Sustaining Kitsap’s brewery boom

June 28--SILVERDALE -- Three days a week, Mike Montoney runs an automotive electric shop, fixing shorts and rewiring dashboards.

Every other day he can be found in a metal-sided shop at the end of his Olympic View driveway, brewing up a new career.

A sweet-smelling vapor wafted from the open shop door on a recent afternoon. Inside, Montoney and partner Mike Painter were assembling a steaming batch of Rainy Rye, a favorite double IPA of their Rainy Daze Brewing company. A Rainier beer sign hung on the back wall. Rock thumped from a stereo.

Montoney opened a tiny taproom in this garage two years ago. Zoning conflicts forced him to shut it down within months. His hoppy beers only grew in popularity, earning accolades at festivals and competitions.

While searching for a new taproom location, Rainy Daze has picked up wholesale keg orders at a pace the two Mikes can barely keep up with. So when Montoney isn't working in his auto shop, he puts in 12-hour days at his brew kettles.

The shaggy-haired mechanic started home-brewing in 1993. His hobby grew more rewarding than his day job. Now he's making his hobby his day job.

"It was time," Montoney said, taking a break over a pint at a picnic table in his yard. "I got sick of working on cars, and what the heck, might as well roll the dice."

A dizzying number of Northwest brewers are taking the same gamble.

The list of Washington breweries doubled in the last eight years, fueled by a ravenous demand for locally made craft beer. Roughly 260 are now licensed statewide.

Kitsap County was home to two microbreweries between 1996 and 2009. Ten are now operating in the county and an 11th will open soon in Kingston. More are rumored to be on the way.

The tight-knit group of Kitsap brewers is making a mark in the industry. Six took home a combined 16 medals from this year's Washington Beer Awards. Beer made here is quaffed in bars across the Northwest, sipped in parts of Canada and even savored in Tokyo restaurants.

Kitsap has become known as a place that brews, said Jonathan Rowe, owner of Marina Market in Poulsbo, a store with a voluminous local beer section.

"The brew culture has developed, and it's so strong in Kitsap County that it's almost defining," Rowe said. "It's what we do here."

Like Montoney, nearly all these craft brew makers were home-brewers who'd dreamed of leaving their day jobs and going commercial. Among the ranks of Kitsap brewers are a former propane salesman, a law school graduate, an electrician, a city engineer and a corporate executive. They've raided savings accounts, cashed out retirement funds and rounded up investors to join the beer boom.

"Guys are paving roads or selling insurance ...," said Eric Radovich, executive director of the Washington Beer Commission. "They're thinking to themselves, 'I could open a small batch brewery, invite my friends, sell a few kegs to local bars and make a living.'"

While a boon for beer drinkers, the rapid rise of craft beer raises an obvious question: How many breweries can the market really sustain?

The Northwest already saw a craft beer bubble pop in the 1990s, when a wave of breweries and brewpubs failed. Many new breweries are also bound to go under, said Mark Hood, founder and manager of Sound Brewery in Poulsbo.

"Absolutely I think there's going to be another clean out," Hood said. "The craft brew market will continue to expand, but not as fast as breweries are expanding."

Most brewers, Hood included, believe even as some breweries fizzle out, there is now a consumer base to support craft beer for the long term. Especially in the Northwest, where beer drinkers are more interested in the brewing process and more willing to broaden their horizons in the beer aisle. Craft beer accounts for roughly 30 percent of beer sales in the Seattle area, and that market share is growing, Radovich said.

Brewers envision a gradual return to a time before mass-produced pale lagers reigned supreme, when drinking beer from a brewery down the street was a the norm.

"Pre-prohibition, every community had a brewery, every community had a butcher," said Scott Kirvan, owner of Slaughter County Brewing in Port Orchard. "I think we're rolling back toward that."

GROWING INDUSTRY

Breweries did abound in Washington before prohibition, but Kitsap's first commercial venture opened in 1935, shortly after the booze ban was lifted.

The Silver Springs Brewery in Port Orchard operated until 1950 and once boasted the county's tallest building, a towering structure on Bay Street. After Silver Springs moved to Tacoma, the county went 30 years without a brewery.

Thomas Kemper ended the drought, opening on Bainbridge Island in 1984. The popular brewery moved to North Kitsap and was later bought out by the founders of Pyramid.

Kemper moved out of the county in the 1990s but its legacy in Kitsap continues. Two employees went on to start Kitsap microbreweries of their own in 1996.

Brewer Don Spencer founded Silver City Brewery with brothers Scott and Steve Houmes. Don Wyatt, an avid home-brewer who worked at Kemper for one summer, launched Hood Canal Brewery in Kingston.

Silver City moved its brewery operation to Bremerton in 2010. It increased capacity while continuing to experiment with styles and packaging, recently releasing a line of microbrew in cans. Though still small by industry standards, Silver City is far and away the county's largest brewery, producing more than 7,000 barrels in 2013.

Scott Houmes said he's glad Silver City could help pave the way for the breweries that followed.

"It feels great to play some role in the movement of craft beer in Kitsap County," Houmes said. "We're proud of that."

While Silver City and Hood Canal carved a niche for craft beer sales in Kitsap, a home-brew subculture was thriving.

Clubs like West Sound Brewers, which Spencer founded, gave hobbyists a place to share techniques and receive feedback on their work. Many also gathered at Heads Up, a Silverdale brewing hub that closed in 2008. Those home-brew circles proved a valuable testing ground for future professionals.

"There was a budding home-brew culture here that was really taking root," Rowe at Marina Market said. "Essentially all the local brewers have come up out of that."

There's no good explanation for why 2010 was a tipping point for craft beer in Kitsap County, but it was. Three breweries, Der Blokken Brewery in Bremerton, and Slippery Pig Brewery and Valholl Brewing in Poulsbo, were licensed that year, and breweries kept coming. Sound opened in Poulsbo 2011, alongside short-lived Battenkill Brewery. Bainbridge Island Brewing, Rainy Daze and Slaughter County joined the scene in 2012. Unicycle Ale, a tiny Poulsbo brewery, was approved in late 2013. Downpour Brewing is setting up shop on Highway 104 in Kingston this summer.

Together, Kitsap breweries produced more than 11,000 barrels of beer in 2013 (about 340,000 gallons or 22,000 kegs), tallying $1.6 million in bulk sales.

In Washington, microbreweries pour about $1 billion into the economy annually, according to the national Brewers Association trade group. Nationwide, the craft beer industry is growing by 15 percent annually, putting a strain on hops producers.

With so many microbreweries jostling for space on market shelves and behind bars, it's no longer enough to just make tasty beer. Brewers need business smarts and a strong brand to stand out.

"Here's the thing about beer: it has to be good," Hood at Sound Brewery said. "After that, you have to work hard and market it, because there are so many new craft breweries opening."

FINDING A NICHE

Early on a recent Tuesday afternoon, the taproom at Bainbridge Island Brewing was already buzzing. Regulars sipped pints of Eagle Harbor IPA and swapped stories at the bar. A chocolate Lab tethered to a stool dozed contentedly. Stainless steel brewing equipment gleamed in the open backroom.

It was the kind of scene Russell Everett envisioned when he founded the brewery with his father, Chuck, two years ago. The tasting room attracts crowds of tourists in the summer and locals year-round.

"We felt like on Bainbridge we had a unique opportunity to have a taproom integrated with the brewery that would serve as a social space as well," Everett said. "I view it as the island's living room."

Every new brewery seeks a sales strategy that will sustain the business and position it for growth. Most begin with a tasting room, an in-house retail space that sells beer, simple snacks and branded merchandise.

A good taproom can create a micro-community around a brewery. It's also the best way to transform kegs into cash.

A keg Everett brews for maybe $40 in ingredients will fetch $400 or $500 by the time its divided into pints and sold a few feet away in the taproom. Even with overhead costs, it's by far the best profit a brewer will see.

"All the breweries that have it right going on, have a rocking taproom, because that's where you keep the lights on," said Everett, who does about 60 percent of his business in-house.

Taprooms can only take a brewery so far.

"You can only fit so many butts in seats," Everett explained. "At a certain point your taproom is full, you've gotta keep moving, and that's when you start wholesaling."

A brewer's next step is usually to wheel a keg to a local bar. Selling beer wholesale for draft is the simplest way to move beer outside the taproom. Placing tap handles in popular taverns also raises a brewery's profile among the general beer-drinking population.

Beyond that, it's a relatively thankless endeavor. A bar will pay $140 for the same keg Everett sells in his taproom for $400. Selling through a distributor subtracts another 30 percent. Meanwhile, the bar marks the pints up and reaps the retail profits.

Bottles offer something of a happy medium. Sound Brewery can turn a keg of its Sommerweizen into 90 22-ounce bottles, which will sell in grocery stores for $5. Sound makes $2.44 for each bottle, earning about $220 per keg.

"Way better than I make from (wholesale) keg sales," Mark Hood said.

Bottling brings hassles of its own. Labels and recipes require government approval, bottling machines cost tens of thousands of dollars, materials are expensive, "and it's a lot of work," Hood said.

Breweries need to sell wholesale to grow, and that's where competition is heating up. Local companies vie for space with a growing selection of Seattle breweries and offerings from neighboring states.

"It's definitely not easy to sell beer," said Houmes at Silver City. "You have to work at it."

Even with a healthy balance of taproom clientele and wholesale distribution, small batch brewers aren't getting rich, if they're making a living at all.

Jeff Holcomb dug into his retirement savings to start Valholl Brewing in Poulsbo. After four years, he's just beginning to draw a paycheck.

"You don't get a salary until you're profitable," Holcomb said. "Every ounce that comes in goes back into the company trying to grow more."

A BEER DESTINATION

Competition is growing regionally, but camaraderie prevails at the local level. If anything, brewers say the proliferation of West Sound beer makers is a blessing.

By their logic, a cluster of breweries will attract more beer enthusiasts than a lone brewery in the sticks. That means more business for everyone. That thinking was reinforced when a startup called Peninsula Brew Tours began shuttling visitors among breweries, wineries and distillers in 2012.

At Hood Canal, Don Wyatt ran the only North Kitsap brewery for 14 years. He appreciates the interest the new breweries have generated, especially among Seattle enthusiasts.

"Because there are so many more breweries now, there's actually a reason for them to come over," he said. "It's helped the county."

With three active taprooms, Poulsbo offers an example of how breweries can thrive in proximity.

Sound Brewery specializes in updating Old World classics. It distributes beer throughout Western Washington and Canada, and ships 45 kegs a month to Japan.

Slippery Pig, which opened on a Finn Hill farm before moving downtown this spring, is known for eccentric brews flavored with homegrown ingredients. A rhubarb IPA and stinging nettle pale ale are among its best sellers.

Valholl curates a lively taproom and its Viking-branded apparel rivals its beer in popularity. Holcomb is looking to place a larger production facility in the county and eventually open a string of Valholl taprooms across several states.

Diversity allows the three breweries to coexist and even complement each other, said Valholl production manager Adam Orrick.

"Sound, Slippery Pig and Valholl are doing completely different things within a stone's throw of each other," he said. "I don't think any brewery is suffering from having other breweries so close by."

In fact, they expect to share customers. Older generations of beer drinkers may have been loyal to a single brand like Olympia or Coors. Craft beer drinkers get around.

"Our ideal customer has a beer or two, has a growler filled, buys a T-shirt, and goes to the next place," said Dave Lambert, owner of Slippery Pig. "We love our regulars, but we share a lot of our regulars anyway."

The consensus among Kitsap brewers is that if they remain distinctive and expand cautiously, there's room for everyone in the craft beer business.

That's certainly Montoney's hope. The Rainy Daze founder plans to close his auto shop this summer and brew full-time if sales remain strong. He relishes the transition.

As a mechanic, Montoney's customers hope to see him as little as possible. As a brewer, his customers can't wait to come back.

"When you're selling beer, people are usually happy to see you," Montoney said.

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