Four New England craft brewers discussed learnings gleaned from developing their contract brewing services during the pandemic at the Massachusetts Brewers Guild’s annual conference earlier this week.
“Castle Island is historically 75% wholesale and of that wholesale, 50% is on-premise, so in March of last year that obviously all went to zero,” Castle Island Brewing founder Adam Romanow said. “We simultaneously found that a lot of our industry peers who were either taproom heavy or taproom exclusive had an immediate need for cans because they couldn’t sell draft beer in their own market or in their own taproom.
“They needed cans, they needed to get them into the off-premise channel,” he continued. “We had tanks. We had cans. We had people looking to work. We put those pieces together and we really ramped up our contract brewing in 2020.”
Castle Island, which operates breweries in Norwood and South Boston, excluded contract brewing from its initial business plan and the “75 iterations afterward,” Romanow quipped. But the craft brewer began offering it as a service in 2017 to fill in production gaps after an expansion project. By 2021, Castle Island was doing enough contract brewing business to merit a cellar expansion to support its growth.
Romanow detailed the reasons Castle Island contract brewing partners seek out the service during a presentation that preceded a panel discussion featuring fellow New England contract brewers, Ben Lauranzano, VP of sales and HR for Newburyport-based Riverwalk Brewing; Matt Malloy, CEO and co-founder of Boston-based Dorchester Brewing; and Jeremy Duffy, co-founder of Pawtucket, Rhode Island-based Isle Brewers Guild.
“Why contract brewing seems like a simple question, but kind of an important one to ask and answer,” Romanow said. “So the first option is you’re looking for the capacity; from what we’ve seen, that ends up being one of the most common things that leads people into contract brewing. You might also be looking for different production capabilities.”
Contract brewing often helps smaller brewers cut costs by achieving scale efficiency on systems larger than their own.
“You might be looking to expand into new markets and you need some quick-turn volume,” Romanow said. “It’s faster sometimes to get contract brewing up and running than it is to install your own tanks to support that. You might be looking to farm out your core beer production and allow your internal production team to focus a little bit more on some of the innovation side of things.”
Castle Island works with six regular contact partners and has six more that cycle in and out as needed. The brewery offers canning, but not bottling, and is able to fill kegs if partners provide their own cooperage.
Before the pandemic, contract brewing accounted for 5% of Castle Island’s overall business, but has since grown to 40%. Last year, the brewery produced about 7,500 barrels, and 30% of that volume was contract, Romanow told Brewbound.
“We’ve seen that pick up in 2021 as more clients have signed on and the clients we had have grown,” he added.
In the same way that Castle Island did not originally plan to engage in contract brewing, it wasn’t in Riverwalk’s original business plan either, Lauranzano said. The brewery, located on Massachusetts’ north shore, inadvertently started the contract brewing side of its business when it offered to brew a batch for friends whose brewery was in need of a piece of equipment that Riverwalk had.
“We liked working with other breweries,” Lauranzano said. “We found that it pushed us. It brought in new styles and it helped us figure out some of our processes.”
Both Riverwalk and Dorchester offer recipe development for partners.
“We offer everything from recipe creation right up to just making exactly what you tell us,” Lauranzano said. “We have one partner in particular who wants to use a very specific malt house, so he arranged to have that shipped to us directly.”
Castle Island picks up the process after a recipe has already been created, Romanow said.
“We’re not recipe consultants; we’re not graphic design consultants,” he said. “We are, for all intents and purposes, hired guns. We’re looking for you to bring these things to us. We will make the beer, we’ll package the beer, and we will sell the beer to you. But all the stuff that comes before that is your responsibility.”
Unlike Castle Island and Riverwalk, Dorchester was founded to be a partner brewing facility when the brewery opened in 2016. Dorchester didn’t begin brewing beer under its own brand until 2020, Malloy said. Both Malloy and Duffy said they prefer the term partner brewing to contract brewing, which Duffy said feels “very transactional.”
“We call it partner brewing for a reason. This is hard to do,” Malloy said. “We are usually the last people that touch a product before it goes out on the shelf and that really matters to us.”
With a 100-barrel brewhouse and 300-barrel tanks, Isle Brewers Guild brews much larger batches than other breweries on the panel. Like Dorchester, it was founded to brew other brands under contract.
“When we were analyzing the industry, there were these amazing brands out of New England — and that was happening around the country — that had capacity issues,” Duffy said. “We met with four breweries just to discuss the concept. And three of them said, can you start tomorrow? So that got us going on the journey to build our facility.”
Many of Isle’s partners — which include Devil’s Purse, Narragansett, Newburyport Brew Co., and Great North Ale Works, according to its website — rely on the facility to brew large-scale batches of their flagships, freeing up brands’ brewing staff to focus on innovation.
“We essentially were built to support the growth factor,” Duffy said. “Our sole mission is to grow our partners to make sure that they have the greatest quality product in the marketplace to meet the demand of the customer.”
Isle enters agreements in the mindset that relationships will last about five years with each client, Duffy said. Partner brewers aren’t bound by that, but Isle assures them that these partnerships are approached with the idea that both companies will work together on an ongoing basis.
All four brewers stressed the importance of open, frequent communication between parties and that, as partners, they are deeply invested in the success of their clients.
“If your beer is in our house, we’re gonna treat it like it’s our own beer,” Romanow said. “We’re gonna treat it with a lot of love and TLC. But that means strong frequent open communication about what your expectations are to make sure that we’re meeting them and there aren’t any surprises at the end.”