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Sunday, April 19, 2015

Dodging Dollars at the Craft Brewers Conference

Getting a bead on what transpired during the just-concluded Craft Brewers Conference in Portland is a tough assignment. That's what happens when you're part of a week long drunk fest that includes seminars and speeches. Hey, that vaguely reminds me of my undergraduate days at Washington State.

For my part, I spent parts of a couple of days at the Convention Center, which was often packed to the gills--despite the fact that many attendees chose to pursue "activities" in other parts of town. My event itinerary included fewer imbibing stops than most, I'm more than sure.

The Brewers Association, the non-profit trade group that represents small and independent brewers, tossed around some impressive factoids. More than 11,000 industry pros attended this shindig, including 600 exhibitors and 175 or so presenters. The Tuesday night Welcome Reception at Memorial Coliseum drew an estimated 8,500 folks. Some may have realized along the way that it was easier to find beer at this conference than it was to find water. But never mind.

The Craft Brewers Conference was last held in Portland in 2001. A lot has morphed in the interim. At the time, there were fewer than 1,500 operating craft breweries in the country. Portland was home to 24 of them. The convention was self-contained in a single downtown hotel, which is hard to imagine considering what has happened.

Fast forward 14 years. There were 3,418 craft breweries at the end of 2014, 58 within the city of Portland. Another 2,000 are in planning nationwide, an elusive number that is forever arching skyward. There's more. Craft beer accounted for nearly $20 billion in sales last year, out of roughly $110 billion in total beer sales. Staggering numbers.

It was impressive to hear Brewers Association royalty talk about the health of the industry and its future prospects. Charlie Papazian, president of the organization, talked about the importance of integrity and staying true to who you are. Gary Fish, founder of Deschutes Brewing and chair of the BA Board of Directors, reviewed some of the industry's current legislative efforts and challenges.

The presentations and educational seminars were nicely done and full of positive vibe. Out on the trade show floor, there was another not-so-subtle vibe. I attended several large medical trade shows in my former life. There were a lot of high rollers at those shows because healthcare is big business. I got the same kind of feeling at CBC...the smell of money was everywhere.

I don't know what I expected. Not exactly this. Exhibitors were hawking all manner of things, but what jumped out at me was the high-tech brewing and packaging equipment. There were obviously folks showing tanks, kegs, signage, schwag, hops, etc. The high-tech stuff struck a chord with me because it isn't cheap and there was a lot of it.

The booths showing high end stuff weren't vacant by any means. These exhibitors were here because there's business to be had. You would never have seen this kind of thing 10-15 years ago. Keep in mind the equipment didn't exist. There were few prospective customers because craft brewers didn't have access to the cash needed to buy the stuff. Bankers were leery of breweries, which were considered long shots likely to fail.

What changed is craft beer has become a huge growth industry, now perceived as a sound, even wise investment. So you have banks and private equity firms searching for ways to get in the game. And don't forget the ever-present and ominous shadow of Anheuser-Busch. There are oceans of capital available to today's breweries. That will continue to be the case until something changes dramatically.

The unanswered question and elephant in the living room is this: How will all this money affect craft beer? Most craft breweries are small, brewing up to 1,000 barrels a year. They have strong local and regional identities and are passionate about what they do. What's going to happen when money enters the picture and blurs ownership and identity? Some, perhaps many, will say this is simply part of a maturing industry. Maybe. But the emerging scenario is unprecedented in the annals of the industry. So we'll have to wait and see what it brings.

Most of the folks who descended on Portland and drank it nearly dry have skedaddled home. The city is returning to normal, whatever that is. Whether the CBC will return to Portland is an open question. I heard many people saying the city isn't equipped to handle a convention of this size. The availability of hotel rooms near the Convention Center is a huge issue, though not the only one.

A connected source told me the Craft Brewers Conference will return to Portland only if it somehow shrinks in size. That seems pretty implausible at the moment, given the direction and momentum of things. But I suppose you never know.

Sunday, April 12, 2015

Craft Beer Locusts Swarm Portland for CBC '15

In case you've in jail or otherwise indisposed, a swarm of craft beer locusts is descending on Portland for this week's Craft Brewers Conference. The gathering has been held here before, but that was 2001. And a lot has happened in the interim. Once you get past the home demolitions and gentrification, craft beer is arguably the hotting thing going in the city.

Given that reality, this will be one hell of a wild week here. Anyone going anywhere for a beer will be confronted with crowds of beer snobs. Numbers can be kind of nebulous, but sources say we'll have upwards of 15,000 people in town, the majority of them connected to the industry. Gonna be nuts.

Who are these people? Brewers, pub owners, distributors, retailers, scruffy beer geeks. There will also be a crap load of vendors in the convention hall, hawking all sorts of interesting stuff. And don't forget the media folks, probably the worst group of all. Just kidding.

The various media outlets have naturally jumped on the CBC bandwagon with lists of the best events and places to visit. What is it about lists, anyway? Beer geeks seem to love them. If you happen to be following along at home (or on a plane), there are some things you may want to keep in mind as you peruse these lists.

The first thing to know is that this isn't going to be the best week to truly see Portland. Even though we are an event and beer-crazed city, we aren't used to this many events (more than 100, I hear) or equipped to handle this week's flood of bodies. If you really want to experience this city at its best, stop back by when there isn't a giant beer convention in town.

As for the best places, there are some venues that all self-respecting beer fans should visit while on temporary leave here. My own short list includes (in no particular order) Hair of the Dog, The Commons, Cascade Brewing, Belmont Station and the Horse Brass Pub. I don't have any strip clubs on my list, but Brian Yaeger offers some useful assistance with that here.

Finally, there's one thing you definitely want to remember as you go about the business of festing this week. After you've had a few too many and you find yourself enjoying an outing at one of our "finer" establishments, don't forget to claim the company credit card on your way out. It's a small thing.

Looking forward to a fine week.

Tuesday, April 7, 2015

The Problem with 10 Barrel's New Pub is Simple

There are some differing opinions on the question of support for 10 Barrel. They recently opened their Pearl location, which was delayed for many months due to who knows what. Inquiring minds wonder if the new place is worth visiting. It's a valid question.

The rather large elephant in the living room when it comes to 10 Barrel (Elysian, too, if they opened a brewpub in Portland) is that the company was sold, lock, stock and barrel (haha) to Anheuser-Busch last fall. How do you put that out of your mind?

Back up. There was a media preview at the new place a few weeks ago. I was shocked to receive an invitation...shocked because I haven't been kind to AB. And they prefer media types who are kind or, at the very least, sympathetic.

I couldn't make the preview due to a prior commitment. I offered to visit another time, but nothing came of it. Perhaps someone on the PR team realized their mistake. No matter. A visit to sample the beers and see the space would have had no affect on my opinion of the place.

There are those who have been pretty understanding of the 10 Barrel buyout. The uproar over the deal was "childish and immature," they've said. These are craft beer people, by the way. Pretty comical. Some of those same folks are now singing the praises of the new brewpub. Big surprise.

Some of the arguments they're making:

The brewers and the beer are wonderful. I'm sure they are, though I've heard through the grapevine that every beer in development must first be approved by the suits in St Louis. It must be reassuring for the brewers to know their creative moves are being watched and evaluated.

The pub layout and ambiance are terrific. Undoubtedly. That's what happens when you spend a boatload of cash to renovate a building and install a pub and brewery. It's in the Pearl so it had to be fancy. Cost may have been an object prior to the AB buyout, less so in the aftermath. Meh.

10 Barrel is providing jobs to a lot of local folks, making it a virtual local business. Great. You can make the same argument in the case of Walmart, one of the most predatory companies on the planet. A bad actor providing local jobs is still a bad actor.

The problem with 10 Barrel isn't the beer or the pub or the people. The problem is Anheuser-Busch, which is not a benevolent friend of craft beer. Some believe AB is doing great things at 10 Barrel. It hardly matters. Because they are ruthless schemers bent on leveraging their position in any way possible, no matter how unscrupulous.

It's a pretty good bet that 10 Barrel's new pub will be packed and busy much of the time during next week's Craft Brewers Conference. I won't be there. Because any money spent in their pubs or on the brands they own works against the interests of craft beer. It isn't that complicated.

Or did you miss the Super Bowl ad?

Maletis-10 Barrel Update: The franchise rights to 10 Barrel brands have reportedly been transferred from Maletis to AB-owned Western Distributing in Portland and Salem. As you know if you've been following along, this was an area of contention between Maletis and the suits in St Louis. Details of the deal were not released.

Thursday, April 2, 2015

Frustration Over AB Branches Grows in Oregon

As a handful of states act to limit the predatory reach of Anheuser-Busch branch distributors, inaction in Oregon has independent distributors on edge. So much on edge, in fact, that they're looking at alternative ways to make something happen.

You may recall recent legislation in Kentucky and Tennessee. In both cases, branch distributors were outlawed. The Tennessee law does allow brewers to own distributorships under certain conditions. Not so in Kentucky, where AB will be forced to sell the distributors it currently owns. Very unhappy campers.

Anheuser-Busch will naturally challenge these laws in court. As they see it, the legislation addresses a problem that doesn't exist: their underhanded business practices. They will have a fleet of attorneys argue that their Constitutional rights have been violated. Never mind the Three-Tier System and the rights of consumers and retailers.

I've talked about branch distributors in this space before. They're part of AB's effort to leverage its position as it loses market share virtually across the board. How it works is simple. They use predatory, discount pricing and other anti-competitive schemes to keep their products on tap and on shelves.

Here in Oregon, there has been no effort to limit or block the expansion of branch distributors. AB currently operates Western Distributing in Eugene and Portland (formerly Morgan). They're able to do this thanks to a loophole in the law that puts no cap on what a large brewer may self-distribute. So they are free to purchase distributors through which they sell their products.

Efforts to block or restrict branch distributors would normally be mounted by the Oregon Beer and Wine Distributors Association, which traditionally looks after the interests of the state's beer and wine distributors in the legislature. Except the OBWDA hasn't done a thing about branch distributors.

We may fairly wonder why there has been no action. Likely, the OBWDA does not relish a fight with Anheuser-Busch. Regardless, its failure to act has caused a riff. The result is that Maletis Distributing has resigned from the group and will reportedly pursue action on its own. Other frustrated distributors may follow.

Please recall that Maletis is engaged in a dispute with Anheuser-Busch over the franchise rights to 10 Barrel. AB bought 10 Barrel last year and expected an easy transfer of franchise rights. But Maletis demanded a fair price and hasn't gotten it. So they continue to to distribute 10 Barrel products, infuriating the suits at AB. Punitive measures targeting Maletis are in place.

Of course, one of the problems with a story like this is that no one wants to talk. I'm relying on snippets of information culled from industry moles who won't be quoted and proprietary publications that can't be quoted. And there's nothing from the OBWDA because they won't talk to or even acknowledge bloggers. They're above the fray, you know.

But it's worth watching what happens. If Maletis succeeds in forming a splinter group that more fully represents the interests of Oregon's independent distributors, we may see some changes in the way things work here. The OBWDA has been around for a long time, but its antiquated cobweb site and lack of action on branch distributors suggest it needs some sort of makeover.

Frustration can be a dangerous thing.

Tuesday, March 31, 2015

Cascade Builds on Success of its NW Sour Beers

Big things are happening at Cascade Brewing. The purveyors of Northwest-style sour beers have been growing like crazy since opening the "House of Sour" Barrel House on Southeast Belmont. Today, they are building on that success.

Plans for the immediate future include moving production to a significantly larger, climate-controlled facility in Beaverton. Most blending and aging will happen there. Meanwhile, the Barrel House, freed of production demands, will be transformed with additional seating and a substantially expanded kitchen.

A little background. Before Larrance opened the Barrel House in 2010, Cascade's sour beers, which had won GABF medals, were sequestered at the Raccoon Lodge on Portland's westside. The Lodge never attracted much of a following, victimized by the fact that people from the city's core generally don't go west for beer.

In fact, Larrance had coveted a spot in Southeast Portland for many years. It turned out the feeling was mutual on the part of core residents. Almost as soon as the Barrel House opened, it was pretty clear that the space was too small. Of the 7,000 sq ft of space there, 5,000 was dedicated to production...much of it barrels. That meant limited seating and a tiny kitchen
Blending house
"Opening of the Barrel House built on our success in a big way," Larrance recently told me. "People who were curious came in to taste the beers. Many liked them. The Barrel House exceeded expectations. The renovation will make the place more user-friendly. We've needed more seating and a fully functional kitchen since the beginning and now we'll have the space to do that."

Of course, the ability to do these things is fueled by the success of Cascade's sour beers. They did not invent sour beers. What they did do is take the sour concept and develop a unique approach to it by leaning on Northwest produce, typically added during the aging process.

Gansberg speaks
Cascades's sour program is largely the creation of Ron Gansberg, who worked at Bridgeport and Portland Brewing before joining forces with Larrance during construction of the Raccoon Lodge in 1997-98. He was then tasked with finding a "magic elixir."

Larrance and Gansberg knew they would not survive selling a commodity product. They had no intention of competing with the likes of Widmer and Deschutes. Instead, they wanted a specialty product, a "magic elixir," that would be produced in limited quantities and sold at a premium price. Sour beers are the result and the solution to that challenge.

There's more than just expansion going on at Cascade. Larrance is working on several pieces of legislation that will enhance Cascade's ability to produce and sell its beer. Gansberg is actively working on building relationships, determined to be as sharing and collaborative as possible.

"Because of the success we've had with these beers, I find myself in a unique position," Gansberg says. "I have an opportunity to work with others and share the expertise and experience I've acquired. That's a big priority within our organization, but I'm also developing collaborative relationships with brewers outside Cascade and Portland."

You look at what these guys have done and you have to be impressed. When they started Cascade Brewing, they had an outline of where they wanted to go and how they hoped to get there, but it was rough. Their success is largely the result of determination and creativity. Now they get to to enjoy the accolades and share what they know. Good times.

In case you're wondering, Cascade will be hosting a a series of events in conjunction with the upcoming Craft Brewers Conference, April 14-17. They expect to feature a hoard of sour and wild beers at two bars. It's going to be packed much of the time. Watch their social media feed for details.

Update: I just found out my article on Cascade Brewing is featured on the cover of BeerAdvocate's April issue. I can't provide a link because there's no online version as of today.

Wednesday, March 25, 2015

Trains, Beer Squabble in the Earthquake State

There's beer on the tracks in California. In what is becoming an uncomfortably common occurrence in craft beer, an established entity is challenging a brewery's right to trademark a brand. A lot of people will be watching to see how it turns out.

Anyone who watches these things is aware of the story. FiftyFifty Brewing of Truckee was hoping to trademark its B.A.R.T. Its application ran into opposition from the other B.A.R.T., an acronym for Bay Area Rapid Transit, the folks who operate a rail system in the Bay Area.

This seems like a bit of an overreach to me. I mean, the FiftyFifty B.A.R.T. is a barrel-aged beer. The other B.A.R.T. is a bunch of stinky train cars. Yet the train people want you to believe the beer people are going to somehow damage the transit brand. Nope, they aren't kidding.

On to the specifics. The train people claim FiftyFifty's use of the B.A.R.T. name is likely to "cause dilution of the distinctive quality" of the B.A.R.T. identity. How anyone would confuse a train with a beer is anyone's guess. But the train people say their brand has been featured in a lot of movies and has earned widespread acclaim that must be protected.

The beer people have their own story and they're sticking to it. They've been using the B.A.R.T. acronym for several years to describe a limited production Barrel-Aged beer that's Really Tasty. Get it? The name also pays homage to a now deceased pup named Bart who once stalked the brewery. So, you see, there isn't any conspiracy on the part of the beer people to muscle in on the train people's territory.

What will happen to the challenge to FiftyFifty's trademark application is uncertain. Ask anyone. These things are almost never cut and dry. The problem for FiftyFifty, as is the case with many breweries, is they simply don't have the liquid funds needed to finance an extended course of litigation to challenge the train people. And the train people know it.

This really just looks like another case of a large entity bullying a smaller one because it can. B.A.R.T., the transit agency, is a publicly-owned system that's been operating since the early 1970s. It has nothing to do with beer and no one in their right mind is going to confuse B.A.R.T., the beer, with B.A.R.T., the transit system.

This is no way to run a railroad, kids.
Another BART

Monday, March 23, 2015

Rising Popularity of Spirits Not Lost on Big Beer

The growing appeal of barrel-aged beer over the last few years has been interesting to watch. It's connected to the rise of extreme beers, in this case beers drenched in booze. This trend is no accident and it's also no accident that the evil empire has jumped on the bandwagon.

We've all seen the barrage of recent reporting on the growth of craft beer, which reached 11 percent share of the beer market last year. That's all well and good. The problem is, beer's share of the overall alcohol market is in decline. It has been for a number of years.

Back in 2000, beer held 55 percent of the alcohol beverage market. Its share slipped below 50 percent in 2010 and stands at around 48 percent today, according to Fortune. So craft beer is gaining an increasing share of a shrinking piece of the pie.

The big winner? Since 2000, it's spirits. Hard liquor held 29 percent of the alcoholic beverage market that year. It reached 35 percent market share in 2014. Given that wine has been mostly flat, liquor's increased share has come almost exclusively at the expense of beer. Big beer.

There are many reasons for the growing popularity of spirits. Part of it is probably generational. Millennials who've never even tried Budweiser love their booze. As well, Prohibition-era restrictions on liquor have been relaxed in a lot of places, making it easier for spirit makers to market their wares.

One could reasonably argue the increased popularity of liquor has helped promote interest in beer cocktails and barrel-aged beer, particularly beer aged in spirit barrels. If you think about it, beer aged in booze barrels is essentially a sort of beer cocktail in the glass.

The ass clowns at Anheuser-Busch are not blind to these trends. That's why they released the cocktail-inspired Rita line, which has seen decent sales success since 2012. In fact, the suits believe Rita would have done even better had she not been damaged via her connection to Bud Light.

I don't know if Ritas are "brewed the hard way," like everything else at AB. That's a tough one. But it's perfectly clear that there's no future in hitching products like Rita to the Bud brand. That's a connection that produces mostly negative reactions, particularly among younger drinkers.

The latest big idea from Anheuser-Busch is all too predictable. They're rolling out Oculto, a tequila-flavored beer targeting younger drinkers. Tequila has been gaining popularity with that crowd, so the move makes some sense. Early Reviews of Oculto aren't good, but never mind.

Oculto will display no clear connection to Anheuser-Busch. The label features a white skull printed directly onto a clear bottle. There will be no mainstream ad campaign. Instead, the AB brass hopes to generate a positive social media vibe by sending agents wearing masks into clubs frequented by Millennials to spread the word.

Will young drinkers be tricked into buying a product that caters to their tastes, but blatantly contradicts their brand preferences? Stay tuned.