HOUSTON: For brewer, emphasizing tradition, community pays

HOUSTON — The fragrant green flowers, each the size of the tip of a man’s thumb, were heaped into three equal piles on a counter in the old Czech Republic town of Zatec. The Americans, in borrowed white lab coats, approached like eager supplicants.
They’d crossed the Atlantic Ocean for this, to see, touch and smell the cone-shaped flowers known as hops, one of beer’s four essential ingredients. Getting to work with a deep bowing motion, they scooped up hops by the fistful and rubbed their hands together, breaking apart lupulin glands of resins and oils and releasing a pleasant floral aroma. They burrowed their noses in and inhaled deeply.
“Oh, God, that smells good,” said the more practiced of the two, Brock Wagner, founder and owner of Houston’s Saint Arnold Brewing Co. Next, he added, “we decide which one smells the best.”
Wagner and Stephen Rawlings, a 28-year-old Saint Arnold brewer, were on Day 4 of a weeklong buying trip through two of the most storied regions in the world of brewing — the Bavarian Hallertau of Germany and now the Saaz in the Czech Republic, not far from the birthplace of pilsner beer.
Hallertau and Saaz hops have been prized by generations of brewers across the globe as well. The Japanese and, increasingly, the Chinese have become major customers.
But it’s American craft brewers like Wagner, a relatively new breed in beer’s millennia-long history, who have made the biggest mark on the European hops business, elevating hops to their most exalted status while using them in creative new ways and radically altering the perception of American beer around the world.
Wagner, now celebrating 20 years in business, is among the veterans in that transformation.
Just 185 U.S. craft breweries and brewpubs in business today opened before Saint Arnold did, records show. The most recent Brewers Association count shows there now are 2,866 in operation, which means the Houston brewery has been around longer than 93 percent of its contemporaries. It survived the boom times of the 1990s and the shakeout that followed.
For the last several years, Saint Arnold has been growing at double-digit rates even as the number of competitors continues to soar. Until 2008, it was the only non-brewpub craft brewery in the Houston area; today, it is one of 12 and the number is growing. Brewpubs, too, are popping up to take advantage of recent law changes.
The local growth reflects a national trend. Since June 9, 1994, when Saint Arnold delivered the first kegs of its Amber Ale from a nondescript industrial park in northwest Houston, the number of U.S. breweries and brewpubs has increased nearly fivefold. That is up from the post-Prohibition low of 89 in 1978 and up from 601 in 1994. Many hundreds more are in the planning stages.
All but 1 percent of the breweries now open are defined by the Brewers Association as “craft,” meaning they are independently owned and adhere to guidelines for the types of ingredients they can use. The label is intended in part to limit shortcuts in the production process and to identify breweries that take a more artisanal approach to making beer.
This subset, huge in number but still relatively small in the market compared to the giant global brewers Anheuser-Busch InBev and MillerCoors, has in a generation redefined the domestic beer scene.
Wagner alluded to this change when a Texas industry group released figures showing the state’s smaller craft breweries had increased production by 44 percent last year and were making inroads in the overall beer market.
“That’s what people think of as beer now,” he told the Houston Chronicle (http://bit.ly/1q2ay0e). “It’s not just mass-produced light lager.”
Getting to this point was not easy. As Wagner likes to joke, in 1994 he had a great idea for a business in 2006. Except for a hard-core group of enthusiasts, many of them homebrewers, most of them male, college-educated and in their 30s or 40s, consumers were initially reluctant to part with their light, familiar beers in large numbers.
“It took 20 years to teach everybody who had forgotten what beer was like,” Wagner said.
In 1996, Wagner and original business partner Kevin Bartol, both former investment bankers, predicted in the Houston Chronicle that they would be making 100,000 barrels within a decade. In reality, sales flattened at just over the 5,000-barrel mark for the next few years.
Twelve years later, production exceeded 20,000 barrels for the first time.
Wagner stuck it out, buying out Bartol, repurchasing shares from initial investors and building Saint Arnold into an iconic local brand through its Saturday tours, pub crawls and an array of community fundraising projects. His and Bartol’s goal from the beginning, he says, was to make the best beer possible and to build a company that Houston and the state of Texas would be proud of.
By late 2009, business was booming and Saint Arnold was constrained only by physical space. That’s when Wagner moved his brewery into a renovated warehouse overlooking downtown, even though it would’ve been cheaper to buy a custom-built building outside the city center. But again, he said he wanted to create a community gathering point. Again, his decision paid off.
Wagner took on investors to raise enough capital to convert the century-old warehouse into a modern brewing facility with a huge beer hall that serves lunch daily, packs in crowds during tours and special events and is rented out for private parties. The brewery attracts an estimated 100,000 visitors annually.
The new digs also significantly increased capacity. Production is expected in the range of 65,000 to 70,000 barrels this year, boosted not only by consumer demand but also by changes in state law last year that Wagner had pushed for over several legislative sessions. Those production numbers are expected to continue to grow.
Charles Vallhonrat, head of Texas Craft Brewers Guild, says Wagner was smart from the beginning to build a sense of community around his product. He recalled being with his brother-in-law when Saint Arnold Amber made its debut. They were at the Ginger Man pub in Rice Village, near the university that drew Wagner to Texas and where he had learned to homebrew in the 1980s.
“We’re sitting at a table trying this beer,” he said, “and this guy came up and introduced himself as Brock Wagner.”
The young owner took their address and Vallhonrat was “incredibly impressed” to receive a personalized postcard a few days later.
He sees an echo of that today. When Wagner hosted a recent brewers’ night for guild members, for example, he opened up the Saint Arnold quality-control lab so the other brewers could bring in samples for testing.
Wagner, whose ancestors include both an Alsace liquor merchant and the founder of a famous saloon in San Francisco, enjoys being part of a tradition.
That was obvious as Leo Berger pulled his Massey Ferguson tractor to a stop and climbed down to meet Wagner and Rawlings, the brewers who’d traveled from America to see where their hops were grown. The plants had long since been harvested, but there’s always work to do at Berger’s tidy farm.
His fields still were staked in precisely ordered rows of wooden poles connected by overhead wires that will support the hops. Berger owns several giant pieces of machinery that pick the hops flowers from the vines, dry them and pack them into canvas bales for delivery to broker HVG’s warehouse.
The surrounding village is picture-postcard Bavaria, a town where Berger, his wife and son make up an eighth of the population. For two weeks at harvest time each year, the countryside is rich with the smell of hops.
Working this land has introduced him to brewers from all over the world who yearn for a connection to the agricultural roots of their professions. Berger calls it an important experience, and not just because it helps him understand what the craft brewers want.
Wagner, who was on his fourth European buying trip, told Berger he wants to make sure the farmers know he supports them. He had said the same thing to the HVG brokers earlier and would repeat that two days later during a meeting at Bohemia Hop in Zatec.
“We want it to be profitable for farmers to grow our crops, so there is that focus on quality,” he said. To go cheap on this important ingredient, he explained, would be foolish.
Wagner was talking with Erich Lehmair and Florian Seidl, sons of hops farmers who now work at HVG. In a conference room where hops-infused mineral water was served, Lehmair started with the bad news: the 2013 crop was below average because the weather was too wet and cold in the spring and too dry in July. Technical readings found the hops had below-average amounts of alpha acids, which provide the bittering qualities that balance the sweetness in beer that comes from malt.
When those acid levels are off, brewers must adjust their recipes accordingly, a tricky prospect.
Then came the good news: the previous five harvests had been “fabulous” and so there were plenty of hops stored up. The money paid to farmers during those years had allowed them to invest in land and equipment. Lehmair said brewers like Wagner, who sign pre-contracts committing to certain levels of purchase, can be assured of their supply.
“The mood in the industry is much better than it was a few years ago,” he said.
Part of that is due to the Americans’ growing taste for hoppier beers that take fuller advantage of the strong, often piney or citrusy flavors and the intense floral aromas they impart. A decade ago, Lehmair said, about 60 to 70 percent of German-grown hops were exported to non-German breweries. Today, he estimated, up to 80 percent are sent abroad.
U.S. craft brewers, which make just 7 percent of all the beer sold domestically, represent 40 percent of HVG’s business.
And since Americans — and the craft brewers following their example in other parts of the world — put more emphasis on the hops’ strongest attributes, German researchers have been experimenting and cross-breeding new and bolder strains. A decade ago, Lehmair said, the scientists ignored hops with strong piney, citrusy attributes.
For Wagner, the annual buying trip serves multiple purposes. Foremost, it allows him to choose the specific hops, from crops grown in a particular field, that he thinks will best bring out the flavors and aromas he wants. Bringing along a younger brewer is a way to both reward and educate.
The trip seems to inspire him as well, to remind him why he got into the business.
“You see this cycle of their life that goes around the cycle of the hops,” Wagner said later, reflecting on the trip. “Plus, you see the tradition of beer they have in Germany and the Czech Republic and you want to draw on that — while always putting our own stamp on them.”

Information from: Houston Chronicle, http://www.houstonchronicle.com
Editor’s note: This is an AP Member Exchange shared by the Houston Chronicle.

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