Reporter’s Notebook: Why I Wanted to Write About Barrels

beer notebook_web2

Writing a piece on the market for barrels seemed like a no-brainer.

Aside from continued interest from beer enthusiasts – half the top-50 beers on Beer Advocate are barrel-aged at the moment – it seemed almost impossible to turn my head recently and not find some piece of news about the liquor industry or its growing secondary market with beer.

There are many factors that go into the increased cost of barrels and what that means for brewers and customers, but a large part of the current supply-and-demand life cycle can be attributed to the wild growth of craft distilleries, which have gone from 70 to more than 600 in the past decade.

This puts stress on the primary source of barrel production – cooperages – of which there are only “24 or 25” operating in the U.S. by one estimate. As these businesses see a surge in production, they’re straining to keep up with demand from distilleries, which in turn see greater interest from a whole host of parties, from barrel wholesalers and brokers to breweries:

…distilleries have had to bump up production to meet demand the last few years, which has in turn stretched cooperages to their production limit. This has limited supply and driven up prices – not a great combo for small and microbreweries looking to make a barrel-aging splash.

Also of note, breweries aren’t just competing with each other, either:

… barrel-aging is high up on the food-trend meter, somewhere below bacon, pickles and IPAs, somewhere above eating insects. There are already barrel-aged coffees, barrel-aged honeys, barrel-aged hot-sauces, ciders, mustards, vinegars, pickles, beers, cocktails and more.

All this has led to many breweries to get inventive. Maybe it’s like Matt Pennisi, profiled in my original piece, who sets Google Alerts to get a leg up on finding barrel sources. Or maybe it’s Firestone Walker’s Matt Brynildson, who told PunchDrink.com an inventive workaround: “Dragging barrels across the border, speaking to guys on the phone in another language, not being able to use barrel brokers like you can use to acquire bourbon barrels – it’s difficult.”

A big challenge, however, might not be getting the barrels, but simply using them correctly.

“I’m very transparent and adamant that we do our best to mitigate any issues with a barrel, but it’s up to them to have the tools and skill level to use the piece of equipment correctly,” Noah Steingraeber, sales manager, marketing consultant and lead barrel slinger at Rocky Mountain Barrel Company, told me. “Barrels come from all different sources and providers who do things differently. You have to know what you’re getting into.”

Essentially, he told me, he’s getting a lot of calls from brewers who want to buy barrels for the sake of using barrels. Which provides one of those “shake my head” moments when you see things like this black-and-white take on the matter:

“If you put a good beer in a barrel, it’s going to come out better,” says Taylor Ziebarth of Adelbert’s Brewing.

Or you see this on social media:

Click to enlarge

Barrel-aged beer from Duck-Rabbit Craft Brewery. Click to enlarge.

Brewers certainly recognize the potential with barrels – whether to expand their own skill set or even make money from their investment – but it seems strange when you find a brewer claiming the lack of cheap, available barrels is detrimental to business growth:

According to Real Ale Brewing Co.’s head brewer Erik Ogershok, the barrel shortage has significantly impacted the craft brewery, setting back expansion efforts and delaying the release of new products to the market.

From my discussions in reporting yesterday’s piece, there isn’t a “shortage,” per se, but a lack of cost-efficient options like there once were.

Which made me think of an interesting question: if investment in craft breweries is receiving greater attention, is this an inroad?

That’s utter and complete, uneducated contemplation, but spurred by my conversation with Matt Pennisi, president and brewer at Durty Bull Brewing. He pointed out that in preparing his brewery for launch this fall, he’s had to work extra hard on funding because the Small Business Administration doesn’t approve 504 Loans for barrels because they’re not “long-term machinery and equipment,” which is defined as something that will last greater than 10 years.

Barrels can be used several times over – two or three was the most common response I received – but they won’t stick around at a brewery long enough to qualify. You can charge the cost to credit cards like Other Half Brewing’s Matt Monahan, with assumption the investment would pay off, but with the rising costs of barrels, that could be more problematic down the line.

One workaround I’ve heard about would have a brewery buying a new barrel, then leasing it to a winery or distillery to be filled, used and aged before getting it back for their own use. Sharing a cost can be effective, but we’re still talking upward for $400 (sometimes more) for a new oak barrel, then there’s some significant waiting involved.

Maybe Real Ale Brewing needs to look elsewhere for funding? Are there other brewers who feel this way? Probably not Big Boys like Goose Island or New Belgium, who can buy huge quantities of barrels and blend as they see fit.

I realize all this research and speculation lends itself to a rather small niche of beer, but it’s obviously popular among beer enthusiasts willing to shell out the cash and sour beer isn’t going away, either. It’s a part of the industry worth a closer look.

What will the increasing cost of barrels do to some of our beloved brews? Probably increase the cost. Most likely force them to seek new types of barrels to use.

Or even – gasp – put greater emphasis on “regular” beer.

Related: The Rising Cost for a Specialty Beer

+Bryan Roth
“Don’t drink to get drunk. Drink to enjoy life.” — Jack Kerouac

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8 thoughts on “Reporter’s Notebook: Why I Wanted to Write About Barrels

  1. Pingback: Over a Barrel: The Rising Cost for a Specialty Beer | This Is Why I'm Drunk

  2. I’ve really enjoyed these posts on barrels, very informative.

    A couple of thoughts on the new/used and bourbon/wine aspects of the debate. I was talking barrels with Fred Lee of Actual Brewing here in Columbus last week and he was saying in his experience that wine barrels were of much higher quality (and therefore could be used more times) than bourbon barrels. His point was that since bourbon barrels are made for a single use they are not made to the same standards as wine and other spirit barrels. Certainly looking at the barrels holding beer in their facility that seemed to be true. I don’t know if that is a universally accepted sentiment.

    One can imagine for sour beers, where the taste of the spirit may be undesirable in many cases, at some point new barrels are going to become preferential to used barrels given the cost trajectories you’ve put forward in this post. Although I recall reading in Michael Tonsmeire’s book American Sour Beers that new French Oak wine barrels can cost up to $1000.

    • Thanks a bunch, Pat!

      The difference in quality was brought up several times in my conversations, but not in that specific fashion, which is really interesting. It seems like that would be a really interesting aspect to research with cooperages themselves. I imagine the easy response would be “we try to make all our barrels to the highest quality” or something to that degree, but from a time and effort analysis perspective it makes sense.

      I was surprised at how high imported, used barrels might go for price, but that’s for very specialized spirits. $1,000 for armagnac, $729 for sherry, etc. New American oak seems like the way to go compared to that new French oak price, which seems about right. Different flavors for sure, though. In a broad sense, there was one mention of “terroir,” but more in a superficial way that people would have interest in something created of local products that may also carry unique attributes of regional wood.

      • Interesting point about using regional wood to get a terroir aspect to barrel aged beer. In a tangentially related note one of the small local breweries made a beer whose inspiration was Dogfish Head 120 minute IPA and then aged it over Spanish Cedar spirals. The Spanish cedar imparted some very interesting and delicious flavors. Although as I understand it the mechanical properties and porosity of spanish cedar (actually many kinds of wood other than oak) are not suitable for making wine/spirit barrels.

  3. Pingback: Celebrating Earth Month: April 2015 Beertography | This Is Why I'm Drunk

  4. Great posts on barrels, interesting to read from a beer perspective. Whisky is hot right now, many of the big name distilleries have expansion plans in the works. These are the companies that are grabbing all the barrels. “Craft” distilleries have boomed in number, but their out put is small comparatively. For example, Jim Beam fills close to 2,500 barrels a day. Many craft distilleries don’t produce that much in a year. So while the craft stuff has boomed, I think it’s still the Beams and Jack Daniels of the world that are snapping up most of the barrels. Scotch has hit a bit of a slowdown, an expected boom in Asia hasn’t panned out like they hoped it would, and sales have slumped a bit compared to expectations. That might trickle down in the form of more availability, but overall, sales are up there as well and they’re trying to milk this popularity surge for all it’s worth, so probably not.

    The differences between American Oak vs. “Spanish” Oak vs. French Oak are interesting. The latter two are the least used, relatively speaking, because there are far less trees of that kind compared to the widespread American White Oak. Most Sherry producers use American Oak, it’s a common mistake many whisky people make that ex-sherry casks are Spanish/European Oak. In single malt Scotch’s early days, from a sales standpoint in the 60’s, most spirit was aged in European Oak, but these days, demand demands a lot more, so ex-bourbon casks are what everyone wants.

    If you want to get really geeky about wood, and really, who doesn’t? Check out http://whiskyscience.blogspot.com/. He’s posted a number of articles over the years on the different types of oak, their uses, effects, etc.

    • This is great stuff – thanks a bunch for sharing this info and insight! Reading about much of the spirit growth you mention is what turned me onto this story and I’ve still got a bunch of stories/notes referencing the incredible growth of the distillery market.

      I’m poking through that Whisky Science blog now and look forward to finding something new!

  5. Good series Bryan. It is interesting to note the great fashion for wood barrels to store beer since I’d guess most of these barrels are of American origin, thus made from the native white oak, which is precisely the kind of wood British brewers did not want for their beer in its heyday (with one exception to be noted). The reason they did not use American oak barrels including ex-bourbon barrels was a strong and distinctive taste it introduced to the beer. That taste was sometimes called a “coconut” or “furniture polish” taste. It is a taste familiar to anyone who enjoys bourbon or Chardonnay. The same taste shows up in barrel-aged beers.

    There was one exception to the British aversion to U.S. oak: Irish brewers used it for their stout thus Guinness, evidently. There are conflicting stories why this was so, some brewers thought the taste of American oak wasn’t noticeable in black stout and porter (a fairly intense-tasting drink of course). Others thought it was but felt drinkers got used to it and that the Irish porter-brewers preferred the net cheapness of the American wood – it was more sturdy than other types and the barrels required less repair. Therefore, in this sense, the gran-daddy of modern U.S. barrel-aged beers, Imperial Stout, can claim a good heritage for using American wood but British pale ale brewers seemingly to a man in the 1800’s and until the mid-1900’s avoided it. They used in preference “Memel” or “Baltic oak”, from oak sourced in particular parts of the Baltic region. This 1902 English brewing journal article explains the story:

    http://onlinelibrary.wiley.com/doi/10.1002/j.2050-0416.1902.tb00192.x/epdf

    For my taste, I’m with the old English pale ale brewers, I think a vanillin/coconut taste in beer is not appropriate. I don’t like it in porter or stout either for that matter. Of course that’s me and clearly thousands of consumers like the flavour, which is fine, tastes vary after all. Memel had very little taste impact on the beer, which is what the brewers of ale wanted, they wanted it to taste of malt and hops, not wood.

    The sources for Memel oak dried up after the Second World War so today, except for some French and Spanish wood as you noted, almost all wood barrels today sourced to age beer are made from American oak. Any port in a storm. 🙂

    Gary Gillman, Toronto.

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