Originally published on www.denverlibertarian.com
There’s nothing easy about opening up a new brewery in Colorado, the market is rather saturated and finding a way to stand out from the competition can be a daunting task. That being said, nestled in the corner of a strip mall in Aurora, one can find Pilothouse Brewing Company, a great brewery in and of its own right, but one that offers up a new twist on the homebrewing concept that sets it apart from the crowd. The idea involves risk and reward, not only for the homebrewer, but for the brewery itself. Will the idea pay off?
The brewery is set up to facilitate a quarterly competition between revolving homebrewers, inviting them to make use of the small batch brewing equipment that is set up just behind the bar. The concept is simple enough, develop a good recipe, join the competition and get to brewing; may the best beer win. Although the onus is on the homebrewer to come up with a great beer recipe on their own, it does require interfacing with the brewery’s team for one main reason: beyond just the taste of the beer, the brewery has a vested interest in presenting a beer that can be consumed. This seems like an obvious point, but it is a critical aspect of the homebrewing competition process. If someone were to get sick from drinking a beer, or even if a beer comes off with a formidable skunkiness to it, the negative press could lead to the end of the business, no government intervention needed.
The competition involves a three round brewing cycle, with larger batches of beer being produced in each successive round. The judging process consists of a simple measure, the homebrewer’s beer sales are divided by its time on tap relative to the beers of the other brewers in the competition. In this way, the beer is truly judged by the demand of the public. Eventually, the top two brewers face off in a battle for the number one slot. There are benefits all around with beer sales and customer traffic for the brewery and competition prizes for the homebrewers. Additionally, homebrewers bring their friends to visit the brewery, which naturally adds a little gravitas to the presentation of their beer.
One of the biggest barriers to entry for a homebrewer seeking to expand is getting their beer out to the general public. A homebrewer is not allowed to just bottle up their beer and take it down to the neighborhood liquor store and convince them sell it, regardless of how great the beer may be. Current Colorado law only authorizes the delivery to, and consumption of, home brewed beer in competitions, exhibitions, tastings, and judgings, but not for sale. Pilothouse Brewing is operating within the context of existing regulations and brewers do not get to participate in any profits from the sales, but they are eligible for the substantial prizes that are offered to the top brewers of the competition. This is a prime example of government distorting a market and disincentivizing entrepreneurship. To help draw in prospective brewers, who already face an uphill battle since they can’t participate in the profits, Pilothouse does offer a credit to the homebrewer for procurement of brewing ingredients, access to brewery staff for general guidance and brewing equipment during the process.
The primary benefit of participating in the competition is exposure to the general public. It would require a tremendous amount of time and capital in order for a homebrewer to get this level of exposure on their own, far beyond what most aspiring homebrewers could afford. In order to produce beer in quantities that could work within the context of the existing, compulsory, three tier distribution system (a relic from the post-Prohibition era), they would need to exponentially scale up their brewing process including their administrative/regulatory procedures as they transition their brewing operation out of the garage and into a commercial space. This, of course, would trigger a whole new set of regulatory permits and fees associated with the building department, not to mention the raw costs of the design and construction processes, too. It is quite the wormhole and that is just scratching the surface, as there are many other government limitations and barriers to entry in the brewing world that are beyond the scope of this article (just do a quick internet search for liquor laws in your neck of the woods and stare at the screen in angry awe at the labyrinth of rules and regulations). Amid the seemingly never ending government regulations, this brewing competition provides an avenue for the homebrewer to scale up their brewing process without the all the red tape and up front costs.
It should go without saying, but this concept is not necessarily the best way for homebrewers to get their beer out to the general public. Indeed, there is no one size fits all approach or guarantee of success with any market solution, but this is certainly a unique development in the homebrewing world. My agorist readers might say, forget it, don’t get caught up in the laws and regulations, just brew and enjoy your beer at home and stay out of sight; sell your beer to your friends, trade it with them or whatever, just don’t play by the rules. I fully support that concept, but for those who are trying to reach a broader audience or gain notoriety in a crowded Colorado beer market, this could be a great opportunity to break out of the home and into the brewery.