The new era of contract brewing

In addition to reporting on the local brewing industry, San Diego Beer News regularly provides a platform for members of San Diego’s beer community to write articles about subjects that are important to them. In our latest Voices of San Diego Beer guest piece, AleSmith Brewing owner and CEO Peter Zien pulls back the curtain at his Miramar brewery to share details about their approach to an industry practice that has historically been misunderstood and discounted: contract brewing. Over the better part of the past decade, AleSmith has established a solid reputation and steady source of revenue that has fortified its bottom line while helping its contract-brewing clients increase their production, expand their operations and, in some cases, build a brand out of thin air. Read on as Zien shares about the reasons breweries enter into contract-brewing partnerships and how his staff work to ensure they are producing the best version of someone else’s beer that they possibly can.

The new era of contract brewing

By Peter Zien, Owner & CEO, AleSmith Brewing Company

It’s been going on for quite a while—whether you knew it or not. Among the myriad options that have long existed for brewing-industry entrepreneurs is having another brewery brew their beer for them. This likely isn’t news for those who make a habit of reading the label on a can or bottle, but for a long time it was frowned upon by certain hard-core beer enthusiasts.

You can’t be a real brewery if you don’t brew your own beer…It seems deceitful…Where’s the passion?

These were common laments and criticisms for what is known in the beer industry as contract brewing.

Thankfully, the public perception of contract brewing has slowly changed, and today it doesn’t raise all that many eyebrows when people learn one of their favorite beers are brewed at another company’s facility. In fact, contract brewing is more common than ever, and it doesn’t appear to be slowing down any time soon.

I should know, our brewery is frequently contacted by other brewing companies inquiring if we have the capacity to brew one or several of their beers. AleSmith has been offering contract-brewing services since the late 1990s, when a well-known local brewery brewed its first beer at our original Cabot Drive location. Around the same time, AleSmith was also brewing beer for Westwood Brewing in Los Angeles. It grew steadily from there, with a big spike coming after we moved into our current 110,000-square-foot headquarters in 2015.

Our current facility’s 85-barrel brewhouse and increased, expandable cellar have allowed us to assist other breweries in expanding their production as they find growing audiences, sign distribution contracts and open new territories. Or in some cases, it’s allowed new businesses lacking the capital to purchase equipment or construct their own facilities to achieve proof of their concepts in order to find investors and raise funds so they can establish their own breweries.

As of this writing, we currently have several well-known breweries under contract to have their beers brewed at AleSmith. There are many reasons those operations sought us out to brew their beer. In addition to those noted above, primary factors have included market conditions, supply-chain interruptions and increased costs for manufacturing, all of which have combined to put a great deal of stress on craft breweries in recent years, especially those with the inability to ramp up production so they can grow.

In some cases, certain breweries have chosen to give up their brick-and-mortar facilities while keeping their brands alive via contract brewing. No longer paying rent nor a mortgage, large payroll and the associated fixed costs of leasing or owning a building provides financial breathing room for businesses where money is tight, but the brand is strong.”

Peter Zien, Owner & CEO, AleSmith Brewing

Regardless of the many scenarios that inspire a business owner to enter into a contract-brewing agreement, it’s not as simple as someone handing over a recipe then exiting stage right. At least not at AleSmith. Our approach to producing the best possible version of another company’s beer requires heavy involvement by our client’s brewing team. Not only do we want to stay true to their vision, but there are potential issues for us to work through, and closely collaborating to trouble-shoot and problem-solve is essential.

For example, not every beer recipe scales perfectly when the physical brewing equipment is different from what was used to develop and fine-tune a beer. In many cases, the beers we contract-brew were originally produced on 10-, 15- or 20-barrel brewhouses with different setups and manufacturers than our German-built system. Fortunately, my talented brewing team is headed by Ryan Crisp and Anthony Chen (pictured below), who have headed production on that state-of-the-art apparatus for the past eight years. They know all its ins, outs and idiosyncrasies, and spend significant time with our contract-brewing clients’ brewers to make the necessary changes so their beer comes out as desired at our facility.

Once brewed, we require the contracted brewery to have their quality control (QC) manager monitor the beer through fermentation, secondary and packaging. If they do not have an in-house QC professional, we offer the services of AleSmith’s veteran Quality Control Manager, Peter Cronin, who has been with us for more than a decade.

Last but certainly not least, when the beer is ready to be packaged, we hold a sensory session where the beer is analyzed by both of our teams to ensure all of quality standards are met and the beer is as it should be. With sign-off from our clients, cans, bottles, and kegs roll off our system. In some cases, the packaged beer is stored at our facility and removed as needed. In other cases, the entire packaged batch is taken to market by the original brewery or their distributor.

With so much uncertainty in the craft-beer world since the spring of 2020, contract-brewing has become as relevant and helpful of an option as ever. And thanks to breweries that genuinely care about their clients’ best interests, setting up processes and procedures to do right by them, it’s a valid option bucking outdated, uninformed stigmas.

So, the next time that you’re enjoying your favorite beer, don’t be surprised to discover it is being brewed somewhere other than its brewery of origin. Furthermore, don’t be concerned about a drop in quality, at least if it’s being produced at AleSmith. Like any brewery that offers contract-brewing services, we understand our reputation is also on the line and that’s something that should never be taken lightly.