Contract Brewing, an arrangement where a company brews and packages beer on equipment that it does not own. Although such arrangements have long been common among larger brewers, contract brewing came to prominence in the United States through the founding and subsequent success of the Boston Beer Company, makers of Samuel Adams Boston Lager. First brewed at the Pittsburgh Brewing Company in 1984, the Samuel Adams brand quickly grew in both reputation and volume, its rise unencumbered by the enormous expense of owning the bricks, mortar, and stainless steel used in the production of the beer.
Since then, after several different contract arrangements, the Boston Beer Company now brews all of its beer in its own facilities, but many other companies followed the contract model, helping to establish and solidify the American craft brewing movement in the 1980s. Today, some brewing companies start as contract operations, but many more use contract brewing to supplement their production when they run out of capacity at their own brewing facilities. The host brewery, in turn, is able to turn excess capacity into a steady revenue stream.
Contract brewing arrangements vary widely. Some are distant relationships by phone, whereas others are very hands-on partnerships. In the most attenuated form of contract brewing, the host brewery may essentially provide everything from the recipe to the actual packaged beer, with very little input from the contracting brewer. In these circumstances, the contracting brewery is essentially a marketing company—they provide the identity for the beer and then market and sell it. In other instances, the contracting brewer may bring in their own ingredients and yeast strains, supply the recipe, and specify every small detail of production down to packaging. In the latter cases, a brewer or manager from the contracting brewery will frequently visit the premises of the host brewery, shepherding beer through the system.
Contract brewing also takes differing forms from a legal point of view. In a simple contract situation, the host brewery will buy all the materials used to make the beer, physically brew the beer, and then actually hold legal title to the beer until the contracting brewery takes possession of it. Another form of contract, referred to as “alternating proprietorship” or “alternating premises,” emerged out of the wine industry in the late 1990s. In this form of contract, the contracting brewery, now referred to as the “tenant brewery,” essentially rents time on the equipment at the host brewery. In this arrangement, all of the ingredients and the resulting beer are owned by the tenant brewery from the outset of the process. In the United States, there are tax implications to the various forms of contract relationships, which are closely regulated by the Alcohol and Tobacco Tax and Trade Bureau.
Although craft beer enthusiasts have sometimes looked askance at contract brewing, it is now so common that the stigma of “not owning the stainless steel” appears to be fading. Issues of provenance and “authenticity” still swirl through craft brewing circles, but both brewers and beer drinkers have recently paid closer attention to the beer itself and the people brewing it than to the brewery’s location or ownership. Interestingly, a new class of contract brewer has recently emerged and immediately become the darlings of beer bloggers across the globe. These are itinerant brewers, often referred to (if perhaps distastefully) as “gypsy brewers.” These brewers follow the model set by the “flying winemakers” who started to emerge from Australia in the 1980s, making wine all over the world. Itinerant brewers wander the world like homeless ronin, brewing beer at various different breweries. These brewers usually release their beers under a single overall brand name, but the beers themselves may have been brewed anywhere; such a brewer (often a single person) will often have several projects going at once, sometimes in different countries. The image of the itinerant brewer, far from being tainted by the idea of “contract brewing,” seems to have captured the American imagination in particular. Perhaps this owes to a certain American fondness for the idea of the wandering gunslinger, traveling the land lightly on horseback, unencumbered by a household, crops, fences, or borders. As information technology and social networks speed and facilitate communications and collaborations among brewers, it is to be expected that the “flying brewmaster” will become more common.