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:
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.
— Jacob Berg (@jacobsberg) April 28, 2015
Related: The Rising Cost for a Specialty Beer
“Don’t drink to get drunk. Drink to enjoy life.” — Jack Kerouac