Richmond Times Dispatch

Still hopping: Craft beer scene in the Richmond region going strong after 10 years despite challenges and competition

By: John Reid Blackwell

2/20/2022

This year brings an important milestone in Virginia for craft beer lovers and craft beverage businesses.

It has been a decade since a change in Virginia law that sparked the state’s ongoing boom in craft breweries, cideries and distilleries.

The legislation — Senate Bill 604 — may not be etched in the minds of the general public, but it’s a piece of legislation that most any craft beverage maker knows instantly. The 2012 bill undid some Prohibition-era rules in Virginia and allowed breweries to sell beer by the glass at their production facilities.

The legislation, which passed the House of Delegates and the Senate by wide margins and was signed by then-Gov. Bob McDonnell, set off a boom in new craft breweries.

It passed after a lobbying effort from what was then only about 11 members of the upstart Virginia Craft Brewers Guild. Now, there are close to 300 brewery members of the guild.

More than 40 breweries, cideries and meaderies now operate in the Richmond region, up from just a couple a decade ago.

“It’s been amazing how, since that law was passed, there has been an explosion, not just in beer, but the supporting industries, too,” said Brad Cooper, co-founder of Steam Bell Beer Works, a family-owned and -operated craft beer maker in Chesterfield County. The family also owns Canon & Draw Brewery in Richmond’s Fan District.

“The food truck business has really exploded, too,” in conjunction with the growth of breweries, Cooper said. Steam Bell, for instance, recently has started its own food truck business.

The legislation “fundamentally changed the calculus for being able to start up and operate your own brewery,” said Brett Vassey, president and CEO of the Virginia Craft Brewers Guild and the Virginia Manufacturers Association.

“Being able to sell beer in your own tasting room really changed the math on the cost and benefit of starting up a brewery,” Vassey said. “As long as you can attract people and you can retain those customers coming to your tasting room to buy either draft beer or beer-to-go, you can make a decent living that way.”

“I personally believe we would have less than 100 breweries [in Virginia] if we hadn’t had SB 604,” Vassey said.

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After 10 years under the regulatory changes, Virginia’s craft beer industry is adjusting to a far more competitive marketplace, with retail shelf space for distributed beers becoming more and more crowded, and with numerous neighborhood breweries competing for customers.

On top of that, breweries have had to adjust to the COVID-19 pandemic, which forced many of them to consider new models of selling, including having curbside pickup and delivery.

The brewers guild lost only six breweries during the pandemic, two of which were expansions of existing breweries, Vassey said. “That is remarkable, when you consider that states like Oregon have estimated they lost somewhere north of 20% of their industry because they kept everything locked down.”

In Virginia, breweries were able to navigate the pandemic through curbside sales, deliveries and focusing on offering outdoor options for customers.

“I have to give credit to our ABC,” said Vassey, referring to Virginia’s Alcoholic Beverage Control Authority.

“Our regulatory agency bent over backwards to find the safest way for these businesses to operate and not go out of business and not jeopardize public health,” he said. “They gave us a lot of latitude for curbside pickup, delivery and outdoor options, and it saved our bacon.”

Last year, Virginia became the top state in the South for the number of craft breweries per capita. Overall, the state today ranks 12th in the nation for total number of craft breweries.

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The explosion in craft breweries “has definitely been very good for beer drinkers and consumers,” said Dave Gott, vice president at Legend Brewing Co., the brewery and restaurant in Richmond’s Manchester area that opened in 1994, long before the current boom in craft beers.

“It has been a double-edged sword on our side of things because it has increased competition,” Gott said. “Competition is good but, when this all started, the opening of breweries outpaced the number of new people drinking beer.”

As the pandemic has waned, the return of customers to Legend Brewing has been “steady,” he said. “Obviously, if you want to try to compare the last two years to anything normal, it is impossible to do because the last couple of years have been so crazy,” he said.

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Hardywood Park Craft Brewery’s founders in Richmond were among a handful of brewers around Virginia who lobbied for the legislation a decade ago.

Eric McKay and Patrick Murtaugh were joined by other brewers like the late Steve Crandall, founder of Devil’s Backbone Brewing Co. in the Shenandoah Valley, and Mark Thompson, co-founder of Starr Hill Brewery in Charlottesville that now also has a location in Richmond’s Scott’s Addition.

McKay and Murtaugh had brewed their first small batches of beer in a former warehouse on Ownby Lane in Richmond in 2011. Their goal, initially, was to distribute the beers to retail stores and restaurants, but they knew that their business, and the entire budding brewing industry, would need more than just distribution options to survive.

“For us, we were only a few months into operating and the writing was on the wall that we were going to run out of money if something didn’t change,“ McKay said. He recalls getting a lot of skeptical responses from lenders in 2011 about whether the Richmond region could support more than one or two independent breweries.

McKay said Hardywood had raised about $1.25 million to get started.

“We did not plan to have a restaurant or taproom initially, and we planned to focus on distribution,” he said.

“I think we realized pretty quickly that it was nowhere near enough given how slim the margins were through wholesale, and given how much it cost to get the equipment installed,” McKay said.

Hardywood joined a few other breweries in putting up money to hire lobbyists for the legislation.

“It seemed like a no-brainer,” Murtaugh said. ‘We did not have much money to give at the time, but we knew it would be a worthwhile investment.”

“I think in our lobbying we emphasized that breweries can contribute positively to tourism and community development and job creation,” McKay said. “Fortunately, the majority of lawmakers listened and understood that what was happening in Virginia had already happened in a lot of other states.”

The passage meant that Hardywood and other breweries could open a whole new channel of sales.

“For us, the ability to have a taproom kind of immediately put us in a position of profitability. It really helped to find a lot of the investments we were able to make over the years that have helped us to grow the wholesale side of our business,” McKay said.

“It was huge from a marketing standpoint, too — to be able to bring people in for events and experience their first Hardywood beer at our taproom,” Murtaugh said.

Hardywood’s original building on Ownby Lane where McKay and Murtaugh brewed their first small batches of beer has been torn down to make way for part of a residential development. But the building next door — at Ownby Lane and Overbrook Road — has undergone a major renovation and now houses Hardywood’s taproom as well as events space with a stage, additional indoor and outdoor seating, fire pits and a pizza kitchen.

Early in 2018, Hardywood opened its 55,000-square-foot West Creek brewery and taproom in Goochland County. Located on Sanctuary Trail Drive in the West Creek office park, that brewery produces Hardywood’s flagship brands, while the brewery in Richmond focuses on more experimental styles of beer.

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Other startup breweries in the Richmond region also were able to take advantage of the new law.

The change in the law came around at the right time for Trae Cairns, who opened Midnight Brewery in Goochland early in 2012, just a few months before the law allowing on-site sales went into effect.

Cairns said his goal at first was to get his beer into the distribution market for sale at retail stores.

“There were not a lot of breweries around at the time. I think we were the third one in Richmond to open,” he said.

“Obviously, the change in the law allowed us to become retail, and with retail versus wholesale, there is a little bit more money in it. It really helped drive a lot of customers to us because they could then come by [the brewery] and sort of hang out for a bit and have a beer or two.”

The model of success now in craft brewing is to build a successful neighborhood or regional customer base before jumping into distribution, said Chris Ray, who co-founded Center of the Universe Brewing Co. in Hanover County with his brother, Phil, in 2012.

“The easiest and most successful model right now is to start small until you do get a following,” Chris Ray said.

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Is the industry saturated? Several brewers say there are still opportunities for growth.

“I think craft brewing can grow in Virginia,” said Phil Boykin, president and CEO of the Virginia Beer Wholesalers Association.

“I think it has room to grow, and I hope it does grow. I think it is going to have to continue to evolve and mature to do that,” he said.

About 15% to 20% of the beer sold in Virginia comes from craft brewers, but only about one-third to 40% of craft breweries in the state are distributing beer beyond sales at their own breweries.

“You have to decide what you want to be as a craft brewer,” he said. “Do you want to be a good neighborhood brewer? Or a regional brewer?”

The popularity of craft brewing also helped define neighborhoods, like Richmond’s Scott’s Addition, which is home to about a dozen breweries, cideries and distilleries, including Ardent Craft Ales, Blue Bee Cider, Starr Hill Brewery, The Veil Brewing Co. and Väsen Brewing Co.

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During the pandemic, brewers had to adjust to some significant disruptions in their business models.

The Brewers Association, a trade group of about 5,400 small and independent American brewers, reported that overall U.S. beer sales volume fell 3% in 2020, the latest data available. Craft brewer volume sales declined 9%.

That reduced the share of the U.S. beer market sold by small and independent brewers to 12.3%. Retail dollar sales of craft decreased 22% to $22.2 billion, or just under 24% of the $94 billion U.S. beer market.

The primary reason for the decline in 2020 was the shift in beer sales from bars and restaurants to packaged sales of beer during the pandemic, the group said.

“Overnight, almost all of our business dropped,” said Cooper with Steam Bell Beer Works, which has its tap room on Oak Lake Boulevard off Genito Road.

“So much of our business was based on people coming in here and having a glass of beer, and that was cut out. Another significant portion was kegs of beer going out to restaurants, but restaurants were closed,” he said.

“The majority of the business turned towards people going to a grocery store and buying a six-pack to take home, which led to a global aluminum can shortage,” said Cooper, adding that the can shortage is starting to improve.

The Coopers also said they are investing with another couple to open a brewery to be called Hidden Wit Brewing Co. off Hull Street Road in western Chesterfield.

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Even amid the ongoing challenges and increasing competition, other breweries, wineries, cideries and meaderies have opened or are planning to open in the Richmond region.

Dancing Kilt Brewery opened on Old Stage Road in Chester early in 2020 only to get shut down by the pandemic a few weeks later.

Founder Thomas Pakurar Jr. said the brewer survived by shifting to curbside sales, including selling to-go flights of beer in 8-ounce cans.

“Originally, our plan was to open up the tasting room and then do canning later on down the road,” said Pakurar, who was a home brewer for many years and now makes a variety of European-inspired beers.

Because of the pandemic, “we had to rethink our delivery model and got a canning machine,” he said. “Two years later, and we are alive and kicking.”

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The latest entrant to the region’s craft beer business will be Three Leg Run.

Steve and Melissa Clayton are expecting to open their new tasting room and brewery, winery and meadery at 4418 W. Hundred Road in Chester on Friday after two years of planning.

The couple are making their own beers, wines and meads to serve at the location. They have renovated a former drugstore space in a strip shopping mall to house their brewery, which is named for a pet dog who had the odd habit of running on just three legs.

While not fully ramped up, Three Leg Run expects to have five beers, two meads and four wines ready to go when it opens.

The Claytons say their main business goal is to become a popular neighborhood brewery before considering any kind of distribution.

“I think a lot of people want to get out now,” Steve Clayton said. “People want to be out and about and get back to their normal life. I am hoping this is a good time for them to do that.”

Customers sit at the bar at Legend Brewing Co. in Richmond’s Manchester area. Legend opened in 1994, long before the current boom in craft beers.

jblackwell@timesdispatch.com

(804) 775-8123

Area breweries

Breweries, cideries and meaderies that operate in the Richmond region include:

• The Answer Brewpub

• Ardent Craft Ales

• Basic City Beer Co,

• Bingo Beer Co.

• Black Heath Meadery

• Blue Bee Cider

• Buskey Cider

• Bryant’s Cider

• Canon & Draw Brewing Co.

• Castleburg Brewery & Taproom

• Center of the Universe

• Courthouse Creek Cider

• Crazy Rooster Brewing Co.

• Dancing Kilt Brewery

• Dogtown Brewing Co.

• Extra Billy’s Smokehouse & Brewery

• Fine Creek Brewery

• Final Gravity Brewing Co.

• Garden Grove Brewing & Urban Winery

• Hardywood Park Craft Brewery

• Haley’s Honey Meadery

• Intermission Beer Co.

• Isley Brewing Co.

• Kindred Spirit Brewing

• Legend Brewing Co.

• Lickinghole Creek Craft Brewery

• Main Line Brewing Co.

• Midnight Brewery

• Molly’s Blind Dog Brewery & Bicycle Shop

• Origin Beer Lab

• Richbrau Brewing Co.

• Rock Bottom Restaurant & Brewery

• Starr Hill Beer Hall & Rooftop

• Steam Bell Beer Works

• Stone Brewing Co.

• Strangeways Brewing

• Tabol Brewing

• Talleysville Brewing Co.

• Three Leg Run Brewery, Winery & Meadery

• Three Notch’d Brewing Co.

• Trapezium Brewing Co.

• Triple Crossing Brewing Co.

• Veil Brewing Co.

• Väsen Brewing Co.

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