Makers of Craft Beer See Untapped Potential in Arizona

Written by Victoria Pelham for cronkitenewsonline.com

George Hancock, co-founder of Phoenix Ale Brewery, said there's great promise for Arizona microbreweries. State records show there were 39 licensed microbreweries in fiscal 2009, and there has been steady increase in recent years. All photos by author.
PHOENIX – George Hancock sees great promise in this downtown warehouse filled with barrels containing fermenting barley and wheat and producing craft beer 600 gallons at a time.

He views the opportunity for microbrewers as so ripe here that he decided to pack up and leave a similar operation he had in Washington for Arizona, co-founding Phoenix Ale Brewery in June. He said the Seattle market is over-saturated but that Arizona still needs more breweries.

Boxes contain one of Phoenix Ale Brewery's brands. State law allows microbreweries under a production cap to sell directly to consumers
“It’s just getting started here, but the market for craft beer is growing rapidly,” Hancock said.

There were 39 microbreweries in Arizona in the 2011 fiscal year, which ended in June, according to the Arizona Department of Liquor Licenses and Control. That was up from 36 in fiscal 2010 and 31 in fiscal 2009.

Those operations are licensed to produce up to 1,240,000 gallons in a calendar year and are able to sell their products directly to consumers.

The largest concentration of breweries was in Maricopa County, with 20, according to data from the state.

Hancock said the advantages of shopping from craft breweries include getting fresh beer that hasn’t been shipped from afar.

“There’s a demonstrated need for the beer,” he said. “We’re already seeing the beer being sold, but it’s being sold by brewers from out of state.”

Shrugging off the recession, Arizona microbreweries have increased production and started taking off in the past few years, said Jerry Gantt, executive director of the Arizona Craft Brewers Guild.

Tim Neuman, a marketing specialist at Four Peaks Brewery, with locations in Tempe and Scottsdale, said the craft beer industry ties well with the movement to support local businesses.

“I think craft beer is kind of coming into a renaissance period, if you will, because a lot of people are taking more pride in their location,” Neuman said.

Opened in 1996, Four Peaks is one of the more established craft beer producers in Arizona, with locations in Tempe and Scottsdale.

In 2009, the growing company was nearing the state’s production cap – 620,000 per year – to be considered a microbrewery. It faced having to curb production or seek licensing as an in-state producer, which would force it to sell through wholesalers.

However, a state law doubled the cap for microbreweries to 1,240,000 gallons per year.

Neuman said raising the production cap could could help to bring breweries from out of state into Arizona.

“They’re not being held back by the amount of beer they can end up producing,” he said.

In the meantime, Hancock is setting high goals for Phoenix Ale Brewery. There are currently no Arizona breweries that ship beyond state lines, and he’s confident his will be the first to accomplish it.

Hancock also expects the market for microbreweries to become more competitive.

“It’s entirely possible that the biggest brewery in five years hasn’t even started yet.” he said.

Microbreweries by county (fiscal 2011):

• Apache: 0
• Cochise: 3
• Coconino: 5
• Gila: 0
• Graham: 0
• Greenlee: 0
• Maricopa: 20
• Mohave: 3
• Navajo: 0
• Pima: 4
• Pinal: 0
• Santa Cruz: 0
• Yavapai: 4
• Yuma: 0
• La Paz: 0

Source: Arizona Department of Liquor Licenses and Control