Craft Brewing Industry Foams Up in the Region

Quad - State Business Journal, Feb 2008 by Heerwagen, Peter

Something is brewing in the Quad-state region, and it's more than just coffee, it's craft beers.

One year ago, Mountaineer Brewing Company started brewing in Martinsburg, while this spring two startups, Roy-Pitz Brewing Company in Chambersburg and Virginia Brewing Company in Winchester, hope to be producing beer.

Besides adequate financing, what does it take to make it in the craft beer business? "Because consumers are savvy, it's the ability to make great beer," said Paul Gatza, director of the Brewer's Association in Boulder, Colo.

The craft beer industry, now on a roll with about 1,400 brewers, was also hopping in the mid-1990s. "It didn't die, but just leveled off," said Gatza. "Back then, it was such a can't miss proposition, everybody and his brother got into it. Hundreds of companies that started up in 1996 were closing by 1998/99.

"A couple of factors that hurt the industry back then are now gone. A lot of craft beers weren't very good, so people avoided all the beers. Now the technological know-how of producing it is superior, and people are willing to try craft beers because they trust the category.

"Also people have a better understanding of the styles, of which there are over 100. An example is India Pale Ale, known as an extremely hoppy beer, a reference to its spice."

Two years ago, Mountaineer Brewing Company, owned by Cluster Spires Brewing Company in Frederick, Md., moved its operation to a 10,000-square-foot warehouse on Lawn Street in Martinsburg.

"Our goal was to produce 10,000 barrels a year, making us the largest brewery based in West Virginia and the only one not part of a brew pub," said Operations Manager Gary Brooks. "It will take us a couple of years to get to that level, and then we'll go to 18,000 barrels, which will take us four years.

"We have two employees in Martinsburg and six when we bottle. We started bottling from the get go and 80% of our sales are from bottles.

"We're distributing in the whole state of West Virginia, but are going into Tennessee, Virginia, Maryland and North Carolina. Martin Distributing is doing it for us in the Panhandle."

Regarding profitability, Brooks said, "We're growing, so we're putting our money back into the business to continue to grow. Things are going pretty well."

While Cluster Spires will not open a brewpub at the Martinsburg facility, Brooks said plans are underway to expand the footprint of its Barley and Hops Grill, and that would include company-owned units in the Eastern Panhandle.

In Chambersburg, two 24-year-old entrepreneurs have started Roy-Pitz Brewing Company, expecting their first kegs to be on the market in a month or two. Ryan Richards and Jesse Rotz, Chambersburg natives, have dreamed of opening a brewery since their high school days.

"We have always wanted to do it; we both have business degrees from West Chester University," said Richards, who added that Roy and Pitz were nicknames the two men went by in their younger days.

Richards and Rotz have raised about $150,000 to finance the venture, with funds coming from the Franklin County AreaDevelopmentCorporation ($50,000), the Chambersburg Area Development Corporation ($25,000) and Orrstown Bank ($25,000), plus $40,000 in equity from local sources, said Richards.

The 5,000-square-foot brewery is located in the basement of a three-story building on North Third Street in downtown Chambersburg. Roy-Pitz Brewing purchased used equipment-a 10-barrel brewing system, as well as fermentation equipment-from the Duck-Rabbit

Craft Brewery in Farmville, N.C. "We will start out selling beer in kegs to bars and restaurants, but we may open a brew pub some time, as well as sell bottled beer," said Richards. "In Pennsylvania, you can sell directly to bars; you don't have to go through distributors. We will also have takeout sales of growlers, a half-gallon, 64-ounce glass jug. They hold their freshness for up to a week."

The two men will start distributing the beer in Franklin County with a goal of selling 40 kegs a month. "We'll be the only employees, but we have people ready to jump on board as we grow."

Both Richards and Rotz attended beer-making schools, Richards at one near Munich, Germany, where he received a master brewer certificate, and Rotz at the Siebel Institute of Technology in Chicago, where he earned an associate degree in brewing.

Honest Ale will be the signature beer for Roy-Pitz Brewing. "It will be sold year-round and is an American style amber ale, more a malt and hop intensive beer," said Richards. "Each season we'll have a different beer. In spring, it will be a dark German smoked lager; in summer it will be our watermelon beer."

Richards hopes to offset the rising price of brewing ingredients by having his brother-in-law plant a hop field on his farm in McConnellsburg, Pa. "It could be a business opportunity for him," he said.

Roy-Pitz will not be the first craft brewer in Chambersburg. In the 1990s, Arrowhead Beer Company opened in the Chambers-5 Business Park, but went bankrupt in several years. "I talked to a lot of people about Arrowhead," said Richards. "Apparently, there were a lot of problems with consistency, and they only had one beer."