Craft beer brewers in York County face more demand, but also more competition

Pennsylvanians love craft beer. In 2014, an average of 13.4 gallons of it was consumed per drinker, according to the Brewers' Association. Beer drinkers in only two other states, Colorado and Vermont, drank more craft beer on average.

The Keystone State also brewed more craft beer than any other state last year— more than 4 million gallons. To be fair, regional behemoths Samuel Adams and D.G. Yuengling & Sons were part of that number, because they fit the Association's recently-broadened definition of craft beer.

Even so, breweries have been shooting up in Pennsylvania faster than a fresh crop of barley. From 88 breweries in 2011, the state was up to 136 in 2014, the Brewers' Association said.

As economists, and people who stare at beer foam, will tell you, bubbles burst. But is this a bubble?

Greg Bentley, co-owner of Black Cap Brewing Company in Red Lion, said the craft beer industry can support only a limited number of breweries. Bentley said that, according to industry data, 1.5 craft breweries open each day in the U.S.

"To me, I don't think that's sustainable for too many more years," Bentley said.

Bubble or not, craft beer is also edging into sales that would otherwise go to mass-produced domestics like Budweiser and Miller Lite — and that's a good thing for craft brewers. In 2014, craft beer made up 11 percent of total beer sales in the U.S., the Association said. That's up from 7.8 percent, and is the first time craft beer has seen a double-digit market share.

With more than a dozen breweries in York County, there's no longer any novelty in being a local beer. Instead, microbreweries and brewpubs must find ways to separate their brands from others and play to their strengths. Here are few examples of how those small businesses have adapted to an increasingly crowded market.

Distribution deals

At Crystal Ball Brewing in West York, co-owner Jesse De Salvo said his company has focused on striking distribution agreements that ship its beer beyond the York County line.

De Salvo said he and the two other owners opted not to spend seed money on a brewpub. Instead they invested in a production facility that brewed 1,000 barrels in 2014, their first year in business.

One year and a couple months later, and Crystal Ball beer is on shelves in 40 of Pennsylvania's 67 counties and has increased its brewing capacity by 50 percent.

"I was just really aggressive with meeting other distributors in the area," he said.

The result was that Crystal Ball landed a distribution agreement with Springettsbury Township-based Brewery Products, a wholesaler with a four-county reach.

De Salvo said he also has worked deals with Fuhrer Wholesale in Pittsburgh, Origlio Beverage in Philadelphia, and All Star Distributing in the Lancaster, Lebanon and Lehigh Valley areas.

Promoting the brand

Christian Quinlivan, who co-owns Liquid Hero Brewery in York, said working with wholesalers, such as Ace Distributing, has also been a large factor in driving their sales.

"We're back-ordered for a couple months right now," Quinlivan said, even though they recently tripled their brewing capacity, allowing them to brew more than 1,000 barrels a year.

In addition, Quinlivan said, meeting beer drinkers face-to-face has been crucial for spreading awareness of their brand.

"On the weekends, especially Saturdays, we do a lot of sampling and tours," Quinlivan said. An estimated 70 percent are new to the Liquid Hero brand, hailing from neighboring states like New York and New Jersey, he said.

The company also has focused on getting their beers into high-traffic retail points such as Santander Stadium and at grocery stores like Weis, Wegman's and Whole Foods.

With their beers available from Chambersburg to Philadelphia, those new customers won't always be able to become repeat customers, even if they wanted to. But that's something Quinlivan said he hopes to change in the next few years, as the company works to increase its capacity and expand its distribution.

Finding target markets

At Gunpowder Falls Brewing Co. in Shrewsbury Township, owner Martin Virga has focused his efforts outside Pennsylvania. The reason, he said, is that his beer is for a particular type of beer aficionado — those who like traditional German lagers.

Virga said he's one of a small group of brewers nationwide who brew their beer according to an ancient German beer purity law, "Reinheitsgebot," which permits only water, barley, hops and yeast to be used as ingredients.

Virga studied beer-making at Doemens Academy in Germany and is obsessed with creating smooth-drinking lagers. It's an interest, he said, which doesn't always match craft beer trends such as jacking up the alcohol content or adding unusual ingredients like chocolate or bacon.

"I'm brewing a beer much closer to the local village beer that you'd have in a village in Southern Germany," Virga said.

Rather than competing locally with a plethora of popular brands, Virga said he's targeted areas that have proven to show strong interest in traditional German lagers. As a result, his beer often travels south to places like Federal Hill in Baltimore and throughout the Washington D.C. area.

Keeping it local

Other brewers have little interest in distribution, preferring to run point-of sale operations that usually also serve food. Back in Red Lion at Black Cap Brewing Company, Bentley said he's brewing about 200 barrels a year. Some of that he and his business partner, George Waller, distribute themselves at local bars such as the Holy Hound or Crimson American Grill.

For the most part, though, the focus is their pub business, which he said has been drawing curious beer drinkers from places like Gettysburg, Lancaster and Harrisburg, as well as the local regulars.

Bentley said he and Waller are both in their 50s and don't have much interest in huge-volume production or taking on big craft brewers like Troegs or Lancaster Brewing Co.

Rather, it's about working hard to make the best beer they can, and having some fun in the process.

"We've met a bunch of great people," Bentley said. "I enjoy brewing beer."

Competition

The question remains whether craft beer will continue to encroach on the big domestic brands, or if local brewers will begin drinking up each other's sales.

Quinlivan said that, in York, that hasn't happened yet. If anything, he said, some craft brewers would likely go out of business because they got tired of the hard work that goes into producing and marketing the beer.

Virga said he still sees "tremendous growth ahead" for small brewers who are willing to do the work.

"However," he said, "because everybody seems to think it's so easy, there is a bubble building, like the housing market."

Bentley said one advantage of running a brewpub rather than a brewery that relies on distribution is that he has less to worry about and not as far to fall if beer sales decline.

"If you try to have a really good product and have great customer service and treat people fairly, you're three quarters of the way there," Bentley said. "Of course, there is some luck involved."

De Salvo said each brewer must define success according to their own goals.

"Everybody is doing it right, if they're happy and they're paying their bills," De Salvo said.

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