What Is a Nano brewery and Why Should We Care?

Breakside Brewing's 1 barrel system
Over the past year I have heard a lot of use of the word "nano" in reference to breweries and their production size. I do not think I had ever heard the word used in a beer context until 2009, and now it feels like I see it thrown around everyday With Fanno Creek's Nano Beer Fest just passed and Rogue's Nano Fest at the Green Dragon coming up this Saturday, as well as Brewpublic's recent Microhopic events at Saraveza and Bailey's Taproom next month, there seem to be plenty of events geared towards the nano set. So I have been wondering what does Nano brewery mean and more importantly why should I care if a brewery is nano or not? 
To try to answer my first question what makes a brewery nano, I naturally have consulted the internets and found that the only official-ish reference to what a nano brewery is located on the good ole governmental page of the TTB in their Beer FAQs section:
 
B:10 What are the guidelines for a Nano brewery?
Nano-breweries, which we define as very small brewery operations, are springing up across the country. Nano brewing is a result of the steady appeal for craft-brewed beers and the beneficiary of the growing home brewing movement. We issue this advisory as a reminder that any beer produced for sale by home brewers is not exempt from Federal excise tax payment.
Section 5092 of the Internal Revenue Code of 1986 (IRC) defines a brewer as a person who brews beer or produces beer for sale. Section 5053(e) of the IRC provides an exemption from Federal excise tax payment for beer that is produced for personal or family use.
Pursuant to § 5053(e) any adult may, without payment of tax, produce beer for personal or family use and not for sale. The aggregate amount of beer exempt from tax under this subsection with respect to any household shall not exceed–

(1) 200 gallons per calendar year if there are 2 or more adults in such household, or
(2) 100 gallons per calendar year if there is only 1 adult in such household.
For purposes of this subsection, the term “adult” means an individual who has attained 18 years of age, or the minimum age (if any) established by law applicable in the locality in which the household is situated at which beer may be sold to individuals, whichever is greater.
Persons who produce beer for sale, no matter how small the amount, must qualify as a brewer under the provisions of 26 U.S.C. 5401. In addition to paying the Federal excise tax on any beer that is removed from the brewery for consumption or sale, consumer packages must contain the government health warning statement (
see 27 CFR part 16). Further, the labeling and advertising provisions of the Federal Alcohol Administration Act, which are found at 27 U.S.C 205, may apply. Regulations implementing § 105, as they relate to malt beverages, are set forth in part 7 of the TTB regulations (27 CFR part 7), Labeling and Advertising of Malt Beverages.
If you have a question regarding whether your operation qualifies for the exemption as found in § 5053(e) or whether you need to complete the brewery qualification process pursuant to 26 U.S.C. 5401, please contact the TTB National Revenue Center at 1-877-882-3277 or e-mail at:
ttbquestions@ttb.treas.gov.

OK, we knew that the term nanobrewery naturally designates that a brewery is small, and according to the government, they are treated no different than a brewery of any other size regarding regulations. So, we still ask the question, is a 10 barrel brew house and 1000 barrel a year production "nano," or merely just small compared to other breweries? There are brewers out there using 1 barrel systems - should they be classified as "pico"? I know we can all agree that an operation that small is "nano," but where do we draw the line, and why is a line necessary to begin with?



To me, seeing brewers like Rogue jumping on the bandwagon of nanobreweries simply by hosting a beer fest - and to top it off, hosting the 2nd Nano fest just after the Nano Beer Fest started by Fanno Creek Brewing in Tigard, OR - suggests that the marketing department has jumped on this as a buzz term. Consulting the website for the Fanno Creek Nano Beer Fest, no explanation is offered for what constitutes a nanobrewery. It has been pointed out that the festival featured breweries such as Fort George (30 bbl system), Oakshire (15 bbl system, about 3600 barrels expected output for 2010), Pelican (15 bbl system, about 1500 barrels a year) that are still relatively small, but most would not consider to be "nano." I noticed a facebook post from tiny local brewer Natian Brewery showing some unhapiness at the fact that larger brewers were being marketed as Nano:

Natian Brewery

Natian Brewery I am seeing some MICRO breweries throwing around the term "nano" when describing themselves. When a micro brewery trys to steal the "Nano" thunder from us tiny guys, it's the same as Budweiser coming out with "craft" recipes and the like. For shame, I say, for shame.....

February 24 at 2:05pm
I contacted Natian Head Brewer/Owner Ian McGuinness to elaborate on his thoughts and what the definition of a nanobrewery was:

"Being that there is no "definition" of Nano, as in, federal/state hasn't given it a production number or financial gains number to define this category, I will hold off trying to quantify this response. But one can look at current classifications in the brewing industry and realize that it has nothing to do with brewery size but actual annual production that constitutes the way a brewery is classified by industry regulators.

But I think this un-official (nano) classification has been brought on by the industry "patrons" not by the industry regulators. So it totally means something more than mere numbers or annual production. Nano is in essence the embodiment of "mom & pop" brewing."

Now let's take Rogue/Green Dragon's
Nano Fest. They have at least set out some guidelines for what should be the cutoff point. They state that nanobreweries are limited to breweries who produce less than 996 barrels per year. That is just about how much Upright Brewing produced last year but will greatly exceed next. I tried to get ahold of a Rogue representative to figure out how they came up with this number, but I have received no responses. As far as I can tell, it is a figure based on their own restrictions, and not an actual definition of a nanobrewery.

While I find it refreshing that Rogue/Green Dragon has put some qualifications on what constitutes a nanobrewery, as well as showcasing them at their own establishment, it still reeks a bit of marketing to me. This point is amplified by the fact that they started the festival just prior to Fanno Creek's fest, an actual nanobrewery by most peoples' definition, and have confused consumers by essentially using the exact same name (Fanno Creek's is titled Nano Beer Fest while Rogue's is titled Nano Fest simply taking out the word "Beer").



Brewpublic has done an admirable job of taking the word nano out of the equation in their Microhopic events that are dedicated to showcasing both brand new and small brewers. Without using the buzz terms, Brewpublic has instead focused on promoting the mom & pop or "micro" brewers for their products alone.
An excellent and varied selection will be showcased at Microhopic 2 at Bailey's Taproom on 9/8.

To me, when I hear people going on about a brewery being "nano," it is a huge turnoff. I support the small, the local, the "mom & pop" as much or more than anyone, but I will be the first to say that none of that matters when it comes down to the beer itself. If we as beer geeks and consumers are going to turn our noses up at the big boys even when they put out a solid beer, then I think there may be something wrong with the craft industry. I'd say it's about promoting quality over anything else, size included. It is not infrequently that I hear people bemoaning Widmer for their Hefeweizen, but some of these same people have never tried many of the incredible beers Widmer makes for the Gasthaus and the Brothers Reserve series.
Let me be clear: I think some of the newest and smallest brewers in town, like Breakside and Coalition, are making some great beers and deserve all the attention they can get, but you won't see me promoting Tugboat or Captured By Porches anytime soon.

Ian Mcguinness objected to my thoughts a bit and offers this contrary opinion:

"Just remember one thing when you want to take size of a brewery out of the equation. Size makes a world of difference, maybe not to someone sitting down at a bar ordering a pint, but it is all the difference to the brewery. Budweiser has the BEST - ABSOLUTE BEST quality program in the industry, if not the entire beverage manufacturing world. Are they your favorite beer? Are you interested in other aspects of your pint as well? Locality, genuene interest from the brewer who made it for you, the story and love behind that pint? In other words, would you rather buy small and local or big and mainstream? It's the difference as going to the farmers market or going to Wal-Mart for your food."
Natian Brewery's 1.3 barrel system

I will say this, Ian. If I am looking for a cup of coffee and there is a Starbucks (not great quality but dependable) in front of me and next to them is a Mom & Pop of the same quality, I will go to the Mom & Pop. But if there is some random shop with some unknown blend of questionable quality, I will march straight into that Starbucks.

It has occured to me that Brewpublic has hit on something that we have forgotten about. We used to call the craft brewers "microbreweries". That term is still used in corporate restaurants everywhere, but has long been a banished term by the industry since the "micros" became so prevalent, and instead we now call them "craft breweries". I like the term "Craft Beer" and I think it is good for the industry to get out of the shadow of being "micro," but perhaps this calls for a return to the use of "micro" for the little guys?

I encourage everyone to support the "micros". We need them, but let's not make this a buzz word like "barrel-aged". Lastly I leave you with a few more words from Ian:

"I argue that in this ever expanding industry, more categories need to be created to reflect the many different breweries in our country. We are living in a new age of beer brewing in America but stuck in the industry language of the past where only 6 breweries rule supreme."

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20 comments:

  1. North of a three-barrel system, regular; south, nano.

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  2. Good write up. I like some of the thoughts you've posed. I agree that nano is a catch phrase now. Almost like it is the new micro. That is, in a sense, why we went for Microhopic as our name of our event. We realize that Coalition and Buckman are not nanos, but like you said, they are new and we just wanted to showcase new breweries, too. We like poking fun at all these nano events. I'm actually surprised there hasn't been a lawsuit or cease and desist order on Rogue or Fanno Creek (not sure which fest came first) for the confusion of the two fests with almost identical names. Maybe nano is a general term now in the industry. Some folks would even consider Pyramid or Deschutes microbrews when compared to AB or MC. Who knows. We just like poking fun and finding silly names for things while trying to promote indie and upcoming breweries. It might have been fun to have an event called a pico, femto, atto, zepto, or even yotto brew fest. But that's too geeky and no one would probably understand it. I say any beer fest, even Rogue's who gives folks a chance to taste breweries like Block 15 and Breakside is a winner. The event at the Green Dragon sounds pretty fun. But I'm with you, a 30, 20, or 15 bbl brewhouse is definitely not a nano.

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  3. Careful, Angelo, or Green Dragon will start an event called picoHopic (almost a palindrome) and slot it one day before yours.

    But Ezra, I agree with you, it can be big and good or small and good. It just has to be good.

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  4. Nano isn't a comment on quality. It is a way to show the public how hard that brewery is working. Natian was at the OBF, we had to brew 15 batches of Honey Red to supply all those kegs. Most of the other breweries there supplied the festival with 1/2 a batch maybe a full batch. One comment was written that Natian was, at least, the hardest working brewery at that festival. Don't you think that counts for something? When a brewery is too small to sign a deal with a distributor so it makes it tough as nails to get into distributor controlled bars, the little guys need some way of getting the word out to pint lovers. Nano is a quick way of conveying that simple message.
    What is wrong with this industry coming up with pico, nano, micro? No reason to stick to conservative labeling in a liberal thinking industry. We feel comfortable coming up with new names for beer styles. Why not new names for brewery styles?
    On last question, does anyone see Natalia in the photo Ezra used of our brewery??!!!

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  5. Forgot to add, we are 1.3 BBL not 3 BBL... if we were only THAT BIG!!!! :)

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  6. In the end it is all semantics. If the beer is good, people will support it. Events that help spread the word on some of the smaller breweries producing quality beer are great.

    Ian's argument comparing buying local brews to buying produce from the farmer's market instead of WalMart is true - as long as the beer is as good or better than what I can get from the big boys. I know the produce at any stand at the farmer's market is gonna be better than anything at WalMart. It will be just as good or better than what I can get at Whole Foods and I support the local farmer. Unfortunately, many beers coming from some small (and big) local breweries are just not on par with some of the other guys in town - big or small. When that is the case, all the love and genuine interest from the brewer is not gonna get me to drink below average beer. There are just too many better options of all sizes.

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  7. Came across a (closed) brewpub in West Virginia the other day that appeared to be doing all of their production brewing on a half-barrel Brew Magic system. What do you call THAT (besides insane?)

    .... wondering why they closed after six months....

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  8. I guess I'm failing to see the argument here. Is there some group that is saying that due to small scale you shouldn't buy the product? or is someone saying that you should buy the product just cause they are small and work hard at it? Or are we just arguing "what is a nano?"

    Either case it seems like the common opinion on here is the correct, buy it if it's a good product. Sadly about half the nanobrews I've had so far taste like half arsed homebrew.

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  9. Wow, so much confusion in such a short period of time! Recently I have noticed this "issue" becoming more prevalent. When I first heard of "Nano"breweries it was in reference to very small (barely larger than Homebrew) systems. This makes absolute sense to me. As Jeff said, 3BBL would be an appropriate cutoff although I think 1BBL is closer to the originators of the "genre" but Brewer's Union is not too far off of a Nanobrewery and they are working with ~3BBLs.

    I am appalled that anyone brewing on 10+BBL systems would try to steal the thunder from folks barely making ends meet (if they are at all). "Nano" is intended to signify the extremely high ratio of labor to beer produced. Look at Heater Allen or Vertigo, these guys started small and have built up their brands and upgraded (or are upgrading) their systems so that they are no longer "Nano" and can function more like a Microbrewery and less like a Homebrewery.

    To me that is the difference; Nanobreweries bridge the gap between Homebrew and Microbrew (or Pubbrew in the case of 3-10BBL systems). I really appreciate the local beer fests but I think a "Nano Fest" should only feature Nanobreweries. Find a different name for a festival featuring only local breweries (or in Rogue's case, just call it the Mini Beer Fest or Indie Beer Fest as you did last year). Nano has been defined if not in precise words at least in spirit, stop trying to co-opt their sweat equity!

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  10. To be fair I am not sure those larger breweries (Ft. George, Oakshire, Pelican, Upright) have ever claimed to be "nano" or portrayed themselves to be. The festivals can ask anyone to join or simply order their beer. Unless I see Ft. George suddenly announcing they are a "nano" I am not calling them out, it just highlights the need for a standard.

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  11. I apologize for not being more precise in my comment. I was not inferring that those breweries are calling themselves nano.

    The word is being tossed around irregardless of its origins. I am blaming those who do so with disregard to its true intent.

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  12. Doesn't matter what you call the brewery Nano, Pico, Micro, Macro if the beer is good then you'll drink it to support them. If the beer sucks eventually they will go away no matter what size they are. Our community has shown it will support breweries of all sizes if the beer is good and for that, we are very fortunate. As beer makers and beer drinkers. It offers us a variety of choices that very few places can match.

    As for the term Nano attached to a festival with few or no true Nano's involved that's up to the organizers to either name it appropriately or to choose the breweries based on their size. In the case of Fanno Creek, I think they named it Nano not because of the brewery size but based on the original festival size.

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  13. From what I've read of people who run these tiny breweries, the thing that seperates many of them from other micros is thier desire to remain small. Many have no desire to give up thier day jobs; brewing once a week is enough for them. There is one in Ohio that serves less than a half dozen accounts for instance.

    This is important to realize, as almost all of these brewers need very little start up capital, have no debt, and do not worry about financing expansion. Contrast that to the brewers who have a 3 year business plan, hundreds of thousands in debt, and constant cash flow worries. There were 2 micros in my hometown that closed up shop after 2-3 years. One of them reportedly had $675,000 in start up debt.

    Of course, ultimately it will be the beer that sells. Supporting a tiny neighborhood brewery can only go so far. If the beer is good, it will sell itself. Today's Nano's remind me of Bamberg Germany at the turn of the last Century. Right before WWI, Bamberg, a Franconian city of 300,000 had over 180 breweries. Almost all were tiny operations that brewered for the local neighborhood. When I lived in Germany, the old timers (this is back in the 1980s) told me of them going a few blocks with beer pails in hand and knocking on the ally doors of the neighborhood brewery. For 5 pfenning, the brewer would fill the pails with lager for thier family's supper.

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  14. One final thought on Nanos. Yes, they may work thier tails off due to the small batches of thier brew; but, I've read enough horror stories of the microbrewers to fill a volume. I can't remember the name of one particular microbrewery- But it is was in New Jersey. The brewer left his day job as a software developer and was able to get financing for a 7bbl system. He specialized in "Big Beers" (both lagers and ales). I followed his blog with interest, as he was a good writer. His blog was nothing but a horror story. Yes, he made outstanding beers (based upon sales and prizes). But between brewing, cleaning, selling and marketing, repairing equipment, bottling and kegging he ran himself into the ground. He worked 18 hour days 7 days a week. He had to fold because of health issues. He had brisk sales, but very low cash flow (ie he couldn't afford even to hire one assistant). And the start-up debt (which wasn't large by today's standards) was a constant worry. He was able to pay-off his creditors with what cash he had, auction his equipment, and liquidate. Five years was enough. At least his marriage survived, and he got his health back. His final blog entry said he was being hired to manage a mediu, sized brewpub in Philly. And with what he went through with his own brewery, it should be a piece of cake. At least he will have a few assistants.

    My heart goes out to those who take the plunge.

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  15. I think nano brewery should be those brewing in kegs, so 15 gallon batches max. It's silly to count the batches or total quantity a year, because then these big systems (big to a hoembrewer) could just turn out a few batches a year and use that term.

    I think of nano brewery as the guy would takes his homebrew set and makes beer to sale from it - that's nano.

    Cheers,
    joshua

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  16. Nanobreweries have been much more popular in the pacific northwest than the rest of the country. They're finally starting to make their way east. We just wrote an article about the rising trend of nanobreweries in denver.


    -Mike Burns
    BeerCraving.com

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  17. From a purely scientific viewpoint if you accept 2 Million barrels/year as the upper end of the Micro-brewery range (this is based on a Wikipedia entry assumed as fact) then a Nano-Brewey upper limit would be 2,000 barrels/year and a Pico-Brewery would be around 2 barrels/year. Just say'in.....

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  18. Not being a Dick...

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  19. We did the same thing with wine when we called them Family Wineries. How it has become a term everyone uses. We started an organization and event called Family Winemakers to designate small producers and let them show their wares without the big wineries being there. Eventually all wineries were allowed because it became so popular that the big wineries pushed to get in. They didn't have to try too hard as the organizers wanted more wineries for the table fees and the public wanted more wineries too. I think this will follow the same pattern. People will buy tickets to events because they want to drink beer - good beers. In general they don't really care how small or large the brewery really is except when they want do buy some outside the event and they can't find it.
    The same argument can be made about buying local. How often do you buy an imported wine/beer? The public doesn't really care about local if the price is right and the wine/beer is good.

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Try not to be a dick.