Saturday, October 17, 2009

Trademark Disputes: Vermonster v. Monster Energy Drinks; Smuttynose v. Bass Ale, &tc.


A few days ago, I received multiple copies of a YouTube clip in which Matt Nadeau, owner of the tiny Rock Art Brewing in Vermont, describes the dispute he finds himself entangled in with a corporate behemoth over the use of a trade name. In short, Rock Art produces a barleywine called Vermonster, which Hansen Natural Corp. claims infringes on its Monster Energy Drink line.



Watching Matt, whom I know to be a genuinely good guy who works hard and makes great beer, grimly describe his plight and the very real threat he faces, it is easy to see his justifiable hurt and outrage. Frankly, I hope the masters of Monster Energy drinks can be shamed into backing off, but I am not optimistic. I suspect that once a big corporation has loosed its lawyerly dogs of war, there is no turning back.

Still, in the age of YouTube and social networks, Matt and the good folks at Rock Art have a lot more leverage than they might have even a few years ago. If they succeed in giving Hansen Natural Corp a big enough black eye, perhaps the little guy will prevail after all.

As you might guess, disputes over trademarks are very common in the world of consumer products, where brand identity is everything. Trademarks are the most valuable assets producers of such products own. In fact, when one company is purchased by another, those assets are often the only ones of any value whatsoever. Sometimes a dispute results from a new company unknowingly infringing on an established mark. There are other cases where the infringement is deliberate, where one firm attempts to steal another's hard-earned brand identity. Other times, they arise from one party's overly broad interpretation of the protection their trademark is entitled to. Occasionally, I believe, trademark disputes are a form of corporate bullying, where a large firm with deep pockets threatens a smaller company with endless litigation, even if the claim has little merit.

Where does the case of Monster Energy Drinks v. Vermonster Barleywine fit in? I don't know enough details of the matter to say, but I am reminded of the various trademark disputes my companies have been party to over the years, especially the first one, in which the nascent Smuttynose Brewing Company found itself squared off against another corporate behemoth - Bass Ale.

The year was 1995. We had formed our company the year before and were busy bringing our first two products to market - Shoals Pale Ale and Old Brown Dog. In between more pressing daily matters I attended to various pieces of legal housekeeping, including registering our trademarks with the United States Trademark and Patent Office. I had been referred by our local attorney to a firm in DC that specialized in trademarks and patents, who promptly filed trademark applications for our logo, our trade names, as well as our catchy slogan (which we no longer use): "Make Mine a Smutty!" All this seemed like a fairly straightforward process, and I did not anticipate any problems.

When a new trademark application is filed, it is published for a period of time allowing it to be reviewed by other trademark holders for possible conflicts or infringements. Much to our surprise, during this review period, we received word that Bass Ale was challenging our application with the claim that it infringed on their well-established trademark.



My immediate reaction was "no fucking way!" According to the paperwork that Bass filed, their trademark consisted of a red triangle. It even stated that the color red was an "integral" part of their mark. Our logo depicted the head of a harbor seal framed by a yellow triangle in the background, over letters spelling Smuttynose (in Caslon Antique) Brewing Co. (in Bauer Bodoni and Kuenstler Script). In my view, there was little chance that any reasonable person would confuse Bass's elegant red triangle with our little pinniped.

I am by no means an expert, so take everything I'm about to say with caution, but, like most people in highly regulated businesses, I've become a bit of a jailhouse lawyer by necessity. And here's what I've learned over the years about trademark disputes. The crux of trademark law hinges on confusion. Does an offending mark create confusion in the eye of the consumer to the point where the offending mark benefits from the equity and good will in an already established mark? Or, to put it in the quaint phrase used by a trademark lawyer I once spoke to, "Is someone trying to reap where they have not sown?"


At the end of the day, that is the basic test that the successful defense of a trademark must meet. In some cases, this is pretty straightforward, a matter of common sense. For instance, if I manufactured a new line of baby food, and I selected the distinctive script used by Coca Cola for my branding, I'd certainly be challenged by Coca Cola, and they would have a compelling case because the likelihood that a consumer would associate that style of lettering, and thus my baby food, with Coca Cola is very high. At the same time, Coca Cola would probably not pursue a firm that used that script to market an MP3 player.




A real-life example is the clothing company that blatantly rips off the typeface used for decades by a large airline. Is American Apparel infringing on American Airlines trademark? Evidently not, because the are in completely different categories, which is an important distinction in trademark law. Clothing and airlines are entirely differently animals and are not likely to be confused. Another interesting aspect of trademark law that I learned is that color schemes can not be trademarked. That is why virtually every box or aspirin you see is yellow and brown, a direct imitation of the package of the original branded aspirin, Bayer.





Is there any chance that a reasonable person, when confronted with Rock Art's Vermonster Barleywine, might infer from that name that it is somehow connected to Monster Energy Drinks? I think most people would say the same thing I did when I heard about Bass Ale's challenge to our trademark application: "No fucking way!"


Sadly, however, being right does not always win the day. When I head about Bass Ale's challenge to our trademark application, I wanted to fight them because I felt we were right. But our lawyers gave me what I still consider to be some of the best legal advice I've ever gotten. They asked me, "What's more important to you, being right, or staying in businesses?" They explained that even though Bass Ale had, in their opinion, a weak case against our application, they had the resources to bankrupt us in the process. We could go to the mat over this issue, and we might well win, but it would be a Pyrrhic victory in the end, and it would snuff our little company out before it had even left the cradle.

I thought long and hard about it. Somehow it seemed so wrong to give in. At the same time, as I discussed it with my partner Joanne, who designed the original logo (and all Smuttynose images and packaging since), we decided that we could reconfigure the logo to satisfy Bass's complaint and at the same time come up with an improvement on the original.

Once we became open-minded to this approach, it was fairly easy to convert the original triangle that framed our little seal with a triangular-shaped rock. Bass's lawyers were satisfied with the change, and our trademark application was approved without further challenge.

I've never regretted making this decision. Frankly, I do think the amended version of our logo is an improvement over the original. I like to tell people that Bass might have inadvertently done us a favor by forcing us into this position. It's not a position I would have chosen, and certainly not one I'd wish on anyone else. It feels awful to have your dream and livelihood threatened by a huge, heartless corporation. Sometimes it is important to fight because you are right; other times it is not. You have to pick your battles carefully.

As I said, though, that was only the first of many trademark disputes that we've been party to. Interestingly, over the years, I've become more sympathetic to Bass Ale's position, as I've had to send several letter off myself to companies that I felt had trespassed on our intellectual property. Here are a few examples of other trademark disputes we've had to contend with:


RED NECK BEER v. CHUCK WHEAT ALE

Back in the mid 90's, we introduced a wheat ale that we called Chuck Wheat. Although it's been many years since we discontinued it, the label Joanne designed is still one of my favorites of all our labels. After Chuck Wheat had been on the market for about a year, we received a threatening letter from a law firm representing the putative manufacturers of a product called Red Neck Beer, claiming that our Chuck Wheat label violated their trademark. Accompanying the letter was a set of (unintentionally) hilarious point of sale items, promoting this beer.


Red Neck Beer had not yet gone into production (they were still looking for investors), but according to their literature, they had big plans to market to a Dukes of Hazzard demographic - microbrew for the NASCAR set. Their graphics consisted primarily of an illustration of a red bandana poking out of a blue denim pocket. The letter we received claimed that Red Neck Beer owned the exclusive right to use blue denim in any context related to beer. Leaving aside the audacious stupidity of the entire concept of Red Neck Beer, it was easy to see that this was merely a fishing expedition. We didn't bother responding to the letter, and we never heard back from our friends at Red Neck Beer. Thankfully, the American beerdrinking public never heard from them either.







THE SENSITIVE LOBSTERMAN v. PORTSMOUTH LAGER



A few months after the 1998 release of our Portsmouth Lager we received a letter from an attorney representing a lobsterman who claimed that because we had not sought his permission to photograph his buoy, we had violated his "registered trademark." Furthermore, the letter said, this lobsterman had experienced "pain and suffering" at the hands of his fellow lobstermen who had been ruthlessly teasing him about his buoy being depicted on a beer label. and suggested that he was entitled to some sort of compensation

Where do we start? I started by calling my attorney and asking if I could please, please, please write back to this lobsterman's attorney and tell him to go piss up a rope. My attorney, a wise and affable man, said no, I couldn't - he'd take care of the matter himself, and he did. Here's the deal. The photo on the label depicts a barn door located on a well-traveled road in York, Maine. The door is festooned with colorful buoys. Like many people in this region, the barn's owner had decorated it with lobster trap buoys that wash up on the beach after storms. We did get written permission from the property owner before taking our photograph, and that is all the permission we needed. And while it is true that holders of Maine lobstering licenses must register their color patters with the state, this is merely for the purpose if identifying submerged traps and has nothing to do with trademarks.

As far as the pain and suffering goes, I can't shake the image of this big, tough lobsterman, decked out in his bright orange bib, being brought to tears by the merciless taunting of his mates. Poor man! It truly breaks my heart. We never did hear back from him or his attorney, so I guess he got over it.

SMUTTYNOSE v. NUTFIELD (AS FRANK JONES PORTSMOUTH ALE)

In 2000, our now-defunct cross-state competitor, Nutfield Brewing, formed a partnership with Don Jones, the former owner of Frank Jones Brewing, where Smuttynose is now located, to revive the Frank Jones name. Frank Jones Brewing has a long history here on the seacoast going back to the 19th century; its final chapter ended with their bankruptcy auction in December, 1993, at which I purchased the equipment we used to start Smuttynose Brewing Company. To be honest, I wasn't that concerned when I first read about this new partnership in the Portsmouth Herald - Nutfield's sales were rapidly heading south, and the Frank Jones brand had never gained any traction before, and there was no reason to think it would be different this time.


I changed my tune, however, when I learned that they were planning to market this product as Portsmouth Ale, an historic Frank Jones brand name. There were several problems with this, in my view. First of all, we had registered the name Portsmouth Ale with the state of New Hampshire, though we had not used it in commerce. More importantly, we had been selling a product called Portsmouth Lager for several years at this point, and I was concerned that consumer confusion was a real danger. In addition, this product was explicitly affiliated with Portsmouth: the slogan on the label deceptively stated "First Brewed in Portsmouth - 1899." Brewed in Derry, it was clearly a carpetbagger's attempt to horn into our own home market. It was my opinion that Nutfield was trying to ride Smuttynose's coattails in an attempt to break into a market that they had never had much success in, namely the Seacoast.

But most of all, I was concerned about the potential this product had to damage to my company's reputation. I never held Nutfield's beers in particularly high regard, and the thought that people might think Smuttynose was making Portsmouth Ale made shudder. Nutfield was already beginning the slow, downward spiral that would lead first to its shuttering its plant and moving production to Shipyard in Portland, and later to its disappearance altogether. The Frank Jones partnership was one of the many straws that Nutfield grasped at on its way down the drain.

Over a period of several months I fired several letters off to the president of Nutfield, each worded more strongly than the last. I felt I had a good case against him. Predictably, he responded defiantly, disputing my claims. Just as I was preparing to initiate legal action, Nutfield abandoned its Frank Jones project, and it was never heard of again, so fortunately I was able to avoid suing a fellow craft brewer.


I do hope we never stumble into another trademark dispute. We've been fortunate so far in that we've avoided the courtroom and unpleasant public spectacles. Realistically, though, we've probably not seen the last one. It is part of the business we are in.

Saturday, September 19, 2009

Uncle Sam, Nanny

"Barleywine is a term originally used by British brewers to describe very strong ales. Though individual examples of this style vary widely, barleywines are characterized by their full body, high alcohol content, pronounced residual malt sweetness, fruity esters and, in the case of American versions especially, distinctive hop character, with a flavor profile that can lean towards the sweet or the bitter, or somewhere in between, and a color ranging from amber to deep copper. Barleywines tend to age nicely, especially bottle-conditioned versions, and have become quite collectible."

That style description - well-known to any beginning homebrewer or casual beer fan - could not be made on our website. In fact, I've just spent the last hour expurgating all references to alcoholic content and relative strength from the descriptions of our beers on our website in order to comply with Federal law. That in response to a letter we recently received from the Federal Tax & Trade Bureau which cited our website as violating the Federal Alcohol Administration Act (FAA Act) and TTB advertising regulations. (That statement above was one of the examples cited in the letter as violating the law.)

The specific law - 27 CFR 7.54(c)(1) - says:

(c) Alcoholic content. (1) Advertisements shall not contain the words “strong,” “full strength,” “extra strength,” “high test,” “high proof,” “full alcohol strength,” or any other statement of alcoholic content, or any statement of the percentage and quantity of the original extract, or any numerals, letters, characters, figures, or similar words or statements, likely to be considered as statements of alcoholic content, unless required by State law. This does not preclude use of the terms “low alcohol,” “reduced alcohol,” “non-alcoholic,” and “alcohol-free,” as used on labels, in accordance with §7.71 (d), (e), and (f).

Interestingly, the law does not prohibit you from stating the actual alcoholic content, in numerical terms (ABV). A later section of the Code of Federal Regulations (27 CFR 7.71 (a)) says:

(a) General. Alcoholic content and the percentage and quantity of the original gravity or extract may be stated on a label unless prohibited by State law.

So there you have it. While you are permitted to state that a particular Barleywine weighs in at 11.5% abv and a particular Pale Ale weighs in at 5.1% abv, but you can't say that the former is stronger than the latter. Nor can you assert that one of the things that distinguishes a Double IPA from a regular IPA is that the former has a higher alcohol content than that latter.

Evidently, Uncle Sam doesn't want you, the consumer, to have this information, or, more likely, he doesn't trust what you'd do once you had it. After all, if everyone knew that Imperial Stouts were stonger than their non-Imperial cousins, who knows what would happen?

Monday, September 7, 2009

Why We're not Shaving Heads for St. Baldrick this Year.


Last year, Smuttynose Brewing hosted what we hoped to be the first of many annual St. Baldrick's events. It was a smashing success - 24 intrepid souls volunteered to have their heads shaved, and in one afternoon we raised over $22,000 for childrens' cancer research. This year,
we planned to hold an even bigger event in the middle of Market Street in front of the Portsmouth Brewery on the same day as the Portsmouth Criterium bike race (which requires Market Street to be closed to traffic), with more heads shaved and more money raised.

That was our plan, until I made the decision to cancel the event. A few weeks ago, we were finishing up our list of administrative tasks and were about to launch our big publicity push to kick things off when I received an email from the St. Baldrick's Foundation with the subject line "Welcome to our Background Screening Process." Inside was the following message:

Thank you for volunteering for the St. Baldrick’s Foundation. You have been listed by your Volunteer Event Organizer as one of the key volunteers in a position of responsibility for your event. As you know, protecting the integrity of donations and the safety of our constituents is important to the reputation of the Foundation and its volunteers. Therefore, certain key volunteers are asked to complete a background screening before your event can be made ‘live’ on our website.

To be prefectly honest, I was somewhat taken aback by this; we'd done the event last year and hadn't been asked to submit to a background check. Moreover, I've worked with a number of non-profits and fundraisers and had never seen a request like this - but I went ahead and clicked on the link provided and was directed to a website with this opening screen.

I was just about to start filling out the form when something stopped me cold in my tracks. It wasn't the prospect of being investigated. As a holder of two federal Brewers Notices and a state liquor license, my background has been thoroughly scrutinized. Yes, it was partly the presumption and chutzpah of the demand that I submit to this demeaning and invasive process in exchange for the privilege of volunteering many hours of my time raising funds for this cause. But that wasn't what stopped me.

We live in a world where we are subjected to daily invasions of our privacy by government, by banks, by credit agencies, by employers, and for the most part, we all go along to get along, don't we? This time I just had to say no.

I can certainly see why any organization that depends on volunteer contributions would want to minimize sticky fingers in their collection baskets, but in my opinion this is one of the most egregious examples of lawyerly overkill that I've ever seen. I'm sure the St. Baldrick's Foundation will do fine without our event and that my little protest doesn't matter much in the grand scheme of things, but it matters to me. For our part, we'll find other worthy causes to support - Lord knows there's no shortage of worthy causes, maybe even some that don't need to verify that we're moral enough before they take our time and money.

I hope those of you who looked forward to participating this year can understand my decision, whether you agree with it or not. As always, I welcome your feedback.

Peter

Sunday, June 28, 2009

Smuttynose Builds its Dream House - Part 4


In July, 2003, my partner Joanne and I took a drive to Newmarket, where our friends Peter Hamelin and John Pasquale were developing their plan to purchase and reopen the famous Stone Church music club. Located about twenty minutes from Portsmouth, Newmarket is an old mill town situated on the Lamprey River, a tributary of the Great Bay. Compared to other thoroughly gentrified communities up and down the Seacoast, Newmarket has always been refreshingly, even defiantly, down-to-earth, populated with a diverse mix of people: folks with roots that go back generations, along with recent immigrants; working-class people, professionals, college students, artists and random bohemian types. It is both well-grounded and artsy in an appealingly unpretentious way.


Although Joanne and I were in Newmarket that day to hear about Peter & John's plans for the venerable Stone Church, the conversation eventually drifted to our own vague ideas for a new facility for Smuttynose. John, who lives in Newmarket and was involved in local politics, asked if we would consider looking at the mill buildings that dominate the center of town. He told me that they were vacant and that the town was actively looking for someone to come in and develop them. In August, 2003, we took our first tour through the old, abandoned mills and we were astonished by what we saw.


Newmarket's mills are a relic of New England's early, water-driven industrial revolution. Built from quarried split granite between the 1820's and the early 1900's, these massive structures were originally used to mill cotton. Later uses included shoe manufacture (Timberland got its start in the mills next door), hydro-electric generation, distilling, and most recently, the manufacture of sheet mica and electrical insulating material, but regardless of the use, they have always been the economic heart of the region, employing thousands at their peak. By 2003, the mills on Main Street housed a single small manufacturer; the mills across the Lamprey River had been converted into residential condominiums; but the bulk of the space - over 70,000 square feet in buildings in a picturesque setting alongside the river - had been vacant for more than a decade.


It is easy to see how seductive the idea was of breathing life back into these beautiful structures, especially with a traditional manufacturing use such as artisanal brewing. Walking through their vast, empty spaces, you can imagine when these buildings were filled with workers operating clanking machinery and pulsed with energy. And although these buildings did not perfectly meet the criteria outlined in the previous post, the notion of transforming these historic mills had an irresistable appeal. John introduced me to the Newmarket Community Development Corporation (NCDC), which owns the mill property on behalf of the town, and we embarked on what would turn out to be a two year-long journey that ultimately did not bear fruit.



Our plans generated a considerable amount of excitement in the community and the region, with a fair amount of positive press. Here's an example from the Exeter Newsletter in June, 2004, shortly after we signed an option to purchase the property. Here's another from the Portsmouth Herald on the same topic. It's obvious that everyone was swept up in the possibilities at this point. We had over sixty thousand square feet of buildable space to work with, even after removing large portions of floor to make room for our two-story high brewing vessels. And because of the location, in the heart of Newmarket, our
plans evolved to encompass more public uses than we have originally envisioned, including not only a new brewing facility and a pub, but other uses that these buildings and their location seemed to call out for - a cafe, office and studio space, and even a small boutique hotel. Conceptually, it all made sense, with all the parts fitting together to form a whole.

But the hard work or making all those pieces fit into the larger scheme of things was just beginning. We had hired an architecture firm in Boston to help us do a feasibility study, and we commissioned some early engineering studies of the site. Over a two year span, I attended countless meetings with various parties who had an interest in our project, and was met with a consistently high level of enthusiasm. Yet, in retrospect, there were clear signs from the very outset that our plans to redevelop the Newmarket Mills were doomed, if only I had been able to recognize them.

Next post - things fall apart...

Tuesday, June 23, 2009

Smuttynose Brewing Builds its Dream House - Part 3

At the end of the last post, I said that I’d next write about our exploration of the mills in Newmarket. I lied.

It has occurred to me that now would be a good time to lay out the criteria that a new Smuttynose facility must meet. They are straightforward and relatively simple, but once you spell them out, you can see how some locations easily meet most of these requirements, but how few locations truly meet all of them.

In simple terms, a new Smuttynose brewery must meet five basic criteria:

1.) Space - we’ve been running out of room here on Heritage Avenue for a long time. The first post in this blog described the reasons for this. Starting with 12,500 square feet in 1994, we doubled our space when we took over our entire building in 2006. We’ve also constructed several additions to the outside of our building to house new tanks, and this summer we're raising the roof to accommodate still more tanks. Before the year is out, we’ll be forced to lease off-site warehouse space as well. You get the picture: the simple fact is we need a bigger facility.

2.) Energy efficiency - the building we currently occupy is appallingly inefficient, from an energy standpoint. But more than that, the way our brewery is engineered is also quite wasteful. Here’s a simple example: during the winter, even during the coldest weather, our fermentation tanks are cooled using a big, industrial chiller which throws off a considerable amount waste heat into the atmosphere, while at the same time we’re running space heaters indoors to warm up the building! We can design amazing efficiency into a new facility by taking advantage of simple synergies between the different parts of our process and the structure itself. “Waste” heat is no longer a waste product, but a way of preheating our brewing water. Interior spaces that need to be cooled can be done naturally in the wintertime. Daylight can be brought into interior spaces, reducing the need for electric lighting. Simple stuff, but difficult to implement in an existing facility, especially one where the landlord has no incentive or desire to participate.

Much ink has been spilled about our efforts to build a “green” facility and seek LEED certification. Frankly, the direction we’re taking is one we embarked on some time ago. Most of the choices we’re making are driven by common sense and a desire to be part of the solution, not part of the problem. Plus, in addition to reducing our footprint, we stand to save a good deal money operating our new brewery, which will help us become more competitive.

3.) Logistical efficiency - In our existing brewery, the inflow of raw materials & packaging and the outflow of finished products & waste material is not nearly as efficient as it should be. This really didn't matter much as long as we were producing a small amount of beer in a relatively small space, but what used to be mildly inconvenient has the potential to cripple us as we grow. A purpose-built facility designed with process flow in mind will improve our productivity in significant ways both large and small.

4.) Public Access - We want to build a brewery that is a visitor-friendly destination, a place where we can offer tours and share the craft of artisanal brewing with people who enjoy our beers. As longtime brewpub operator through our sister company, the Portsmouth Brewery, we have always wanted to operate an onsite restaurant & pub, as well. Put another way, the site has to have sex appeal. Some places have it; some don’t. And usually you know before you’ve even set foot out of your car. Unfortunately, the places with the most romance tend to fall short in other areas.

5.) Favorable Zoning - As we've learned though sad experience, few things get people’s undies knotted up like a good old-fashioned zoning dispute. Because of our project’s particular needs, we must choose a site that is zoned to permit both light manufacturing and commercial uses. And that, my friends, is easier said than done, as you will see when we talk about our experience trying to build a new brewery in our home town of Portsmouth. But that comes later.

In conclusion... Using these five criteria, it is easy to grade each of the locations we’ve considered over the years. Some had the potential for space and efficiency, with absolutely no charm. On the other hand, some sites were dripping with romance but failed on every other count. The old Frank Jones brewery buildings were a good example of this. Existing structures, especially old mills, do not lend themselves well to logistical efficiency and good process flow. And any city officials or politicians who say they can “fix” problematic zoning restrictions to fit your plans is blowing smoke up your skirt. It’s never that easy - run the other way!

Next time, we’ll travel back to Newmarket in 2003.

Sunday, June 14, 2009

Smuttynose Brewing Builds its Dream House - Part 2


One afternoon is the summer of 1995 or '96, my ex-partner Paul Murphy and I drove across town from Heritage Avenue to Islington street and, armed with flashlights and screwdrivers, let ourselves into a vacant mill building with a key that had been lent to us by the building's owner, Joe Sawtelle. We had been warned to beware of rotten floorboards in the upper floors, so we trod very carefully through what appeared to be a 35,000 square foot pigeon coop. (And yes, there are baby pigeons - we saw lots of them that day.)


Although Smuttynose Brewing was still in its infancy - our production was just a few thousand barrels a year- and we did not distribute outside of New Hampshire - the microbrewery segment of the beer industry had experienced explosive growth from the mid-eighties through the mid-nineties, and we were already wondering if we'd need to seek out new digs before long. How Mr. Sawtelle knew that, I have no idea, but he contacted us and encouraged us to look over his building at 1001 Islington, which he said he'd sell for $500,000. But although it was fun to fantasize about building a new facility in an old mill located a stone's throw from downtown Portsmouth, common sense told us that the time was not right and we did not pursue the idea any further than a few self-guided tours through the musty old hulk of a building. Eric Chinburg purchased the building shortly thereafter and converted it into a very nice apartment complex.



Around the same time, we were contacted by the owner of the old Frank Jones brewery buildings, which were located a bit further down Islington Street. This complex of late 19th-century buildings had housed until recently Schultz's hot dog factory. The Schultzes where looking for potential new users for some or all of these buildings and thought we might fit into their plans to revitalize what they called Schultz's Brew Yard. Though the romance of relocating our brewery into the remnants of the historic Frank Jones Brewery was appealing, we did not give it serious consideration, given the magnitude of such a project. Ten years later, in 2005, we would take another look at the same buildings, which had recently been sold on auction and still remained vacant (and still are). But in the interim we had turned our focus to surviving the brutal shakeout that hit the craft beer business in the late nineties. In the meantime, finding a new home for Smuttynose Brewing would have to wait.


In the next post, I'll write about our exploration of the mills in Newmarket. As always, your comments and questions are welcome.

Wednesday, June 10, 2009

Smuttynose Brewing Builds its Dream House - part 1

A couple of weeks ago, I received an email from a fellow who has been following the news of our proposed new brewery for quite some time. A resident of Hampton, our future home town, he was writing to ask about the status of the project and pointed out that we were doing ourselves and our fans a disservice by maintaining a sphinx-like silence on the topic. "I was hoping to see construction begin this spring but it looks like there is nothing going on at the site," he wrote. "Rumours are spreading in town that the project has been scrapped due to the economy. If it is hasn't been scrapped you need to get out ahead of things on a PR basis and let your fans know what is going on. The lack of any discussion of the project on your website only fuels the rumours further."

Yes, the writer is correct - a lot of people have been wondering what's going on with Smuttynose and our future home at Towle Farm in Hampton, and here, at last, is our response. The purpose of this blog, with apologies to Mr. Blandings , is to provide not only ongoing updates on our progress, but also some background and history of our brewery and its plans for expansion. The short answer is Yes, we are moving ahead with our plans to build a new facility at Towle Farm in Hampton. We plan to start construction in the first half of 2010 and will be moving in about a year later, in 2011. But getting to that part of the story is actually a rather long and involved tale, so I'll start by asking for your patience and indulgence in advance. I'll post here from time to time in hopes of presenting this in bite-sized pieces. Let's begin with a quick thumbnail sketch of our growth and expansion up till now.

In 1994, the year we opened for business, Smuttynose Brewing owned only the six 40-barrel tanks that we purchased with the assets of the bankrupt Frank Jones brewery. Although none
of these tanks was rated to hold pressure, a previous owner with little money and even less common sense had jury-rigged two of them to serve as pressured conditioning tanks. The brewery, with its small, twenty-barrel brewhouse, had a capacity of about 2,500 barrels a year. Within less than a year, we added four 50-barrel fermenters, purchased from Harpoon, which had outgrown them, two horizontal 100-barrel dairy tanks to be used for conditioning, and two vertical 180-barrel conditioning tanks that we acquired from a brewery in Buffalo which had closed its doors. This tripled our capacity, giving us the potential output of about 7,500 barrels a year. We grew into this capacity within four years.

By 2005, our tank inventory consisted of the original six 40-barrel, nine 50-barrel & one 20-barrel fermenter, plus four horizontal and two vertical conditioning tanks. In 2006, we outgrew microbrewery status when our annual output exceeded 15,000 barrels. That year we purchased our first 200-barrel fermenter, whose 23-foot height required us to build an addition attached to the existing building. We have since purchased two more 200-barrel fermenters, building a new outside addition each time. In early 2006, we leased the other half of our building, adding about 11,000 square feet of warehouse space to our existing 12,500 square feet. We filled that space in a matter of weeks with packaging, raw materials and finished product.

In 2001, we replaced our old 20-barrel brewhouse with a 50-barrel brewhouse purchased from a brewery in Miami that had gone out of business and have since upgraded that brewhouse substantially, adding a whirlpool as well as a new mill and grain handling system. We've replaced & expanded our refrigeration system, and replaced & upgraded virtually all of our bottling and kegging lines.

This year, 2009, we expect to produce about 23,000 barrels, or about 310,000 cases’ worth of beer. To accommodate this growth, we will add two more 200-barrel tanks, a fermenter and a new conditioning tank, early this summer. Since we no longer have room outside the building for more additions, we now must find space inside the building, raising the roof by ten feet and reinforcing the floor to carry the weight of the new tanks (50,000 pounds apiece, including beer). The only spot inside the building with enough space for these tanks is where our hospitality room is currently located, so visitors to Smuttynose this summer will be greeted with a much smaller place to gather for tours. This space will accommodate only one additional tank, another 200-barrel fermenter, which we expect to add next spring. After that, expanding this facility will require a whole lot of creativity.

In my next post, I'll write about some of the early sites we considered for a new facility. As always, your comments & questions are welcome.

Monday, May 11, 2009

Portsmouth Brewery Video Snippet - 5/11/09

It's Monday afternoon and our indefatigable manager Ben Bilodeau shares half a minute of his busy day with us.

Thursday, April 30, 2009

Additional Kate Day Details...

Howdy all:

A couple of weeks ago I posted a countdown clock on the Portsmouth Brewery's Brewers Notes Page, marking time till next year's Kate Day: Monday, March 1. Since then, I've read a good deal of commentary on Beer Advocate and elsewhere, so I thought I'd take a few minutes and provide some additional details.

Here at the Brewery, thinking about last Kate Day, we concluded that the biggest matter we needed to address was the long line and hours-long wait that many people had to endure.

When we opened our doors at eleven-thirty that day, the restaurant immediately filled to capacity (about 300 people, give or take), and there was no turnover due to the fact that those who had gotten seats remained there till after Kate was tapped at 1:14. Of course, this meant that anyone who had not entered our doors in the first wave was forced to stand in line until seats in the restaurant began opening up, hours later.

How can we address this, we asked ourselves? The most obvious thing is to move the tapping time closer to when we open our doors, so people are not required to wait (inside or outside) for hours. That was an easy decision: we've set the tapping for 11:37 am, shortly after we "officially"open for business. People will be able to stop in, enjoy a Kate and a bite to eat, and get on with their days. Tables will turn over more rapidly, and there will be less of a wait outside. We hope.

Moreover, after, giving it further thought, we concluded that Kate Day consists of not one but two related activities: the celebration & socializing surrounding the actual tapping, and the purchase of bottles. Why did they have to take place simultaneously, we asked? Would things run smoother if we took care of bottle sales first thing in the morning, hours before the tapping? We think they will.

So, in short, here is how Kate Day will shape up next March 1.

1.) Bottle sales will commence at 9:00 AM and will be conducted on a first-come, first-served basis. We will start to issue calendar pages at seven in the morning, to reduce the amount of time people have to wait in line. Bottle sales will be conducted in our downstairs bar, but no drinks will be served there during this time. Once bottles are purchased, people will be asked to go outside so we can clear the room prior to tapping.

2.) The tapping itself will take place at 11:37 AM, in both our upstairs and downstairs bars. We'll open our doors a bit earlier than usual, eleven instead of eleven-thirty, to give everyone a chance to settle in.

We're confident that these changes will help make the next Kate Day more enjoyable for all. As always, we welcome your feedback.

Cheers,

P-

By the way, regarding rumors of larger batches of Kate being brewed at Smuttynose ...



... no comment.

Tuesday, April 21, 2009

Damned if You Do; Damned if You Don't


Yesterday, I received the following email from a customer in a neighboring state:



Hello!

I was to lead by saying how much my wife and I enjoy your brews. The Winter Ale is one of our absolute favorite beers, and, as beer lovers, we try many different brews.
But I am also a homebrewer and often use the empty bottles from commercial beers we have drank (I won't use other people's bottles, so I can ensure they are clean), and I am writing to let you know that I think the glue your company uses to affix the labels is OVERKILL, and will probably limit the number of your beers that I buy in the future. While it takes about 5-10 minutes to soak and remove the labels off of other beers (Orlio, Dogfish Head, and Saranac for example) in only hot water, it took nearly 3 hours for me to simply loosen the labels from the MANY Winter Ale bottles I tried to reuse today. Even soaking them with Simple Green didn't assist me, and I had to scrub the bottles. Doing this also meant that some of the glue and label went down my drain and into my septic, and that just won't do.
I'd like to request that you consider other methods or other glues to keep your labels stuck. My wife LOVES your beers, but even she says if it means having to spend that amount of time removing labels that we may have to buy other beers in case we need bottles later (we give away our brews as gifts).
Thank you for taking the time to read this.



After labelling our bottles for fourteen years with an ancient World Tandem machine, and fielding ceaseless complaints from wholesalers, retailers and consumers about our flagging, crooked and missing labels, we invested in a nice roll-on labeler. The glue that worked with the World Tandem did not match the new machines, so we had to try numerous different types of glue until we found one that adhered to cold, wet bottles and set quickly with minimal sliding; flowed well in varying temperature and humidity; did not produce noxious vapors; and cleaned up easily. We finally found a glue that met all these requirements, and we've been pretty darn happy with the results.

Now we learn that we may lose a customer because our labels stick too well. Sheesh. We may be able to salvage his business, yet, as we will soon install an air knife in our bottling line. An air knife is essentially the thing that blow-dries your car as it leaves the car wash. In a bottling line, it blows moisture off bottles as they enter the labeler, so the labels are affixed to a semi-dry surface, instead of a wet one. Once the air-knife is installed and operational, we may find ourselves looking for a new glue, since the glue we use now, which is ideally suited for our current parameters, may not work as well with blow-dried bottles.

Cheers,

P-

Friday, March 20, 2009

Why we’ve retired Portsmouth Lager


Yesterday, Tyler Jones, assistant brewer at the Portsmouth Brewery, made entry in the Portsmouth Brewery Brewers Blog announcing that the very last keg of Smuttynose Portsmouth Lager had been tapped. Several readers asked what will replace that beer when that final keg runs dry, and they surmised, correctly, that it would be the newest Smuttynose offering, Star Island Single. I’m writing today to briefly introduce this new beer, but first I’d like to say a few words about Portsmouth Lager, the circumstances in which we introduced it back in 1998, and why we made the decision to retire it eleven years later.

1998 was a watershed year at Smuttynose. The craft/micro segment of the beer industry was entering the third year of a brutal shakeout phase, and we were taking a beating along with everyone else, having seen close to a third of our sales volume dry up during the previous two years. Small breweries left and right were falling by the wayside, and at the rate we were going, I feared our turn would come soon. Consumers, retailers and wholesalers had lost confidence in the craft segment, which in the early nineties had become flooded with shitty beer and phony knock-off products. Some of the wholesalers in our network had already dropped our brand from their portfolios; others were threatening to do so any day; and most of the rest wouldn’t answer our phone calls. It was a very bad time to be a small brewer.

In retrospect, it was also a time of great opportunity. 1998 was the year we introduced our Big Beer Series, a move that was universally hailed by our wholesalers (the ones that would still talk to us, at least) as one of the stupidest ideas they’d heard in a long, long time. Why were we proposing to make a series of big, exotic-sounding beers, they asked, when the market was moving towards light beers? Any why, they further asked, would we put those beers in a package - 22-ounce bottles - that no one - no one - wanted to buy? I like to tell people that, in the position we were in, we were a little like the mountain climber in the excellent book and film Touching the Void who had fallen down a crevasse and was clinging, broken and bloody, to a narrow ledge. Climbing up out of the crevasse was not an option; the only choices were to die on the ledge or go down, deeper into the darkness. (You really need to read this book or see the movie, at the very least, to see how that decision worked out for the stranded climber.) So, like the climber, down deeper we went, and the Big Beer Series was born. Ten years later, with the extreme beer movement in full bloom, it looks like a prescient decision. At the time, it was folly, an act of desperation.

At the same time, we also hedged our bets and introduced Portsmouth Lager. One of the strategic decisions we made at the time was to pull out of several outlying markets and refocus on our home turf. Portsmouth was due to celebrate its 375th anniversary that year, and I thought honoring our home city with an eponymous beer would be a smart move, in a pandering sort of way. Looking at our portfolio of brands, we believed that it would be a good idea to offer an accessible, user-friendly product that would be a nice counterpoint to our hoppier, heavier and darker ales. We further reasoned that a continental style lager would fit that bill nicely, since it was a style that was under-represented in the world of craft beers (with the notable exception of Samuel Adams Boston Lager).

I believed, naively as it turns out, that the name Portsmouth Lager would enjoy some of the same romance that Sam Adams benefitted from, and that it would be embraced by visitors and locals to our Seacoast region as the definitive “local” beer. This was not to be the case. New Hampshire, despite its puny size (ranked 46th out of 50 in land mass), is one of the most Balkanized states in the country. For reasons that have always eluded me, one of the dinkiest states in the Union defiantly parses itself into “seven distinct cultural and geographical regions.” The result? Well, to quote Gertrude Stein, “there is no there there.” The Granite State is sandwiched between two neighbors - Maine and Vermont - that have done a fantastic job of cultivating their brand identity, yet in between, our own New Hampshire “brand” remains a mystery. Try a word association test: I’ll bet you can rattle off a list of features and products that you associate with the states to our east and west - blueberries, lobsters, rocky coastline, maple syrup, dairy farms, covered bridges, fall foliage and so on. Here in New Hampshire? Velcro, Pitco fryolators, the Old Man in the Mountain (whoops), Segways & tax free shopping (and don’t get me started about that First in the Nation bit). We’ve got our own blueberries and lobsters and dairy farms - tons of ’em - but no one seems to know it. I have come to believe that there is a good reason that New Hampshire, despite all its incredible natural advantages (and there are many), has launched very few successful comsumer products. It’s not an accident that a company that got its start at the Portsmouth farmers’ market - Stonewall Kitchen - moved its operations across the river to York, Maine, so it could benefit from the “made in Maine” cachet. And one of the most widely known consumer products manufacturers in the Granite State, Stonyfield Farms, doesn't mention New Hampshire on its website’s homepage or “about us” page. Back to 1998, when we proudly presented our new Portsmouth Lager to the sales staff at one of our local wholesalers, one of the salesmen said derisively “nobody in Manchester is ever going to buy a beer named after Portsmouth.” Mind you, Manchester is located exactly 46 miles from Portsmouth, but as it turns out, he knew what he was talking about. We had to learn it the hard way, though.

After a slow launch in a down market, and encountering indifference from our local wholesalers and retailers, Portsmouth Lager never gained traction in the market. Cut out of the sets in the supermarket chains, where 80% of the beer is sold in New Hampshire, it became nearly impossible to find in our home state, except on draught at the Portsmouth Brewery, where it has been consistently one of our most popular offerings. People would discover it in a Variety Pack and write to us asking where they could buy it, and we’d shrug helplessly. So while all of our other brands were growing, Portsmouth Lager numbers remained static, buoyed up artificially by the significant volumes that were served at the Portsmouth Brewery and placed in Variety Packs. And the warm embrace we anticipated from Portsmouth's bars and restaurants never happened; most of them remained perfectly content to offer up Boston Lager as their local beer.

Truth be told, we started to discuss phasing Portsmouth Lager out of the lineup several years ago. Our brewers felt that, given our limited capacity, we could not afford to tie up valuable tank space with an underperforming brand that took twice as long to brew. They were correct, of course. So what held up that decision? Me. I was having a very hard time letting go of an old friend. Of the beers we’ve made at Smuttynose, Portsmouth Lager has always been one of my favorites. It’s unpretentious, easy to drink and flavorful - stuff I like in a beer. When David Yarrington took over as Executive Brewer in 2001, one of the first things he did was tweak the recipe, making it more authentically European in its hopping and malt, which, in my opinion, made a good beer better. Finally, though, arithmetic and common sense prevailed over sentimentality.

Joanne and I have speculated that perhaps a different package design or name might have yielded different results. I tend to think that’s true, up to a point, but I also believe that our timing was poor for this particular product. With a few notable exceptions (Victory’s Prima Pils comes to mind), the number craft breweries producing successful lager beers, especially light continental lagers, is relatively small. It’s been a tough nut to crack for all of us, though I believe that this is changing.

At the end of the day, our decision to retire our Portsmouth Lager was based on our belief that we could replace it in our lineup with a beer that will serve a similar role, namely an accessible, user-friendly beer that will complement to the rest of our lineup. For over a year, we’ve been playing around with draft versions of what has finally evolved into our Star Island Single. Some of you may have tried an early iteration, the lamely named TBD Blonde, at festivals and bars that like to play with us. We're very happy with the final product, which we’ll be bottling for the first time on Monday. Let us know what you think.

By the way, since I know people will ask, the spice referred to in the Statement of Composition (“Session ale brewed with spice”) at the bottom of the label is coriander, which we add in a tiny amount, just above the detection threshold, to give the beer a little je ne sais quoi.

Some time when I've got a few minutes, I’ll write about creating our Star Island Single label. In the meantime, you can check out our lovely model, Dixie von Trixie, on her Myspace page.

Cheers,

Peter

Sunday, March 1, 2009

Kid Rock Beer


A couple of weeks ago I noticed in one of the trade newsletters I get a link to an article in the Detroit Free Press about the deal made between a brewery in Michigan and Kid Rock to produce a Kid Rock “craft” beer.


Since this announcement, there has been a fair amount of commentary on the merits of this project, pro and con, but that's not what interested me. Novelty products have a long history in the beer business. Some are clever, some witless and exploitative, and others downright tasteless. Here are some of my favorites:


And who could forget the immortal Nude Beer, which made its appearance in the late eighties. For a brief time I was the proud owner of a complete set of mint-condition labels that I had
received from a friend of mine who was doing a contract brew at the Lion in Wilkes-Barre. I had them pinned to the bulletin board in my brewery in Northampton until a vandal saw fit to “disrobe” them by removing their scratch-ticket brassieres when I wasn't around. Without their silvery garb, the women on the labels just looked kind of sad and embarrassed, so I took them down and they've been lost to time. But I digress...

I'll leave it to others to figure out where Kid Rock's entry fits into the novelty beer pantheon. Being numbers-obsessed, what caught my eye about the article was the math. Somehow, the numbers didn’t add up.

According to the article, Michigan Brewing makes 100,000 barrels and employs eight people to do it. Last year Smuttynose produced one fifth of that - 20,000 barrels - and employed twenty-two people. Wow. I thought we worked pretty hard, but we must be incredibly lazy and inefficient here in New Hampshire.

Strangely, that efficiency evidently goes by the wayside when it comes to Mr. Rock's new beer. Anticipated annual production of 100,000 cases - about 7,250 barrels - will create 161 new jobs at the brewery, according to the article. So, let's recap: currently, the brewery produces 100,000 barrels with eight employees, or 12,500 barrels per employee. Kid Rock's 7,250 barrels of beer will require 161 new employees - that’s one employee for each 45 barrels of production. This must be one special beer!

Let's drill down a little farther. Say that new employee makes a modest ten bucks an hour and works a forty hour week. That's $20,800 a year. Toss in employer tax contributions and minimal benefits, and you’re up to $24,000 a year. The 45 barrels of Kid Rock beer that this employee is going to produce translates into 620 cases. Divide that into $24,000 and you get a labor cost of $38 a case. Add in cost of goods and operating expenses, plus state and federal taxes as well as wholesaler & retailers markups, and you've got one expensive beer!

I know Mr. Rock has got some loyal fans, but they are going to be sorely put to the test.

I'm thinking that the reporter who wrote this piece must have misplaced a few decimal points or couldn’t decipher his interview notes when he got back to the office. If not, Kid Rock’s novelty beer may take the prize as the world's most expensive beer, probably not what they had in mind.


Cheers,

P-