Yeast is a living organism. Specifically in brewing, there are two types of yeast commonly used. Ale (Saccharomyces cerevisiae) and lager (Saccharomyces uvarum). Most ale yeasts work at a temperature between 64-72F, and lager yeast between 44-58F, but there are exceptions. Yeast works by converting fermentable sugars into alcohol and CO2. In addition, if the temperature during fermentation goes outside the specified range, yeast slows down production, and can begin causing fusel alcohols, which are longer alcohol chains and can give solvent like off flavors.
Two main forms of yeast exist: dry and liquid. Fermentis makes a fair selection of very quality dry yeast, with Wyeast and White Labs both competing in the liquid yeast business. Dry yeast is somewhat less expensive, but liquid yeast has a far better selection of flavors available. So does this mean one is better? No, both dry and liquid produce excellent, quality beers, and all companies mentioned produce excellent products. It comes down to preference. If you want dry or liquid and how big of a selection you need. Most brewers use liquid yeast.
Also know that yeast is a MAJOR flavoring component in beer, contributing to approximately 70% of overall flavor. Of course water, any brewing salts (treatments), grain, and fermentation temperature all affect flavor, but yeast is by far the largest part. Take extra special care when deciding what yeast you are going to brew with.
Yeast also requires oxygen to thrive. Before pitching yeast into beer, either shake the fermenter very well for several minutes to introduce oxygen, or buy a cheap aquarium pump and stone, clean well, and pump air into the fermenter for several minutes. The pump is the better method, and a decent pump with tubing is about $10.
So how do you use yeast in beer? If you have dry yeast, simply warm a cup of water to between 100-105F, dump in the yeast, stir it up well, and let it rehydrate for about 15 minutes, then pour it into the fermenter. With liquid yeast, whether a Wyeast smack pack or White Labs vial, you can just open up the package and use it immediately. Wyeast includes instructions on the package. However, making a starter is a good idea. You can watch the videos here which explain how starters are made. Basically, a starter provides a "boost" for the yeast, more cells, and helps it take off faster.
Also, let it be known that with liquid yeast, the "use by" date on the product is only a guideline. Liquid yeast can be used for a few years after the date, but a starter is required. Just be sure the package has been sealed the entire time.
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