By Anthony St. Clair
For the Oregon Beer Growler
Breweries throughout Oregon are establishing or growing programs to age beer in wine and spirit barrels. They also face a common problem: barrels are getting harder — and more expensive — to source. Some breweries are dreading a looming barrel shortage, but the reality may be far different, depending on the way breweries want to begin, maintain, or expand their barrel programs going forward.
“Barrel sourcing is getting harder these days,” says Matt Van Wyk, brewmaster and head of the barrel program at Eugene’s Oakshire Brewing. “Not because barrels are becoming more scarce as a whole, it's just that the pie is being broken up in a lot more pieces. And it's not the small neighborhood breweries who are necessarily taking all the barrels, but the larger regional breweries who often get ‘first dibs.’”
Brewers from around the region have voiced similar perspectives and concerns, but the industry on the whole has been changing greatly, in ways that are not always apparent from a brewery’s day-to-day operations perspective.
Tom Griffin is a barrel broker who’s been linking breweries with barrels for 19 years. When he began in 1996, three U.S. breweries were using barrels. Since then, he’s brokered barrel sales in 14 countries.
Things have changed.
“My business over the last 15 years had doubled every year,” Griffin says. During his first year doing business, he brokered barrel sales to 25 breweries for a typical barrel price of around $35. In 2014, Griffin received inquiries from 2,000 breweries, meaderies, cideries and distilleries, ultimately supplying barrels to 900.
While many brewers wonder about the impact of multiple breweries buying barrels — or the effect of large breweries buying large quantities — Griffin puts things in perspective. According to Griffin, 1.5 million barrels were sold and shipped last year, with an estimated 50,000 being used in the brewing industry, which is about 3.33% of barrel production.
“The popularity of brown spirits — Scottish, Japanese, Canadian — is what’s driving this whole phenomenon,” Griffin explains. “Supply cannot keep up with the demand. Brewers aren’t driving barrel shortages. The huge demand for brown spirits is.”
Back at Oakshire, Van Wyk has seen the impact of a more limited supply. “Bourbon barrels used to be sourced for $90–120, plus shipping. Now we are reaching levels twice that amount.”
Griffin has seen similar changes. “Nineteen years ago, a barrel was $35,” he says. “Today I’m seeing $155, plus shipping, and it can be as high as $250.”
Supply also varies greatly month to month, year to year and tree to tree, Griffin explains. “Wood can vary because of what side of the hill it grew on,” he says. “The minerals in the ground are different place to place. It’s such a more variable product.”
Wine barrel quantities vary depending on the harvest, and can cost more than bourbon barrels. “Young bourbon barrels are the easiest to get. Old barrels have the best, most-aged whiskey. Following that, rye, then brandy barrels.”
As Van Wyk looks ahead to the short- and long-term, he’s not yet seeing a big change in Oakshire’s barrel program. “We may just have to work harder to source barrels,” says the brewmaster. “They are out there, we just have to find them and make some relationships … The cost of ingredients will always affect beer pricing, and barrels are simply an 'ingredient' because they can't be used indefinitely. We also might decide to sell more of our barrel-aged beer in-house as a way to keep pricing manageable. But we'll evaluate all of that after the beer is made and ready to sell.”
One change Van Wyk is considering is to source barrels closer to home from Oregon wineries. Van Wyk also notes that wine barrels can be reused more times than bourbon barrels, spreading the barrel cost across more beers and making the use of wine barrels a more profitable option. “We may increase our wine barrel inventory and fill in with spirits barrels where available,” he says.
However, over the next 12 to 24 months brewers can expect some easing on the supply side. “Three major groups will start or expand operations for cooperage in the U.S.,” says Griffin. “That will ease the pressure on the brown spirits industry. Plus there’s unprecedented growth for artisan everything, but especially beer and brown spirits. Everyone’s jumping on that bandwagon, so the commodity side of this is picking up.”
During the next 24 months, Griffin says breweries can expect to see more price variability. “There will be a price bump over the next year or so too, but smaller than we’ve seen over the last five years,” he says. “This year the price bumped $30-60. Medium bump to come, maybe two small price bumps, $10 and $10. I see $200 as the ceiling, then things will level off.” After three to five years, “we’ll see supply relax a lot.”
Combined with being aware of the changes coming for the barrel industry, for the brewery looking to begin a barrel program, Griffin offers some advice.
“I never would have said this two or three years ago, but I’ll say it now: Get one barrel and do it small. Practice. Just practice. Get to know the nuance of aging beer in barrels. Treat the barrel as an ingredient, but remember that it’s a whimsical one where you cannot expect consistency. Do barrel beers because you love them, not because you think you’ll make a lot of money with them. Practice and hone your craft. Make it special.”
Above all, Griffin says, “be patient. The market is bonkers right now, but in a few years a patient brewer running a small program could be ready to expand to bigger things.”
Stories from the print edition of the Oregon Beer Growler.