At the end of November, the redoubtable beernews.org picked up on a report from the VerySmallBeer.com blog (its author wants to remain anonymous, but he does carry a few stories about Chicago events). The story stated that Chicago’s new Latin-themed 5 Rabbit Cerveceria will be switching its contract brewing operations from Argus Brewery in Chicago’s South Side to Minhas Craft Brewery in Monroe, WI.
I probably wondered more than anybody else what might happen to this unique brand. I have done a lot of griping about Minhas, renamed for the 20-something Canadian entrepreneur who bought out the 165 year old Huber Brewery and set it to cranking out cheap beers for Canadian markets and American convenience stores. I had already made a face at it in my coverage of Frank Thomas Big Hurt beer; though in fairness, I still haven't opened my cans.
Here’s the original post from VerySmallBeer:
I have received word that 5 Rabbit Brewing has changed contract brewers. I previously stated my admiration that 5 Rabbit was upfront about Argus as a contract brewer. Well they are now switching to Minhas Craft Brewery. I think this is a smart move. While I would prefer to see beer brewed both locally and by the people who own the brand, Minhas is a smart choice. Minhas is pretty experienced in contract brewing, and in my opinion can provide better quality assurance. QA is key to a growing brand. Best of luck to 5 Rabbit and lets hope they get their own place soon!
Many of our favorite local brewers did originally need contract brewers to help get product out while they were getting their own brewhouses together: Three Floyds’ Alpha King bottles once stated they were brewed in New Ulm, MN (Schell’s), while Half Acre started out with beers made by Sand Creek at Black River Falls, WI.
I queried 5 Rabbit’s brewmaster Randy Mosher, who is also one of the most interesting beer guys, brewers, and label designers I know.
"Argus has made some first-class beer for us, as evidenced by our gold GABF medal, but because they are only a ten-barrel brewery, they have never been able to make as much beer for us as we need. After they began brewing for us, they ramped up sales and distribution efforts for their own beers, further tightening the capacity available to 5 Rabbit. Their decision to stop brewing for us just moves up the end of what was always intended to be a temporary relationship.”
True that. Argus rather quickly jumped from draft house brews for Ballydoyle and Jimmy Green’s to packaging said brews and carving out shelf space at liquor and grocery stores.
“We are currently contract brewing with two other companies. Those relationships may also be temporary, as we just signed a contract on a fabulous 30-barrel system from DME, and hope to be able to start production in our own facility sometime next summer.
“As for Minhas, their business model today mostly involves making high-adjunct, low price beers for the Canadian market. As you know, these are difficult to brew, and a market like that is very sensitive to product inconsistencies. We know they are capable of brewing good beer. Their brewmaster, Kris Kalav, is just leaving the presidency of the Master Brewer's Association of America's regional chapter. Our recipe for 5 Rabbit Golden Ale uses 100% German malt--all in bags. Quite a PITA for a 200-bbl batch! We think it actually tastes better than the beer we've been getting from Argus. It certainly will be more consistent.“
In a followup e-mail, Randy explained some of the economics of the current craft beer world, and how it relates to a startup like 5 Rabbit:
“The craft beer industry is growing as fast as it can, about 12%/year, limited mainly by the ability to expand production. For how high up is, look at Portland, OR. Craft is more than 30% of the market there, still rising. Can that happen everywhere? Probably not, but I think it shows that there is a lot of room left for people with a vision and determination. Just jumping on the bandwagon isn't enough; you have to push the art forward, and offer people unique tastes.
“The purists don't have too much to worry about from contract brewing, as there's really very little contract capacity, so being a contract brand isn't all that easy. Everybody is flat-out making as much beer as they can. There may be a little extra capacity when a brewery opens or expands, which is quickly gobbled up, then goes away when the house brand production maxes out. As a long-term strategy, it sucks right now.
“In our case, if we were to have opened a brewery right away, it's likely that it would have been a 15 bbl or so, not the 30 we now have planned. So, our fans will have more of our beer than they would have otherwise. Starting by contracting allowed us to demonstrate the concept to investors which then made them willing to fund the brewery, enthusiastically.”
I admit I have to agree with someone who knows more about the business side of the industry than just what goes into the bottle. And expansion in your current space is a difficult task in a crowded city; nearly every day on Facebook, I see a photo of a local brewer trying to slip a new fermenter through the door. And Goose Island's selling to AB/InBev was partly motivated by a promise of funding for expansion at its Fulton Street Brewery.
5 Rabbit's own brewery is planned for an August 2012 opening, according to a recent Redeye article. Their hope is to locate in or near Pilsen, a Latin neighborhood originally named by its Bohemian foudners for the birthplace of the world’s favorite beer style. Synergy, folks!
(And no sooner had I started writing this article referencing the scarcity of 5 Rabbit in my neck of the burbs, than I found some of their 5 Vulture at my nearest grocer! Now I've tasted their three mainstay beers and will have a summary review soon.)