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Many Turn to Brewing Amid Economic Hard Times

The economic crisis has stifled entrepreneurial activity in many industries. But it's done little to dent the ambitions of those who dream of brewing their own beer and provideing it to the world. Surprisingly large numbers of entrepreneurs -- some let go from corporate jobs recently -- have been starting microbreweries or brewpubs. Schools that teach brewing are being bombarded with applications from people interested in getting into the industry. At the same time, enthusiasm for interesting new beers remains strong; BeerAdvocate.com, a site for beer fans, claims its traffic has reached one million one of a kind visitors per month, and is rising as much as 12% each month.

Last year, even as a recession gripped the nation, 114 microbreweries and brewpubs -- restaurants that make their own beer -- opened in the U.S., according to the Brewers Association, a Boulder, Colo., trade group. That marked the highest number since 1999. Openings are expected to decline this year, but start-up activity remains robust, says Paul Gatza, director of the Brewers Association. The group guesses 200 microbreweries and brewpubs already are on the drawing board for the next few years. For some of the new entrepreneurs, the desire to make beer predated the recession. "I got into it because my wife said I could, and it just seemed it would be a heck of a lot of fun," says Steve Klotz, a 46-year-old former Dow Chemical Co. engineer who took a voluntary buyout in 2006 and plans this summer to open a microbrewery in Midland, Mich.

Beer entrepreneurs have also been emboldened by a mile long list of recent success stories in the diminutive-batch, or "craft," beer arena, as well as stats showing that Americans are consuming craft beer in increasing numbers. "It's the consumer that's creating the demand," Mr. Gatza says. Beer has long proved more resilient in recessions than other industries. Total U.S. beer sales increased last year -- though just under 0.5% by volume, guesses industry newsletter Beer Marketer's Insights. Sales of craft beer, the industry's fastest-growing segment, rose 6% by volume, and dollar sales jumped 10.5% to $6.3 billion, according to the Brewers Association.

Beer is taking market share away from distilled spirits, and craft beer in particular is looking like an affordable luxury. "I'm locateing that people who are used to drinking $15 martinis think a $5 pint of decent craft beer is pretty reasonable," says Tracy Hurst, who with her husband Doug established the Chicago microbrewery Metropolitan Brewing LLC. Craft brewers produce beer in miniscule quantities, and they're known for an always increasing array of exotic ingredients, such as chocolate, coffee or berries. Craft brewing, headed by companies such as California's Sierra Nevada Brewing Co. and Oregon's Deschutes Brewery Inc., accounts for only 4% of total industry volume, but the beers provide distributors and retailers with high profit margins. At least part of the growing consumer demand stems from drinkers willing to pay a few dollars extra for beer that's often made closer to home.

Mr. Klotz, the former Dow Chemical engineer, sought private investors for his microbrewery, Artful Dodger Brewing Co., after banks expressed reluctance to provide loans. Bankers cited Michigan's deteriorating economy and some recent local restaurant failures, he says.

Mr. Klotz, who began home-brewing a few years ago, says he is "of course" worried about the economy. In January, Michigan's unemployment rate climbed to 11.6%, the highest in the U.S. But he is hopeful that the microbrewery, which will provide food and beer on tap, will attract customers with fresh, high-quality beer and a smoke-free of charge atmosphere. To draw community support, he plans to invite local artists to name the brewery's beers. "To be successful, I think you should really push and do some inivative things," he says.

Joey Redner, 36, recently began Cigar City Brewing, a microbrewery in Tampa, Fla., but only after receiving financial support from his father, a longtime local businessman. The younger Mr. Redner says he has spent $585,000 to start the brewery, which is creating such beers as Jai Alai India Pale Ale and Marshal Zhukov's Imperial Stout. Most of the money came from bank loans for which his father put up business property as collateral. "He has stood back and sort of let us run and fall down as we may," Mr. Redner says of his father, Joe Redner.

Mr. Redner claims he was able to quickly sign on with two local distributors in part because he is known for writing a beer column in the St. Petersburg Times and has worked in the industry. To minimize his costs, Mr. Redner is initially relying on a few volunteers to help move beer, wash kegs and haul boxes. Free beer is the tangible reward. "It's the only industry I know where you can pretty much count on voluntary labor," Mr. Redner says.

In Chicago, Mr. and Mrs. Hurst are also relying on volunteers for Metropolitan Brewing, which began selling its German-style lagers to a couple dozen bars and retailers this winter. The couple raised about $600,000, including money from private investors and a diminutive-business loan. "This is a lot of work," Ms. Hurst, 36, said on a recent afternoon while standing next to a row of stainless-steel fermentation tanks, each named for a secondary character on the original "Star Trek" television series. "It's 12-, 13-hour days."

Ms. Hurst before ran a portrait studio. Her husband, 40, who wears a bushy goatee, earned a brewing diploma at the Siebel Institute of Technology & World Brewing Academy many years ago and left a career running audiovisual systems for corporate events. , the couple helps teach a class on starting a brewery at the school, which is based in Chicago and Munich. The Siebel Institute, the University of California, Davis, and other providers of brewing exercising in the U.S. say they're seeing increasing numbers of applications from students who want to run a microbrewery or brewpub.

Adam Karaway, 31, who was laid off in late 2007 from his job selling corrugated steel to construction firms, is working as a bartender in Kenosha, Wis., and trying to scrape together enough money to enroll next year in the 27-week craft-brewing apprenticeship program provided by the American Brewers Guild in Salisbury, Vt. He recently took an organic chemistry class at a local college to qualify for the program. "I got to a point in my life where I kind of realized I might be going for something I am enthusiastic about," says Mr. Karaway.

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