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Thursday, February 22, 2018

Golden Road and the Abyss Ahead

It's funny how dots sometimes connect themselves when thinking about beer and, more specifically, the beer business. Thinking up things to write about isn't always easy. Then you get slapped in the face and a point comes instantly into focus.

Long ago, I set up a Google alert that funnels beer industry news into my inbox. That intel is typically pretty light compared to the pro newsletter stuff I occasionally receive and read thanks to generous "friends" in the business. But sometimes the Google bots surprise.

The other day, into my inbox came a Sacramento Bee article outlining Golden Road Brewery's plan to open a brewpub in Sacramento. You may be aware that Sacramento is somewhat behind the craft beer growth curve in California. The state has more than 900 breweries, but just 58 of those reside in the Sacramento area and roughly 50 of those have opened since 2009.

If you pay attention, you likely know Golden Road does not exist, at least not in its original independent form. Just as 10 Barrel, Elysian and Goose Island no longer exist. All of these breweries were subjugated by Anheuser-Busch in recent years and are, in effect, baby Buds, members of the High End portfolio. Denials are alternative facts.

It's not hard to figure out why Golden Road is opening in Sacramento. It's an underserved market with a lot of low hanging fruit. Golden Road, which originated in LA, is arguably a better fit for Sacramento than 10 Barrel or Elysian, both founded in the Northwest. They'll go in there and market themselves as a California brand. Consumers will descend like swarms of locusts.

Pubs are just one prong of Anheuser-Busch's strategy to shove independent craft brewers into the shadows. With its mainstream brands mostly in freefall, AB had to come up with a viable survival strategy. The strategy, which came into focus over a period of several years, was to partner with and, eventually, buy a collection of craft brands.

By the way, AB now owns enough craft brands to create significant disruption in the market. It need not buy any more, though I continue to believe it will buy the Craft Brew Alliance, of which it is already a partner, before late summer. As discussed here more than once, that is strictly about Kona, which has huge national and international potential. But never mind.

The primary reason AB wants pubs is to establish strategic outposts in areas where the captured brands are not readily known. That's why 10 Barrel has pubs in Denver, Boise and San Diego. Pubs help lend local legitimacy to brands. Consumers in many cases don't know or don't care that 10 Barrel or Golden Road are part of big beer.

Of course, the pubs are largely a sideshow. The main thrust of AB's strategy is being played in retail, primarily grocery stores. That's where the majority of beer is sold in this country and that's where Anheuser-Busch is diligently working to reduce independent craft brands to secondary, redheaded stepchild status. And the strategy is unfolding nicely, unfortunately.

I got a nice reminder of that in the beer aisle on a recent trip to Fred Meyer. What's occupying
the prime shelf space? Golden Road, 10 Barrel, Elysian and other zombie AB brands. Beer from independent craft breweries was relegated to a small area off the beaten path, where it's less likely to be seen or grabbed impulsively.

Sad to say, this is the future of retail beer. With its High End brands and the power it wields in grocery via distribution, pricing, etc., Anheuser-Busch aims to gradually squeeze independents out. Except for beer specialty stores, this is the emerging reality.

Otherwise known as the abyss ahead.

Thursday, February 15, 2018

Reeling in One of Portland's Finest Dive Bars

The great bulk of contemporary craft beer consumers are too young to have any inkling of what Portland's beer world looked like before the late 1980s. There were taverns and bars, but nothing like the beer bars and brewpubs we have today.

Things gradually began to change after passage of the Brewpub Bill (SB-813) in June 1985. That moment presaged what was arguably the greatest victory of the craft era: the notion that beer needn't be sequestered in dark, grimy establishments.

The brewpub and beer bar scene we have today owes its existence to the Brewpub Bill. These places are often, though not always, welcoming to adults and minors. They are well-lit and typically (though not always) less grubby than the dive bars and taverns of yesteryear.

Sometimes I wonder if maybe we lost something in the bargain. I can well recall going to grubby bars and taverns when I was younger. Strictly for fun. There was no rush to sample or discuss the latest new beers. In fact, there were no such offerings. These were bar excursions.

My favorite grimy bar as a young drinker was The Cellar in Lewiston, Idaho. It was a dark, dingy dump in a downtown basement. They served pitchers of swill and patrons lapped it up graciously. There was foosball, pinball and other gaming. A simple experience with rugged charm.

Of course, even with the advent of fancy beer bars and brewpubs, grubby dive bars never went away. There are plenty of them, even in beer-wonky Portland. It's just that beer snobs (like me and most of my friends) tend to steer toward fancy, beer-centric bars and pubs. No offense to the dives. We chase nerdy beer.

Several weeks ago, I asked a friend in the know where to find the best deep fried chicken and jojos in Portland. He advised me to visit the Reel M Inn Tavern on Southeast Division. A quick trip verified the accuracy of the chicken and jojo advice. But there was more.

This is your quintessential dive bar. According to legend (and the internet), a great dive bar has certain characteristics. Firstly, and maybe most importantly, it has to walk a fine line between being a standing health code violation and the place you want to be on any given night. Check.

The Reel M Inn is dimly lit, dingy and filled with apparent regulars. It has free pool and other gaming, plus a spunky bartender who chats it up with customers she mostly knows by first name. Reel M Inn gets bonus points for the marked up ceiling beams, mounted deer racks, multiple neon signs and related grubby charm. Even the out of order men's toilet was a nice touch.

One way the Reel M Inn doesn't fit the dive bar shoe is food. An authentic dive bar ought to have crappy frozen pizza or some sort of stale packaged snack that patrons order only when drunk out of their gourds and desperate. Not the Reel M Inn, whose terrific chicken and jojos make it a destination for a lot of people...my wife, for example.

Since that initial visit, we've been back a couple of times. Those trips have been for the chicken and jojos, but I've come to appreciate the place for what it is. On the most recent trip, my wife wanted to play pool. The gents manning the table graciously invited her to play. There's a casual friendliness here that you don't find in most snobby beer bars.

Part of what's different is socioeconomic, I think. This isn't the same crowd you find at your typical pub or beer bar. A lot of these patrons are looking for drink deals, which come in the form of can prices and shot specials. There's a decent, if compressed, draft list. But Rainier and PBR pounders look to be the fastest movers. Along with low tier liquor. Big surprise.

The Reel M Inn lives down the street from where Division turns into an upscale arcade. The chatty bartender told me they get a fair number of tourists, folks who are evidently headed to the fancy digs a few blocks away and stumble in. Some of them must be shocked when they see this joint. If that keeps them from moving here, mission accomplished.

The thing is, this is what bars have always been about. We've lost sight of that a bit in our craft beer obsession. There's a warm camaraderie that isn't remotely concerned with beer at the Reel M Inn. It's based on conversation and community. Regulars migrate here daily, yet welcome visitors. You can be a pint drinking champion or a pool shark here. Or you can melt into the woodwork.

No way will the Reel M Inn become my Cheers bar. I'm fine where I am. But I'm glad I found it and I look forward to occasional visits. Because it reminds me of what's great about neighborhood dive bars and taverns.

Thursday, February 8, 2018

For Widmer, the Future is Innovation

Monday evening, I attended an event at Widmer Brothers Brewing Pub, formerly known around these parts as the Gasthaus. A bunch of folks from the Portland beer community, mostly brewers, were invited to stop by, sample the beers and see the place Widmer now calls home. Fun evening.

I'd been there ahead of the event. Several weeks ago, I stopped by on the advice of someone who said the innovation program, lead by Thomas Bleigh, is putting out some nice beers. Sure enough, the beers were pretty good on both occasions.

The innovation and small batch program is almost certainly Widmer's future. Soon enough, the parent CBA will become a fully owned subsidiary of Anheuser-Busch. That deal, as I've suggested here and elsewhere, will probably happen by summer for contractual reasons. I'll be shocked if it doesn't.

The CBA made its shift in focus official the other day when it announced that John Glick, vice president of its emerging business unit, is quitting to pursue "other business opportunities." The emerging business unit, launched in 2015, was responsible for acquisitions (just one) and forming strategic partnerships. With a buyout imminent, there's nothing for Glick to do. He's gone, golden parachute pending.

At the same time, the company formalized its intent to refocus on innovation. It named Karmen Olson, the former director of emerging partnerships under Glick, as director of innovation. She promises an aggressive approach to innovation across the CBA portfolio. It's open season on that in this wacky beer climate, so she'll have some fun.

The innovation strategy first began to emerge a couple of months ago, when the CBA abruptly shuttered the Gasthaus Pub. That was mostly a cost-cutting move, intended to create a leaner CBA that would be more attractive to AB. But the underside of that move was and is the new Widmer Pub, which opened a few days later and features mostly small batch, specialty beers.

The CBA brass naturally denies that shutting down the emerging business unit and shifting to aggressive innovation signals that a buyout is on the horizon. That's par for the course, though. Buyouts in craft beer are always never going to happen until they're announced. Until then, operatives on both sides stonewall. You know the drill.

As I've detailed and you may know, AB's sole interest in the CBA is Kona, which is growing rapidly and has huge national and international potential. Given its current trajectory, I don't see how AB can afford not to have Kona. Widmer, along with its longtime Northwest stablemate, Redhook, will be altogether dispensable once the buyout happens. 

It's hard to say what will happen to Widmer in the wake of the deal. Whether it continues on as part of Anheuser-Busch's High End portfolio or is spun off as a separate entity, Widmer will have to feature a strong local and regional focus. Its national appeal has declined in recent times, thanks largely to the influx of new local breweries, but Widmer still has potential here. 

The key to getting some traction is going to be innovation. Small and inventive is the current buzz. Some would say Widmer has been innovating for years. If that's the case, those activities have gone largely unnoticed by those who follow local beer trends. Widmer has been widely regarded as a declining quasi-national brand without a future, the dysfunctional older sibling of Kona.

Nonetheless, they're on the right track. Pushing ahead aggressively with the innovation program is good business. The folks involved are doing a nice job and it provides a path forward, regardless of how things turn out. Stay tuned. 

Wednesday, January 31, 2018

All That Glitters...GDI Sells to Columbia

After you spend a few years around the beer industry, you get to know people. For me, it somehow came to pass that a lot of people I know and talk to regularly are part of General Distributing. But not for long.

The news that General is being sold to Columbia Distributing came as a bit of a shock. I didn't get word from inside GDI. Nope. A friend alerted me Monday afternoon. I quickly texted Jim Fick (part of the owning family), who verified that the company is, indeed, being sold.

Maybe I shouldn't have been shocked. It's been common knowledge for at least several years that Columbia, which is huge and has a presence in several states, wanted to purchase much smaller General. Until now, the price simply hadn't been right. Finally, it evidently was.

Not that long ago, GDI was a laughing stock in beer circles. A large part of its territory is rural, where it sells loads of yellow beer. Perhaps that explains why ownership was slow to respond to the craft beer wave. When I first met Jim Fick in 2013, GDI had a pathetic craft portfolio of mostly second and third tier brands.

That began to change when Steve "Tiny" Irwin was named General Manager in 2015. Irwin's background in craft beer is strong. He immediately began to build a savvy team of craft aficionados. His relationships around the industry helped GDI sign of a handful of vibrant brands...Sunriver, Melvin, Modern Times, Left Hand, Founders, etc.

The sale to Columbia means all GDI brands are free to go wherever they wish. They are not tied to Columbia. That's the law in Oregon. When a distributor sells, the contracts it has with beer suppliers (breweries) are null and void. Feel free to move on.

The irony is the brands in question chose General for a reason. Irwin may have been part of that reason. But any of those brands could have chosen Maletis or Columbia, the area's biggest players. They chose General because they felt they would get more attention and have a greater chance of success by being part of a smaller book of brands.

With General out of the picture, those brands will have to decide where to go. Consolidation in distribution means limited choices. Will GDI's brands go to Columbia or Maletis, both of which have huge books? Will they roll the dice and go with Point Blank or one of the smaller distributors that have small books, but limited retail penetration?

Of course, this isn't just about brands. Most GDI employees will be out of work when the sale closes at the end of March. It hardly matters that Columbia says it will give these folks a chance to interview for open positions. This is a business and you don't need duplication. A few GDI folks will probably transition to Columbia. Most won't. That's the nature of the buyout beast.

When I spoke to Irwin Tuesday evening, I asked him what was next for him. He nimbly dodged the question, saying his first priority was finding jobs for his people and the right homes for the brands he so diligently signed over the past few years. I honestly hope he succeeds.

If you step back and look at this sale, you may be tempted to believe the Fick family planned for several years to sell the business. They hired Irwin because they figured he would build a respectable craft portfolio that might increase the overall value of the business. If you think that, you aren't alone. Several people who know the industry have suggested it to me.

The alternative narrative, and one I am forced to consider after talking to Irwin and other reliable industry sources, is that the Ficks simply lost faith. They invested heavily in craft when the industry was growing like a weed several years ago. In 2017, growth slowed dramatically. They saw the business changing in crazy ways. They decided it was time to get out.

I don't know which version of the story I believe or want you to believe. But I don't think we're better off with General Distributing out of the picture. All that glitters isn't gold.

Sunday, January 28, 2018

Swill on the Line for Eagles Fans

The Philadelphia Eagles are playing in the Super Bowl. They'll be up against New England, a team they lost to in the 2005 Super Bowl. A little payback would be nice. Also, Philly fans will get to cash in on free beer if their team wins.

If you aren't paying much attention to this year's game, you aren't alone. It's a game between teams that aren't widely popular. Most of the country can't stand the Patriots and their smug fans. Philly doesn't stack up much better. Eagles fans brawled with each other and threw beer cans at Vikings fans before the NFC Championship. Afterwards, they pelted the Vikings team bus with beer cans. Anyone hate sour winners?

Sometimes choosing a team to root for in big games can be a challenge. But everyone surely sees that Philly is a bit of a tough case. Its sports teams haven't had a lot of success in recent times. The Eagles last won an NFL title in 1960. Despite its boorish fans, much of the country will be rooting for the Eagles in the big game. Everyone loves a hard luck loser...I mean underdog.

As everyone knows, betting is a big part of any Super Bowl. Most people around the country wouldn't be interested in this year's game (any year's game, actually) if they weren't invested in an office pool, square game or other betting. Gambling is a big reason for the NFL's success...and also for the ratings of Super Bowls.

This year's big game bet was hatched last summer, when Eagles offensive lineman Lane Johnson promised to provide free beer to beer drinking Philadelphians if the team won the Super Bowl. It was a crazy thing to do. But Anheuser-Busch quickly doubled down, saying it would provide the beer (the term is used loosely, as you shall see) if the Eagles win it all.

Of course, no one had any way of knowing at the time that the Eagles would wind up in the Super Bowl. So the beer guarantee on AB's part might well be viewed as nothing more than a publicity stunt. Which maybe isn't a bad thing, given the declining fortunes of Bud and Bud Light. Even a fake goodwill campaign is better than nothing.

With the Eagles in the big game, the AB suits needed to wipe away thoughts that they might have impure thoughts or be playing favorites due to a beer guarantee. So they produced videos congratulating the Eagles and Patriots. You do what you have to.

But the shills at AB must be thanking their lucky stars. Because it turns out Philly metro, which is slightly larger than Boston metro (6.2 million to 5.5 million), is in dire need of some positive spin for AB products. According to surveys, Bud Light is #5 on the list of beers recently consumed by drinking age adults. Yuengling, Coors Light and Miller Light were the top three.

Things are better for AB in Boston metro, where Bud Light came in #2 behind Sam Adams, both of which track well ahead of the rest of the top five. If AB wants to make an impact, it seems like a far better investment to pick up the tab for hard luck, longsuffering Philly fans than to mess with beer depraved Boston.

The good news for Philly fans? The Eagles have to win the game for them to collect free beer. The bad news? The beer is Bud Light. But I hope they win, anyway.

Wednesday, January 24, 2018

Charlie Papazian Will Ride into the Sunset

I brewed my first batch of beer in 1995. I have my wife and Charlie Papazian to thank. She gave me his book, The Complete Joy of Homebrewing, for my birthday that year. The book guided my entry into the world of real beer. I mention it because Papazian will retire from the Brewers Association when he turns 70 next year, after 40 years of service to craft beer.

Papazian played an essential role in what became a revolution. He is the Henry Ford of craft beer. There were certainly people homebrewing before he formed the American Homebrewers Association. But he inspired a generation to make good beer and provided a road map describing how to do it.

We know Papazian would go on to do much more, which I shall get to. But his homebrewing book was possibly the crucial piece. Because some of the homebrewers who referenced the book would go on to launch the craft beer industry in this country.

Kurt and Rob Widmer were avid homebrewers and thought they might be able to make a living as pros. They wound up launching Widmer Brewing. Art Larrance, Fred Bowman and Jim Goodwin got caught in the same siphon and wound up founding Portland Brewing in 1986. The list goes on and on. You can bet many of these folks read Papazian's book along the way.

One of the great features of the book is it doesn't read like a textbook. The tone is friendly, down-home: "Relax. Don't worry. Have a homebrew." Learning how to make beer was supposed to be fun, not arduous. I can vividly remember reading the book as much for entertainment as for brewing intel. Like most who used it, I didn't become a pro brewer. But I did homebrew for many years and the book did help push my interest in better beer.

Of course, Papazian would go on to do much more. When he and Charlie Matzen formed the AHA in 1978, they published Zymurgy, a magazine that promoted the organization and publicized the federal legalization of homebrewing that year. In 1982, Papazian helped launch the Great American Beer Festival. Now in its 37th year, GABF attracts some 60,000 attendees annually and awards arguably the most coveted medals of any competition.

Soon thereafter, the Association of Brewers was reorganized to include the AHA and Institute for Brewing and Fermentation Studies. Later, in 2005, the Association of Brewers and the Brewers’ Association of America merged to form the Brewers Association, the not-for-profit trade association that supports small and independent American brewers.

Papazian will spend his final year at the Brewers Association completing muriad projects, including a craft brewing archive. The archive will reportedly house 40 years of craft beer history, including more than 100,000 publications, photographs, audiotapes, films, videos and documents. He'll also deliver the keynote address at the National Homebrew Conference in Portland next summer.

I've not met Mr. Papazian personally, though I certainly could have. We crossed paths at the Craft Brewers Conference a couple of years ago and again at GABF last year. He has achieved virtual rock star status among beer fans. While roaming the grounds of events, he is routinely greeted and asked to pose for photos. I've considered getting a picture with him, always thought better of it.

Like so many of the folks who launched the craft beer movement, Papazian didn't fathom where it might go. Looking back, he had this to say in a Brewers Association press release:

“I had a playful vision that there would be a homebrewer in every neighborhood and a brewery in every town. But what I did not imagine, couldn’t imagine, never considered, was the impact that craft brewing would have on our culture, economy and American life."

Thanks for everything, Charlie. Well-done. We wish you well.

Saturday, January 13, 2018

The Rising Tide of Craft Cans

The rapid rise of beer in packaged form began in earnest after World War II. Beer had been available in bottles for many years and in cans for about a decade. But draft was king. That began to change following Prohibition, largely the result of consumers preferring to drink beer somewhere other than a bar or tavern.

Advancements in packaging, refrigeration and transportation made during the war eventually helped make packaged beer more popular than draft. Growing up through the sixties and seventies, I clearly remember an abundance of macro beer choices in bottles and cans.

Most people considered cans to be inferior in those days. They were easier to handle, but there was the constant scourge of tasting the can, whether it was steel or aluminum. Bottles were preferred by most self-respecting beer drinkers and mainstream consumers.

When craft beer came along, canning was impractical. Not that anyone would have bothered with it. The supposition was that bottles were superior if you wanted to protect the integrity of your product. So packaged craft beer came mostly in 12 oz bottles or 22 oz  bombers. Cans were rare.

Today, those assumptions and practices are under siege. A lot of consumers have decided they like the flexibility of cans, which are lighter, less breakable and easier to take on excursions than awkward bottles. They've also decided that beer from a can tastes just fine, that maybe the reason cans had a bad rep in the past was the beer that came in them.

Walk into your local bottleshop and you'll see the result: cans everywhere. In fact, you're more likely to see that trend on display in a bottleshop than you are in a grocery story, according to intel in a recent article by Brewers Association economist Bart Watson. Cans are winning big with a particular segment of the market, which I'll get to shortly.

In the big picture, bottles remain the top dog in packaged craft beer, Watson says. Bottles accounted for about 72 percent of packaged craft production in 2016. Cans came in at just over 28 percent. But can growth is spiraling upward. Watson reckons cans will account for about 31 percent of packaged craft in 2017, once the numbers are in.

The most intriguing part of this for me is where the most spectacular growth is occurring. You might assume brewers across the board are switching to cans. But that isn't the case at all. In fact, only a small percentage of breweries are switching from bottles to cans, according to Watson. Regional craft breweries are largely sticking with glass.

That's why you aren't going to be blown away by craft cans in grocery. Regional and national craft continue to dominate shelves in that channel. Which means a lot of bottles. So shopping the beer aisle in grocery isn't going to be much of an indicator, in terms of can growth. But your local bottleshop probably is.

The reason is wrapped around who's using cans and who's growing. Watson demonstrates this with a table which shows that smaller (likely newer) breweries are far more heavily invested in cans than older, larger breweries. It also turns out smaller breweries are responsible for the greatest craft segment growth, by percentage. And this beer is far easier to find in bottleshops than grocery.

Breweries producing less than 10,000 barrels were responsible for 58 percent of craft segment growth last year; those producing between 10,000 and 100,000 barrels were responsible for 17 percent of segment growth. Between them, these folks accounted for more than 85 percent of craft can share in 2016 and they grew that share by more than 20 percent last year.

The trend to cans is an emerging tsunami. In a few years, they will surely account for more than 50 percent of packaged beer. Cans have gained traction with young fans who flock to smaller, newer breweries. It hardly matters that those breweries tend to produce trendy brews to attract that audience. The appeal of those beers is driving wider acceptance of cans by the day.

Larger, established brewers are being forced to take note. Most have been slow to accept and adopt cans, but attitudes are changing. Hey, even if you don't want to brew and release trendy new styles, putting your beer in cans with updated label art is smart marketing.

Wednesday, January 3, 2018

Novelty and (Brief) Ecstasy

When Art Larrance opened the Raccoon Lodge in 1998, his top priority was finding what he now refers to as a "magic elixir." In short, he and his minions, principally Ron Gansberg and Preston Weesner, wanted to invent a unique beer that would define them.

You know the story. After messing with barrels as part of an IPA aging experiment, they more or less stumbled on sour beer. The concept didn't catch on right away, but they had their "magic elixir." Cascade Brewing, Larrance's corporate name since day one, has ridden sour beer to great fame and fortune.

Keep in mind that Larrance was one of Portland's founding brewers at Portland Brewing. He was quick to understand that standard, everyday beers weren't going be enough to keep a brewery viable. He figured he had to have something special to rise and stay above the crowd.

That philosophy was not generally embraced by craft brewers prior to the spike in brewery count that started to happen about 10 years ago. Breweries went about their business with standard lineups and the occasional seasonal, in draft and occasionally packaged form.

As Jeff Alworth pointed out in a recent post, the accelerating brewery count has altered strategies dramatically. Since 2007, the number of breweries in this country has quadrupled. We now have more than 6,000 operating breweries. You need to do something to attract attention in that environment.

The consequence of this reality is that virtually all craft breweries are rapidly pushing out experimental beers hoping to land on something that will attract the momentary interest of consumers who have very short attention spans. Even the beers tend to come and go quickly.

I don't use Untappd or any other app that might help me track my beer consumption. But I'm guessing I drank or sampled nearly 1,000 beers last year. Most of those beers I drank once. Many of them I saw once, as they vanished from sight after a brief period. But never mind.

Let's face it. The push for novelty has resulted in a lot of sketchy beer. We're currently stuck in a hazy rut. Breweries are nervously throwing everything but the kitchen sink at hazy beers, hoping to create something that produces ecstasy in the minds and mouths of consumers, if only briefly.

You must have a hazy, preferably several, to be relevant in today's marketplace. Within the last 24 hours, I've received several press releases and seen numerous social media posts announcing the release of hazy beers in cans and on draft. It makes my head spin.

Frankly speaking, it is no longer possible to keep track of all the new and soon-to-be expired brands. The notion that a beer isn't relevant unless it's new and trendy is creating a high level of insanity and insecurity in craft beer. The mass urge to discover new and unique beers got us here.

I have no idea how we get out.

Friday, December 22, 2017

Trends and Bends in the Year that Was

As is the case every year, we're beginning to see the usual end-of-year reports summarizing what happened. It was another interesting year in beer. There were some positive and problematic developments. Below are some of the most significant ones in my view.

Craft Cans
I first mentioned the benefits of cans here several years ago. At the time, cans represented a fraction of what was showing up on store shelves. Six-packs of 12 oz bottles and 22 oz bombers dominated the retail market. That's changing.

What started as a trickle became a tsunami in 2017, as more and more craft brewers adopted aluminum cans. Bombers, once the chosen packaging of small craft brewers, are the biggest losers in this transition. Their shelf presence is in decline. Even 12 oz bottles are taking a hit.

While it was once difficult and costly to can beer, mobile canning systems and generic cans that can be labeled on site are making canned beer economically attractive. Brewers see that cans are less expensive to ship, less susceptible to breakage and better at protecting beer than glass.

Of course, what's good for brewers isn't always accepted by consumers. Cans, once the dominion of crap macro beer, for decades carried a negative stigma. That's changed, in large part because cans are now filled with quality product. It's also true that the cans themselves are better, not to mention lighter, less bulky and easier to transport than bottles. Consumers are seeing the light.

The growing popularity of cans will likely continue, arguably a good thing. That doesn't mean bottles are going away entirely. I suspect 12 oz bottles will be around for quite some time and some beer styles are a better fit for large format bottles due to conditioning and cellaring considerations.

Local Beer
The Brewers Association just reported that there are now more than 6,000 breweries in the United States, some 98 percent of them small and independent. More consumers have access to locally made beer than at any time in our history. Period.

While that's been good for consumers and small breweries, it has not been good news for large craft brewers. National and regional stats through the year suggest that many, though certainly not all, large craft breweries lost sales volume in 2017.

Here in Oregon, we see that in dramatic losses by Deschutes, Portland Brewing and Bridgeport (see Jeff Alworth's recent post on this subject). If we could see the numbers for Widmer, they would depict a similar story of significant decline with no end in sight.

Why are large craft brewers having a tough time? It's quite simple, I think. Not that long ago, beer consumers bought the bulk of their beer in grocery stores. We just didn't have great access to quality, local beer. It wasn't widely sold in stores and there weren't that many breweries.

Things have flipped. With so many more breweries, local beer is far more accessible. That's not just draft beer. Thanks to better packaging options, like cans, local beer is now available in more places, even stores. Given the choice, consumers seem to prefer buying local. That has hurt many large craft brewers.

This trend is likely to continue for the time being. But big beer is working to push all independent craft beer out of mainstream retail channels. If that happens, consumers who want local beer will be forced to buy it directly from breweries or at taprooms and specialty shops.

Price Escalation
Every year I see reports suggesting that craft beer prices have been relatively stable. Every year my personal travels tell me prices are rising, virtually across the board. I suspect this has a lot to do with consumers being willing to pay more for perceived quality. But there's clearly more involved.

The other night, I saw an $18 four-pack (16 oz cans) for the first time. This was a hazy IPA. Nearby, single cans of similar beers were available for more than $7 each. Various barrel-aged and mixed fermentation beers are regularly priced at $25 and above. The $12 six-pack is a regular thing.

Part of me wonders if the escalation, particularly with cans, is somehow connected to the raging fad that is hazy IPA. Since they started showing up en masse, hazies have been expensive. But seeing an $18 four-pack was shocking. Can a $20 four-pack be far behind? Shhhh!

Anyway, there's clearly an escalation happening. Consumers are dumb enough to pay crazy money for beer; breweries and retailers are more than happy to take advantage. The higher profit per piece shelved and sold is nice for everyone...except dumb consumers.

Will this trend continue? Craft beer has achieved cult of personality status in recent years. It occupies cultural space once owned by music and film. That won't last forever. Eventually, consumers are going to reject exorbitant prices. Eventually, the haze craze will moderate or go away. Eventually.

Event Madness 
Back in the dark ages, about five years ago, a few of us were talking about event fatigue. Beer centric events were happening at a rate of one or two a week and it was getting hard to keep up. Little did we know what was coming.

Driven largely by social media, the pace of events has turned into a tsunami. Release parties, tap takeovers, festivals and mini-festivals litter the calendar. Breweries and pubs are constantly looking for ways to promote their beers and brands. Someone stub their toe in the brewery? Organize a party to celebrate their return to action. Festival hype is off the charts.

You can't fault breweries, pubs and festival organizers for using social media. Traditional print and electronic media are virtually worthless as a means of promoting beer brands and events at the local level. Social media can reach a targeted audience in minutes.

My problem with this arrangement is that these events often aren't events at all. In many cases, they're a joke. Yet you have event whores who organize their schedules around scurrying from place to place fixated on what's next. Attention spans and conversational drinking take a beating.

The event crush and social media circus will certainly continue into 2018 and beyond. In fact, they're likely to intensify. Sad to say, this is the nature of craft beer until a new way of promotion comes along. When will that be? Sorry, I don't have a crystal ball.

Happy Holidays!

Tuesday, December 12, 2017

Portland's Plot to Steal the Old Town Stag

The ongoing battle between Old Town Brewing and the city of Portland continues. Officially, the city says it's working to resolve the dispute amicably. Behind the scenes, it's scheming to bully Old Town into eventually giving up the fight to preserve its legally granted trademark,

As pissed off as folks in and around the brewing community are, everyone needs to understand that this is mostly a matter of negligence and stupidity on the part of the city. Yeah, there's a hefty bit of greed mixed in, but this is mostly about stupidity and negligence.

Let your mind wander back to 2010, when the city of Portland bumbled into acquiring the White Stag sign in Old Town. Had it not acquired the sign and agreed to pay for annual maintenance and such, the old sign would have apparently wound up at the dump.

Once the city gained ownership, it took a rather sloppy approach to protecting what it had. Instead of registering the sign and the stag with the U.S. Patent and Trademark Office, the city obtained rights to use the image on a variety of products, including clothing and footwear, but not beer products, from the state. That was in 2011.

A year later, in 2012, Old Town Brewing registered the stag image with the U.S. Patent Office, securing the sole right to use the logo on beer-related products. That mark became "incontestable" recently, having been active for five years. Keep in mind that a U.S. trademark carries significantly more weight than state protection.

The city eventually did get around to registering the stag image with the U.S. Patent Office in 2015, allowing use on clothing, tote bags, cycling jerseys, etc.. However, it failed to obtain a trademark that would allow it to use the stag on beer products, or to license the image to beer companies.

Perhaps recognizing its negligence, the city made three attempts (2015, 2016, 2017) to acquire a federal trademark that would allow it to use or license the image for beer. The Patent Office refused the city's application each time. Actually, the city's request was initially approved in 2016, then revoked after Old Town filed a letter of protest.

Today, city officials whine that the stag is part of the city's identity. "It's our Space Needle, our Golden Gate Bridge, an iconic representation of Portland," so they say. They argue the city owns the sign and, as such, must have the right to use or license it any way it wishes.

Strange, though. If the stag and the sign were such an important part of Portlandia culture, you wonder why the city wasn't more proactive in 2010 or 2011. That's when it could have filed for and surely secured a federal trademark allowing it to use the stag as it pleased. Bunch of bunglers.

Having failed to make a broad trademark application in a timely fashion, the city is now attempting to bully Old Town into surrendering its trademark by forcing it to spend thousands of dollars on attorney fees and related legal expenses.

Make no mistake. This is all about squeezing a local business that has limited resources. Were this Nike or Intel, the city would be treading lightly, knowing full well those companies have fleets of attorneys and ample budgets to defend trademark infringement. Not so with Old Town.

You may wonder why the city would do such a thing. Old Town is, after all, a local business in good standing. Officially, the city wishes Old Town well...all the while sneaking around in the background and plotting to undermine it.

The answer is that the city plans to license the stag image to our old friends Anheuser-Busch for a king's ransom. It hardly matters who they have to run over in the process. City officials want the money and know AB will pay plenty for the right to connect its shoddy products to Portland.

You almost feel bad for the stooges at city hall. Almost. Had they not been negligent in protecting the iconic stag, their greed wouldn't be out in the open. The city would have a federal trademark and be free to do as it pleases. But officials blundered and the mistake is now obvious.

Maybe city officials should get a grip on reality. They blew it. Time to move on.

Wednesday, December 6, 2017

Fat Heads PDX will Transition to Von Ebert Brewing

There will be another "new" brewery in Portland early next year. Fat Heads Brewing, launched in 2014, will close in January. It will be replaced sometime in the first quarter of the year by Von Ebert Brewing, which will be operated by current Fat Heads franchisee, Tom Cook.

When news of Fat Heads closure hit beer media email boxes and social media Tuesday evening, a lot of people wondered why the apparently successful brewpub would close. In fact, the closure has nothing at all to do with the business here.

What's actually at work is that corporate Fat Heads, based in Ohio, has a lot going on in its home market. Rather than continue to focus on its remote Portland outpost, the company and Cook mutually decided to end the franchise arrangement.

"I know it sounds like spin," Cook said via email. "But that's exactly what happened. They wanted to focus on the Midwest, where they have a lot going on with a new production brewery and the new Canton brewpub. I wanted to focus on Portland. We decided it's probably best for them to continue in the Midwest and for me to do my own thing out there."

He admits it wasn't an easy decision. The franchise has been highly successful here. Indeed, the success of Fat Heads surprised more than a few in the beer geek crowd. Many thought an out-of-state chain would quickly collapse in beer wacky Beervana. Didn't happen.

"I think we succeeded here because we built a great team and gave it the right tools," wrote Cook. "There's no way I would be doing what I'm doing with Von Ebert if my team here wasn’t staying and fully behind me. This wasn’t an easy decision, but I think it's the right decision for everyone."

Von Ebert, when it opens, will specialize in hoppy brews from Head Brewer, Eric Van Tassel. Sean Burke, formerly of The Commons, is also part of the Von Ebert Brewing team. Burke's talent for brewing uniquely interesting beers is well-known. Cook expects they will release 100 or so unique beers per year, including American, German, Belgian and barrel-aged beers.

"Von Ebert Brewing is a new concept, where northwest family traditions meet bold new ideas in craft brewing,” said Cook in a press release. "We’re excited to unveil a completely new experience for customers, blending our brewing expertise with the adventurous flavors Portland has come to love."

The pub will feature what he refers to as "elevated American pub food." Items will include traditional German pretzels with beer cheese, stone-oven-baked pizzas, cheeseburgers stacked high with locally sourced meats, decadent sandwiches and smoked wings.

"True to our character, our menu will combine classic pub fares with the kind of top-tier quality, local ingredients you can only find in Portland," Cook said.

Those in the know are aware that Cook had quietly planned to open a brewpub in the vacated Ringside Steakhouse space adjacent to Glendoveer Golf Course in east Portland. Evidently, those plans will be more or less on hold until he clears some regulatory hurdles.

"There's more to come on this," he wrote. "I don’t want to comment or give a timeline until I finish with the City of Portland. I would hate to promise something and then learn we can’t do it."

If you're like me, you wonder about the Von Ebert name and logo. There was nothing about its origins in the press release announcing the plan. So I had to ask.

"My great grandmother came to the United States from Germany and her last name was Ebert," Cook wrote. "She gave up quite a bit in Germany to bring my family here, so I wanted to pay some respect to my immigrant family. "Eber" in German means boar, thus the boar in the logo."

Good answer.