BAND OF BREWERS

How local beer makers united to help
each other and Pennsylvania drinkers, too.

bandBrewers
Left to right: John Trogner (Tröegs co-founder), Gene Muller (Flying Fish founder),
Tom Kehoe (Yards founder), Bill Covaleski (Victory co-founder),
Gordon Grubb (Nodding Head brewer), Mark Edelson (Iron Hill co-founder),
Brian O’Reilly (Sly Fox brewmaster)

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PHOTOGRAPHED BY DANYA HENNINGER

If you like your mug club at or enjoy a pint in the tasting room after a brewery tour, you have an unlikely new trade group to thank. Pennsylvania is home to the country’s largest American-owned brewery: D.G. Yuengling & Son, which has been turning grain into beer since 1826. Nowadays, it ships more than 3 million barrels each year. Pennsylvania is also home to more than a hundred other breweries, most which are much younger and a lot less prolific than their stalwart state mate. Take Old Forge Brewing Company in Danville, for example. Now in its seventh year, it produces around one-thousandth the volume of beer as Yuengling and sells it in just a handful of counties, as opposed to 18 states.

By most measures, the two companies are as far apart on the American brewing continuum as possible. But they have a core feature in common: To do business, they must successfully navigate the arcane Pennsylvania liquor code. Recently, they’ve begun tackling that task together, thanks to a new trade association. The organization is called the Brewers of Pennsylvania (aka Brewers of PA, or BOP if you’re feeling chummy), a six-year-old group that now counts 101 of the state’s 136-plus breweries as members.

Nearly all of the region’s craft beer pioneers are on board—Victory, Yards, Sly Fox, Tröegs, Weyerbacher— as are plenty of much smaller newcomers, like Philadelphia’s Crime & Punishment and Saint Benjamin. Samuel Adams is also a member; although its maker, Boston Beer Company, is headquartered in Massachusetts, a good twothirds of its beer is made at its two Pennsylvania brewhouses.

The coalition between the state’s old-guard giants and its smaller upstarts wasn’t a given, since they don’t use the same marketing tactics (think “same as you’ve always loved” versus “new, bold, different”) or even necessarily target the same age audience. That the two groups realized working together could be mutually beneficial was thanks to an unplanned call one morning in late 2009, when Victory Brewing Company cofounder and president Bill Covaleski answered his phone and discovered Yuengling chief operating officer Dave Casinelli on the other end.

The pair had never previously spoken, so Covaleski’s curiosity was immediately piqued. Casinelli got right to the point.

“Have you heard about HB 291, a bill that just passed the Pennsylvania House and is heading to the Senate?” he asked. No, Covaleski had not. Take a look at it, Casinelli said. Covaleski skimmed the legalese, and quickly discovered the issue. If passed, the law would strip Pennsylvania breweries of the right to self-distribute their beer (that is, to sell directly to bars and bottle shops, without going through a middleman).

“Uh, I don’t think this is good,” he told the Yuengling COO.

“I didn’t think you were going to think it was good!” Casinelli replied. It was the beginning of a beautiful friendship.

Until then, Yuengling
hadn’t found much reason
to get involved with the
craft brewing movement—
when your brand is nearly
interchangeable with the
word “lager,” why would
you concern yourself
with trends?

Until then, Yuengling’s Casinelli hadn’t found much reason to get involved with the craft brewing movement—when your brand is nearly interchangeable with the word “lager,” why would you concern yourself with trends? But when he came across HB 291, he realized it would affect many smaller breweries the same way it would affect his company, and he decided to try to enlist their help in fighting its passage. “We may manufacture at a different scale, but in the end, we’re all beer manufacturers,” Casinelli says.

The ostensible problem HB 291 tried to address was this: In Pennsylvania, in-state breweries have the right to distribute their own beer, but out-of-state breweries are forced to go through wholesalers—a middleman. A recent U.S. Supreme Court decision established that in-state and out-of-state manufacturers had to be treated equally, as far as getting products onto store shelves. Does the requirement to go through a wholesaler place an “unfair burden” on the outlanders? Someone (perhaps lobbyists for the wholesalers) convinced the Pennsylvania legislature that it did.

Now, distributing beer is no easy task. Among other things, it takes knowledgeable sales reps, a dependable truck fleet and an organized order-tracking system. Most breweries do sign with wholesalers. But some do not. In its home region of Schuylkill County, Yuengling retains the right to self-distribute. Philadelphia Brewing Company self-distributes across its entire footprint. (PBC is not, in fact, a BOP member; more on that later.) And while Sly Fox and Victory no longer do it, they both point to self-distribution as a driving factor in their early growth.

“We would never have been able to build a brand without self-distribution,” Sly Fox brewmaster Brian O’Reilly says, explaining that getting individual bar owners to buy your beer on a trial basis is much easier than convincing a big wholesaler to take you on for county-wide distribution.

When we were first starting out, self-distributing was critically important to grow awareness of our brand,” adds Victory’s Covaleski. “That’s why—even though I don’t do it anymore—I’ll defend the right to do so for my brethren of any size.” And so, at Covaleski’s invitation, other Pennsylvania brewers joined the HB 291 discussion.

Throughout early 2010, a series of regular conference calls on the matter included input from Chris Trogner of Tröegs, Sly Fox’s O’Reilly, Artie Tafoya of Appalachian, Damien Malfara of Old Forge and Jess Paar of Sam Adams.

The hodgepodge group strategized and planned, schemed and debated, and even went to Harrisburg to give official testimony. Eventually, the bill was defeated.

As the year drew to a close, a question lingered at the forefront of everyone’s mind: Did the end of HB 291 mark the end of the coalition? Or was there a way to turn the surprisingly effective fellowship into something more lasting?

Clout in Harrisburg is not something modern Pennsylvania breweries were used to having.

When the state crafted liquor laws after Prohibition, the beer industry was divided into what’s known as the three-tier system. Brewers are the first tier—they make the product. Wholesalers are the middle tier—they buy the product and distribute it. Retail stores and bars make up the third tier—it’s where the beer (and, sure, maybe a person or two) actually gets drunk.

The establishment of this highly regulated system meant the government had its hands (and tax collectors) in nearly every facet of the industry. That, in turn, led to the rise of statewide trade associations. The wholesale tier lobbied for rights and privileges via what’s now called the Pennsylvania Beer Alliance. The retail tier had the Pennsylvania Licensed Beverage & Tavern Association, founded in 1941.

The brewery tier formed a group called the Pennsylvania Brewers Association. However, by the early 1990s, most of the hundreds of breweries operating in the state had either been acquired by rapidly expanding conglomerates (think Anheuser-Busch) or had simply folded due to market pressure, so the PBA’s membership comprised less than a dozen.

In the late ’90s, the Pennsylvania brewery scene slowly began to expand again. Independent breweries like Victory, Weyerbacher, Sly Fox, Tröegs, Appalachian, Yards and Stoudt’s opened, and in 1997, they formed their own trade group: the PA Microbrewers Guild.

Thing is, the folks running these small, bootstrapped operations didn’t have the time or money to give their little trade association the attention it deserved. Without regular meetings and without the funds to hire a full-time lobbyist, it never really became a force in state politics.

So in 2009, when Casinelli called Covaleski about HB 291, both the old-guard Pennsylvania Brewers Association and the Microbrewers Guild were effectively defunct. And yet, the patchwork coalition members of both organizations had formed to defeat the bill was effective. Why not solidify the new relationship?

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Bill Covaleski (Victory co-founder) and Dan LaBert (Brewers of PA executive director)

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Packaging lines at Tröegs Brewing Co.

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Yards Brewing tasting room

Describe Bill Covaleski as driven, and you won’t find anyone to argue— not even the man himself. Ask him why it is that Victory became the largest craft brewery in Pennsylvania, as opposed to any of its peers, and that’s his answer: his drive.

“[Cofounder] Ron [Barchet] and I are never satisfied,” he says. “We wake up every morning thinking, ‘What can we do next?’ ” In December 2010, the “what’s next” Covaleski wanted to tackle was the creation of a new brewers association.

He called a meeting and gathered the motley HB 291 band of brewers in the private dining room at the back of Victory’s Downingtown brewpub. As they set out to write the bylaws of a formal trade group, one fundamental question loomed: Could it be set up in a way that was fair to members both small and large—some one thousand times as large as others?

“The critical vote was on the dues structure,” Covaleski recalls. “It was going to be based on barrelage—you’d pay a certain amount per barrel produced—and I was really worried that either Yuengling or Sam Adams would object.”

But the two largest breweries in the state did not raise objections. “There wasn’t any question in my mind as to whether to agree,” says Yuengling’s Casinelli. “We’re not concerned that we pay the most dues. The group operates on a balanced and fair mechanism. The smallest of the small can’t dominate it, and neither can the largest.”

The dues question settled, the cohort then set about figuring out logistics. They decided the Brewers of PA would meet annually to choose five major legislative issues for the year, and that each member would get an equal vote in making that choice, no matter their size or contribution in dues.

“When we set priorities, everyone in the group has a say in what they are,” says Scott Smith, founder of Pittsburgh’s East End Brewing, which produces around 3,000 barrels a year (around one-fiftieth as much as Victory).

“It’s not like you can go in 80 directions at once,” agrees Old Forge’s Malfara. “Certainly, the larger breweries might have their own issues, but on the other side, why would they care to fight for something that might only benefit a brewpub? It’s a two-way street.”

He points to the “mug club” issue as an example. In 2012, the Pennsylvania Liquor Control Board issued a decision that made it illegal to give frequent-buyer discounts on beer or “points” for pints purchased—programs many brewpubs had been running for years. In June 2014, however, thanks in great part to lobbying by the Brewers of PA, the decision was reversed, pleasing not only the brewpub owners, but their loyal customers as well.

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Victory co-founders Bill Covaleski and Ron Barchet

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Jennifer Yuengling (Yuengling plant coordinator)

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The Crime & Punishment tasting room

This came just a month after what could be considered another BOP win for small brewers: the right to set up tasting rooms and sell pints directly to customers without the need for a separate brewpub license. This rule change, which went into effect in May 2014, is essentially what allowed Philly’s Crime & Punishment Brewing Co. to open its doors and give Brewerytown residents a local drinking spot (the protests of a bottle shop on the next block had essentially killed Crime & Punishment’s brewpub license).

There are a few purposeful holdouts to the BOP coalition. A representative of one nonmember Philly-area brewery who declined to be quoted expressed frustration with what they believed was an ongoing bias toward the big guys, as far as legislative priorities were concerned.

The directors of another brewery, the Philadelphia Brewing Company, don’t believe in trade groups on principal. “I never had an interest in hanging out with a bunch of my business competitors,” wrote co-owner Bill Barton in an email, “[but] I’m sure many brewers find associations helpful.”

Over the past six years, the BOP has grown exponentially, especially after hiring a full-time executive director, Dan LaBert, in 2011. Still, a third of the breweries operating in the state aren’t yet members. That might be because they don’t have the time—if they opened recently, they’re probably busy with startup snafus—or because they don’t realize the many other amenities the group strives to offer.

Members can take advantage of group rates on energy usage and raw ingredients, and also get regular access to an experienced lawyer, which is a big benefit. To offer this, the Brewers of PA retains a general counsel—the same fellow who helped the group navigate the original HB 291 issue—and hosts quarterly conference calls which any member can call into to get free legal advice.

“I take advantage of that call every time,” East End’s Scott Smith says. “Just when I think we’ve got everything answered, we get bigger or make some new evolutionary step and a whole new set of questions arise.”

Tim Patton, who only very recently added his three-year-old Philadelphia brewery Saint Benjamin to the BOP roster, says he hasn’t been a member long enough to assess whether the legislative lobbying has a tilt one way or the other, but is pleased with the ancillary benefits of membership. “We have had an easier time finding professional services, such as legal, insurance and accounting,” he says. Access to shared knowledge is nearly impossible to quantify, but is also an undeniable benefit.

“I’ve also asked Bob, the brewmaster at Yuengling, for advice on can fillers and all kinds of different things,” says Brian O’Reilly of Sly Fox, which is in the middle of the pack when it comes to production, with around 30,000 barrels shipped this year. “And it’s so great swapping stories with the guys at Sam Adams. They do pay a lot more dues, but the dues aren’t the best reason to have them in the group—it’s their knowledge.” Turns out that feeling is reciprocal.

“The intelligence our board members have is fantastic,” Yuengling’s Casinelli declares. “We’ve been active in this state on a political level for decades, but it made so much sense to align with these guys. Pennsylvania has some of the finest craft breweries in America.”

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