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.



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.