Brewery biz isn’t all Schlitz and glamour

By ROBIN SHANNON
New Orleans CityBusiness
NEW ORLEANS (AP) — In the almost 30 years since Abita Brewing Co. opened its doors as the first beer-making business in Louisiana since the Prohibition era, the craft brewing industry in Louisiana has grown to include six other production facilities and multiple microbrewery operations across the state.
Despite what they describe as its intoxicating appeal, local brewery owners say the industry here has been slower to ferment than in other parts of the country and that tapping into the business comes with potential hiccups.
“Small brewing operations have a huge following and huge markets in the Northeast and Northwest states,” said David Arbo, one of the owners of Covington Brewhouse. “The South tends to lag behind in trends that flourish in other parts of the country. We are just now at a point where places like Colorado, California and the Northeast have been for decades.”
Scott Wood, who is working to develop a Lower Garden District warehouse into a “nano-brewery,” said his biggest obstacle has been negativity from those who say it can’t be done.
“It’s not about not wanting to see it happen. We have just gotten a lot of cautionary tales about opening a new business,” Wood said. “People have said that they haven’t seen anything like us, so they think we can’t make it. We are out to show them we can.”
Wood, a southern California native, moved to New Orleans after meeting his wife, Lindsay Hellwig, a Louisiana native. The couple started Courtyard Brewery from a home brewing kit set up in their French Quarter apartment.
Wood said his brewhouse and taproom will occupy a small fraction of a 5,000-square-foot vacant warehouse on Erato Street.
“Finding the right amount of space and an understanding landlord can be a struggle for smaller brewers who are just starting out,” he said. “It took us more than a year to find a space that fit our needs because we had to find a landlord willing to subdivide their property. Warehouse owners don’t normally want to do that.”
In addition to finding space, most small brewery owners say it is essential to find landlords willing to offer leniency when it
comes to rent.
Michael Naquin, who will open 40 Arpent Brewery in Arabi early next year, said a brewery operation typically needs six months to a year to start seeing a profit.
“You have to build up enough product to generate enough sales to pay for all your expenses,” said Naquin, a veteran brewer who has worked with Zea’s Restaurant and NOLA Brewing Co. “That doesn’t happen right away. You typically are not selling anything in the first few months because you are working to get off the ground. Having a back-loaded rental agreement that defers payments is key to getting started.”
Wood said another part of the struggle comes down to convincing a landlord and the surrounding neighborhood that breweries have a high level of stability.
“I’ve seen how small neighborhoods in California will rally around brewery operations when they get going,” Wood said. “This is not a two- or three-year business. The people doing it are passionate about it. Plus, it is an inexpensive business, so the profit margins are high.”
Wood initially considered the Bywater as a possible location for his brewery, but other business owners in the area told him the approval process with city and neighborhood groups was “murderous.” When he zeroed in on the Lower Garden District space, he went door to door to speak with residents and neighboring business to get a sense of concerns.
Brewers must also contend with longstanding state laws that dictate how breweries can distribute product to the masses. Louisiana laws allow small brewpub operations like Crescent City Brewhouse to brew and sell beer onsite to consumers, but not to other retailers.
Those operations wishing to sell to a wider audience must abide by the three-tier system, where the brewery makes the beer and must sell it to a distributor, who then sells it to bars, restaurants and other grocers.
The process is designed to help small breweries, but some find it stifles growth.
“It can be hard for a brewery just getting started to grow if they can’t get their product out to a wide audience,” NOLA Brewing CEO Kirk Coco said. “The laws prevent us from doing what we do best.”
Coco would like to see the state amend or create new laws that support growth in the industry. He said self-distribution laws, which are in place in 16 states, would foster growth of microbrewers and brewpubs by allowing them to sell directly to bars and retailers.
“It gives the smaller guy more exposure,” Coco said. “No one brewery is going to dominate in the city. We should be a city with several operations and tremendous variety.”
Arbo, who joined the ownership group of Covington Brewhouse earlier this year, said although he has only been in the business a few months, support from other brewers has been constant.
“The industry is a sort of fraternity,” Arbo said. “Everyone is in it together because everyone is doing something different. We all share successes and failures. Competition is good.”