The State of LAAW: The Gypsy

“There’s also no doubt in my mind that 75 percent of the people on that list of [pending breweries] will fail. Or will find out that what they have is a very expensive hobby… [which] I don’t mean as a pejorative. ‘I can make 35 barrels of beer a month.’ OK, well, I’m sorry, that’s not a business yet. And the gypsy brewers, as far as I’m concerned, are exactly the same thing. I know a couple of these folks — some of them have got some awesome beer. But to me, you’re not legit until you’ve got skin in the game, which means capital at risk.” – Hugh Sisson

Did you know that it’s possible to brew beer without owning a brewery? Ever heard of Gypsy brewing? How about contract brewing? Gypsy brewing is a form of contract brewing, and it’s becoming more and more popular with breweries such as Stillwater Artisanal Ales, Mikkeller, Evil Twin, Venice Beach Beer Co, Brouwerij West, and Cosmic Ales. The general concept is that you don’t own a manufacturing facility, but you contract your batches out to not one, but many breweries and travel from brewery to brewery while doing so. Many of these gypsies consider their beers to be collaborations and are every bit as talented as brewers that have their own facilities. Heretic Brewing is an example of the third branch of Contract Brewing, Alternating Proprietorship. In an AP model, you own some of the equipment and the brewery owns the rest. There is a bit of a stigma attached to contract brewing today, and brewers like Stillwater are aiming to change that.

Traditional contract brewing was just that, a contracted batch of beer. It still goes on widely today, with restaurants that want a house brand of beer with the bar’s name on it. They will pay a brewery such as Red Hook, Sam Adams, Budweiser, Firestone, etc. to brew a batch of beer under their house label. The brewery usually provides a catalogue of generic recipes – Blonde, Amber, Stout, Pale, IPA – and the restaurant chooses which ones they want for their taps. If you’ve ever been to Los Angeles Brewing Company in downtown and had their house brand beer and wondered where their brewery is, the answer is – there isn’t one. They paid a brewery to make the beer and put it under their label. So why the stigma? Many people would argue that contracting beer is a short cut and rightly so. The restaurant gets the credit for the brewery’s hard work, but at the same time it’s a mutually beneficial relationship. The brewery makes money from the contract, and the restaurant makes money from selling the generic beer.

The difference between this type of contracted beer, gypsy brewing, and today’s contract brewer is the level of effort involved. Gypsy brewers brew their beer with brewers on site and quality control it on the way, just as John and I did. We’ve formulated the recipes, we perfected the homebrewed version, we’ve won the awards, we’ve done the leg work. We are also at the brewery on brew day, at the brewery every weekend quality controlling, we are there when it’s kegged, and we will be there at the bar when customers drink it. So I ask again, why the stigma? We don’t have a brewery, yes, but it’s more that we don’t have a brewery of our own yet. This is our business plan in action. We are patronizing a fellow brewery, learning from them, making our beer, and bringing it to the public. When people try our beer, we hope they will believe in our plan as much as we do and will be excited for us to take the next step in opening a facility of our own.

And now we come to the statement by Hugh Sisson, “you’re not legit until you’ve got skin in the game, which means capital at risk,” a comment passing judgement on the hard work of others. It’s true that we have another brewery brew our beer, they order the ingredients, they brew it according to our recipe, and they bottle and package it. It’s also true that we are there during every step of the way. It’s also true that our cars are being held as collateral to buy $15,000 worth of kegs. It’s also true that we have put massive amounts time and our personal money into this project. We are invested in this project as are so many others that are following similar paths. The brewery climate is different than it was when Hugh started. There are many different ways to get to one’s goal, and our hope is that our planning and love of craft beer will lead us to owning our own brewery one day.

I want to continue working in and with the Craft Beer industry because I like the people that work in it. People are positive-thinking, support their community, promote locally-sourced ingredients, expand people’s understanding about one of the oldest traditions known to man, and love doing it every day. It saddens me that we have brewers in our midst that seek to discourage or shoot down young entrepreneurs when they could encourage and work with them. That’s one reason that John and I support Eagle Rock Brewery. Jeremy has been pivotal in helping us through the entire process and continues to lend help any way he can. He believes in LA Beer and the community it creates. When we drink Populist or Solidarity we are not only drinking an awesome beer, we are supporting ERBs vision and mentality. It’s something that we can all strive towards.

*Check out this article related a current Hugh Sisson controversy of Contract/Gypsy brewing – here

*Check out this article related to contract brewing on CraftBeer.com – here

Below is an example of the work we did during our first 23-hour brew day. We definitely put our backs into it, and it was worth it.

Mashing In

Shoveling grain

Cleaning the Tank

 

 

 

 

 

 


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*Brewery Logo Artwork Courtesy and property of Heretic, Stillwater Artisanal, Mikkeller, Brouwerij West, Venice Beach Beer, Cosmic Ales, and Evil Twin.

About Kristofor Barnes

Kip is the founder of Bierkast and co-founder of Los Angeles Ale Works. Kip picked up home brewing after college and has since become an accomplished award winning home brewer. He enjoys drinking and brewing all types of beers. He is graduate of the University of Southern California's School of Cinema Television. Kip lives in Culver City, CA with his sciency wife Katie. Follow him @bierkast or #FollowTheLAAW @laaleworks

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2 Comments

  1. travis:

    interesting quote at the top if you sell 35 bbls a month in house thats

    35*31*18/12 = 11573 12 oz servings at 5 bucks a pop thats $57,865 if revenue a month.

    or you could sell 217 5 gallon kegs… obviously you should be prioritizing selling kegs if your small right?

    • Kip:

      Kegs actually have the worst return. Profit margin increases as package size decreases. Most breweries make their money on bottle sales and draft sales in their own tap room. Many local bars opted to by 5 gallon kegs when craft was more “new”, but now that it’s a proven money maker, a majority of sales for kegs is in 1/2 bbl size and the 1/6 bbl size kegs sell slower because bars want more bang for their buck. Sisson’s quote is really misguided and comes from a place of both ignorance and fear. To say that all contract brewers do not have skin in the game is ludicrous. Each an every contract brewer and brick & mortar brewer is different and should be treated as it’s own entity. Both business models have the potential to make great and terrible beer.

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