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Sunday, May 20, 2018

Beer on Kauai: 40 Years Later

My first trip to Kauai was 40 years ago. It's shocking to realize that. I was about to start my senior year of college and my mom talked me into joining her. She had been here several times prior to that 1978 trip and knew the lay of the land. The place had an unfinished look in those days; it's a little different today.

I wasn't particularly interested in the beer scene in 1978. Tennis was my addiction. For beer, about all you could find was standard issue macro brew. Kauai and the rest of the Hawaiian Islands did have Primo, a novelty we coveted at home mostly because we couldn't get it there.

If you're wondering, Primo is still around. Production on Oahu ended shortly after my first trip and the brand hopped from Schlitz to Stroh to Pabst, which currently owns it, in the intervening years. But it's still out there somewhere. It isn't worth the trouble, if you're thinking of looking for it. No.

My second trip to Kauai came in 1996. This was just four years after Hurricane Iniki turned the island upside down, and things were still a little sketchy. I had started homebrewing around that time, so I was more interested in the beer scene. We drank a lot of Kona Fire Rock Pale Ale on that trip. There were some imports, as well. The scene was mostly unchanged when I returned in 2001.

There have been a string of Kauai trips since. I've lost track of how many. At some point, I discovered decent beer at Waimea Brewing. That place, located next to the Plantation Cottages in Waimea and billed as the Westernmost Brewpub in the World, moved to Port Allen and became Kauai Island Brewing in 2012. It continues to attract locals and tourists.

Kauai Beer Company opened in 2013 in Lihue. I visited the brewery not long after it opened. The place was a shell, basically a tasting room. Owner and co-founder Jim Guerber, an avid homebrewer, got mixed up in craft beer when friends kept telling him his beer was too good to stay a secret. Owner of a software company, he didn't need the money or the headache. But he liked good beer. He took the plunge.

The transformation of KBC since 2013 is amazing. From basically nothing, they now have a variety of beers on tap and a full kitchen. They are open for lunch and dinner and they continue to do a Thursday evening promotion with local food trucks. The place was buzzing when I stopped in at lunchtime the other day.

I wrote about KBC for BeerAdvocate in 2014. They have a copy of the article framed and mounted in the pub. I've seen Guerber at beer events here and there. He was mingling with patrons when I visited the other day and I didn't speak to him. But I tapped him on the shoulder as I was leaving. He opened his arms wide and spun around like Vanna White, as if to say, "Look what we've built!"

It's true. KBC has gone from nothing to something. They've done it in what remains a craft beer desert. Most bars and restaurants in the resort areas are dominated by Kona and macro. The beer selection in grocery stores is shameful, dominated by AB swill. My beer of choice here is Maui Brewing's Bikini Blonde. It fits nicely with the tropical weather and Maui is independent.

I don't know how many small breweries Kauai could support. The emerging strong preference for local beer on the mainland may not translate here. Some (heavy) styles don't really jive with the climate and the full-time population (around 72,000) may not have caught the craft beer bug like people have at home. Maybe two craft breweries is enough here.

Regardless, it's great to see independent breweries doing well. I'm especially impressed with what they've done at Kauai Beer Company because they started with not much more than a plan and built it out from there. Plus, I watched the transformation, intermittently.

After 40 years, Kaua's beer scene is evolving in a positive way. Keep it up, folks.

Monday, May 7, 2018

Long Odds at Portland Brewing

Bringing a brewery back from the edge of oblivion is a tough assignment. But that's exactly what's been going on at Portland Brewing, where management has been diligently working to return the once respected brand to relevance. The odds are stacked against them.

The situation at Portland Brewing is not good. OLCC stats, which are woefully unreliable in a lot of ways, show the brewery dropped 3,700 barrels in volume last year. That translates to a 13 percent decline. Those are Oregon only, if you're wondering. Of course, Portland Brewing isn't the only loser. Bridgeport, Oregon's oldest existing brewery, suffered a 30 percent decline in volume. Yikes!

When you're trying to revive a collapsing brand, the simplest thing you can do is refresh its visuals. So you put some time and effort into redesigning the packaging and graphics. Portland Brewing has done just that, says a recent press release. It's a different look, for sure.

Part of that strategy includes applying "Portland Originals" status to MacTarnahan's, the brewery's flagship amber ale, and Portland IPA, which has been renamed Ink & Roses IPA. The idea is to connect with the brewery's ancient past, when those beers were well-regarded around the city and region. I think applying Originals status to a beer that has been renamed and redesigned (see below) is curious, but never mind.

Yesterday, I picked up bottles of MacTarnahan's and Ink & Roses. Mac's was one of my go-to beers back in the day. We once consumed a pony keg of it at a dog birthday party. The modern rendition seems fine to me. No complaints. Even the IPA, which was altered from its original form to accentuate hops flavors and aromas, was decent, if not spectacular.

The big picture strategy driving the rebranding project is to create a link between Portland Brewing and the city's iconic brewing history. They're doing that by emphasizing the brewery's place in local craft beer history and, hopefully, the industry's future.

Setting aside the packaging and the beer, the strategy is slightly disingenuous. In actual fact, Portland Brewing, like 10 Barrel, Bridgeport and others that have been absorbed by big beer, no longer exists as an independent entity. That's been Portland Brewing's fate since 2004.

A little history. Portland Brewing was founded in 1986 by buddies, Art Larrance, Fred Bowman and Jim Goodwin. It was the last of Portland's four founding breweries to open. The pub on Northwest Flanders was too small virtually from the outset and the brewery eventually moved to its current location in industrial Northwest in 1993.

To finance the move and expansion, founders sold common stock. Soon after they arrived in the industrial area, the company was in financial distress. Local legend and mega investor Mac MacTarnahan soon gained control of the company. But it wasn't a picnic. By the early 2000s, Mac's health was failing and so was the company.

The MacTarnahan family, weary of financing a losing proposition, sold to Pyramid in 2004. Portland Brewing was soon rebranded as MacTarnahan's Brewing. In 2008, Pyramid was acquired by Magic Hat, which was itself acquired by North American Breweries in 2010. Then Costa Rica-based Florida Ice and Farm bought North American Breweries in 2012. Soon thereafter, someone had the good sense to change the name back to Portland Brewing.

Layers of ownership stifled creativity and Portland Brewing drifted aimlessly. The pub stayed busy, but the beers collapsed into irrelevance. It wasn't long before bombers and six-packs of Portland Brewing beer were showing up heavily discounted in grocery and c-stores. You rarely sniffed the stuff in self-respecting bottleshops and beer bars.

That was the situation Robert Rentsch walked into in 2015. Rentsch, a successful brand builder at the Craft Brew Alliance, was hired as general manager of Portland Brewing. His task was and is to rebuild and reinvigorate the brand. When I talked to him shortly after he was hired, he didn't have a full picture of what he would do, but admitted it would be a challenge.

Frankly, I think the attempt to wrap Portland Brewing up with the city's brewing history is a mistake. It might work with drinkers who don't understand why the connection is a fraud, but it won't be enough even if it does get traction. In fact, I believe the chances of returning Portland Brewing to any kind of relevance are sketchy, at best.

The problem is the industry has changed dramatically in recent years. We're seeing craft beer become hyper local. With more than 6,000 breweries, consumers across the country have access to local beer. As a result, they're buying local and turning away from beer made in distant places. That's why regional craft breweries are struggling (see Deschutes, Green Flash, etc.)

Portland Brewing is desperately trying to recapture its local identity because it believes that identity will buy it a piece of the action. But that's largely a mirage. The people who happily stand in line to buy Great Notion beers are never going to buy or order a Portland Brewing beer. They want something local, trendy and preferably one-off...something that carries cool brand status.

For established breweries like Portland Brewing, that kind of product simply isn't very attainable. The places most able to make those kinds of beers are independent, nimble and comfortable making rotating small batches of innovative beers.

Long odds, for sure. But good luck to them.

Monday, April 30, 2018

Public Coast Brewing: A Dream Realized in Cannon Beach

The allure of craft beer sucks people in. They get the bug in their system and can't get rid of it. That's a partial explanation for the more than 6,000 breweries in the United States today. It's also why Public Coast Brewing opened in Cannon Beach.

Founder Ryan Snyder caught the craft beer bug three decades ago while living in Las Vegas and working at Holy Cow (now Big Dogs) Brewing. Craft beer was still in its infancy at the time, but Snyder got hooked and became determined to one day open his own brewery. 

Snyder, not a native of Oregon or Cannon Beach, moved here in the 1990s and joined his wife's family business. The family owns and operates a cluster of Cannon Beach properties, including the Surfsand Resort, the Stephanie Inn and the Wayfarer Restaurant. 

In 2004, they purchased Clark’s Restaurant, at the northern edge of Cannon Beach. Snyder coveted the location because he saw it as the ideal place for the brewery he dreamed of. But the dream was not realized overnight. The place was first known as the Lumberyard Rotisserie and Grill. 

"When we purchased the building, it was to build a brewery," Snyder told me in an email. "That was part of the original plan with the Lumberyard, which would have ultimately been a taproom and grill that served handcrafted beer. In 2016, we decided to make the transition and Public Coast became a reality."

Snyder (left) and Leroux in the brewery
The Public Coast story and philosophy were part of a by-invitation media outing last week. A small group of folks who cover Oregon beer happenings were invited to Cannon Beach to tour the brewery, sample the beers and hear all about the place. Events like this don't crop up very often. I hadn't seen the place and knew little about it. I accepted.

The beer objective at Public Coast is balanced, drinkable brews that cater to mainstream drinkers. Snyder is a fan of the styles that defined craft beer over several decades. Beer geeks aren't the target, although Public Coast does have a barrel program and some borderline trendy beers, such as a hazy IPA. The food menu also features simplicity...burgers, salads, fish and chips, etc. 

For his brewmaster, Snyder chose Will Leroux, a renaissance man and self-described forager, farmer and beekeeper. Leroux trained as a chef and got interested in homebrewing. He had a talent for crafting flavors, but no professional brewing experience prior to joining Public Coast. Fred Bowman, founding brewer at Portland Brewing back in the day, has provided assistance. 

There's a method to Snyder's madness, if you will. The culture of Cannon Beach was curated from within, not from outside, he contends. That's why he was determined to open a brewery, not a taproom focused on beers produced outsider the area. Handcrafted products cultivated from within the community and immediate vicinity are the central theme in his vision.

What that translates to in beer terms is some decent, if fairly basic beers. I enjoyed '67 Blonde Ale (winner of a Gold Medal in the 2018 Oregon Beer Awards), Northwest Red Ale and Oswald IPA. The Lager 321 had a fruity finish that didn't belong. The Imperial IPA (8.9%) was nakedly boozy and lacked backbone. The hazy IPA was decent, if unexciting compared to many I've had. 

Public Coast beer is not widely available. Snyder wisely realizes the pub is his profit center and has no intention of distributing his beer aggressively outside Cannon Beach. However, his marketing brain understands that drawing visitors to Public Coast will be easier if he creates some brand recognition away from the coast.

With that in mind, Public Coast has a canning program and is doing limited distribution of cans and draft in and around Portland, from whence a majority of Cannon Beach visitors embark. If you want to chase the beers down, there's a map with locations here. In a tasting, we found some disparity between draft and canned, generally, but not always, in favor of draft. But never mind.

Of course, Public Coast isn't the only brewing show in town. Bill's Tavern is the old-timer, having been at fixture for years. Pelican Brewing, which also has locations in Pacific City and Tillamook, opened its Cannon Beach brewpub in 2016. The competitive scenario is fairly typical of what we're seeing in craft beer, as the brewery count climbs. 

Strangely enough, Snyder doesn't view Pelican or Bill's Tavern as direct competitors. Say what? He sees them as restaurants that serve beer, while Public Coast is a brewery and casual meeting place with a limited food menu. He thinks that's an important differentiating factor.

That's a tough one. These places are all breweries that offer food. The primary discernible difference is that Public Coast doesn't offer table service. Nope. All orders are taken at the food counter or bar. Patrons take their beer or similar beverage with them and pick up food when it's ready, after being summoned. 

Some visitors may like this casual approach to service, but it seems out of place to me. Cannon Beach's economy is driven by tourism and a clientele that expects quality and service. It isn't cheap or grubby here. Fast food doesn't have a presence. Is that the niche Public Coast wishes to occupy here? I don't think so.

Snyder admits counter service hasn't exactly been a hit with customers. Some don't get it, aren't used to seeing it, maybe. Look, Snyder is no dummy. He and his family invested a lot in getting this place up and running. If the lack of table serve becomes a significant problem, I trust he'll make the necessary adjustment. This place is his dream, after all.

If you're headed to the coast, check the Public Coast website for hours. They're currently open Thursday through Monday, noon to 9 p.m. I have no idea if those hours change during the busy summer season. Check ahead for best results.

Note: My trip to Cannon Beach, including beers, dinner and overnight accommodations, was provided by Public Coast Brewing. Thanks to Ryan Snyder, Will Leroux, the staff at Surfsand Resort and the folks at Lawrence PR for the invitation. 

Sunday, April 22, 2018

At pFriem, Reasoned Priorities Drive Success

Since it opened in August 2012, pFriem Family Brewers has built a reputation as one of Oregon's most prolific breweries. Whether you're talking about the best specialty beers, best mainstream beers or best brewpub experience, pFriem seems always to be in the conversation.

Friday evening, pFriem invited a group of media geeks out to the Hood River pub to provide a sort of progress report and hint of what's to come. We enjoyed beers, food and toured the brewery and barrel room. Later, we listened to Josh Pfriem and his associates discuss what they're up to.

Opportunities to casually mingle with industry stars like this don't come crop up all that often. When they do, you almost always expect some kind of major announcement. In this case, some of us wondered if maybe they would announce plans to open a pub in Portland. Or maybe they were launching a few of their beers in cans, the hottest industry trend at the moment, next to hazy IPA. Inquiring minds.

It turns out there are no immediate plans to open a pub in Portland. There isn't any rush because pFriem's Hood River location is already quite popular with Portland consumers. According to Josh Pfriem, something like 70 percent of their Hood River clientele comes from Portland. That's a fascinating statistic, frankly speaking. It means pFriem is a destination.

Think about that for a second. If pFriem were to open at pub in Portland, which would present a number of challenges and risks, the business in Hood River would take a hit. If people from the city are happy coming to you, why should you assume the risk of coming to them? At this point, given the state of the industry, it just doesn't make sense.

The question about cans yielded a similar response. Although they're seriously looking at getting some of their beers in cans, that's not the top priority. We see a number of breweries aggressively moving to cans, yet pFriem is hanging back, content to invest in other areas. My guess is we'll see two or three pFriem beers in cans within a year or so. Time will tell.

One of the most interesting factoids we collected Friday evening is what's driving pFriem's priorities. Josh revealed that their best selling beer is...the Pilsner. Close behind is the IPA. Those two beers account for about 70 percent of their sales. Keeping those pipelines full is a top priority. As such they are expanding fermentation capacity and improving other efficiencies in the brewery. Makes sense.

Of course, pFriem's specialty beer program is well known. It includes a list of mostly spectacular beers. They had just released barrel-aged Nectarine Golden Ale on draft in the pub and we tasted it from bottles after dinner. The beer is a major home run, I think, and will be released to the public this week. Don't miss it.

To advance their barrel and specialty program, pFriem will soon install a Coolship. That will allow them to tap the local, airborne fauna, such as De Garde does in Tillamook and Logsdon has done in Hood River. This is a significant step and I look forward to seeing the results. Just keep in mind that these beers take several years to curate. Patience recommended.

If all goes as planned, pFriem will increase its annual production from 15K barrels in 2017 to 19K barrels this year. Those numbers mean sustained growth in an industry that's getting more competitive virtually by the minute. Staying in that kind of growth mode is becoming increasingly elusive and requires meticulous attention to detail, to say nothing of expertise.

The big story here, it seems to me, is that pFriem has somehow managed to reach and satisfy casual craft beer fans and beer geeks. There aren't many breweries in Oregon or elsewhere that have successfully walked that tightrope. It isn't easy. Pfriem has done it with smarts, integrity and, yeah, probably a little luck. Sometimes, you make you own luck, my dad always said.

These next few years are going to be challenging and interesting at the same time. The cowboy era in craft beer is coming to a close. Success from here on out is going to require the kind of deliberate, well-reasoned approach pFriem has taken and is taking.

I suspect it's going to work out for them. We shall see.

Note: Special thanks to Josh Pfriem, Rudy Kellner, head brewer Gavin Lord, marketing guru Michelle Humphrey, and the other amazing staff who contributed to a splendid evening.

Wednesday, April 18, 2018

Surfing the Vancouver Spring Brewfest

Quick road trips are good for the soul. Even better when beer is involved. That's why I accepted an invitation to the Vancouver Spring Brewfest last week. All-in-all, it was a pleasant experience, maybe a little less wonky than some similarly sized Portland festivals.

This is the fourth rendition of the Spring Brewfest. I attended the summer version of this event a few years ago, but had only a sketchy notion of an established spring event. It seems organizers have been diligently working to further develop Vancouver's craft beer culture.

The venue seemed odd...a postage stamp. Looking through some of the media coverage, I learned previous Spring Brewfests were held in a larger space at the Vancouver Landing. That space was unavailable this year due to construction.

That precipitated the move to the brick plaza at the southeast corner of Esther Short Park. The summer festival, which consumes more space and features things like live music, is held in the main park. But the city apparently doesn't allow events of any kind on the park grass until May. So the Spring fest wound up occupying a tight space.

I visited in the early afternoon. It wasn't particularly busy for the first hour. But things were getting a little cramped by the time I made my exit a couple of hours later. Even then, getting a beer was no problem. There were no deep lines such as you see at many Portland events, just wads of people in groups mucking up the paths to the beers.

This event is billed as a showcase of local beers, meads and ciders, and most of what they were pouring was local. But a fair number of beers were from outside the local area...Bend, Ashland, Seattle, Enterprise. That's mostly just an observation. Knowledgeable craft beer fans want to drink local beer. There was plenty of that here, as well as some stuff that wasn't quite as local.

Without a wing person to share tastes with, I didn't come close to sampling the entire beer list. Good thing, obviously. I did seek out hazy IPAs and my favorite from those I tasted was Heathen's 50 Shades Hazier, bursting with hops aroma and flavor. Grab a pint if you see this one. No glitter beers in sight, thankfully.

The same old rule apparently applies when it comes to enticing Portland fans outside the city for beer. They don't come. I would normally see a lot of industry-connected friends at an event like this one. I ran into one such person. This was a Vancouver/Clark County crowd, which organizers likely expected, even if they hoped a few brave souls would cross the Columbia. Not happening.

Honestly, it's great to see craft beer continuing to spread its wings on the other side of the Columbia. Well-attended events like this one are a nice example of that. Craft's trajectory may have seemed inevitable here, but there have been quite a few stops and starts over the years.

It appears Vancouver and Clark County is in a solid groove now. Beer quality is improving, breweries and taprooms are opening. The area is no longer starved for good beer. Stars aligning.

Wednesday, April 11, 2018

Social Media and the Demise of Print

Last week's announcement that the Celebrator Beer News will cease print production was a shot across the bow of traditional beer publications everywhere. It was also a reminder that social media is the heir apparent of print and digital in the beer world. Not necessarily a good thing.

The Celebrator, founded in 1988, helped push the craft beer movement along in its formative years. As others have noted, you had to search for beer-related stories and information for many years. That changed with the explosion of the industry within the last 10-15 years.

That growth spurt spawned another one: There are currently hundreds, if not thousands, of print and digital outlets dedicated to covering the craft beer scene. I'm obviously including the numerous blogs, like this one, that cover beer in a variety of ways.

There's certainly redundancy in a lot of this coverage. You read about a brewery or beer or brewer in one place and soon see a similar story somewhere else. As long as there was an audience hungry for information and anxious to read it, redundancy probably wasn't such a bad thing.

Of course, we all know print is in death throes. Newspapers and magazines are having a terrible time. The ones that have a good digital platform still have readers, but the ad revenue model of print has never transferred very well to the digital format. It's a financial calamity, actually.

The larger problem for print and digital outlets is that a lot of people don't read anymore. Blame technology, blame laziness. Whatever. The reality is that people prefer their information in small chunks. We're dreadfully uninformed as a result, but we don't seem to mind. Drink up!

The Celebrator, which may or may not survive in digital-only form, isn't the only beer-centric publication on thin ice. Beer Advocate, a magazine I've written for in the past, announced a while back that it was moving from monthly (10 issues a year, I think) to quarterly publication. I'm sure there are others we aren't yet aware of.

Print is being driven to extinction at least partially due to the growing power and influence of social media. Facebook, Twitter and Instagram mesh almost perfectly with shortening attention spans and the evolving consumer preference for smaller chunks of information.

Social media is not a great fit for some businesses. The med-tech company I consult for is a perfect example. It hasn't yet figured out how to effectively use social media to leverage sales or customer relationships. I recommended serious exploration of that strategy 10 years ago. True story.

Beer-centric businesses, on the other hand, quickly saw the potential of social media. They realized young beer consumers are highly driven by social media. Attracting that crowd meant devising events and activities that could be promoted via those channels. That's what release parties, tastings, tap takeovers, festivals, launch parties, etc., are all about. You knew, right?

The appeal of social media transcends its ability to reach youthful beer consumers. It allows beer-centric business to reach customers and potential customers more quickly, easily and cheaply than ever before. That's a big part of why traditional beer publications are struggling...they simply can't deliver what a decent social media presence can.

What's the downside? The demise of traditional outlets means there will be less objective, informative reporting out there. Social media, a platform designed for short form promotion, is open to groupies and hucksters who sometimes have an interest in what they're promoting without that interest being apparent or acknowledged.

I readily admit that conflicts of interest can be present in any form of media. Some beer blogs are nothing more than promotional vehicles for brands willing to hand out free beer and swag. Social media, because it's available to virtually anyone with a following without regard to expertise or conflicts of interest, merely takes the concern for objectivity to another level.

But this is the course we've chosen, for better or worse. And maybe it'll work out fine. Maybe it won't matter that social media coverage is skimpy on detail and too often subject to conflicts of interest. Maybe.

Wednesday, April 4, 2018

Goose Island's Awkward Stab at Relevance

Goose Island Brewing was established in 1988. It was a proud craft brand for more than two decades, respected in its hometown of Chicago and beyond. In 2011, it was consumed by Anheuser-Busch, a buyout that wasn't exactly welcomed by craft beer fans. Of course, there were many more buyouts to come.

For several years, Goose Island rode the wave of craft popularity. Heavily discounted kegs of Goose IPA sucked up tap handles in bars everywhere. Never mind that the great bulk of that beer was and is brewed in AB factory breweries or partner breweries. Goose was hot.

It's all gone sour, of course, Goose brands have been taking a dive in grocery and retail stores around the country. The only brand in growth mode is Goose IPA, up 29 percent last year. That number, mainly the result of discounting, is a fraction of the rate at which the IPA was growing several years ago.

Goose Island is caught in the same downward spiral we're seeing with many of the regional craft breweries. These folks are struggling, in good part because smaller, local brewers are better at innovation and producing what contemporary beer fans want. You need to be creative and nimble. Large breweries aren't.

Big beer failed to see the shift in tastes coming. When they started buying up craft breweries, they expected to dominate the marketplace via mass production and distribution of formerly independent brands. They've actually had some success with that. AB's High End portfolio has done well, largely due to the power of distribution and discounting.

But the number of small local breweries cropping up all over the map is a stick in big beer's spokes. The little guys have momentum. They're closely connected to their markets and many of them specialize in small batch, experimental beers that tap the hearts, minds and taste buds of local and regional consumers. This is the state of the industry, like it or not.

Adjusting to the changed reality is proving a steep challenge for big beer, which includes regional craft and the Baby Buds. Even though Goose Island has well-known specialty brands, its national status renders those brands less relevant to consumers. Its mainstream beers, widely considered to be pedestrian and out of touch, face declining appeal.

Addressing that challenge isn't as simple as installing a small batch brewery and making small batch beers. That's the easy part. The larger challenge is winning back status and credibility. That's tough. And breweries the size of Goose Island aren't that nimble, despite being bankrolled by their masters in St. Louis, Belgium or wherever.

Nonetheless, Goose Island hopes to remake its image. First thing on the agenda was a canning machine. You may have noticed that innovation beers often tend to come in 16-ounce cans these days. Goose noticed. It bought a tiny canning line and hopes to exploit the can fad by rolling out small batch, experimental beers in its home market. Blanks with label wraps, anyone?

There's also help on the way for Goose Island's specialty beers, including Matilda and Sofie, which are underperforming as consumers chase local options. They'll likely revamp the packaging with new bottles and labels. Because when beers aren't selling, it's almost always the packaging. Who was it that warned us about breweries that sell packaging, not beer? Hmmm.

It's worth mentioning that returning to local roots is a popular theme in big craft at the moment. It's popular because it's about the only option they have. Consider the case of Widmer, still waiting for a fat AB buyout check. It closed the Gasthaus Pub suddenly late last fall and promptly opened a taphouse featuring experimental, small batch beers. Shocking, eh?

Like Goose Island, Widmer has watched its brands collapse across a wide range of geography. Both would like craft fans to forget their national aspirations and connections to big beer. Both want to be seen as being all about experimentation and innovation. Both see building credibility at home as a means of lifting their struggling mainstream portfolios everywhere.

But it's hard to imagine Goose Island's mainstream beers rebounding nationally. Or Widmer's. The sheer number of small, local breweries has altered the landscape pretty much for good. Efforts to reclaim and build on local relevance look mostly like awkward stabs in the dark.

Saturday, March 31, 2018

Small Brewers Challenge Traditional Industry Powers

The Brewers Association just released it's annual stats on the industry for 2017. Anyone who stops by here on any kind of regular basis probably knows of the numbers. We now have more than 6,200 craft breweries and the craft sector grew at a 5 percent clip.

Of course, there are signs of growing pains. Nearly 1,000 brewpubs and breweries opened in 2017, similar to 2016. But there were 165 closures, certainly the most we've seen in the craft era. That's not shocking. The rising brewery count makes closings more or less inevitable.

The raging growth we've seen over the last decade is historic. It's been good for consumers and brewers. There are more choices out there than ever before thanks to imagination, innovation and smart marketing. Also more places to find and drink fresh local beer.

But not everyone is happy about the altered lay of the land. The emerging popularity of taprooms and direct-to-consumer sales is upsetting the longstanding structure of the beer industry. That story is nicely documented in this Brewbound article.

The enemies of the status quo are the taproom and the brewpub, places where breweries sell their beer directly to consumers. The growth of that strategy is flipping the three-tier apple cart on its head and causing significant distress among the players that previously owned the industry.

Regional breweries have taken a direct hit. They once had no problem selling their beer in stores and in draft form. Today, consumers are buying more and more beer in taprooms and pubs. Large regional brewers, like Deschutes and Sierra Nevada, are struggling. And they don't like it.

The problem for regional craft extends to restaurants, bars and taverns. Where they once had free access, they are now forced to compete with local brands for tap handles and sales. Consumers want fresh choices. Established regional brands, considered old and tired, have lousy traction.

Traditional on-premise retailers are getting smacked around, too. With craft fans flocking to taprooms and brewpubs, restaurants, bars and taverns see their market slimming. As the Brewbound piece documents, some retailers have taken punitive action against brewers. But the reality for these folks is simple: they can adjust to the new reality or suffer the consequences.

Distributors are not immune, either. All that beer being sold direct to consumers doesn't pass through distributor hands. Distributors still get their pound of flesh for most packaged product and some draft, but the move to local beer and direct sales is a thorn in their side.

Fair is fair, though. The niche small brewers are exploiting is their best possible response to what's going on in the industry. Big beer, led by Anheuser-Busch, is locking down grocery store sets and squeezing small brewers out. That situation will only get worse moving forward.

The best case scenario for craft breweries has always been selling their beer directly in a taproom or pub. Higher profit per ounce, glass, gallon or keg. The emerging reality in distribution has encouraged and forced craft brewers to actively develop that model. It's no accident.

And the success of that model is changing the beer world. But it's unclear how far this can go. The size of the US beer market is declining, not growing. Which means all breweries are, in a sense, chasing the same customers. Right now, local craft brewers are on a roll, transforming the industry.

There's undoubtedly a limit to how many small breweries the market can support. Are we approaching that number? Maybe. But, for now, the little guys are flourishing and the traditional power structure is on edge. Oddly satisfying.

Saturday, March 24, 2018

Portland: Provincialism and Californication

When I was interviewing industry-connected folks for Portland Beer a few years back, one of the things I heard repeatedly was that provincialism was a big reason craft beer caught on here. Portlanders have been historically inclined to support products made here.

It's clear to me that our old school provincialism is waning. I'll get to why shortly. First, its roots. Provincialism, I believe, is rooted largely in Portland's blue collar past. The city was a hub for the extraction economy from its early days through much of the 20th century.

Commerce moving up and down the Columbia and Willamette Rivers made Portland the largest and most important city in the Northwest through the late 19th century. The arrival of the railroads transformed Seattle, with its superior port, to the center of trade in the Northwest.

It's possible that being pushed into obscurity by rapidly expanding Seattle gave blue collar Portlanders a go-it-alone, do-it-yourself attitude. Residents became suspicious of products from the outside and developed rigid preferences for local goods.

Those were the embedded attitudes Portland's founding craft brewers tapped into when they were starting out in the 1980s. They'd take their products out to bars and taverns; patrons, who weren't necessarily unhappy with the macro swill they were drinking, would gladly try it. Because it was local.

The willingness to try local beer wasn't necessarily unique to Portland, but it was apparently embraced more strongly here than in other places. Provincial attitudes were crucial to putting Portland on the craft beer map, where it remains at or near the top today.

When I arrived here in 1989, the city was still in the throes of a grubby provincialism. Most of what is now the Pearl District was home to abandoned or broken down warehouses. Streets were virtually impassable, unless you were driving a Jeep. That theme was prevalent around the city.

Over the course of the last 10 or 15 years, things have shifted dramatically. The influx of newcomers has transformed large swaths of the city. The busted up or abandoned warehouse is now an endangered species, thanks to the demand for housing and retail space.

The strong provincialism of yesteryear is being displaced by something different. One might argue that was inevitable due to the migration here from around the country. With so many newcomers, attitudes were going to shift. No way around it.

If you aren't aware, the majority of our migrants come from California. Yup. It's right next door, it's an expensive place to live and they've had some significant issues in recent years. People are giving up on California and coming to Oregon, Portland being the most popular destination..

The result is a sort of Californication of our city. Old Portland is being demolished and replaced by trendy new buildings and businesses straight out of the Bay Area and southern California playbook. And there are no signs of it slowing down.

In the beer world, the strong preference for local product is diminishing. On my travels, I routinely see beer from all over the country being warmly welcomed. California breweries, and there are a lot of them, make some great beer. A number of them are doing well here.

An instructive allegory for Portland's transition may well be what happened to The Commons. Locally-owned and well-supported in its initial, quaint location, The Commons moved to a larger space and failed to attract expected crowds. Cash flow problems cropped up. The brewery crashed.

Enter San Diego-based Modern Times, which leased the space and now plays to a packed house regularly. The pub is gaudy, just what you expect to find in California. But it's wildly popular. Inoculated by a flood of Californians, Portland is losing touch with its provincial past.

Whether that's a good or bad thing is, I suppose, a matter of opinion. But it is the reality.

Saturday, March 17, 2018

Craft Beer and the Great Mirage

Predicting the future is a sketchy business. That's just as true of the beer industry as it is of sports gambling. We look at the scenery and think we know what's coming. Then everything flips and we're left holding the bag. Look at what happened to Virginia last night.

Over the past few years, craft beer growth rates were stupendous. Easy money fueled a breakneck expansion of brewing capacity across the country. The rationale was simple: double-digit growth suggested there would be a market for virtually unlimited beer.

By one publication's reckoning, the expansion of brewing capacity during the past five or so years is comparable to what happened at the end of Prohibition. If you don't recall, the brewing industry, wiped out almost completely, had to be built back up from nothing to meet demand.

Of course, we now know the growth many expected to continue unabated has guttered. Demand for beer is flattening. The double-digit growth of craft beer has slowed to perhaps half that. The result is a lot of unused brewing capacity, similar to what happened in the late 1990s.

The excess capacity scenario generally foreshadows declining prices. Brewers look to sell beer and keep their doors open by lowering prices. There's some evidence of that happening. After years of increases, the big brewers are, indeed, backing off on prices.

Craft is a little different. In the big picture, we're seeing smaller price increases than in recent years in the mainstream beers. There's an interesting caveat at the top, where specialty product pricing appears to be no object. Consumers don't care. Premium and Super Premium craft, which account for only a fifth of the business, are responsible for 75 percent of craft dollar growth. Crazy.

But not everyone plays in the Premium sandbox. Most craft breweries sell mainstream product to folks who aren't beer geeks. Their challenge, given the situation with unused capacity and downward pressure on price, is figuring out what to brew that will allow them to stay in business.

The continued implosion of domestic premiums looks like an opportunity for craft brewers to chase dollars with lighter, lower ABV products at attractive prices. Breweries like Firestone Walker, New Belgium and Founders, among others, are doing so.

By the way, that strategy fits in well with demographic realities. Millennials, who drove a lot of craft's growth in recent years, are moving out of their twenties and getting fat. They're starting to look for lighter options. We've seen this movie before with prior generations.

So the idea of targeting the domestic premium space seems valid. The problem, as industry analyst Bump Williams recently noted on the Brewers Association Power Hour, is that craft brewers cannot beat the big brewers on price. The big guys are too efficient. They will prevail.

Thus, thoughts of escaping the craft slowdown with lighter, cheaper product in the domestic premium space is largely a mirage. As soon as that market blooms, big beer will enter the fray with aggressive discounting and swallow up the business.

Yeah, just one more reason these are scary times for craft brewers.

Saturday, March 10, 2018

Grains of Wrath: Testing a Theory in Camas

One of the great fascinations of our time is that all brewers want to own their own breweries. Well, almost all. Time and time again, we see successful (and unsuccessful) brewers taking the leap from employee to brewery owner and head brewer. It doesn't always end well.

Enter Mike Hunsaker, ex-head brewer at Fat Heads Portland, soon to be known as Von Ebert Brewing. In 2016, Hunsaker announced he would leave Fat Heads to co-found Grains of Wrath in Camas. There was great excitement.

Like a lot of brewery projects, Grains of Wrath took longer to open than anticipated. It also cost more than the partners expected...going significantly over budget, apparently. The place finally opened this week...to a warm welcome, fortunately.

I stopped in for lunch on Wednesday, which was opening day. The facility is impressive. Right away you note the massive outdoor patio, complete with fire pits and a beer garden. Inside, there's a large seating area that looks out north facing windows (garage doors) onto the patio.

The bar, a smaller area shoehorned between the brewery and kitchen, is fairly typical. It's slightly dank, thanks to low lighting and dark fixtures. There are high tables and chairs. Behind the bar, sports flicker on a couple of large TVs. The brewery is visible on two sides. No minors allowed in here.

They were pouring 10 beers on my visit, pretty good for a place that just opened. Hunsaker built a solid reputation with his hoppy beers at Fat Heads. But he's far from a one-trick pony. Luger, a German-style Pilsner, is excellent. I did not not taste the full list, but did prefer the EGA IPA to Overkill. Opinions will vary.

They have 26 taps to work with and all but a few will eventually be pouring house beers. That's exactly as it should be. Give Hunsaker and crew a few months and this beer list will be packed with interesting choices. Grains of Wrath will have good beer. Make no mistake.

My guess is food offerings will follow the same pattern. The lunch menu on my visit was not extensive. The dinner menu evidently has more choices. Fine. But I think the food menu will evolve just like the beer offerings. We've seen this before.

Grains of Wrath bills itself as a family oriented pub. That's a good strategy in Camas, which is effectively a suburb of Portland/Vancouver that somehow retains a small-town identity and feel. The median income is high in Camas. It hasn't been overrun by millennials like Portland. A lot of families do live out here.

But the family motif appears to me to be at odds with the edgy, punk rock, metal branding. On my visit, the sound system was blaring some unknown (to me) metal. It was too loud for comfort. The punk branding isn't completely in your face, but it's obvious enough. The package makes me think this isn't a place for families. Yet that's who they say they're targeting here. Fascinating.

Prices are another concern. Pints are $6 and $6.50. Add tax (10 percent of my bill) and you've got what some, perhaps many, will consider to be an overpriced pint. I usually drink half pours so I can sample a few beers without getting gooned. I asked for a half pour. "I can do that, but the price is the same," returned the barkeep. Again, fascinating.

A lot of thought and money went into this facility. It's an attractive space. The beers and food are going to be fine or better. The patio is going to attract hoards in warm weather. But there's a disconnect here: The branding and ambiance don't align with the stated target audience.

Maybe Grains of Wrath quietly hopes to be a destination for meandering Portland millennials. In that case, the branding makes some sense. But that strategy runs counter to current beer market logic, which suggests craft beer fans, even millennials, prefer to drink local and close to home.

There is, of course, the possibility that brand identity and ambiance don't matter, that you can succeed regardless of wonkiness on those fronts if you're good enough or unique enough. Grains of Wrath may be the perfect test case for that theory.