This time around, N.H.'s craft beer industry shows signs of staying power

Made with premium ingredients like malted barley, wheat and rye, craft beer is brewed for style and distinction, not mass appeal


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Beer, it's been said, is recession-proof. Or at least that's what Bill Herlicka set out to prove in 2009 when he opened White Birch Brewing in Hooksett.

At the time, he was working as a project manager at one of the world's largest investment companies, managing budgets in the millions of dollars; by night, he was a home-brewing beer aficionado, concocting everything from Russian Imperial Stouts to hoppy Belgian ales.

So when he sensed a round of layoffs looming at work, he figured it was as good a time as any to try his hand at professional brewing.

"Life is too short to do something you don't love to just plug along," he said. "I want to wake up and feel like I'm excited about going in to work."

Starting small, he opened White Birch in June of that year. By August, the beer -- which he brewed in 15- to 20-gallon batches -- was ready to be poured.

"We had to figure out how to grow -- we didn't want to open the business like so many breweries do," said Herlicka, who hit the road, trekking to beer festivals across New England to give away samples, hear feedback and meet his future customers. "It was either find an audience, or go home with the Cadillac of homebrewing systems."

In its first calendar year, White Birch went from brewing one barrel a day to two, sometimes stretching capacity to three when demand was strong (a barrel, by the way, is 31 gallons). Now, two years later, White Birch has traded up to a seven-barrel system, and its ales are available in stores and bars throughout New England and into New York City and Philadelphia.

White Birch was New Hampshire's first nano brewery, but not its last, especially not in the wake of a newly enacted state law that expands the barrier to market entry for small brewing operations. And, say lawmakers who introduced this year's legislation, more bills are already on the horizon for next year.

"We're in the golden age of beer right now," said Herlicka.

While definitions vary, craft beer is more easily defined by what it is not. Craft breweries are not owned by giant beverage corporations and do not produce more than 6 million barrels of beer a year. Unlike their mass-produced counterparts, craft beer often isn't filtered and doesn't contain preservatives or adjuncts like rice and corn. Made with premium ingredients like malted barley, wheat and rye, craft beer is brewed for style and distinction, not mass appeal.

Fast-growing segment

There's no doubt about it: beer is big business. In 2010, U.S. beer sales surpassed $100 billion, a market that is largely dominated by huge corporations like Anheuser-Busch InBev and MillerCoors. In terms of market share, all craft beer sales together barely make it David to the giants' Goliath.

Estimates from the Brewers Association, a trade organization of craft breweries, show craft beer makes up just shy of 7 percent of the total U.S. beer market. But, what it's quick to point out is that while sales of mass-produced beer have stagnated and even dipped in recent years, craft beer sales are on the rise.

In 2010, overall beer sales in the United States dropped by 1 percent, while the craft brewing industry grew 11 percent by volume and 12 percent in sales, according to the association.

"The craft beer segment is by far the fastest-growing segment of the beer market, and it shows no signs of abating," said Ron Parker, co-owner of specialty beer store Bert's Better Beers in Hooksett.

No doubt boosted by cross-border shopping, New Hampshire had the highest per-capita beer sales in the country last year.

The bottle shop, which also opened during the recession, carries more than 400 varieties of beer, ciders and mead, which are sold in single bottles so customers can build their own six-packs -- the philosophy behind which, said Parker, is that customers are more willing to shell out a few dollars to try a single specialty beer than drop $10 or $12 on a six-pack they may not enjoy.

"It's funny to watch people come into the store for the first time," said Parker. "Their jaws drop ... we hear a lot of, 'I didn't know there are this many beers.'"

No doubt boosted by cross-border shopping, New Hampshire had the highest per-capita beer sales in the country last year. For every person of legal drinking age, 32.7 gallons of beer were sold, which is 12 gallons more than the national average, according to estimates from the Washington, D.C.-based Beer Institute.

But demand for specialty beer in New Hampshire is a fairly new phenomenon.

"Thinking about the beer scene in New Hampshire just three to four years ago, mostly it was grocery stores and gas stations," said Herlicka. Craft enthusiasts would head to package stores in Massachusetts to stock up, he said. "You just didn't see people demanding better beer in New Hampshire."

'Changing beer culture'

In the past few years, with a wave of new breweries, beer stores and brewfests, New Hampshire has seen something of a craft beer renaissance.

Specialty beer marts like Bert's are now tucked into every corner of the state: there's BrewTopia in Keene, The Beer Store in Nashua, Barb's Beer Emporium in Londonderry and Concord, Hampton Falls Village Market on the Seacoast, Smiley's Discount Beverages in Dover and many more.

Stores like these are "really driving the change in beer culture," said Peter Egelston, owner of Smuttynose Brewing Co. and the Portsmouth Brewery. "You just can't have an evolved beer culture without a retail tier that's more evolved. In all fairness to the supermarkets, they're not built to hand-sell products -- they're built to accommodate volume and convenience."

But, said Kristen Neve, co-founding partner of Tuckerman Brewing Co. in Conway, even giant chain grocers like Hannaford, Market Basket and Shaw's are increasingly looking to diversify their beer aisles.

That's good news for the state's nano brewers, which also found some relief in the passage this past legislative session of House Bill 262, which allows microbreweries making less than 2,000 barrels a year to pay a reduced annual licensing fee of $240 instead of $1,200. It also allows them to sell two cases of beer to visitors, unlike larger operations that can only sell one.

Nano breweries are allowed to offer free samples, but the bill sought to expand that to let them also sell drinks on premises. Distributors argued it would make the breweries too much like bars, and the bill was amended so that nanos could only sell one 4-ounce glass per label per person on premises.

"Nobody is going to sell a 4-ounce beer," said Kevin Bloom, owner of the now-defunct Manchester Brewing in Concord, who worked with legislators to write the bill. "You don't tell farmers they can't sell their own wheat. Why is this different? If you can give it away, then why can't you sell it?"

Bloom said bills are already in the works for the next legislative session to make it easier for brewers to sell beer on-site and, like wine, to make it legal to sell at farmer's markets.

'90s beer bubble

Even as the beer landscape in New Hampshire evolves, pervading the memory of brewers today is the history lesson of the mid-1990s, when craft beer first flooded the market en masse.

Growing in leaps and bounds, it made giant gains of 50 percent growth in 1994 and 1995, and then the bubble burst. Places that had expanded too quickly, over-invested in expensive equipment, and not focused on the beer "went belly up," said Herlicka.

"There were a lot of beers out on the market that were of a very questionable quality," said Egelston. "They weren't very good, many had very gimmicky packaging and names -- some of us who've been around for quite a while kind of shudder at what was being passed off as true craft beer."

Still, many of New Hampshire's biggest and most successful breweries were born in that era -- Smuttynose in 1994, Woodstock Inn Brewery in 1995, Tuckerman Brewing Co. in 1998. How did they survive? "They focused on good beer and good food, and they cultivated something for their customers," said Herlicka.

At that time, Egelston said retailers and distributors chalked craft beer up to a passing fad. And, he admitted, there were times he wondered why he was investing so much in Smuttynose, which sold "every drop of beer we could make in the first few years of business" then saw sales plummet 30 percent from 1996 to 1998.

Still, "I really believed we were onto something," he said."A lot of us who did own small breweries and were going through this very difficult time, what a lot of us held onto was this idea that our wagon was hitched to a very different team of horses -- we were part of a much different movement."

It's a movement, he said, that now ties in easily with the Slow Food, localvore movement. In the same way many consumers want cheese, artisan bread and other food made with local, fresh ingredients, they want to pair it with handcrafted beer made locally with premium ingredients.

"In the last couple of years, New Hampshire has been embracing local producers in a way we've never seen before," said Egelston.

Staying local, or at least not spreading too thin, was one lesson that savvy breweries learned in the wake of the '90s bubble.

At Bert's, Parker said, the "single most-requested beer we can't get our hands on" is Yuengling, from the nation's oldest brewery, that satiates Pennsylvanians the same way Bostonians worship Samuel Adams.

"They have no further room for expansion," he said. "Rather than shortchange their loyal customers to reach into new markets, they stay local."

Increased consumer demand for local beer means that some of the state's newest breweries -- like Squam Brewery in Holderness, Throwback Brewery in North Hampton, The Prodigal Brewery in Central Effingham and Moonlight Meadery in Londonderry -- will get a warmer embrace from consumers and retailers than he did 17 years ago, said Egelston. And that's a good thing.

"I think we're just seeing the tip of the iceberg as far as the potential for craft beer goes," said Egelston. "There are a lot of people out there in the world who like good beer, but they just don't know it yet."

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