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Thursday, December 27, 2012

Kauai's Craft Beer Challenge

Kauai is an amazing place. People come here for the great weather, the surfing, the snorkeling, the golf and a range of other activities. Some people even come here just to relax in the warmth, if you can imagine that. What people obviously don't come here for is the beer.

A bit of background. I've been to Kauai many times over the years. It's gotten easier in recent times because there's a place to stay. That place is in Poipu, on the south side of the island in the rain shadow. It's usually dry here, while it pours on most of the island. Oh, in case you don't know, Kauai is the westernmost of the Hawaiian Islands.

The bar at Brennecke's Beach Broiler 
Frankly speaking, the beer selection has never been great here. In the old days, we would wander down to Brennecke's Beach Broiler (an open air bar and restaurant) which overlooks the city beach and suck down whatever we could find after a day of fun in the sun. Steinlager was a favorite, and eventually so was Kona's Fire Rock Pale Ale and Longboard Lager.

Despite the craft beer revolution that's overtaking America, Kona is now the only beer you can regularly find on tap in bars and restaurants around Poipu. They serve several Kona beers at Brennecke's and at the Honu Beach Bar at the Marriott Waiohai Beach Club. Across the street at Keoki's Paradise (bar and restaurant) they have a greater selection of mostly Kona beers, as well as Blue Moon and some other Coors products. The grocery stores offer more of the same.

Look, the Kona beers aren't bad. They're clean and highly drinkable. But they really aren't very exciting next to what I'm used to finding in Portland and on the West Coast, generally. And let's face it, good craft beer isn't that hard to find in a growing number of American towns and cities. So why not here?

Back up. There is exactly one craft brewery on the island of Kauai today....Kauai Island Brewing in Port Allen. They've been open since July and I've written about this place before. But I had never been there until today. I'll have a more complete look at the place in the next day or so. The question remains, why aren't there more breweries here?

The beach at Marriott's Waiohai Beach Club
Some might say it's a problem of demand. Kauai's 2011 population was estimated at just over 67,000. These folks are spread around the island. Of course, you have to also consider the transient tourist population. More than 1 million people visited Kauai in 2011 (stats), the bulk of them from the US mainland, mostly from the West Coast. These are people who know about good beer. One craft brewery for more than a million people? Nah, demand isn't the issue.

The issue almost certainly revolves around cost. A lot of small businesses don't survive long here. I've seen this in action. The area seems to be increasingly dominated by big corporate players who can afford to buy or lease property and don't mind high state taxes and exorbitant utility costs. And let's not forget the importance of being able to weather recurrent downturns in tourism. Small businesses have a very difficult time in this economic scenario.

One of many spectacular views
When it comes to breweries, the problem is magnified because Hawaii's beer excise tax ranks fourth in the country, behind Alaska, Alabama and Georgia, at 93 cents a gallon. Compare this to the beer crazy states of Oregon and Colorado, where the rate is 8 cents per gallon. So you have all the standard business factors, plus the high excise tax. A perfect storm!

In case you're wondering how Kona Brewing has flourished in the scenario I've just described, part of the answer is here. I may return to this issue in the upcoming post about Kauai Island Brewing.

Cheers from Poipu.

Tuesday, December 18, 2012

Brewing Consistency and Plausible Deniability

One of the great challenges in brewing is batch quality and consistency. I know this from personal homebrewing experience...although I have to admit my most serious issue along these lines is and always has been sanitation. But never mind.

Talk to Kurt and Rob Widmer about consistency. In the days when their brewing operation was tiny, they worked overtime to attain consistency across multiple batches. It wasn't easy. Batches that didn't measure up were tossed...no questions asked. Because they refused to damage their fledgling brand with rotten beer.

One of my labels from back in the infected day
That wasn't quite the case with the ill-fated Cartwright, Portland's first craft brewery back in 1980. Founder Charles Coury came from the wine industry and used those sanitation values. Fermentation often occurred in open containers. Thus, Cartwright's beer was inconsistent and sometimes infected. That didn't go over very well and the brewery closed in 1982. Little did Coury know he was 30 years ahead of his time...sour beers being wildly popular today.

Consistency and quality are less of an issue today. Brewers have figured out how to make consistent, quality beers. Large regional breweries that have plants in several locations around the country manage to produce beers that are essentially the same.

If you ask the Widmer boys about that, they like to bring up the macro brewers. The big boys, they say, have quality control dialed in to the point where different batches of Bud, for example, look and taste the same regardless of where they are brewed. Don't laugh. Differences in very light beers are more easily detected than similar differences in darker, fuller craft beers.

Yeah, that's infected
With consistency issues largely a thing of the past in competent breweries, it makes me especially curious when a well-known, popular beer undergoes a drastic change. I'm not talking about a brand AB InBev has gobbled up and is systematically destroying by cheaping out ingredients and production values in a factory brewery. Nope. I'm talking about an independent craft brand with full control of its quality and consistency.

Look, I realize brewers sometimes get pushed into a corner due to changing market conditions or altered ingredients. Or maybe a brewer decides a beer needs to change...the way Boneyard decided to dial down the ABV in RPM and Hop Venom over the last year. That change was totally above board. Tony Lawrence outlined what he was going to do and did it.

But what are we supposed to make of a situation where a beer with a great reputation suddenly undergoes a fairly dramatic change (according to numerous fans) and the brewer denies using different ingredients or doing anything different in the brewing process?

Listen, I honestly don't think there's a good explanation. Because it doesn't make sense. I'm mostly at a loss. What the hell do you think is going on?

Sunday, December 16, 2012

Behind the Blogging Ethics Conundrum

There was a bit of buzz the other week related to an article that appeared in the December issue of Beeradvocate. The article presented some opposing views on what constitutes appropriate ethical standards on the part of people who blog about beer.

This isn't a very glamorous topic for those who aren't somehow invested in blogs, whether as writers or consumers of content. But it actually is a big deal, because the people who read blogs deserve to know what drives the people who write them.

Let me take you back to the the bad old days before the web. In those days, getting information of any kind out to a larger audience typically meant getting published in print. And that generally meant following certain journalistic standards. Sources and facts were often checked and editors were always on the lookout for anything that smelled of possible conflict of interest. Wait...those were the bad old days?

This arrangement has been turned on its head by the emergence of digital technology. Sure, there are online publications that continue to follow established journalistic standards. But anyone can be a self-appointed expert and publish a website, blog or social media page. The barriers and filters that existed when print dominated have broken down in the face of decentralized digital publishing.

In the case of beer blogs, the lack of institutionalized barriers has turned the medium into a veritable free-for-all. Authors cover what they want and often say nothing about what they're getting in return. So you have a blog heavily promoting an event or product whose success will benefit the author of the blog. Yet the connection is not disclosed. It happens all the time, and it happens because a lot of bloggers think it's okay.

However, it turns out there are rules governing blogs. The Federal Trade Commission places blogging  in the same category as endorsements and testimonials. In 2009, the FTC finally revised its Guides Concerning the Use of  Endorsements and Testimonials in Advertising [link], last updated in 1980. Why did it take so long? I have no idea and it makes no sense. The pertinent passage from the web reads as follows:
The revised Guides also add new examples to illustrate the long standing principle that “material connections” (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. [italics added]
Returning to the Beeradvocate article, one of the people mentioned is Brady Walen. Before he assumed the role of Marketing Communications Manager at the Craft Brew Alliance last year, Brady was a beer marketing consultant and wrote The Daily Pull blog. As soon as he took the position at the CBA, he quit consulting and blogging. Why? Because he didn't want to have his credibility brought into question over any possible conflict of interest.

Ashley Routson was also mentioned in the article. Ashley works for Bison Brewing and is widely known in the beer community as The Beer Wench. Her main blog, DrinkWithTheWench.com, is well known and largely promotional. What she does is promote craft beer in a broad way by talking up beers, events, brewers and more. Even though she works for a brewery, Ashley doesn't see any conflict of interest in what she does.

Who's right? You can make the argument that both are. Brady didn't have to quit blogging when he went to work for the CBA (assuming it wasn't a condition of his employment). He chose to stop because he didn't think he would be able to write what he wanted without constant questions about propriety. Ashley isn't worried about conflict of interest because, even though she works for one brand, she promotes numerous craft brands...and says so on her site.

The point is, blogging isn't a free-for-all. You can't legally accept free beer and related goodies in exchange for covering an event or product without disclosing that connection. In a small way, this is comparable to the record industry payola scandal of the Fifties...when it came out that disc jockeys promoted records based on which record labels paid them.

What are the penalties for violating FTC Guides? Hard to say, really. The FTC website says they aren't really monitoring blogs and reported violations are evidently reviewed on a case-by-case basis (more here). I suppose that means any kind of penalty would have to suit the size of the violation. Who knows what that means in the case of a blogger who receives a few free beers in exchange for coverage.

But disclosure is something bloggers should be aware of and attentive to. In practice, it isn't that hard to disclose incentives or trinkets received in exchange for coverage of an event, product or whatever. It really shouldn't be a matter of following some government agency rule ...it's something we owe our readers from a purely ethical standpoint.

Monday, December 10, 2012

Palouse Falls Brewing to Close; Future Uncertain

Despite the fact that craft breweries continue to proliferate around the country and we don't hear much about closures, bad things sometimes do happen...breweries do close. And it often doesn't have anything to do with crappy beer.

One of the breweries I visited several times on my travels to Eastern Washington is Palouse Falls Brewing in Pullman. This business has been operated by the husband and wife team of Jeff and Linda Green for several years. They are great people, highly respected in the community. Unfortunately, they have decided to close the brewery on Dec. 22.

I learned of the impending closure of PFBC on Facebook. You can search for their Facebook page and read the announcement there if you wish. As I write this, there's nothing on the brewery website and the only news coverage I found is behind a subscription firewall on the local newspaper in Pullman. No thanks.

The details surrounding the closure of Palouse Falls Brewing, according to the owners, are these: They learned last spring that they would not be allowed to exercise an option to purchase the property on which the brewery stands...property which needs improvements for the business to move forward. Knowing of the property situation, they recently accepted an offer to sell their existing brewing equipment as a package. You suspect the first circumstance led to the second.

A curious part of the announcement, confirmed in an email from Jeff Green, is they hope to find a new location in the area and reopen. They would then need to purchase the building and acquire new brewing equipment. A lot people in the Pullman area, as well as WSU alumni who often visit, are hoping Palouse Falls Brewing gets a second life. And maybe it will.

The Trifecta
Craft beer fans always wonder about situations like this. We know craft beer has a lot of momentum and brewery failures seem to be rare. Yet it does happen. When it does happen, it's interesting to look at what may have led to the demise. Sometimes you have to read between the lines and look a little deeper. Sometimes not.

The first significant thing to know about PFBC is that Jeff and Linda did not come from a brewing background. Before opening the brewery, Jeff spent 20 years in manufacturing. Linda worked in various administrative and management positions. Neither had brewing experience. The brewery idea came to them as they looked for a viable business opportunity.

The second item rolls out of the first: The Greens never brewed any beer in Pullman. Nope. After an initial source didn't work out, they contracted with Northern Lights Brewing of Spokane (now No-Li Brewing) to provide brewed wort. The finished worts were shipped to Pullman in large plastic vats, transferred to tanks for fermentation and eventually filtered, conditioned and kegged for consumption. This is effectively contract brewing...where you perform the final steps.

Finally, the original concept was a production brewery and taproom with no attached pub or restaurant. The plan was to use a small percentage of the available production capacity to build a following for several brands. They hoped to eventually create enough demand to distribute in kegs and bottles around the region and beyond. A bold plan.

What happened
The fact that the Greens didn't come from a brewing background almost certainly affected their business plan. Launching a production brewery in an area where demand for craft beer is years behind what it is in Portland and Seattle may not have been a great idea. Success in this type of venture requires volume via wide distribution that might take years to build.

Their lack of brewing knowledge did not affect the beers, which were fine. Crimson Pride, a medium-bodied red ale with a balanced flavor, aroma and bitterness, is arguably their flagship beer. It has been regularly available on tap in many locations around Pullman. The other beers were quite drinkable, as well.

However, you have to wonder about the economics of paying someone else to do the bulk of the brewing work. This is especially true when you are already paying for a large production space that is being used for only part of the process. The Greens did a lot of the post-brewing production work in Pullman themselves, so they didn't have a lot of employee overhead. Nonetheless, you have to wonder how the overall arrangement penciled out.

Finally, a production brewery and taproom runs counter to the brewpub model that has been so successful in many places. The reason the brewpub model works is the pub provides an additional revenue stream. If all you have is a brewery and a taproom, you're relying on sales volume in those channels to support your operation. There's also the fact that food is an additional draw for people who aren't going to come in just for your beer. Sure there's additional overhead, but it seems to pencil out for many of these businesses.

It's worth noting that Pullman's other brewery, Paradise Creek Brewing, is a brewpub. I visited when I was there in September and they have a spectacular space (my story here). I don't know how they're doing in terms of profitability, but they have some interesting beers, a few of which are being distributed in kegs and bottles. Their brewing system is fairly small and the marketing plan limited.

The Future of PFBC
If and when Palouse Falls Brewing does reopen, Jeff says it will be in a smaller location with a downsized brewing system. They own the various recipes and brands and would apparently do their own brewing from start to finish in a new location. The distribution plan would be pared down to a more realistic regional target. No word on whether food would be part of any new operation, but you suspect not.

It seems to me the revised plan is the kind of thing that might work. Starting out small and building a following is strategy that has worked well for a number of Portland breweries. Why not in Pullman? There are a lot of people pulling for the Greens to succeed, as much because they are great folks as for their beers. Hopefully, things work out.

Thursday, December 6, 2012

Widmer Moves Forward with Reinvented Approach

I probably sipped my first glass of Widmer Hefeweizen while I was a graduate student in the great tundra of the Palouse, otherwise known as Washington State University. This was in the late Eighties and there were maybe one or two pubs in town where you could find decent beer.

The Widmer story is fairly well known. The brothers, Kurt and Rob, built the business from the ground up, with a sizable assist from their dad, Ray. You see, Ray could fix anything...a nice skill to have when your brewery is made up primarily of scavenged dairy equipment held together by baling twine. Things weren't very sophisticated in those days and the Widmers weren't the only ones who built a brewery from junk.

Kurt and Rob back in the day
But the business was a success and they eventually grew up and out of their original digs on Northwest Lovejoy. Seeking a larger space, they looked at numerous locations before getting hooked on an abandoned building on Russell Street. This was not a good area in those days and nearly everyone advised them against taking up residence there. But the price was right ($1) and they made the leap.

A few million bucks in renovations and improvements later, they went on to even greater success at the Russell St. location. The brewing operation has expanded dramatically into one of the largest regional craft breweries in the country. Today, Widmer is part of the Craft Brew Alliance, which includes the Kona, Redhook and Omission (gluten-free beer) brands.

They've produced many great beers over the years, but it's an accepted fact that Hefeweizen built their brand. The brothers tapped into the broad appeal of Hef when they partnered with Anheuser-Busch in 1997. That deal provided access to the AB distribution network, thus putting Hefeweizen on store shelves throughout most of the country. A major home run.

I had a chance to chat with the brothers the other week as part of a project that's a little bigger than this blog...more on that down the line. I was surprised to find them sharing a very plain office at the street level on Russell. This is a long-term arrangement. I don't know how they manage it, honestly, but working in close proximity has probably benefited the business over the years.

Back to the flagship beer, Hefeweizen. If you follow the beer industry at all, you may know the beer that essentially built the Widmer brand has been dropping market share in recent years. It's the result of more competition in the wheat beer segment (from Blue Moon and others) and a growing flood of craft beer choices, generally.

The lagging performance of Hefeweizen has forced the organization to rethink and alter its approach. You see this represented in the Rotator IPA series, the Series 924 beers and the increasing number of experimental and seasonal beers. An active creativity is driving the business into the future these days.

I was recently invited down to taste some of the new (and old) concoctions. A tasting trip to the Gasthaus is always a worthwhile treat, even more so when you have the benefit of a guide...in this case brewer Ben Dobler. Ben came to Widmer in 1996 after three years at Bridgeport. He is well-immersed in the experimental, pilot brewing program.

Tasting in progress
The current lineup of Widmer beers has some interesting twists. Of course, there's a seasonal aspect to it and you won't find everything on the list in the pub. A few of my highlights below.

X Wheat is unfiltered wheat beer brewed from a recipe used in the early days of Hefeweizen. Tasted next to the current version, X-Wheat is clearly a bolder interpretation of the style. It seems the current Hef has been softened up somewhat over the years to gain (my guess) wider appeal. I really liked the X Wheat.

Series 924 Milk Stout has a rich chocolate flavor and is ultra smooth with a vaguely sweet finish...apparently the result of adding milk sugar. I'm not normally a stout fan, but this is a good one. Milk Stout has limited availability so you'll have to get it soon.

Brrrr Seasonal Ale is Widmer's standard winter beer, available in bottles and on tap. A lot of people get fooled by this beer, thinking it's a dark winter beer. That's not what it is at all. Instead, Brrr is a mildly sweet, mildly hoppy red ale. At 7.2%, it isn't exactly light. But Brrr is balanced and highly drinkable.

Alchemy Project: Barrel Aged Brrrrrbon '12 is essentially Brrr aged in Kentucky Bourbon barrels. This is the third year of this beer. Bourbon aroma and flavor is very upfront and pretty hard to miss in this one. I think it could use some cellaring. This is a big beer (9.2%) and it will surely be better in a year or two than it is now...though it isn't bad now.

Nelson Imperial IPA is one of the year-round Series 924 beers. It packs a pretty serious hop punch (70 IBU) balanced out to some extent by a subtly sweet malt background. I've liked this beer since it was released because it's consistently clean and flavorful. There are other Imperial IPAs I like better, but Nelson is a solid standby.

They were featuring several New Zealand Hop beers...Pacific Gem, Pacifica and Southern Cross. Ben described these as experimental brews made to test the characteristics of the hops. None of these beers was great, though Southern Cross wasn't bad. They're far more important as a symbol of Widmer's commitment to trying new approaches and ingredients.

In the overall scheme of things, I'd say the challenge posed by the threat to Hefeweizen has made Widmer better. They cruised along for many years on the strength of Hef's financials. I don't want to say they weren't creating anything interesting during that time, but they have most definitely turned their game up a notch in the last few years. It's good to see.