Q&a -- Hugh Sisson

A Head For Quality Beer

The founder of Baltimore's first brewpub and a craft brewery talks about changes in the market, competition from big brands and Maryland's tax and distribution systems

April 06, 2008|By Rob Kasper | Rob Kasper,Sun Reporter

Hugh Sisson is a local expert on boutique brews.

He and his family opened Maryland's first brewpub, Sisson's, in South Baltimore in 1989. Six years later, he started Clipper City Brewing on Hollins Ferry Road, almost in the shadow of an old Halethorpe brewery that, over the years, turned out National, Carling, Heileman and Stroh's beers. Today, it's one of many small craft breweries that have sprung up around the nation to satisfy a growing thirst for high-quality beer.

Sisson also serves as co-host along with Al Spoler of Cellar Notes, a weekly WYPR radio show that reviews wines. We asked him about trends and troubles in the beverage world. Craft beer sales increased 12 percent nationally last year while sales of so-called mainstream beers are almost flat. Why?

I think it is part of a long-term trend in many products, where people are trading away from quantity and going up in perceived value.

You definitely see it in the wine industry. The $20 bottle of wine is almost everyday juice. The average high-end craft beer six-packs are running anywhere from nine to 12 bucks.

I think it is also tied to an emphasis on responsible consumption of alcohol. Instead of having three martinis, you have one. But if you only have one, you want it to be something good. The same is true with beer, and with wine. Is this the result of the boomers getting older and drinking less?

That might be a part of it. But craft beers draw younger drinkers as well.

It used to be my rule of thumb that we, as craft brewers, would not attract customers until they were 25 or 26 years old and they could afford us. Now we are beginning to pick up people who are 21 and 22, who are still in college. They are more interested in experimenting and they are interested in trying local products. Part of it, too, may be that they are reacting to their father's Budweiser, they are choosing a beer different than the one their dads drank. Speaking of Budweiser, it and Miller Brewing have made forays into the craft beer market. Miller Lite is test-marketing three Lite craft beers, a wheat, a blonde ale, and amber, in Baltimore. Anheuser-Busch, makers of Budweiser, have a number of new "crafty" beers out in market as well. What do you think of this effort?

My suspicion is that it is not going to work. These companies clearly have the ability to make very good products. Anyone who is a professional brewer has to have an enormous respect for their consistency. They do what they do very well.

But I think questions arise from a branding point of view. Budweiser has spent enormous reserves creating what that name means, so too with Miller Lite.

Trying to make Budweiser mean amber ale seems incongruous with what they do.

If I were them and wanted to do this, I would spin off another brand.

Then again, when you look at how much beer they make and how little I make, and at least from a marketing standpoint, you have to give them a lot more credit than you give me. Recently the price of beer has jumped. Why?

Brewers, and in particular small brewers, have been hit with an enormous increase in the cost of raw materials. Our malt costs at least doubled.

As for hops, I give you this example: Cascade hops are a pretty ubiquitous variety of hops on the craft beer side. We were paying $3.50 a pound for them all the way through November 2007. Now we are locked in at $7.50 a pound for 2008. Recently I saw that the spot market for those hops is $25 a pound.

I read a national brewers forum, and virtually every three days of the week there will be a posting on it from some brewer looking for hops.

Brewers have had to pass these costs along. We have had to raise our price for Loose Cannon, which has a high amount of hops, about $1.20 a case in January. I think most brewers, if they haven't already done so, will fold the price increase in from now until May. What caused the shortage in hops and malts?

Some of it, especially for malt, is that American farmers have been planting more corn that they can sell to ethanol plants. The biggest contributors have been poor harvests in Europe two years in a row. There has also been increased demand for malt and hops for China and India, and there is only so much product to go around.

My suspicion is that the price of malt will mitigate if Europe has a good harvest this year. But hop prices are going to be difficult for two to four years. Speaking of the rising price of beer, you recently testified in the Maryland General Assembly against proposals to raise the tax on beer. What are your objections?

They are talking about an excise tax, which is regressive form of taxation. Not a whole lot of things - gasoline, liquor and cigarettes - get subjected to excise taxes. Such a tax gets passed along four times, from the manufacturer to the wholesaler to the retailer to the consumer.

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