Economics

The Friday Mash (Cleveland Rocks Edition)

Two hundred and twenty years ago today, surveyors of the Connecticut Land Company named an area in Ohio “Cleveland” after General Moses Cleaveland, the superintendent of the surveying party. The city’s first “a” later vanished when a newspaper publisher couldn’t fit it on the masthead.

And now…The Mash!

We begin in space, the final frontier. Shmaltz Brewing is celebrating Star Trek’s 50th anniversary with two “collector’s edition” Golden Anniversary beers:”The Trouble With Tribbles” and “Voyage to the Northeast Quadrant”.

“Foraging”—combing local fields and forests for ingredients—is a foodie trend that breweries are just starting to join. VinePair’s Kathleen Wilcox profiles two of them and the people who own them.

Here’s one SEC title the Alabama Crimson Tide won’t be winning: best craft beer city in the conference. The honor belongs to Athens, Georgia, the home of the Bulldogs.

The Beer Institute, whose member companies control 80 percent of the American market, has agreed to put nutritional information—including calories, carbohydrates, protein, and fat—on beer labels.

It wasn’t exactly Smokey and the Bandit, but a beer distributor picked up his first allotment of Deschutes beer in Bend, Oregon, and drove it cross-country to Salem, Virginia.

Africa is a challenging market for breweries. They’ve responded by stepping up production of beer using local ingredients and rolling out low-cost alternatives to their flagship brands.

Finally, a London-based company is the first to brew beer using artificial intelligence. It uses an algorithm called Automated Brewing Intelligence to collect customer feedback via a Facebook Messenger bot, then uses the feedback to improve the recipes of its beer.

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The Friday Mash (Wall Street Journal Edition)

On this day in 1889, the first edition of the Wall Street Journal was published. With a total of 2.4 million print and digital subscribers, the Journal is the largest newspaper in the United States by circulation.

And now…The Mash!

We begin in the Bay Area, where David Kravets of Ars Technica magazine reviews Heineken’s new “Brewlock” technology. Brewlock consists of a rubbery bladder that holds the beer inside a plastic centrifuge. Compressed air pumped into the centrifuge forces out the beer before air can mix with it.

In Ephraim, Wisconsin, beer is legal for the first time since 1853, when it was founded by Norwegian Moravians. Efforts to overturn the beer ban failed in 1934 and 1992.

The mayor of Zaragoza, Mexico, says there’s no water for consumption by its residents. He blames Constellation Brands’ brewery, which uses the water to brew Corona and brands of beer.

A Microsoft recruiter messaged a “bae intern”, inviting him or her to an Internapalooza after-party with “noms”, “dranks”, and “Yammer beer pong tables”. A company spokesperson called the message “poorly worded”.

The “world’s oldest payslip,” which dates back 5,000 years, reveals that some laborers in ancient Mesopotamia opted to be paid in beer for their work.

After Wales made it to the semifinals of the Euro 2016 soccer tournament, Budweiser celebrated the team’s success by treating every Welsh adult to a beer.

Finally, Matt Cunningham is growing hops and barley on his farm, a big step toward a beer brewed with all Ohio ingredients. Sounds perfect for Ohio State football games, where beer will be sold stadium-wide this fall.

Will Craft Lager Be Mega-Brewers’ Next Headache?

Unless you live in New York or southern California, you’ve probably never heard of House Beer. But House founder Brendan Sindell and his business partner have big plans for their beer. Really big plans. They want to beat Anheuser-Busch and SABMiller, and Coors at their own game: making lager in large quantities. And they plan to do so by making a better-tasting lager.

Despite craft beer’s rise in popularity, the overwhelming majority of beer sold in the U.S. is still lager. Some craft breweries, such as Sierra Nevada, have added a lager to their lineup, but most of their product is ales, India pale ale in particular.

House’s business model is different from that of craft brewers. It will offer just one beer, its lager. Its current production in 8,000 barrels a year, but it plans to expand rapidly, targeting customers in metropolitan areas starting with Chicago and Austin.

A panel of beer enthusiasts at CNBC tasted House beer, and found that it was better than the leading domestic and imported lagers. “[T]here’s none of the sour bite that accompanies a northern European lagers or pilsners. House is a lager beer that’s equal parts tasty and quenching without any of the flavor drawbacks that accompany mega-lager-brewers. It’s not as bitter or watered-down as some mega-brands are.”

What Happens To Beer After Brexit?

The UK’s likely exit from the European Union has far-reaching implications, and beer isn’t exempt from them.

Even though the U.S. isn’t part of the EU, American beer drinkers might soon feel the effects of “Brexit”. In the wake of the vote to leave, the British pound lost more than 10 percent of its value against the U.S. dollar. That might result in cheaper British beer in American stores.

Currently, goods from EU members on the Continent enter the UK duty free, and vice versa. Once the UK leaves the EU, it would be free to impose tariffs on German malt and French cider apples. The UK also might decide to eliminate tariffs on hops from Australia or the U.S. Conversely, EU countries might start charging tariffs on English beers and ciders and on raw materials such as hops.

All of this, however, is speculation. It will probably take two years or more to negotiate the UK’s departure from the EU, and no one is sure of what the terms of Brexit will include.

Why Some Breweries Avoid Distributors

For a start-up brewery, Denver is a challenging market. The area is not only awash in breweries, but demand has driven up the price of cans. This has caused some small breweries to adopt a different business model: bypass packaging altogether, and sell fresh beer only to the immediate neighborhood. Breweries that adopt this model avoid the expense of buying a canning or bottling line, hiring sales personnel, and hiring a distributor. And they have the option to package if market conditions change.

Breweries that sell directly to customers enjoy a greater return on investment. They have more freedom to experiment with beer styles, and brewery owners contend that their product is fresher than the packaged variety. Many have won a devoted following in their neighborhoods. Small breweries have even created their own beer festival, called Festivaus. It attracts more than 60 Denver breweries, and a crowd of over 2,000 attendees.

In two decades, Denver’s craft brewing industry has come full circle. In 1994, when Great Divide Brewing Company opened, it faced stiff competition from four nearby brewpubs; and, at the time, a brewery that opened a taproom was expected to operate it as a restaurant. Instead, Great Divide packaged its beer and didn’t open a taproom for 13 years.

The Friday Mash (Vermont Edition)

On this day in 1791, Vermont was admitted to the Union as the 14th U.S. state. It is only one of three states that had previously been an independent republic; the others are California (very briefly, and unrecognized) and Texas (1836-45).

And now…The Mash!

We begin in Chicago, where the Field Museum has teamed up with Off-Color Brewing to re-create a purple-corn beer brewed by Peruvian women a thousand years ago during the Wari Empire.

In Europe, drought conditions resulted in last year’s hop harvest being one of the worst in decades. The resulting scarcity drove up prices, which hit small breweries especially hard.

Franchised beer bars may be coming to your town. Growler USA has two locations in Oregon and North Carolina each with more than 80 taps, and plans to open ten more this year.

“Endless Slogans”, an ad for Toronto-brewed Boneshaker Unfiltered IPA, pokes fun at beer ads by mocking every ad cliche from sexual innuendos to bad puns.

A German environmental group has alleged that the country’s most popular beers violate the Reinheitsgebot because they contain trace amounts of glyphosate, an ingredient used in herbicides.

Celeste Beatty is one of the few African-American women to own a brewery. Her Harlem Brewing Company’s beers will soon go on sale at 39 Wal-Mart stores in New York State.

Finally, Anheuser-Busch InBev finds itself in “investor purgatory” after reporting disappointing earnings last week. A-B InBev’s sales are–pardon the pun–flat, and currency volatility has upped the cost of sales.

Why Good Beer Might Start Costing More

Bryan Roth, who blogs at This Is Why I’m Drunk, delved into the economics of craft beer prices. The analysis starts with the assumption that inelastic pricing exists in the beer market. In other words, when the price of beer goes up, drinkers are still willing to pay for it.

Inelastic pricing is more prominent with respect to craft for several reasons. Some craft drinkers are willing to pay more to impress others with their taste in beer. A related, and more common, reason is that many craft drinkers are willing to pay for the experience of trying a new beer—especially if it’s hard to find. In addition, those switching from macro to craft do so with the understanding that the latter will cost them more. Finally, craft drinkers are influenced by the decision of their peers, who have come to accept the high cost of the product.

Roth also points out that geography significantly affects beer prices. Portland, Oregon, is awash in craft beer. And because the supply is so great, breweries that charge too much for their beer—especially if the beer itself is of lower quality than the competition—could find themselves out of business.

The Friday Mash (Wednesday Edition)

It’s Thanksgiving weekend, which means that Ludwig, our beer-drinking lion, is spending quality time with his pride. His first stop is, of course, the Detroit Lions game at Ford Field. Then, after he and the other lions feast (on zebra and all the trimmings, of course), he’s going to take a long nap. He’ll be back next Friday with the regular edition of…

The Mash! 

We begin in Chelsea, Massachusetts, where The Field hosted its annual Pub Debate over whether marijuana should be legalized. The debate was conducted under British parliamentary rules, and both drinking and heckling were encouraged.

Chris Bosh of the NBA’s Miami Heat hosted a block party for his neighborhood. Bosh, an avid homebrewer, included a growler of his beer with each invitation.

Sierra Nevada Brewing Company has launched the Alpha Hops Society. For a $250 annual fee, members will receive a quarterly release of small-batch experimental brews.

Last month’s mega-merger between Anheuser-Busch InBev and SABMiller has put midsize brands such as Carlsberg and Heineken in a squeeze between a goliath with one-third of the industry’s market share and a growing craft sector.

The “Flux Capacitor” is back from the future. Treadwell Park, a beer hall in Manhattan has installed the device, which lets bartenders control the carbonation and temperature of each beer.

Here’s evidence that beer pong can be educational. Alex, from QuickSolar.com, hosts a two-minute video in which he uses the game to explain the solar photovoltaic effect.

Finally, beer, then whiskey. Rhonda Kallman, co-founder of the Boston Beer Company and a craft beer legend, has started a new venture, the Boston Harbor Distillery. It makes whiskey out of—you guessed it—Sam Adams beer.

How Oskar Blues Managed Growth

Can a craft brewery get the funds needed to expand without its independence? Dale Katechis, the CEO of Oskar Blues Brewery, found an answer. Instead of selling out to a larger brewery, he brought in Fireman Capital, a private-equity firm in Boston. Katechis met Dan Fireman while developing a succession plan for his brewery, and concluded that Fireman would make a good business partner. He said, “It was refreshing to meet someone who understood the heart and the soul of this business was and knew how important the heart and the soul is to it. Sometimes, it isn’t the best business decisions that are the heart and the soul.”

Oskar Blues used some of Fireman’s cash to acquire Perrin Brewing Company of Grand Rapids, Michigan. Katechis was introduced to the brewery by Keith Klopcic, a co-owner of Oskar Blues’s Michigan distributor. Perrin had gone from zero to 14,000 barrels in two years, and had a distribution network in place; however, it “wasn’t into packaging.” After taking over the brewery, Katechis introduced a canning line. Cash flow doubled within three months, and Perrin is expected to grow substantially. Klopcic is in charge of Perrin, which will remain independent of Oskar Blues.

The Friday Mash (Fantasia Edition)

Seventy-five years ago today marked the premiere of Walt Disney’s Fantasia. The animated film opened to mixed reviews, but it is now considered one of the classic animated films of all time.

And now….The Mash! 

We begin in Great Britain, where a 2002 law granting excise tax breaks caused a proliferation of breweries. The country has more than 1,300, and ranks first world-wide in breweries per capita.

Football fans will soon see something new in Bud Light commercials. The National Football League has changed its rules to allow the use of game footage involving active players.

In Oregon, the craft brewing and newly-legalized marijuana industries have something in common: a proliferation of start-up businesses.

Guinness will soon become an all-vegan beer. The brewery will stop using isinglass, a by-product of the fishing industry that’s used to clarify the beer and make yeast settle faster.

Boston-area entrepreneur Adam Oliveri has started a boutique beer distribution business. His Craft Collective has already signed distribution contracts with 16 craft breweries from the Northeast.

How dangerous is a “beer belly”? Depends on one’s fat distribution. Otherwise slim people with a beer belly run a much greater risk of serious health problems than obese people with one.

Finally, San Diego Beer Week isn’t just an opportunity to taste great beer. It also gives new breweries a chance to introduce themselves. More than half of San Diego County’s 115 breweries are less than three years old.

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