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08.21.2009 10:55 am

Missouri’s craft brewers weather the recession

St. Louis Post-Dispatch
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[This is a sneak peak of part of a story that will run Sunday in the St. Louis Post-Dispatch. You heard it here first. Get our Twitter updates here.]

St. Louis’ craft brewers are saying they have something more than quirkiness: Staying power.

Craft brewers across the region say their business is proving surprisingly resilient as the economy slices into the hide of other industries. Times are difficult, but small and independent craft brewers are growing or holding steady.

“I don’t think our crowd has pulled back,” said Dushan Manjencich, owner of Buffalo Brewing in midtown St. Louis. The brewpub’s sales are up this year by 10-15 percent.

Craft brewers - including beer-brewing restaurants called brewpubs, microbreweries and regional breweries that send beer across hundreds of miles - sold 4.2 million barrels of beer in the year’s first half, up from 4 million in the same period last year, according to the Colorado-based Brewers Association.

With the overall U.S. beer industry basically flat, craft brewers will take that pace of growth, even if it’s slower than before.

“Real good, considering,” said Paul Gatza, director of the Brewers Association. “A lot of companies are still growing and expanding distribution.”

O’Fallon Brewery in O’Fallon, Mo. is certainly looking for new territories. The company, which saw its beer sales to Missouri wholesalers rise 4.7 percent through June, is expanding distribution into Kansas and is also eyeing other states as far away as Florida.

“It’s pretty much, putting the blinders on and working the plan and not really doing anything different during the recession,” said co-founder Tony Caradonna. “People are still coming to the party.”

Craft brands are slowly gaining space on store shelves and restaurant menus, Gatza said. One reason is that some drinkers are switching from wine to beer. Also, locally-made products - including beer - are hot. And perhaps most importantly, support from wholesalers and retailers is growing, thanks to the hefty profits that stores and distributors can earn from, say, a $9 six-pack of craft beer.

Craft beers represent 3.2 percent of the U.S. beer industry’s case sales and 5.2 percent of dollar sales, according to Nielsen.

Several craft brewers and beer-focused restaurateurs say they have not had to cut prices to attract drinkers. In one sign that craft brewers are protecting their brands, prices for craft beers have risen more than 4 percent this year, according to Information Resources Inc.

Proprietors of several local brewpubs said brewing their own beer helps them stand out in the crowded restaurant business and stake out a niche even in a tough economy.

“That was why we chose to do the microbrewery,” said Manjencich at Buffalo Brewing. “It lets you have a little niche. Anybody down the street can sell Budweiser.”

Across town at St. Louis Brewery, the makers of Schlafly beer are watching sales rise in Missouri and across the Mississippi River in Illinois. The company’s beer sales to wholesalers in Missouri were up 32 percent in the year’s first half.

For St. Louis Brewery - which operates the Tap Room in downtown St. Louis and the Bottleworks in Maplewood - the spike in beer sales in stores across the St. Louis region has helped compensate for flatness in its restaurant business. The company is in the middle of a renovation at Bottleworks that will allow it to brew thousands of additional barrels of beer per year.

“We’re now a brewery with a restaurant, instead of a restaurant with a brewery,” said Dan Kopman, chief operating officer.

That might be a good thing, because bars and restaurants are weathering tough times as consumers try to save money.

At Morgan Street Brewery on Laclede’s Landing, co-founder Steve Owings said overall business is flat. The brewpub opened in 1995 and focuses on attracting visitors to downtown hotels and conventions as well as sporting events.

Banquets, which represent about a third of Morgan Street’s overall business, are fewer and farther in between these days. In the past, the brewpub has hosted parties for companies such as Edward Jones, Anheuser-Busch and Enterprise. But now, companies don’t want to be seen as showing off by throwing parties.

Morgan Street’s beer production is on pace to be flat compared to last year, or perhaps short by a couple of batches.

“You never know what might happen in terms of demand,” said brewmaster Marc Gottfried.

Square One Brewery near Lafayette Park and its sister brewpub, Augusta Brewing, are boosting production to keep up with bigger sales. Augusta’s production of beer is up about 27 percent compared to last year, and Square One is up 5 percent, said Steve Neukomm, owner of the establishments. Augusta might brew 550 barrels or more this year, he said.

“This year, we’ve actually been running very well,” he said. “I’ve been very, very happy. I almost don’t want to say something and jinx it.”

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7 comments

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You may take my home, but you’ll never take my Schlafly APA.

— Anthony Filipski
12:29 pm August 21st, 2009

The King is dead! Long live the Craft Brew! Congrats to all the great craft brewers. You guys make beer the way beer was intended!

— Muleskinner
12:48 pm August 21st, 2009

MMMMMMMMMM … BEER!

— Rico
1:35 pm August 21st, 2009

If this trend continues, Germans will have to stop making fun of Americans for the crappy water beer generally associated with our country.

— b
2:08 pm August 21st, 2009

I love my IPAs..but still have to raise a glass of Budweiser now and again. AB did alot of things right…Lager is hard to brew and they have done a fine job. Haven’t seen a Schlafly Lager…could it be too difficult?

— ChaCha2
3:54 pm August 21st, 2009

Schlafly has been making a pilsner (lager) for many years now, it’s really good! Give it a try.

— ChaChaCha
4:25 pm August 21st, 2009

I just recently had another lager, made by Schlafly, called Hot Liquor Lager, served at Bottleworks. That beer was REALLY good.

— b
11:55 pm August 21st, 2009