Beer connoisseurs defying economic hurdles to start own breweries

Like scores of other avid home brewers, Shane Welch has turned his personal passion into a commercial enterprise. But he has followed his own path in marketing his beers.

Welch’s company, Sixpoint Craft Ales, in the Red Hook section of Brooklyn, does not sell beer in bottles, for instance. Instead, it primarily sells kegs to pubs and restaurants in the New York metropolitan area.

If consumers want to drink Sixpoint beer at home, they need to bring 64-ounce jugs, known as growlers, to the bars to refill them.

“We are not going to pursue the traditional brewery path,” said Welch, who grew up in Milwaukee, a city steeped in beer-making history. “It doesn’t make sense to ship it halfway around the world. That is an antiquated business model.”

The economics of the beer business can be daunting. Microbreweries need to sell thousands of barrels of beer a year before turning a profit. Until they do so, small-business loans can be hard to get. And ingredients such as hops have become pricey.

In addition, startups are entering a tough competitive field. A wave of consolidation has left a handful of companies brewing most of the beer that most Americans drink.

Last year, InBev of Belgium acquired Anheuser-Busch, creating the world’s largest beer maker.

Another merger last year, between the U.S. operations of SABMiller and Molson Coors Brewing Co., formed a company called MillerCoors.

But none of this has prevented beer-making enthusiasts from trying their luck.

Roughly 450 microbreweries operate in the United States, an increase of almost 25 percent since 2004, according to the Brewers Association, a trade group based in Boulder, Colo. That figure does not include nearly 1,000 brew pubs, which primarily sell the beer they make at their own restaurants.

Paul Gatza, the director of the Brewers Association, said the pace of new microbrewery openings had slowed this year with the recession. Last year, 56 microbreweries were opened, and 10 closed. Three of those that closed had opened in 2008. This year, the association has tracked 25 microbrewery openings and five closings.

Even among America’s craft brewers — as aficionados call the independent breweries — some have grown into larger operations. The Brewers Association reclassifies microbreweries that exceed 15,000 barrels of production a year as regional breweries. In this way, nine microbreweries became regional breweries last year.

Welch, who runs his microbrewery from a 7,000-square-foot former filing cabinet factory, described the creative process of making beer as “understanding what people want and matching the reality to that desire.” He has come up with dozens of beer recipes using a wide variety of grains.

His approach, which he said was to keep the business as “amorphous” as possible, appears to be working. Welch said Sixpoint is on track to sell around 8,000 barrels of beer this year — roughly 10 times what it sold in 2005, its first full year of production.

Patrick Rue, who operates the Bruery out of a 10,000-square-foot warehouse in Placentia, Calif., is pursuing a different strategy. Although his microbrewery has been in business only a little more than a year, its Belgian-style beer — which is brewed a few miles from Disneyland — is sold in states as far away as New York, New Jersey and Massachusetts.

“We need to sell a little bit of beer in a lot of places,” Rue said. “That’s our bridge to survival.”

The Bruery, which shipped its first case of beer in May 2008, sold about 1,200 barrels during its first 12 months of production. All of the bottled beer — which accounts for roughly three-quarters of sales — comes in champagne bottles, with prices ranging from $8 to $14. “It’s hard to compete with Sam Adams on price, so you have to be distinctive,” Rue said.

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