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Craft Beer Brewers Taste Success As Team

"The normal reaction is 'Great, this is a chance to put our competitors out of business,'" Koch says. "My attitude is that our real competitors are not our fellow craft brewers, but ignorance and apathy -- people who don't know about beer and don't care about beer -- and if we craft brewers as an industry can make people more knowledgeable about beer and more interested in drinking good beer, we're all going to grow."

Yuengling hasn't been brewed in a kitchen during anyone's lifetime but still finds itself a willing -- if, at first, unwelcome -- member of the craft brewing community. Yuengling Chief Operating Officer Dave Casinelli joined the company in 1990, five years after owner Dick Yuengling Jr. took control. At the time, Yuengling was cranking out 40,000 to 45,000 cases in its original brewery in Pottsville and not straying too far from its home base in Schuylkill County. Once it hooked on with a wholesaler in Philadelphia and got restaurant chains such as Ruby Tuesday (RT - Get Report) and Applebee's (DIN - Get Report) to give them tap space, however, Yuengling saw demand skyrocket in Pennsylvania, New Jersey and Delaware and demand increase to nearly 3.5 million cases. The brewer initially pulled back from broader markets but, after opening two breweries in Mill Creek, Pa., and Tampa, Fla., in the late 1990s and early 2000s, saw shipments soar from 1.35 million barrels in 2005 to 2.16 million in 13 states last year.

"If there's one thing I've worked hard try to do, it's to get the craft guys who look at Yuengling and its success and get them to see that we were one of them not long ago," Casinelli says. "We're still nothing more than a big regional brewery, but Dick Yuengling is a throwback to the old regional brewers and the brewing families who cares about the little guys."

Yuengling has made a point of sharing the wealth with some of its counterparts in the state industry group Brewers of Pennsylvania -- which helps regional and craft brewers throughout the state address logistical and political obstacles to their business. It has given such brewers as Philadelphia-based Yards and Wilkes-Barre-based Lion Brewery access to its labs and has made production capacity and parts available to its fellow brewers.

"If the Lion Brewery or the (180-year-old St. Marys, Pa.-based) Straub Brewery has a problem, breaks down or needs a part or equipment, we're always there to help those guys," Casinelli says. "We don't see them as competition, we see them as community brewers like us."

Peers in production
Even on the brewery-saturated West Coast, where Symphony IRI Group says craft and import beer share is as much as 56% (including 25.5% craft beer share in Seattle and 30% craft share in Portland, Ore.), cooperation is key to the craft sector's success. Sierra Nevada in Chico, Calif. -- the nation's third-largest craft brewer after its production jumped from 613,000 barrels in 2005 to 724,000 two years ago -- produced 45 brands last year after not altering its lineup between 1992 and 2009. That growth helped it start growing its own hops -- starting with a half-acre in 2003 and expanding to nine acres in 2009 -- and producing its own energy through a solar array it began building in 2005 and biodiesel-fed fuel cells that generate 85% to 100% of the brewery's power on site. Instead of squirreling all of those resources away, however, founder and owner Ken Grossman has encouraged other breweries to come tour the site, take notes and even leave with some of Sierra Nevada's innovations.

"As far as ingredients, equipment and lab analysis, that's something we have over other craft brewers," says Sierra Nevada spokesman Bill Manley. "We have a pretty sophisticated lab, so we run a lot of lab analysis for other, smaller craft brewers just as a favor. Even our proprietary research on things like hop flavor and bottle cap liners, for example, go into white papers that are available for everybody."

That cooperation has nearly as much impact on Sierra Nevada as maintaining a private hops field for research and development and introducing varieties like Kellerweiss and Torpedo IPA that reduce its popular pale ale's share of production from nearly 90% to little more than 70%. Production capacity, distribution and innovation are just some of a big brewer's worries; bringing craft beer into the marketplace is as much about politics as it is about presentation.
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