Offshoot Breweries: Why Established Companies are Opening Spinoff Facilities

July 1, 2015 By Justin Kennedy

One afternoon several years ago, Jace Marti was wandering the warehouse of his family’s 150-year-old brewery in New Ulm, Minnesota, when he discovered a set of hulking cypress lagering tanks. The tanks, which dated to the 1930s and hadn’t been in use by August Schell Brewing Co. for nearly 20 years were in terrible, dilapidated condition. At the same time, they were so gorgeous, so distinctive, that Marti was determined to put them to use.

The sixth-generation brewer racked his brain, eventually deciding that the 143-barrel vessels would be perfect for conditioning his Noble Star line of Berliner Weisse-style beers. Problem was, he couldn’t persuade his partners to risk introducing Lactobacillus and other souring bacteria that are essential for fermenting Berliner Weisse into their pristine primary brewery. (Sour beer fermentation often involves pesky bacteria and microflora that can invade and permeate an entire brewing space.)

“They’re pretty unique things,” says Marti, who is still in the process of refurbishing some of the cypress vessels. “And establishing a separate facility gives us a chance to use the tanks and to explore sour beers in depth, without worrying about what the bacteria may do to the rest of the brewery.” So Marti found an 11-acre plot of farmland, all the way across town, and began planning a 12,000-square-foot fermentation facility dedicated to displaying and using the cypress tanks solely for fermentation of the Noble Star beers.

A Necessary Place for Experimentation

The idea of establishing an offshoot brewery is nothing new. The Lost Abbey Brewing Co. was an outgrowth of Port Brewing Co. nearly a decade ago when brewer Tomme Arthur began dabbling in the dark arts of wild and sour fermentation. Jolly Pumpkin, too, was established in 2004 as a sour spinoff of Northern United Brewing Co., which also includes the North Peak and Grizzly Peak brands as well as Civilized spirits and Bonafide wines. And MillerCoors had a similar intention when establishing AC Golden Brewing Co. as a specialty and experimental subsidiary in 2007.

But more and more the practice is becoming very much de rigueur, as long-established companies like August Schell are beginning to branch out into previously unexplored territory, not just with reimagined graphic design and brand overhauls, but with separate, newly minted fermentation facilities and spinoff brands.

The need for a separate sour fermentation zone was the impetus behind Orange County’s The Bruery’s recently establishing its new brand and facility, Bruery Terreux, which commenced brewing this spring in downtown Anaheim, California, about three miles from the current headquarters in Placentia. “We had been discussing this move for a while,” says director of marketing Benjamin Weiss, “and we thought it made sense as part of our expansion and growth plan to move the sours to a separate place, both physically and categorically.”

David Walker, a founder of Firestone Walker Brewing Co., says his head brewer, Matt Brynildson, had similar concerns when Jim Crooks, the brewery’s lab manager and so-called master blender, suggested experimenting with wild ales. “Matt is a careful gent who has a bias for order and precision,” says Walker. “He maintains a brewery with predictable outcomes, so when Jim started talking about wild fermentation, Matt quickly dispatched him a safe distance away.”

That distance—about 95 miles from the original brewery—is in a town called Buellton, California, where Firestone Walker’s Barrelworks wild fermentation site was founded in 2013 to keep the wild beers from spoiling the clean ones. “The notion of separating Barrelworks from the primary brewery lies in the difficulty of producing wild beers and the unpredictable way they behave,” says Walker. “Wood, prolonged fermentation, blending and introducing fruit all make for odd companions to a modern, diligent brewery.”

The Bruery’s Patrick Rue knows this all too well. In 2013, several of his beers, including Ebony & Oak, White Chocolate and Barrel Aged Autumn Maple—ones that are not intended to be sour—were found to contain unwanted bacteria and microorganisms like Lactobacillus and Pediococcus. This prompted Rue to issue a recall and offer refunds on some of the infected beers, as well as store credit for customers who were not 100 percent satisfied with their purchases.

At the time, Rue said in a statement that he was resolved to never let it happen again. “We are extremely motivated to get these issues resolved and put procedures in place so they don’t happen again,” he wrote on The Bruery’s website. “By the end of 2014, we’ll be brewing wort and sending it over to our sour & funky barrel house, fermenting it there and packaging there. Only clean beer will be packaged at the brewery on a new bottling line, and our existing bottling line will be moving over to the sour & funky barrel house.”    

Despite the statement, Weiss says that the wheels were in motion for a separate facility well before any commercial incidents of cross-contamination occurred. “We’ve been planning this for a while now, and while those incidents were unfortunate, they weren’t the main reasons we started looking at establishing a new space.”

He adds that Bruery Terreux, which translates to “Earthy Brewery,” will focus on fermenting, barrel-aging and packaging The Bruery’s considerable arsenal of current beers that incorporate wild yeast and bacteria. This means that ones like the flagship Saison Rue, Oude Tart, Tart of Darkness, and Hottenroth—all made with varying bouquets of souring bacteria—will transition over to the Bruery Terreux label. Weiss emphasizes that the recipes will remain the same despite the transition—in fact, all of the wort will continue to be produced at the Placentia headquarters before being pumped into containers and trekked three miles into Anaheim—which will allow the current Bruery brand to renew its focus on experimental styles that don’t involve wild yeast or bacteria, like the popular line of bourbon barrel-aged stouts and strong ales.

Related: Tasting Beers from Offshoot Breweries

August Schell’s Marti says that his company’s new facility will keep the sour Noble Star beers away from his company’s “clean” beers, which include the Schell’s and Grain Belt labels. The new facility will prominently feature and utilize 10 of the handsome cypress wood tanks—essentially tall, upright vessels, similar in style and function to wooden foeders—for fermenting small batches of the Noble Star beers, including Star of the North, North Country Brünette, and Framboise du Nord, all iterations of the Berliner Weisse style. “Unlike wine or spirits barrels, or new oak barrels, these guys are pretty much neutral,” says Marti. “They don’t really add any flavor to whatever we put in there. They’re just good at conditioning, which is why they were good for lagers.”

Like Bruery Terreux and Barrelworks, all of the wort for Marti’s sour beers will be made at a central location and then transported via container truck to the new fermentation space. Later this year, a taproom will open at the new facility, allowing visitors to sample the beer among the tanks. “We want people to see the beauty of these tanks up close,” he says.

Firestone Walker’s Barrelworks beers also are in short supply, usually limited to just a few hundred cases per batch. “We have about 10,000 square feet of space there with about 1,500 oak vessels fermenting beer for anywhere between six months to many years,” says Walker. “The feel is as much like a winery as a brewery.”

The beers—including Agrestic, Bretta Rosé, and Krieky Bones—are inoculated with Brettanomyces and Lactobacillus, aged on oak for many months (sometimes with fruit or vegetables) and blended to achieve a particular balance of acidity, tartness and tannins. “It’s a long process, so I can’t see these beers being in broad distribution on a regular basis,” says Walker. “Besides, we are having too much fun operating at this nano level, with all the flexibility and creativity that it affords us.”

Other companies have taken less drastic measures to separate wild fermentation. Allagash Brewing Co., for example, while maintaining a discrete wild barrel house where the Coolship series and other wild fermented beers are aged, has stopped short of establishing a new brand or opening additional facilities. Meanwhile, Wicked Weed Brewing in Asheville, North Carolina, recently opened Funkatorium, a bar and tasting room inside a new fermentation and barrel-aging facility a few blocks from the original brewery, where it also bottles and packages all of its wild and sour beers under the original Wicked Weed label.

Not Just A Clone

A desire to keep unwanted microorganisms at bay isn’t a brewery’s only motivation for opening a brand new facility. Of course, demand, expansion and logistics prompt most to open new outposts, including Sierra Nevada Brewing Co., Oskar Blues Brewery and New Belgium Brewing Co. which have opened or plan to soon open outposts in western North Carolina. Stone Brewing Co. and Green Flash Brewing Co. will follow suit with new production breweries in Richmond, Virginia, and Virginia Beach, Virginia, respectively, later this year. (Ballast Point Brewing Co. is said to be eyeing Richmond for an East Coast outpost location, too.)   

Flying Dog will also expand into Virginia this year, but not with a production facility. In fact, the new operation, called Farmworks Brewery, will produce such a small amount of beer that it will be available only on premises.

The opportunity for Farmworks came about when Jonathan Staples literally bought the farm—a 53-acre plot called Shadow Farm, in Lucketts, Virginia, about 15 miles south of Flying Dog’s headquarters in Frederick, Maryland. Staples, the owner of James River Distillery in Richmond, wanted to grow hops on the farm as well as produce other ingredients for brewing and distilling. He realized that there was some extra space, so he reached out to Flying Dog, encouraging it to use about a tenth of the land for a new farmhouse-inspired brewery.

“It’s really a celebration of Virginia agriculture,” says Ben Savage, Flying Dog’s chief marketing officer. “We’ll be experimenting with ingredients grown on the farm that will offer a new array of fascinating beers.”

Editor’s Note: Between the interview with Ben Savage and the magazine’s on-sale date, the relationship with Flying Dog and the farm it was to build its new brewery on went sideways, and the plan was scrapped. “We remain excited about a farm brewery concept, and we are still very much interested in developing the Farmworks concept if the right opportunity presents itself,” Savage said in a release.

A 15-barrel brewhouse and tasting room are being retrofitted inside what was once the farm’s horse arena; nearby, the former stables will become Farmworks’ barrel-aging site. “It’s an active, working farm with cattle, vegetable crops and acres of hop bines,” says Savage. “We plan to use specific areas of land for growing pumpkins, berries, herbs and spices that will be used for brewing.”

Staples’ Black Hops Farm, along with Lucketts Mill & Hopworks, will be supplying the majority of hops used at Farmworks. The farm will also serve as a central processing and pelletizing operation for regional hops growers who can bring their crops to the farm for processing and packaging.

Though a highly collaborative project, the new brewery will be owned and operated exclusively by Flying Dog, and will function with all the trappings of a modern-rustic brewery—a coolship, a set of foeders and a barrel cellar. With this type of equipment on hand, Savage says that Farmworks will focus on wild and sour beers, as well as traditional farmhouse styles like saisons, grisettes and bières de garde. He says that since these styles are so distinctive from what Flying Dog has become known for—aggressively flavored pale ales, experimental IPAs, and other rejiggered traditional styles—using a completely different name was in order.

“Right now, we don’t have plans to distribute outside of the farm,” says Savage. “We’re not going to even bottle—maybe we’ll fill growlers— but for the most part we want to become a destination brewery, one that folks will travel to from all around the country.”

A Recreation Destination

Bell’s Brewery in Kalamazoo, Michigan, also expanded, er, shrunk, into a new, smaller facility with its Upper Hand Brewery, which opened in Escanaba, Michigan—a small town in the state’s Upper Peninsula—last November. The new brewhouse, technically a division of Bell’s Brewery, has less than half the capacity of Bell’s current 50-barrel Kalamazoo system and will produce just about 6,500 barrels per year total, compared to Bell’s current 350,000-barrel capacity.

“There’s a lot of hunting and fishing and snowmobiling in the UP,” says Bell’s and Upper Hand founder Larry Bell, whose Upper Peninsula ancestry goes back more than 100 years. “I went up there all the time as a kid, and now we have a camp up there.”  Upper Hand is regionally focused, he says, “and what we’re brewing there has a regional marketing appeal. The best selling beer in the UP is Busch Light, so we’re making a lot of lager.”

In addition to Upper Hand Lager, the company produces two other year-round beers—Upper Peninsula Pale Ale and Escanaba Black Beer—all of which are distinct from any of Bell’s existing recipes. “Upper Hand is pretty much an autonomous operation,” says Bell, who adds that a new beer, Yooper Ale, brewed with UP-grown oats, will be added soon. (Yooper is an affectionate term for a native or inhabitant of the Upper Peninsula.) “They grow a bunch of oats there,” he says.

For now, Upper Hand beers are available only in the Upper Peninsula counties and a small part of Wisconsin. Bell says the plan is to distribute to northern Wisconsin, Minnesota and North Dakota—“You know, places where people talk funny,” says Bell. And while brewery tours and tastings are in the works, for now Upper Hand is not open to the public for tastings, growler fills or bottle sales.

In an industry chockablock with inquisitive drinkers—when nearly everyone wants what’s fresh, what’s new and what’s unexpected—companies are feeling pressured to keep up with an ever-changing beer landscape. Sierra Nevada may be best known for pale ale, but it’s still relevant 40 years on because of its constant innovations, most recently Hop Hunter IPA brewed with an innovative ingredient, distilled hop oil. (Not to mention its line of Trappist-inspired Ovila beers.) It is moves like this that keep drinkers interested and garner respect from new generations of beer enthusiasts.

Take that a step further and introducing drinkers to a new brand or a new spinoff brewery—be it with fancy barrel-aged California sours or workaday Upper Peninsula lagers and pale ales—may be the new key to success. Often drinkers want what they haven’t had before, and brands like Terreux, Upper Hand, Barrelworks, Noble Star and Farmworks are delivering just that.

Editor’s Note: A previous version of this story mentioned wooden lagering tanks that had stood unused at the August Schell Brewing Co. and stated they were last used for Deer Brand lager, which was no longer made. That brand continues to be made by the brewery, but not in the tanks described. We regret the error.