So in the last few weeks a Vermont story was picked up in the national news and swept wildly around the internet. It ignited passionate debate and commentary from all corners of the web. No, we’re not referring to the pig decals on cop cars story, or the emu on the loose in the Champlain Islands. We’re talking about the Trapp Family Lodge Brewery expansion plans. And by all corners, we mean the various beer blogs and news sites that reside in the corner of the internet. This short piece in Seven Days was picked up by Beer News and kicked off a debate by the good folks at Aleheads over the appropriate role of foreign investment in small breweries and whether this fundraising effort was a sign of a larger craft beer bubble. Before we get into the details of the debate and the beer review, its helpful to do a quick recap of the situation.
Vermont’s ski areas and resorts have struggled for years to create stability to their bottom lines. It seems every few years a major mountain goes up for sale and changes hands. Some ski areas have built golf courses to bring folks to the mountain during the summer. That’s helped, but golf is also a weather dependant sport and Vermont’s northern climate means golf season really doesn’t get going until late May or June. Resorts started catering to mountain bikers and other thrill seekers with amusement park like rides, which has added another revenue stream. The next phase in diversification has brought new investment in base lodges, hotels and amenities. Sugarbush and Jay Peak are the standard bearers of this latest phase, and no resort has been more talked about this year in Vermont than Jay. January saw the opening of their massive new indoor water park, the Pumphouse, which is only a part of the new development which includes a new hotel and conference center (Tram House Lodge) and hockey rink (the Icehaus).
How did Jay Peak and Sugarbush make these new improvements? A little known government managed foreign investment program called EB-5. Here’s the basic framework. An entrepreneur has an idea but needs capital to get it going. In Vermont, they take their plan to the state run EB-5 Regional Center which reviews and signs off on the business plans. Then the entrepreneur goes oversees to shop the project to foreign investors, where those interested commit $500,000 to the project. In many cases the terms of these investments are extremely generous to the entrepreneur because the investor ‘s primary incentive for participating is the receipt of a green card from the US Government. Interest on the investment might be close to zero or come in the form of property, depending on how the terms of the business plan are structured. If the project is successful at creating or preserving 10 jobs (direct or indirect) and the investor maintains their investment for five years, they are then eligible for US citizenship and able to recoup some or all of their investment.
So what does this have to do with beer? Well it seems anyone and everyone in Vermont looking to expand their business is considering utilizing the EB-5 program. Including the von Trapp family, which has plans for a $22 million project at their resort and cross country ski area in Stowe. The project would include a renovation to the existing lodge, new time share villas and an expanded brewery and restaurant. The Seven Days piece notes a desire by Johannes von Trapp to raise $10 million specifically to expand the brewery, growing their production from a current level of 1,800 barrels to 50,000 over the course of a few years. That would be a huge jump for the Trapp Family Lodge Brewery, which is currently only available on draft at about 70 bars and restaurants around Vermont. For comparison sake, Otter Creek has capacity to brew 60,000 barrels and currently produces somewhere in the neighborhood of 30,000 barrels annually. Long Trail is the most consumed beer in Vermont and produced 117,000 barrels in 2010. They’ve also greatly improved their out of state distribution through their purchase of Otter Creek, having grown from about 75,000 barrels in 2008.
That would put a 50,000 barrel Trapp Family Lodge Brewery at the upper levels of production for Vermont beer. Beyond some additional tanks, they’ll need bottling or canning equipment and additional staffing. It’s easy to see the numbers add up quickly. If they keep the quality of the Vienna Lager that we had in this growler, it’s likely they’ll meet their growth plans. This beer had a nice amber color with a fluffy head. The nose was sweet, slightly floral. The taste was a delicious malty-bready flavor with a distinct biscuit almost oyster cracker finish. Will this be the new favorite of hop heads? No, but I tend to agree with von Trapp that there’s room in the Vermont craft beer spectrum for this type of beer. Add in the Rauchbier, Trostenbier and Helles Lager that are also part of the Trapp offerings and I think you’ve got a compelling line up that will be welcomed in bars and bottle shops around New England.
What does this investment mean for the state of craft beer? Is this the bubble? I’m split on that question. On the one hand because this growth is one part of a larger resort expansion its a bit more protected than a brewery taking on this project on its own. The investment mechanism also protects the project to a degree. Alternatively, this is an enormous expansion for a beer line that really isn’t tested outside of Vermont. The growth of other Vermont breweries has been slow and steady, developing their brands over a period of years. The risk posed to craft beer at large is that Trapp tries to grow too quickly, fails and not only poisons the well for EB5 as an investment tool for breweries but depresses broader support for growth and investment in craft beer at large.
Verdict: Crisp and tasty, once they start bottling I wouldn’t hesitate to grab a six pack to quench my thirst for lager.
Brewed in Stowe, we grabbed this growler at Hunger Mountain Co-Op’s Thursday Growler fill for $8.99.