House of the Witch: The Renegade Craft Brewers of Panama

Panamanians are by far the biggest beer consumers in Latin America, but not when it comes to the good stuff. Will that all change with the rise of a new craft beer brewery?

The Daily Beast

Panamanians love beer. It's practically a law of nature. Like relativity, thermodynamics, and universal gravitation. They love to drink it and they love to sell it. According to Central America Data, it's a $390 million dollar a year industry. The thing is, Panama has the perfect climate for consuming massive amounts of the stuff: tropical with uniformly high temperatures, face-melting humidity, and very little seasonal variation. Not to mention the beautiful, meandering coastlines on both the Pacific and Atlantic sides of the country, where sandy, wind-swept beaches are speckled with thirst-inducing frequency.

But it's not just any beer that Panamanians love. It's shitty beer. Entry-level lagers with little-to-no body, high-carbonation, low alcohol levels and bargain-basement price tags. In fact, beer prices in Panama are about 36 percent lower than anywhere else in Latin America. This is probably one of the main reasons why, in a 2011 Kirin Institute report, Panama was ranked eleventh in the world for beer consumption—four notches above the U.S. (ranked fifteenth) and leaving the next Latin American country in its dust (Mexico, ranked thirty-first). Eleventh place is quite the crowning achievement for the little isthmus—especially considering the low quality offerings.

But from the anguish of soulless industrial lagers rises the emancipation of artisan brewing. Like a phoenix rising from the flames of a mash tun, micro and craft breweries have emerged like spores all over the planet, even in the hardest to reach places: Bruggsmiðjan Brewery in Árskógssandur, Iceland, founded in 2006; Kingdom Brewery in Phnom Penh, Cambodia, founded in 2010; Baguales Brewery in Puerto Natales, Chile, founded in 2006—the list goes on. It's surprising then, considering not just Panama's insatiable thirst for beer but also their fondness for North American culture, that it has taken so long for the roots of independent brewing and bottling to take hold. But take hold they have.

Northeast of Panama City, beyond the crumbling 16th-century ruins of Panamá Viejo, the Costa del Este Industrial Park heaves with transport trucks, clouds of diesel, a symphony of honking, seemingly endless stretches of loading docks, and the uneasy stench of unrelenting commercial productivity. It's the kind of place you only go to if you have to. And even when you’re there, you question the true necessity of your errand. Tucked in the back corner of this chaos, beside an industrial cardboard manufacturer on Calle Primera, is Casa Bruja: Panama's one and only craft beer brewer and bottler.

The rain is coming down in sheets. It's normal for Panama this time of year, but it gives the industrial park an even scummier air. A plastic factory, a hardware supplier, and shipping–and-receiving giants like Fed-Ex and DHL are neighboring businesses. It's like a corporate apocalypse. Casa Bruja is a diamond in the rough, a refuge among all this bedlam. I'm not inside for two minutes before Jonathan Pragnell, the owner of Casa Bruja, offers me a taste of his still-fermenting Talingo Imperial Milk Chocolate Stout. Though premature, the beer is great. Perfect for sipping while I shake off the rain.

Pragnell is only 30 years old, but looks slightly older with overgrown stubble, messy dad-hair and the beginnings of a formidable beer belly which is oddly reassuring, like a chubby chef. But he's also energetic, talkative, and boyishly excited about not just his beer, but all beer. Pragnell, who was born in Panama City, shows me around his modest, two-room, 317-gallon brewery: six fermenters, two bright beer tanks, two walk-in fridges for storing cases, kegs and hops, a single refrigerated delivery van and a closet-sized laboratory, with what looks like a high-school microscope on the counter. The lab is currently being used for yeast cell counting by Casa Bruja's head brewer, Omar Lombardo, a young food-science technologist from Urgnano, Italy who did his master’s in Belgian yeast.

Launched in February of 2013 with an investment of half a million bucks, Casa Bruja (“House of the Witch” in English) has been growing steadily. "We just recently broke even," Pragnell reveals proudly.

Their Chivoperro IPA has won two consecutive silver medals (2013, 2014) at the Copa Cervezas de America—the largest beer competition in Latin America. For the first year and a half of operation, they bottled only eighty cases per day, manually. But a recently purchased automated bottling line has increased their output to sixty cases per hour. "About a case a minute," Pragnell says matter-of-factly. In addition to the bottling, 40 percent of Casa Bruja's production is in kegs. Loud rock music echoes through the brewery. Juliet De Los Santos, Casa Bruja's office manager, seems to be DJ-ing a Youtube playlist from one of the computers in the office area. Pragnell hands me another glass of beer. "We call this Cayuco," Pragnell says proudly. "It's a seasonal beer made with local fruit. We just kegged it. It's light and fruity. The aroma is incredible."

The facilities are clean, organized, and well-cared for. But it's practically a home brewing operation compared to the giant national brewers that Pragnell is, on some levels, competing with. The four national brands in the country (Soberana, Panama, Balboa, Atlas) are made by two separate behemoth brewers: Cervecerías Barú (now owned by Heineken International) and Cervecería Nacional (owned by Grupo Bavaria of Colombia which is, in turn, now owned by SABMiller). For decades, these two industrial brewers have basked in a sort of shared-monopoly over the Panamanian beer racket. In 2001, Cervecería Nacional revealed that they controlled a staggering 80 percent of the market, with Cervecerías Barú having controlled the remaining 20 percent.

Since then, the spread has shrunk. Cervecerías Barú resolved problems with their draft system that prohibited them from selling on tap for almost seven years. They have experimented with new products and have invested millions into aggressive marketing and promotion. Now both breweries are fighting to retain their half of the cake. On the SABMiller website, they claim that Cervecería Nacional now controls 49 percent of the market with a yearly production of about 50 million gallons of beer—Case Bruja produces just over 34,000 gallons of beer a year, for comparison. (When I asked Cervecerías Barú's business intelligence manager, Jorge Angel Gutierrez, about his company's current market and production figures, he refused to divulge the "confidential information.") In the past year or two, however, the two giants have lost almost 10 percent of the market to imported and specialty beers—a shift driven by the country's rapidly expanding economy. According to The International Monetary Fund calculations, the Panamanian economy is currently experiencing a GDP growth of 6.9 percent, making it one of the fastest growing economies in Latin America. "The middle class here in Panama is growing more and more everyday," Pragnell confirms. "That's why our beer is doing better and better every day as well."

Casa Bruja wasn't the first company to experiment with artisanal brewing in Panama. In 2005, Istmo Brew Pub opened as the first of its kind in Panama City. With a small selection of beers brewed in-house, Istmo made a name for itself among expats, tourists and middle-class Panamanians who were sick and tired of the sad national lagers. (I paid a visit Istmo Brew Pub and found their beers undrinkable.) In 2010, La Rana Dorada followed in Istmo's footsteps and opened a brewpub in the neighborhood of El Congrejo. Two years later, they opened a hotly-anticipated second location in the trendy Casco Viejo district—in 2014, they won a gold medal at the Copa Cervezas de America for their IPA. In 2012, the Bocas Brewing Company was formed on the country's Atlantic coast in the popular Bocas Del Toro province, but based on their social profiles online there seems to be very little activity at the brewery. And Cervecería Legitima, yet another brewpub, is set to open in the city sometime in 2015. The trend is solidified, the market is growing. But Casa Bruja remains the only independent brewer in Panama with a bottling and distribution plan. "A brewpub is entirely different," Pragnell explains as we finish up at the brewery. "Brewpubs sell pints of beer at four dollars or five dollars right to the customer. There's a lot of markup. It's easier to make money. We sell our bottles of beer for a dollar or two in the stores."

One of the stores Pragnell is referring to is Bodega Mi Amiga, a veritable institution on Via Porras in downtown Panama City. Bodega Mi Amiga is the largest liquor store in the country—and the oldest, dating back to 1959. (It's interesting to note here that Panama has no dedicated specialty beer stores… yet.) Bodega Mi Amiga sells every kind of liquor you can imagine, or that is legally allowed to be imported into Panama. And beer. Lots and lots of beer. "Right now beer is a trend," Bernardo Rivas, the owner of Bodega Mi Amiga tells me in the imported beer aisle. "In the first six months of this year, we saw a 48 percent growth in sales of imported and craft beers."

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Though Casa Bruja is available in a few other stores around the country, Bodega Mi Amiga is the only store that stocks Casa Bruja bottles in the national beer fridge, right next to the watery, industrial lagers. "It's in the right place," Rivas says, "I want people to know it's a national beer." Both Pragnell and Rivas get the feeling that this trend will subside soon due to the high price of imported craft beers like BrewDog and Rogue. With industrial national lagers only costing less than $0.50 a can in grocery stores, it's hard to justify spending $4.89 on a bottle of BrewDog Dead Pony Pale Ale or Rogue Shakespeare Stout. Especially in a country where the minimum wage is a meager $3.00 an hour. But Pragnell is hoping Casa Bruja will sidestep the trend's downturn. "We're sort of on the borderline," Pragnell says, "we have the quality of international imports but at a price closer to the national lagers." Casa Bruja's Fula Farmacia Blond Ale sells for $1.95 at Bodega Mi Amiga.

Lynchburg is a six-month-old German sausage and ale house in the heart of Panama's San Francisco neighborhood. Finished almost entirely in wood, like you're inside a wine barrel, Lynchburg has tufted red banquettes, southern rock as loud as it can go and a stunning backlit bar. "We have a specific glass for every kind of beer we sell," Christian de Mena, the frenetic owner of Lynchburg, says to me at the bar. "Draft beer used to be very rare back in the day here in Panama," he adds, "now, customers come in and the first thing they ask is 'What do you have on draft?' Things are changing." I order a $4.00 glass of Casa Bruja's award-winning Chivoperro IPA. It comes in an elegant branded tulip glass. At 6.1 percent alcohol, it packs a punch but it's still what Pragnell calls a "Session IPA"—meaning it's on the lighter side of the IPA spectrum so one "can drink four or five pints at the bar and not be overwhelmed by the flavor." It's a bright, drinkable IPA made with dry American hops giving the nose hints of mango and passion fruit.

The bar starts to get busy and the bartenders, two of whom are wearing Casa Bruja T-shirts, begin to really hustle. A waiter brings out some fresh pretzels and homemade pork and wine sausages. De Mena offers me a glass of Sir Francis Drake, Casa Bruja's red ale. "I love this beer," he says as he sips from his own glass, "out of all the beers we have on tap, I drink Francis Drake 80 percent of the time. I love the color, the taste, the aroma and the simplicity. It's a nice hoppy beer." De Mena's customers seem to agree. More than half of the patrons at the bar are holding glasses full of Casa Bruja's malted barley red ale.

In June, Newsroom Panama reported that beer production in the country had reached an all-time high between January and April of this year. A report by the Comptroller General reveals that 89 million liters of beer was produced in that time, a 5.4 percent increase compared to the same period last year. The report also showed that the production of Panama's national spirit Seco Herrerano (an inexpensive party favorite distilled from sugarcane that goes down like nail polish remover) has dropped 27 percent during the same period, to 1.9 million liters. It may all sound like a surefire trend for budding entrepreneurs to latch on to, but independent Panamanian brewers are competing for a very, very small portion of the current market—as little as 0.02 percent according to Jacky Yaffe, managing partner of La Rana Dorada. "We are trying to educate the people of Panama until local craft beer is at least 0.5 percent of the market," Yaffe told La Estrella in October.

Pragnell, who studied industrial engineering at Purdue University in Lafayette, Indiana, took a decidedly oblique path into craft brewing. After working in warehousing logistics for a Spanish humanitarian company, Pragnell took a particular interest in international aid work. Before long, he was working as a logistics officer for the United Nations in Latin America and was personally organizing up to seven aid flights a day to Haiti just after the 2010 earthquake. After three weeks of high-energy crisis management, Pragnell returned to his everyday office work. "I was suddenly so bored," he confesses, "I was underworked and overpaid." Things picked up again when the 2011 tsunami hit Tōhoku, Japan. Pragnell spent three months in Japan engineering prefabricated warehouses. "Then I came back to Panama again, sat down at my desk and was bored as hell," he says. All this time, even back when he was studying at Purdue, Pragnell was an avid home-brewer.

After loosing a promising operations position with the UN in Haiti, then another in Ghana, and a third in Mozambique, Pragnell sent an impulsive email to James Watt, the CEO of BrewDog in Aberdeenshire, Scotland, asking for a job. Three days later, BrewDog's operation manager offered him a minimum-wage assistant brewer position. It was here, at BrewDog, that Pragnell met Omar Lombardo, who is now Casa Bruja's head brewer. After eight months, Pragnell was promoted to brewer, a position he occupied for another six months before returning to Panama with a business plan for his very own craft brewery. It's been hectic for Pragnell ever since he left Purdue and something tells me it's only going to get crazier. "Executing your dreams at forty or fifty," Pragnell says, "is just a bit too late."

On Calle Andrés Mójica, in Panama's San Francisco neighborhood, Brew Stop acts as a fulcrum for the craft beer community in the city—a germination dish where gringos and locals unite over a shared love of great beer. The unpretentious half-bar-half-beer store has been peddling the "American craft beer experience" for ten months now and business seems to be booming. Customers can purchase cold beer at full price or warm bottles of beer at retail prices to take home. I order a pint a Fula Farmacia, Casa Bruja's 4.7 percent Blond Ale. Light amber in color with a subtle sour finish, Fula is one of Casa Bruja's best sellers.

"It's a small community here," says Esteban Arosemena, part owner of Brew Stop. "We're all very likeminded in a certain sense. We're all trying to bring about some sense of awareness about good beer." I ask Arosemena about the challenge of selling full-flavored, crafty beers in a market dominated by pesky industrial lagers. "They are the cheapest thing on the market and they are what has been offered," he says. "But once you start giving someone good beer, it's hard for them to go back to the light lagers they were used to."

But if you think Cervecería Nacional and Cervecerías Barú are willing to lose any paying customers to newer, tastier beer options, you're wrong. Dead wrong. Until recently, Pragnell had been selling kegs to a popular bar in downtown Panama until the bar decided to replace all their draft beer selection with products from one of the two major national brewers—a deal that no doubt was sweetened with a cash incentive.

The big beer industry in Panama is far from innocent, so dirty dealings like this are not hard to believe. In 2007, Salvatore Mancuso, a savage Colombian paramilitary leader claimed that he'd been receiving $0.70 for each case of beer sold by Cervecería Nacional in the Uraba area of Colombia, which ultimately lead to allegations that Mancuso and his armed right-wing troops had been hired by Cervecería Nacional to kill union workers. And Cervecerías Barú has recently come under fire for seizing the bank accounts of the Panamanian Football Federation (FEPAFUT) and demanding compensation of $7 million dollars for a breached contract—a contract that FEPAFUT backed out of so that they could sign a new one with rival Cervecería Nacional.

In a move that perhaps most clearly underscores Cervecería Nacional's burning desire to retain those customers who are demanding more flavor from their suds, the company has recently launched a new product: 507 Premium Red Lager. Taking some plays out of the craft beer playbook, 507 has an edgy logo, interesting artwork and is only available in funky, clear bottles. "Even though the bulk of the demand for beer is still controlled by industrial production," Galaxis Ardila, master brewer and director of quality assurance at Cervecería Nacional told Capital Financiero, "the market is fragmenting because increasingly, a growing number of consumers are looking for different flavors and textures." While 507, which retails for $0.79 per bottle, is more enjoyable than the old mass produced lagers, it's a far cry from a Sir Francis Drake from Casa Bruja.

In Panama, private consumption is at an all-time high—a shift prompted by an all-time low unemployment rate of 2.9 percent in 2013 and 2014, the lowest in the region. And optimistic predictions from Trading Economics put the 2015 and 2016 GDP growth rate at a whopping 9 percent. What does that promising growth mean for the renegade brewers at Casa Bruja? "I'm improvising," Pragnell admits. "But I don't want to make Casa Bruja so big that I don't sleep at night. If I keep growing and growing, I'll never stop working. I simply want to work eight hours a day and provide for my family.

There is certainly a lucrative yet dignified sweet spot between small time micro-brewer and soulless mass-producer. Where it is exactly, no one knows. In Panama, is has yet to be found. Just another golden treasure hidden somewhere in the great unknown, waiting to be discovered, plundered and protected. But like all lost treasure in this part of the world, it's something that will either be found by the people, or by the pirates.