ABT Introduction

P.O. Box 267814, Chicago, IL 60626 U.S.A.
Tel: 1-773-465-7285 | Fax: 1-773-465-7387
E-Mail: abt@abtonline.com

INTRODUCTION

Definition

A "brewpub" is a small brewery (a "microbrewery"), operating in conjunction with a retail pub/restaurant, which derives a substantial portion of its total revenues from retail sales of malt beverage products (beer) directly to end use customers for on-premise consumption. A brewpub may or may not also have wider off-premise wholesale distribution of its products, but always sells most of its beer production directly to retail consumers. As of June 1, 1996 there were 611 brewpubs and 387 wholesale microbreweries in the United States and Canada. The Association of Brewers reports that new small-scale breweries (brewpubs and microbreweries) are currently opening nationally at the rate of between five and six per month with the highest concentration in California (91), Oregon (42) and Colorado (28).

Distribution in brewpubs resembles that in taverns; in this respect they are similar economically. The average brewpub derives about 40% of its revenues (and a much smaller percentage of its profits) from food and other non-beer items. Thus, a brewpub may also have some of the characteristics of a restaurant. However, since some successful brewpubs rely almost exclusively on their beer sales, these characteristics, while important, are not essential for success.

A brewpub's most distinguishing business characteristics stem from the fact that it is a brewery. The fact of the on-premise brewery and its on-site brewed beer is a marketing "hook" that cannot be matched by any ordinary tavern or restaurant and is what marketing analysts call a "sustainable competitive advantage."

History

Brewpubs are not a new concept in the restaurant business. Long before there were commercial breweries many taverns, inns and restaurants in Europe and Asia operated small breweries "in the back room" to produce brew to serve to their patrons. From ancient Egypt where many inns operated combination brewery/bakeries to medieval England where most of the brewers were women, on-premise brewing and consumption was the accepted norm. In Europe, especially in England, Germany and Bohemia, a number of these "home breweries" dating back to the Middle Ages are still in operation. Others, such as the famous Hofbrau Haus in Munich, Bavaria, have developed into regular commercial breweries.

In recent years these venerable establishments have been joined by hundreds of new brewpubs. These newcomers have sprung up to cater to the increasing public demand for alternatives to the standard national brands of beer. There are currently around 225 in the United Kingdom and dozens more scattered around northern and central Europe.

Brewpubs In The United States and Canada

Hundreds of brewpubs existed in the United States before national prohibition in 1919. Such well-known early American as William Penn, Samuel Adams and Patrick Henry owned and operated "brewery taverns" in addition to their political activities. The growth of commercial breweries in the 19th century reduced the need for on-premise brewing, but a number of brewpubs and hybrid brewery & tavern operations continued to operate (particularly in small towns) into the early 20th century. Collegeville had such an operation in the mid 1870s when Hartung's City Brewery & Tavern was run by a man named Robert Hartung.

Contemporary brewpubs are part of the microbrewery revolution that began in the late 1970s as a response to the increasing consolidation of the brewing industry among a few national brewers. As the actual choices among national brands has grown fewer a niche in the marketplace has developed for small-scale brewers who have chosen to specialize in producing only superior, all-natural beers. Brewpubs have generally followed this trend in order to stand out in the very competitive restaurant trade.

The first modern brewpub in North America opened in 1983 in the small seaside town of Horseshoe Bay, British Columbia. Its immediate success attracted wide attention on both side of the border and set off a building boom that is still picking up speed.

The first American brewpub began operating in 1984. In the next few years new pubs opened at the rate of 20 or so per annum. In 1995 the number of new openings jumped to 152 - a growth rate that has accelerated in 1996.

As is often the case the Midwest has been a bit slow in responding to a national trend. The first regional brewpub, Brewmaster's Pub in Kenosha, Wisconsin, opened in 1987. Missouri joined the brewpub ranks in 1991 with the tapping of the first keg at the Saint Louis Brewery & Taproom. Since then brewpubs have opened in Springfield and St. Charles. An industry source has recently reported that new brewpubs are being planned for suburban St. Louis, Branson, Kansas City, Jefferson City, St. Joseph and Hannibal.

The future holds a great deal of potential for well- managed brewpubs. As any tavern owner knows the most profitable item to sell in a pub is draft beer - the primary sale item for a brewpub. Industry observers are varied in their assessments of what is to come, but a portent by William "Bill" Owens, former owner of Buffalo Bill's Brewpub in Hayward, California and currently the publisher of the American Brewer and Beer magazines is worth noting. In a speech presented to the 1989 National Micro & Pub Brewers Conference he said that his prediction for industry growth was "2,000 by 2000."

Return to Home Page Send us e-mail