one.

Great Northern's plan is to carve off a distinct identity based on a single beer. As you can see from my links there is even a distinct website for Black Star that mentions the brewery but not the myriad of other beers also brewed by Great Northen.  This single beer strategy is the old macro-brew strategy of Budweiser, Coors and Miller (and Henry Weinhard).  It also makes sense given the beverage focus of the McKenzie River Corporation - they are about building beverage brands not brewery brands.  

Another distinct part of the strategy is the type of beer they decided to go with - a light lager.  This again is a macro strategy and suggests that they are targeting this part of the market.  I suspect that they are not trying to compete for the Deschutes customer, but for the Coors customer that might be convinced to spend a little more for a beer that is a little better.  In a sense this is a market not contested by the craft brewing industry with the possible exception of Samuel Adams, so they might just have a real chance to carve off a small piece of the market (and a small piece of the macro market is still enormous). 

The upside is huge: many many people still drink macro lagers. However, the downside is huge as well: giant macro brewers have economies of scale on their side, so you can only compete by brewing something worth the extra money you charge.  Black Star is going for craft brew prices so the big question is whether drinkers will think it worth the extra price.  

I suspect that here in Beervana the going will be tough.  In their favor is the fact that almost no one lagers here and so there might be a chance for a quality lager to catch hold.  But when Portlanders drink lagers they usually go for PBR either for ironic or iconoclastic hipster reasons.  I also suspect that the glitzy marketing campaign may well backfire here and they'd do well to tone it down.  In addition, we have some hard to find but exceptional lagers like those Heater-Allen is putting out which makes their market as a craft lager not completely uncontested.  So whether Black Star can really gain a foothold will be an interesting question to see answered.  They have rolled out in California and there I think they may do quite well.  It is an appropriate beer for the climate and few craft lager choices exist.

As for me I am much more interested in the other beers Great Northern Brewing produces and lament the fact that they are not bringing us their IPA or ESB. [On a humorous note, the ESB is a bigger and hoppier beer than the IPA - go figure]  But then I am a Northwest hop head and a lost cause anyway.

I wish them luck.

Thursday, October 14, 2010

Ode to Some Classics

Economists call the paradox of choice situations where more choice actually makes you less happy.  Usually it is due to uncertainty and search costs (work on search models won this year's Nobel prize) whereby the effort involved in making the right choice is large and the marginal benefit small.

I am continually reminded of this in the beer isles in Portland markets - the array of fine craft beers along with constantly changing seasonal and special beers is dizzying.  In fact, though it is the best beer store I have ever been in, I am often overwhelmed by Belmont Station as it becomes so hard what, of the beers I cannot find anywhere else, I should actually buy.  Now I take to deciding before I go in what I am going to get.

Which brings me to the point of this post.  I am so eager to try new and unique that I find myself more and more infrequently drinking some of my most beloved and now classic beers.  Of these I'll give special mention to five: Bridgeport IPA, Deschutes Mirror Pond, Full Sail Amber and Sierra Nevada Pale Ale and Samuel Adams Boston Lager.   

It used to be that in restaurants and bars if you wanted craft beer you would find one or two of these beers (Sierra Nevada and Sam Adams nationally and in the NW the other three) but usually no more and nothing unique.  So I would drink them a lot.  Now with places as unlikely as Laughing Planet having a tap array that is full of great craft beer, I go for the new, unique, different even when there.

Which leads me back to the question: am I better off with all this other beer?  I think the answer is yes, but that I make mistakes in putting too much weight on the newest-latest and too little on the magnificent classics.

So why do I love them?  Bridgeport IPA is perhaps the quintessential IPA and a classic British style IPA not usually seen in the NW, beautifully balanced and not too heavy.  It is more sessionable than the typical NW IPA.  Deschutes Mirror Pond is a hop head's delight with an amazing hop bouquet that tickles and entertains the nose with every sip.  It is a pale ale with a perfect body on which the hops dance.  Full Sail Amber is a medium bodied but rounded ale with delicious malt notes.  Sierra Nevada began it all with a recipe that is timeless.  And finally, with all of the attention to craft ales, Sam Adams redefined what a lager could be to American craft beer drinkers.  They got big and commercial but there is no denying Boston Lager is a great beer.

You will note that all but one beer is of a similar style.  Now you know my sweet spot: I am a hop head who loves the hop bomb, but I appreciate even more deeply those brewers that show restraint but can brew a 4.5 to 6% ABV beer with a lively hop character.  One thing I don't care for are heavy malty beers: no scottish ales for me, thanks.    

Anyway, this post is a reminder to myself and others not to forget the gems that have been around.  Just because they are not the newest-latest doesn't mean they are not the best.

Fall Beer Festivals

Bill's wrap-up post on the Fresh Hop Tastival at Oaks Park made me think of a contrast: 

The scene inside the tastivals dismal enclosed tent:



(it was awfully dark in there so you can't see much in the picture <-- this is a joke, I didn't actually take a pic inside the tent and apparently no one else did either)

And the lovely scene under the Skamainia Lodge's open tent (as seen in this pic from Brewpublic):



These were held simultaneously, sot the weather in both places was similar.  I can attest to the fact that the downpour at Skamania was easily handled by the tent.  The as long as you were a foot or two under the cover you were kept completely dry.  So here is my advice to the OBG: open up the Oaks Park Tent!

Wednesday, October 13, 2010

New European Beer Taxes Threaten to Derail the Recovery


Apparently the beer tax in Oregon is likely to once again be on the legislative agenda.  It is on the agenda of European lawmakers as well.  Now, a PriceWaterhouseCoopers study commissioned by The Brewers of Europe suggests that a new excise tax on beer would hurt European economies and threaten their recovery.  This study might come in handy for Oregon brewers as well as they try and prevent such legislation locally.

From Beernews:
The Brewers of Europe commissioned this study to quantify the impact of excise taxes on the overall tax collection, and employment and profitability in the brewing sector compared to other alcoholic beverages. Pierre-Olivier Bergeron, Secretary General, The Brewers of Europe said:

“The study provides strong evidence that arbitrary increases in excise tax would hit brewers – and the 1.8 million jobs created in the European hospitality sector generated by the brewing sector – hard just as the economy is striving to emerge from a deeply damaging recession. The study also shows that tax increases will ultimately NOT increase government revenues nor attain the expected levels.”

The study comes at a crucial time, with skyrocketing taxes on beer in some European countries as governments scramble to rake in cash. “At a time when regulators across Europe are looking at scenarios about taxation, we would urge them to give any plan a full economic reality check,” Pierre-Olivier Bergeron continued. “This study provides the data for sound judgments.”

A comparative cost analysis within the study shows that producers of alcoholic beverages constitute a significant industry within the EU, worth €242.5bn in 2007 in terms of sales. Sales of beer account for the highest proportion by value – €111.5bn or 46%. Beer contributed the highest amount of taxes to Member States across the EU and the lion’s share of jobs.

“This study shows that beer is the most expensive form of alcohol to produce,” observed Pierre-Olivier Bergeron. “So any move toward taxing all drinks based solely on alcohol content (‘unitary taxation’) would disadvantage a low alcohol beverage such as beer further in terms of cost of the product to the consumer.”

Monday, October 11, 2010

Celebration of Beer Weekend at Skamania Lodge


This weekend I was a guest of the Skamania Lodge for their Celebration of Beer event.  Though the weather left a little to be desired (though I have to admit, I love evergreen clad mountains in the mist) it is an amazing setting and the event was a lot of fun.  The tent kept everyone dry and the beer kept everyone warm.  Full Sail sent their winter Wassail which was a prescient choice given the weather.

I have been to many beer events now (and my job takes me to many hotels) and I must say that this event  is by far the best I have attended, particularly because I am a little claustrophobic in crowds and the big events overwhelm me.  Plus, I do love the Pacific Northwest and the setting at Skamania can't be beat.  The hotel is very nice, very well-run with a nice attention to detail, yet it maintains a relaxed and casual vibe.  The festival itself mimics the Lodge (well-run, relaxed and casual) and while there are still a few kinks to be smoothed out of the two year old event, it is already a real star in the Oregon and Washington beer event universe.

Here are my reflections about the weekend:

Friday, October 8, 2010

Fresh Hop Tastival at Oaks Park Beer List

The Fresh Hop Tasitival's beer list is out and it looks incredible.  A virtual one-stop shopping list.  The problem is...how to choose.  One place to start is with Bill at It's Pub Night who has done the yeoman's job of seeking out fresh hop beers all over town and making some recommendations.  


As for me I am looking forward to John Harris's Lupulin, Double Mountain's Killer Green, Ninkasi's two offerings, Duschutes Fresh Hopped Mirror Pond (both thanks to Bill's recommendations), Upright's farmhouse version and especially Cascade's Fresh Hop Porter. Also, can't miss the Mutt for old times' sake (though Bill says it is especially good this year).

Now I do take issue with Silver Moon however - Hoppapotamus?  Really?  Perhaps you think that your spelling gets around my little (TM) - think again.  My lawyers will be in touch.

Enjoy!

Fail

Update: Just transferred it to a secondary fermenter and took a little zwickel.  Result: not half bad.  A little intensely bitter, but the hops do sing - beautifully aromatic and flavorful.  I think this, done again properly, may well be the HOPOPOTAMUS flag bearer.

It is with a bit of sheepishness that I admit to being, up until recently, a partial extract brewer.  Partly this is because of how successful you can be brewing with part grain/part dry malt extract, partly it is due to the the additional equipment requirements, but mostly it was due to lack of imagination and motivation.  But my brother, the professional brewer, called me a wimp for not going all-grain and extolled the virtues of the added flexibility all-grain brewing provides.

So I finally relented.  I have now made the great leap forward to all-grain brewing.  I had no doubt that I could do it without much extra effort and I had no doubt that I could do it exceptionally well.  Hubris.  What I did was a complete botch-up job.

But first a little background.  When I begin to consider going all-grain, I of course thought of the cheap converted plastic cooler and was ready to invest the $50 and get going.  But alas my wife, erstwhile employee of an environmental organization, starting yammering on about heating up plastic, venting toxins, yada yada yada.  [Next she'll be on about the dangers of storing waste from an alumina plant in a big reservoir - yea right, like what could possibly go wrong with that?]  Anyway, so the plastic cooler plan was scuttled.

Thus it came to pass that my birthday arrived and my whole family got together and bought me an obscenely fancy - but obscenely cool - mash tun and I was a-ready to brew.  [They also bought me a massively outsized but incredibly awesome mash paddle]


The Mash

What better way to begin my life of all-grain brewing, thought I, than to brew the next installment of THE HOPOPOTAMUS - the best beer in the world?   So off to Steinbart's I went, collecting The Beerax along the way, to buy an enormous amount of grain.  13.5 pounds to be precise.  I also grabbed five, yes five different varieties of hops, one upping the previous Hopopot by adding Columbus hops to the mix.  


The Beerax and the Paddle

And we were ready to begin.

Thursday, October 7, 2010

Beer and Double Marginalization

I have been baited:

I think the beeronomist might have something to add to this:

The Great Britain-wide average [for a pint of real ale bitter] was £2.80, a 4% rise on 2009. But this covers broad regional disparities, with the cheapest part of the country, the West Midlands, falling well short at £2.45 below the most expensive, Surrey, at £3.08.

According to the Guide's co-editor Fiona Stapley, the wide variation in prices reflects not just the socio-economic make-up of each area but also the levels of competition, the nature of their bars and the type of beer on offer.

"In areas where you have heavy concentrations of the big chains, the prices tend to be higher," she says. "In pubs which brew their own beer, prices are on average a third lower.

Actually I do. Nothing substantial, mind, more of a note about economics.

Economists call the process by which an imperfectly competitive firm (like a brewery) and a seller of the product both take a cut of profit double marginalization. Most non-economists understand this instinctively - the more actors involved in getting a product to market means a little markup each time.

Breweries (well, craft breweries at least) are imperfect competitors because they make a differentiated product - one that no one else makes quite like it.  Its all beer, however, suggesting that monopolistic competition might be the best model to think of, but whichever moniker you use the fact is that each breweries beer is unique in its own way. Nevertheless the beer marketplace is pretty competitive when you are in a retail environment because, despite being unique, a lot of craft beers are good substitutes for each other.

So in retail two things, over and above simple supply and demand, are going on to push prices in two directions: distributors and retailers are practicing double marginalization (or triple in this case) which adds to the price of beer. Lots of competition on the shelf or in the tap lineup however keeps prices from getting too high as each brewery knows that if you charge too much you will lose a lot of sales. In the end price reaches its equilibrium.

In the brewpub a slightly different dynamic is going on. The double marginalization is no longer in play which should suggest that prices would be lower in brewpubs (though remember scale economies are not as great for a brewpub as they are for a packaging brewery). But the nature of competition changes as well. Once customers are in the brewpub the brewer is essentially a monopolist and can, as monopolists do, charge more for their beer. So in this sense it is not surprising to see Oregon brewpub beer prices essentially the same as a non-brewpub.

Of course, there is competition among brewpubs and you might think that this would cause price competition leading to lower brewpub prices stemming from the choice by consumers of which brewpub to frequent. But Oregon brewpubs are pretty dang savvy about creating unique brand identities and unique brewpubs - think HUB, Lucky Lab and Deschutes' Portland Pub, all very different.

In fact, I think this is the most likely explanation for why brewpub prices are lower than regular pubs in England. In England the brewpub experience is similar to the pub experience and the customers are more price sensitive and not likely to pay more just to experience the pub. In Oregon, a brewpub is a special place and we value patronizing them. Perhaps also brewpub beers are not too different than locally available commercial beers - though it seems to me you could say this about Oregon as well.

It is only a theory, anyone wish to support or refute it?

Beeronomics: The Blog

As of today I am going to change the way I operate when it comes to beeronomics.  A while back I created the Beeronomics blog simply as a place to compile the beeronomics posts that appeared in The Oregon Economics Blog because I was finding that I had two audiences: people interested in beer and the intersection with economics and people interested in economics and the intersection with Oregon and Oregon's policy issues.  The Beeronomics blog was a way for beer enthusiasts to read beer posts without having to endure all the other economics and Oregon stuff.  Though many of my OEB readers like the beery stuff as well, I know many others don't care one wit about it.  

So, starting today, I shall relegate my beer posts to the Beeronomics blog.  When I post anything with true economics content I shall cross-post on the OEB so you won't miss out on the true beeronomics content if you just stick with the OEB.  But I shall also post other stuff on Beeronomics that might not have a high level of economics content and for that you shall have to navigate over.  I will keep a link to the each blog on the top of the main page. 

Though this seems obvious, it was not an easy decision.  I like the fact that blogs reflect the personality of the authors.  Unlike straight-laced journalism or academic papers, blogs allow people like me a chance to express themselves and relegating the beery stuff to a separate blog diminishes a little bit of my personality in the OEB.  I also started blogging as a way to talk more informally with students, share my enthusiasm for economics and demonstrate how economic thinking can be applied everywhere.  In fact that was the genesis of beeronomics in the first place.  There is nothing particularly special about beer except that it is a hobby of mine and a fun place to apply economics. I try to engage my students and encourage them to apply economics to what they know and love.  But it is hard to be a serious commentator on Oregon policy and write about a great beer you should try so I shall do so separately in the future.  

There are separate twitter feeds as well, so you can subscribe to Beeronomics, The OEB or both.  And yes, this does take a little more work so if I find that it is taking too much time, I may just go back to a single blog.  

As always, thanks for reading.

Wednesday, October 6, 2010

Middle Class Spending on Alcohol is Down



The Wall Street Journal reports on data from the Consumer Expenditures Survey that show that average spending on alcohol for those in the middle income quintile fell more than 20 percent last year.  But is this bad or good news for beer?   As the article points out this does not mean that they are consuming any less alcohol, they may instead be switching to lower coast alternatives.  They may be moving from whiskey to beer for example or from expensive whiskey to less expensive whiskey.  It all gets back to whether beer (and especially craft beer) is a normal good or an 'inferior' good.  Don't get mad beer lovers, inferior is simply a term of art in economics for a good which you consume more of when income declines.  Just like how you might switch to hamburger and away from sirloin as incomes decline, you might drink less single malt and more craft beer.

Anyway, looking at the beer statistics it is imports that are suffering which I think is more of a symptom of the growing domestic craft beer awareness.  For a while it used to be if you wanted good beer you almost had to go import, but no more.

Interestingly, the wealthy spent more on alcohol during this same period.  There is some sort of joke in here about using alcohol to assuage the guilt of rising income inequality but I am not going to make it.

Tuesday, October 5, 2010

Two NW Fall Beer Events Worth Attending



Well, perhaps they are all worth attending, but these are two happening this weekend that are worth extra attention.

Celebration of Beer Weekend at Skamania Lodge

Look at the picture above (and Jeff's from last year) and you immediately understand the appeal of this event.  This mix of stunning setting, great beer and good food looks a real treat and I will be attending this for the first time this year and am looking forward to it.

It is a great mix of Washington and Oregon Breweries and includes some can't miss names - Double Mountain, Fish, Full Sail - and some I have yet to sample, like Lazy Boy and Salmon Creek.  There is also a beer battered and beer boiled seafood buffet on Saturday night and a kegs and eggs buffet on Sunday morning.  And if you are really brave, you can try teeing off in the golf challenge with some brewer/duffers.  



This one was clearly made for me.  I love the fresh hop beers, warts and all, because they feel just that: fresh.  And I live a short (and very pleasant) walk to Oaks Park through the wonderful Oaks Bottom Wildlife Refuge. I plan to attend.

There are few moments when beer feels particularly connected to the land - unlike wine which always feels that way - and fresh hop beer is one of them (seasonal fruit infusions are the other in my opinion).  This festival allows you to sample many variants of fresh hops used in all the different beers.  The one I am most pining for is this years Double Mountain Killer Green which uses Brewer's Gold hops.  Other beers to watch out for?  Jeff at Beervana has had the new Deschutes Hop Trip and finds it 'tasty.'  And John Harris never fails to create some fresh hop magic. I believe Harris is a proponent of the theory of using dried hops at the beginning of the boil to lay down a base of bitterness that is easier to control and then fresh hops at the end for aroma and flavor, you can try and see if you can detect beer made thusly versus all fresh hops.  

But wait, you say, how can you do both?  Fortunately, there is a Tastival preview on Friday night.  The intrepid craft beer enthusiast will not be stopped! 

So where is the economics?  Easy: beers are complementary to each other, to food, to beautiful settings and to good company.  Thus enjoying them together increases the satisfaction I get from consumption, making such festivals and events a deal.  Plus, contrary to appearances, I don't actually drink that much beer, but I do love to try new ones - so these festivals with little sampler tastes are ideal for this enthusiast.