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Friday, December 22, 2017

Trends and Bends in the Year that Was

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Happy Holidays!

Tuesday, December 12, 2017

Portland's Plot to Steal the Old Town Stag

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Wednesday, December 6, 2017

Fat Heads PDX will Transition to Von Ebert Brewing

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Good answer.

Tuesday, November 28, 2017

Orchestra Taps into Craft Beer Biz Blind Spots

It's no secret that the rapid growth spiral of the past 10 years has created new challenges in the world of craft beer. Once upon a time, it was relatively easy to enter this industry. You didn't have to be great to succeed because there wasn't much competition. Not rocket science.

Brad Windecker
Today, the equation has flipped. The rising brewery count means craft breweries are often competing with each other in a variety of ways. The incursion of big beer, discussed here on many occasions, is squeezing independent craft brewers out of revenue streams that were once robust.

The result of that evolution is that breweries and brewpubs need to be better organized and managed. Places that wing it and hope for the best are going to experience tough sledding. The current scenario demands reliable systems that can help manage all aspects of the enterprise.

Enter Orchestra Software, a Beaverton company that develops software designed for the needs of the craft beer and craft distilling industries. Orchestra, the brainchild of CEO Brad Windecker, was established in 2008 and has more than 300 clients, including many in Oregon. The company has 50-plus employees and is growing rapidly.

Along with a short list of local beer media, I recently attended a portion of Orchestrate 2017, the company's annual user conference. Some 500 attendees descended on Portland to learn more about Orchestra's software and to get a peek at what they have in the development pipeline.

Orchestra's principal driving theme, shared by Windecker in a conversation with beer media, is that breweries are businesses. Seriously. It's hard to believe, but the concept is often lost on brewers. Indeed, I can think of more than a few breweries that operate without any apparent semblance of a business clue.

"The reality is that we've been through a period in which it was very easy to enter the industry and succeed," Windecker says. "Not everyone who did so had good business sense. With growth rates flattening and competition stiffer, it's getting tougher. If you don't have systems to help run your business efficiently, you're at a big disadvantage."

He's right, of course. High growth has created instability. Windecker reckons that perhaps 25 percent of U.S. craft breweries are not professionally managed. With the market tightening, there figures to be a shakeout and a lot of used equipment on the market in coming years as poorly run breweries fall by the wayside. Not a great scenario.

To help, Orchestra has solutions for large and small brewing entities. It's core customer is a growing craft brewery or distillery in the US that is best practice and technology driven. No surprise. Because integrating management software into your business requires some level of interest in best practices and technology.

"We have customers who aren’t growing," says Windecker. "We also have customers in Scotland and elsewhere in the world. And some of our customers aren’t best practice or particularly tech driven. Those folks typically use fewer of our tools than clients who are more fully immersed in technology and best practices."

What Orchestra provides is an all-in-one management solution that helps breweries make the most out of their profit center, which is typically their pub. The majority of their clients are small. Besides running their breweries efficiently, they need support for a broad range of traditional and non-traditional activities (see graphic).

"We’re always asking customers what problems they have that we aren’t solving," Windecker says. "Once we get past the basics, the first thing we hear is retail. The generic systems out there haven't been very good. We’ve been working on addressing that challenge for several years. We're also looking at ways to build social media and related marketing functions into our platform."

A related part of the challenge is meeting the needs of customers who typically have little or no experience with bulky, complex software. Historically, that meant onsite implementation and ongoing training and support. But that's not where the company is headed.

"We have to innovate to work with a generation of brewers and brewery owners who are familiar with mobile apps," says Windecker.  "Many of these people have never seen software like ours. We have to make our platform more user-friendly, and we're doing that by moving to apps that can be run on phones, tablets or computers. We'll do a lot less training in the future."

Up until now, there's been very little out there on how to run the business of a brewery. When Windecker speaks at a PSU accounting course for craft beer, he sees a room full of students yearning to learn more about the business aspects of the industry.

"It's funny," he says."Outside that classroom, it’s hard to learn about the business. There’s a lot of information on the science of making beer and almost nothing on how to actually run a beer-related business. Orchestra is working to provide technology-based solutions that help these folks run their businesses effectively."

If you think about the trajectory of craft beer, Orchestra makes perfect sense. We once had an industry comprised of a relatively small number of boutique businesses loosely competing for customers. Today, we have thousands of breweries competing with one another on many levels. Being good at business is going to be a key to survival in this scenario.

Which means the potential upside for Orchestra Software is huge.

Monday, November 20, 2017

The Fate of Hedge House and More

Yesterday's news that Lompoc's Hedge House in Southeast Portland is closing comes on the heels of last week's featured stories regarding the overnight closure of Widmer's Gasthaus and the final day of operation at The Commons. The last day at the Hedge House will be Nov. 28.

The announcement was met with shock. Maybe it shouldn't have been. We've been cruising along in unlimited craft beer growth mode, watching countless places open and assuming there was room for everyone. Market saturation is today's reality. And there is a price.

During last week's media preview of Lompoc's holiday beers, with the Widmer news fresh, I asked owner Jerry Fechter about the challenges presented by growing competition and saturation in the restaurant and pub business.

The reality, he said, is that all the Lompoc pubs have been affected by the seemingly endless number of similar businesses that have opened around the city. There's no longer any limit on how many places can open in a given area. He made no mention of impending closures, but confided that the situation had him frustrated and worried about the future.

As we were reminded in the press release announcing its closure, the Hedge House resided in a quaint and underdeveloped location for many years after it opened in 2003. It wasn't fancy and it was beloved by many precisely because it was a simple place where you could relax with your friends, your family or your dog.

In fact, the Hedge House surely benefited by being in a sort of rundown area where rents were cheap. That was a common theme in Portland craft beer for several decades. Southeast Portland and what is now the Pearl District were once littered with vacant warehouses and busted up storefronts perfect for breweries and related businesses. It's flipped now, of course.

As the area around the Hedge House was flooded by a virtual tsunami of trendy bars, restaurants and related establishments, sales slowed and its prospects dimmed. Even if it had been idyllic in terms of service, food and beer, the Hedge House was an old school place ill-prepared to compete with the barrage of fresh new choices.

The situation we face is odd. After several years of double-digit growth, craft beer will likely see low single digit growth for 2017. Yet new breweries, pubs and taprooms continue to open. There isn't room for everyone. Established places like the Hedge House appear to be at greater risk than shiny new joints that are more marketable to the young crowd that spins craft beer's disco ball.

There's no way to change course. The market will sort out which places will survive and which ones won't. I think older, established spots are most vulnerable, though poorly run newbies aren't immune to market forces by any means.

Monday, November 13, 2017

An Ugly Week for Craft Beer

It's been a rough week for Portland-area craft beer fans. We learned a few days ago that Amnesia Brewing will close in a few weeks. On Saturday, The Commons greeted patrons for the last time on Southeast Belmont. Today, Widmer announced big changes at its Gasthaus Pub.

These are local signs that the industry is slowing down, which has been widely reported in numerous places this year. Double-digit growth that gave breweries the confidence to invest in new locations and expanded brewing capacities is flattening. Alarms are going off.

I first visited Amnesia years ago when it was on Mississippi Avenue. This was pre-trendy Mississippi and Amnesia was a destination. The pub was grubby and the food list dank, but the beer and maybe the patio was good enough to draw regular crowds.

For reasons of their own, Amnesia's owners decided to let go of the space on Mississippi and move to Washougal in 2014.. My recollection is they wanted a larger production space so they could make more beer, much of it to be sold in packaged form. They also wanted out of rent increases.

It didn't pan out. The Washougal pub was a work in progress. I visited a couple of times and found the food and service sketchy. In theory, the pub should have been able to attract a following in that underserved area. That apparently never happened.

If they truly hoped to make a living selling packaged beer in Vancouver and across the river in Portland, they were delusional. Amnesia's beers were decent enough. But they were lost in the flood of packaged beer that found its way onto area shelves in recent years. The market for their beer collapsed.

Earlier this year, The New School reported that Amnesia was for sale and looking for contract brewing partners. They had unused capacity. Many were shocked. Amnesia's owners and others denied the story. But the evidence was clear. They were just hoping to buy some time.

It's tough to know all that went into this failure. Amnesia, even when it was on this side of the river, was not a particularly well-run operation. As it struggled in Washougal, Stormbreaker moved into the former Amnesia space on Mississippi and built a solid following of its own. Sometimes, a prime location is the most important thing a business, any business, can have.

The Commons
A flock of local fans descended on The Commons as it's final day approached. Looking at social media posts, it appears the place was packed for much of the afternoon and evening on Saturday. Then, all the laughter and fun came to an end, at least for now.

The story has a lot in common with what happened at Amnesia. Except that The Commons always made excellent, interesting beers. They developed a strong following with those beers, but it was never a mainstream following. The beers appealed to a niche audience.

Nonetheless, they reached the point where they could not keep up with the demand for their beer from their leased space on Southeast Stephens. Owner Mike Wright concluded that a larger production brewery and pub space were the keys to continued growth.

He subsequently bought a building on Southeast Belmont and spent a boatload of money installing a larger production system. A significantly bigger pub space was part of the bargain and patrons initially reveled in the openness of the new place.

Of course, it didn't work out. Demand for The Commons' niche beers in distribution flattened. The new pub space, not as warm or intimate as the place on Stephens, failed to bring in the additional business that would have justified the investment. Construction in the area around in the area around the pub almost certainly contributed to that.

Wright has said the demise of The Commons was the result of cash flow problems. Indeed. Like many in the industry, he believed wild growth would continue. It was a mirage. He incurred a pile of debt to buy and renovate a building. The debt led to cash flow problems and collapse of the business.

Modern Times is leasing the vacated space. That's good news for Wright, who will now collect rent. The Modern Times approach will be substantially different on several counts. For his part, Wright will likely restart The Commons on a smaller scale down the road. We shall see.

The announcement that Widmer is closing its restaurant and transitioning that space to a tasting room with light snacks hit like a ton of bricks. Heads were spinning. The impact likely would have been greater if the announcement hadn't been made on dead news cycle Sunday.

The plan is to turn the former pub space into a place where Widmer can show off it's innovation brewing program. Strange, eh? As they've pursued massive national distribution of the CBA brands via the Anheuser-Busch network, they've been troubled by their inability to attract attention to the speciality beers they make. Very frustrating.

There's more, of course. For a while now, the Widmer and Redhook brands have been in decline pretty much everywhere. As discussed here many times, Kona is the only CBA brand that's growing, reaching near-double digit growth in the US according to the company's Q3 earnings report.

That report also includes news that overall net sales were up just 3 percent; but gross profits were up 14 percent. How so? Well, you either cut the cost of making your beer or you sell it at a higher price. Care to guess which is true in this case?

The answer is that the CBA has expanded its brewing footprint at AB factory breweries, thus reducing cost per barrel and increasing profit per barrel. It's an ingenious business move, though one that might not sit particularly well with dedicated beer fans if they knew or cared about it.

Also embedded in the Q3 report is news that increases in net sales and gross profits were partly offset by decreases in brewpub sales and lower pub gross margin. In fact, the Gasthaus pub had been an awkward drag on profitability for quite some time. But not any more.

Closing the pub and re-purposing the space will cost roughly 65 jobs. Clearing those salaries and benefit packages from the CBA balance sheet will warm corporate profitability. The idea that they're going to reinvent the Widmer brand by showcasing a few specialty beers is largely a ruse. The geeky crowd that chases specialty beers declared Widmer irrelevant long ago. But that hardly matters. The CBA is profitable and wants to be more so. The pub was an obstacle and had to go.

You may fairly wonder why the CBA, which saw its gross margin expand to nearly 35 percent in Q3 (per report), needed to boost profits further. This is a company that, despite some challenges, expects to deliver in the neighborhood of 5 percent revenue growth this year. What's the deal?

The answer may lie in the contractual agreement the CBA has with Anheuser-Busch. The CBA brass wants to sell to AB at the optimum share price. Between now and next August, the minimum offer price is $23.25. The CBA's stock price closed at nearly $20 per share last Friday, well short of the required offer price. The brass wants (needs) to get closer to the minimum offer price as quickly as possible because they know $24.50, the minimum offer price after August 2018, is unrealistic given unstable market conditions. That's why they unloaded the pub now.

So the people whose jobs went away in the downsizing of the pub were sacrificed so the CBA can sell at a higher price, which will benefit shareholders and line the pockets of folks in high level positions within the company. Nothing personal, if you lost your job. Just business.

Big Picture
As bad as this news is, we're probably going to get more of it in coming weeks and months. The crazy growth of the last few years has resulted in a saturated market that is increasingly unstable. There's just too much beer out there.

The failures we see with Amnesia and The Commons are directly related to the situation we have with debt, unused capacity and flattening sales volumes. What happened at Widmer is a little different because it's largely related to cutting costs and increasing profits quickly.

In the overall scheme of things, the news points to the fact that craft beer has become a big, heartless and volatile business. Fasten your seat belts. Craft's bubble is bursting and things are going to get worse before they get better.

Friday, November 3, 2017

OBF Grapples with Attendance Drop, Uncertainty

One of the bigger surprises on last week's beer news radar screen was news that attendance at the Oregon Brewers Festival declined dramatically in 2017. I guess a lot of us probably assumed attendance was declining for the last few years. But the actual number shocked me.

For many years, OBF organizers have been saying the event attracts 80,000 fans to Waterfront Park. That claim was repeated in the promotional materials for this year's event. Then we learned that 2017 attendance was 49,000, an astonishing number.

That information came to light at a Tuesday night briefing at Cascade Barrel House. Jeff Dense, professor of political science and craft beer studies at Eastern Oregon University, gave his annual talk on the OBF's economic impact and other findings.

In case you're wondering and unaware, Dense has been studying the economic impact of OBF since 2011. He and a team of students completed more than 900 on-site interviews this year. As in past years, he used that information, along with data provided by event organizers, to build conclusions.

Some of the findings are intriguing. Nearly half of attendees were from out-of-town this year. Almost the same percentage were attending for the first time. Women accounted for 44 percent of festival attendance. But the drop in attendance is a sore spot, in part because it contributed to an 18 percent decline in economic impact, according to Dense.

Art Larrance, co-founder and director of OBF, stepped forward and said hot weather may have hurt attendance. He also said the sheer number of summer festivals is creating serious competition for the event that launched the festival concept in Oregon 30 years ago. When it started, OBF was the only show in town. Now, beer festivals are an everyday thing, he said.

In response to declining attendance, Larrance said they will eliminate the Wednesday session and reduce the total number of beers to about 80. They also expect to fold up the Specialty Tent, occasionally known as the Buzz Tent or International Tent, and go to a smaller 12 oz mug (four tokens) and 3 oz taster (one token). Oh, and they'll offer cider and wine for the first time ever.

There's a lot going on here, so let me dive into the detail. I spoke to Larrance by phone to get additional perspective on some of these issues.

Attendance is a complicated issue, Larrance said. Even he doesn't fully understand the 49,000 estimate. It's a bit of a mess, actually. The 80,000 attendees organizers have been touting was based on wristbands. But one wristband isn't the same as one attendee because some people visit the festival multiple times. They handed out 70,000 wristbands this year. The 49,000 is an estimate of "unique visitors" based on information collected in the surveys and an equation.

In fact, the attendance numbers aren't as shocking as they first appear. Look at the graphic below, provided by OBF. Of the three years shown, only 2016 exceeded the standard estimate. This year was definitely the low ebb, but it isn't as if they're in multi-year freefall if we go by wristbands. And that's what we have to look at if we want to make a fair comparison.

Hot weather and beer event saturation. Sure it was hot. But we've had heat at this event many times and never heard about draconian attendance declines. Event saturation is certainly an issue. There are beer events happening year-round in this city. The pace intensifies during the summer. I suspect the combination of heat and event fatigue probably kept some locals away. Still, the dropoff isn't a disaster if you look at year-to-year wristbands.

It's something no one wants to talk about in detail, but declining revenue, not attendance, is the true reason behind the panic and push for change. They're selling fewer tokens and less beer, while expenses are staying the same or rising. Larrance talked about the need to cut expenses, which are substantial when you factor in park rental, security, police, etc.

Some of the revenue loss is their own fault. The 2017 glass had a 4 oz taste line, reportedly a mistake. It had been a 3 oz line in recent years. A 2017 taste, for one token, was a great deal for attendees and probably discouraged folks from laying out five tokens on a full mug, 14 ounces this year. In recent years, when tastes were smaller, there was more incentive for folks to fill their 12 oz mugs for four tokens, a boon for organizers. As noted, they'll go back to the smaller glass and taster size next year, thus encouraging more people to pony up four tokens for full glasses of beer. Shazam!

Kicking Wednesday to the curb is an odd idea. Look at the graphic again. Wednesday attendance, which funnels out of the brunch, has been pretty steady. Sunday, on the other hand, is a consistent loser. It looks like Sunday is the day that needs to go. There must be more at work. Perhaps Wednesday, which is heavy on industry and media attendance, is a money pit. Of course.

The Specialty Tent is an easy out. It's mainly an attraction for geeks and it occupied a shady area that might be better-used for seating in hot weather. Since it was comfortable, Larrance said traffic was static and people who hung out there didn't buy all that much beer. Which means it was part of the revenue hit. Losing it isn't a huge deal, except to the geek crowd.

They've offered more than 90 beers under the big tents in recent years. Cutting it to 80 sounds worse than it likely is. Contrary to some claims, OBF organizers actually spend considerable time curating the list of what pours. They actually turn a lot of applications down. If there's a flaw in that process, it may be that they're too loyal to longstanding friends and supporters.

Larrance told me they get frequent requests for gluten-free items. Since there's a lot of good cider and wine in Oregon, he thinks it's reasonable to provide some options outside beer. Bringing in wine and cider will make a few people happy. Will those folks outnumber those who are unhappy about losing the Specialty Tent and Wednesday session? Seems unlikely.

As we talked, Larrance offered up that maybe the OBF has seen its best days. "All events run their course," he said. "With so many choices out there, we can't blame folks who choose to attend other events around town. We're trying to come up with ways to evolve with the times to make this a viable event going forward. It isn't easy."

Indeed, it isn't. The entire face of craft beer has changed since the first OBF in 1988. As I've discussed here before, events and event marketing are driving a lot of what happens in today's industry. I believe an increasing number of modern craft beer fans are looking for a more intimate and personal experience than the OBF provides.

This is much less about the beer than the experience. People enjoy going to smaller events where they can mingle with brewers, brewery owners and others connected to the industry. Check your social media feed for upcoming release parties and tap takeovers. Look how many of those events feature the opportunity to talk with folks who have something to do with the beer.

By comparison, the OBF is impersonal and not at all intimate. The volunteers pouring beer typically know nothing about it and there's rarely anyone around who does. The OBF can and should commit to offering the best possible beer list. But that won't remove the stigma of it being a huge, impersonal drunkfest at a time when more and more folks are looking for something more.

Larrance is thinking outside the box in response to the challenges. He's toying with the idea of bringing in a group of brewers from outside the US and essentially building a mini-fest around them. That's something he tried with brewers from the Netherlands and Japan in recent years, but it sounds like this will be a more serious effort, if it happens. Give him credit for creativity.

I honestly wonder if we're not entering a difficult period for larger, older beer festivals. When I was at GABF in early October, it became clear to me that some of the best action was outside the Convention Center at smaller events. Maybe that's going to happen with OBF. Maybe it will morph into a cluster of smaller events at parks, breweries and pubs around the city.

Craft beer's future is full of intriguing possibilities.

Tuesday, October 24, 2017

Hipster Apocalypse Now

Perhaps you've heard of Mason's Brewing Company. They're a small Maine brewery that produces around 2,500 barrels a year. If you keep up with the beer news, you likely know they're currently a target of Anheuser-Busch and its ill-tempered offspring, 10 Barrel.

Mason's recently received a letter demanding they stop using the name, "Hipster Apocalypse" on their flagship IPA. 10 Barrel claims Mason's would be "capitalizing on the goodwill created by Apocalypse IPA," which has been brewed since 2009.

Owner Chris Morley was in the process of filing for a trademark on Hipster Apocalypse when 10 Barrel cried wolf. He says he plans to challenge the demand and is willing to spend a boatload of money if that's what it takes.

Sad to say, that's likely exactly what will be required. Because Morley isn't fighting 10 Barrel. That company ceased to exist when it was consumed by Anheuser-Busch in 2014. Today, 10 Barrel exists only as a captive brand of a behemoth that doesn't mind throwing its weight around the beer industry.

Morley rightfully notes that this is another great example of a thuggish corporation pushing a little guy around. For sure. A quick Untapped search revealed that “Apocalypse” isn’t an uncommon name in the beer world. Morley evidently pulled up more than 10 other beers across the country with “Apocalypse” in the name. Go figure.

The thing is, squabbles over beer names are becoming pretty common in this industry. It's a symptom of the fact that the brewery count keeps rising and creative beer names keep bumping into one another. Larger breweries typically send out cease and desist letters when they feel the need to bully smaller breweries that don't have the cash to lawyer up.

In this case, the suits at Anheuser-Busch hope to bully Mason's into using another name for their IPA. Mason's has only a small distribution footprint in Maine and Massachusetts, according to industry reports, but AB plans to dominate that area (and more) with Apocalypse IPA and prefers not to endure competition from any brand of a similar name.

Seriously, though, if anyone is going to be damaged here, it's Mason's. Because Hipster Apocalypse is produced in relatively small batches in a small brewery. And the packaging features cool, vibrant branding. Meanwhile, 10 Barrel Apocalypse IPA is produced in giant factory breweries and has bland, generic branding.

I don't know how much money Morley is willing to spend to defend Hipster Apocalypse. It probably won't be enough because Anheuser-Busch can spend whatever it wants and drag the case out forever if it goes to court. That's when the financial risk becomes too great for a small operation.

The sad thing is, bullies win too often in business. But maybe not this time.

Wednesday, October 18, 2017

Second Profession Brewing: Portland's Newest Brewery

There's a new brewery in Portland. Big surprise, eh? Second Profession Brewing is now open on Northeast Sandy Boulevard, taking over the space formerly occupied by BTU Brasserie. Owner Charlie Goman, a homebrewer with Wisconsin roots, hopes to build a following on the German/Northwest gastropub model.

Charlie Goman
The pub recently reopened under the Second Profession (I'll get to the name) banner and is operating on a limited beer and food menu for the next couple of weeks. They'll hold a grand opening bash Oct. 27-29. In the meantime, they're in soft launch mode, open Wednesday through Sunday, 4:00 to 10:00 p.m.

You may recall the defunct BTU, which operated for a couple of years as a brewpub with Chinese-style food. The food was better than the beer, but the owners were never quite able to successfully meld the business' two identities and the place floundered. Awkward.

Goman had been interested in starting a brewery for several years when he stumbled on the mothballed BTU space. He was bored with his career in copier sales and IT-related work. A whiteboard wish session suggested a future in brewing. A sign on the BTU door said, "Closed for Spring Cleaning," but the place was closed permanently and up for sale.

Goman jumped in, seeing a potentially great location with a brewery already installed. It's no small thing for a brewer to find an arrangement like this. It's similar to what happened with Charles Porter, who was able to access a turnkey brewery for Little Beast Brewing in Beaverton, relieving him of the expense of building a brewery from scratch.

For his part, Goman "loves beer" and "hopes to provide a unique experience" at Second Profession. If you haven't heard something like that a gazillion or so times, you probably haven't been around Portland's craft beer scene very long. Standard schtick. But it might just work out for him.

The revised pub layout is pretty much as it was in the BTU era. It's a bit brighter now, with white walls and modern-themed, German folk artwork. The brewery, a 7 -bbl system, has been cleaned up and tuned up with the assistance of brewery consultant, Marc Martin. It's ready to roll.

Three beers poured at a recent media preview included a Rye-IPA, a Pale and a Farmhouse Ale. All seemed decent enough. More styles are in the works,, including lagers, which were part of BTU's failed plan. The brewery's horizontal lager tanks are designed to make them and lagers will be a nice fit for gastropub fare.

Nonetheless, the future of Second Profession will likely be determined by food, not beer. Why? Because the clientele in this area is more likely to be driven here by food than by beer, regardless of how good the beer may be. Goman intends to offer what I see as stripped down German comfort food. We're talking brats, warm potato salad, garlic fries and a variety of greens. Simple stuff.

This clearly isn't going to be as upscale as Stammtisch or Prost, which is fine for the area and this space. Keep in mind there is no more Gustav's or Rhinelander down the street. That building was demolished months ago. Choices are somewhat limited in this corridor. A place that offers a simplified comfort food menu alongside decent beer has an opportunity to do well.

A potential obstacle is the oddly shaped and visually awkward space. I suspect it was a problem BTU struggled with. The place just looks odd when you walk in, with the bar jutting out into the seating area. To me, the layout is better-suited to a casual pub than a more formal restaurant. So it could work out here. If patrons come, the relatively small size of the space may become an issue. That's a problem Goman would like to have, but we'll have to see how it goes.

The name has been the subject of a social media thread and blog post. It is not particularly well-imagined in my mind. Goman's description of how he came up with it makes good sense...he sees the place as his second career or profession. It's personal. But Second Profession has little pizzazz. It's not a name that conjures up much excitement. Nope.

Of course, it could be worse. As someone on social media commented, the place might have been called Oldest Profession Brewing. That's going to happen one of these days, as the industry gets edgier and edgier. You heard it here first.

Friday, October 13, 2017

Denver's House of Sky: GABF '17

Published in 1978, Ivan Doig's This House of Sky presents a memoir of his life growing up in the Big Sky country of Montana. I was reminded of the book title as I traipsed around Denver last weekend. Denver isn't Montana, obviously, but even in the downtown area, you have the sensation of a very broad horizon.

It took some time for me to fully absorb my experience at the Great American Beer Festival. I was warned upfront that the event is huge and unwieldy, so that part wasn't unexpected. But some aspects of the festival I didn't anticipate.

The Drinking
Having attended the Craft Brewers Conference in Portland a couple of  years ago, I figured GABF to be more of a giant trade show focused on beer than strictly a beer festival. I was correct. Although there was plenty of beer in the Convention Hall, there were also countless vendors showing off a variety of mostly beer-related wares. Trade show.

I attended Friday evening and Saturday afternoon drinking sessions. The Thursday evening session was out because I wasn't arriving in Denver until too late. My initial plan, on the advice of folks "in the know," was to attend only the early Saturday session. I wound up there Friday evening because I had nothing better to do.

In fact, the Friday session was less of a mess than Saturday afternoon. The crush of beer fans after the Saturday morning awards ceremony created near-gridlock conditions. Getting to medal winners or specific beers you wanted to taste often proved difficult due to congestion. There were just too many bodies in too little space, evidently not a new problem for this event.

What could they do to make it a little less of a shit show? It seems to me they either have to reduce the number of tickets sold or increase the amount of floor space. Because the layout isn't the problem. I do think it's unfortunate that there is very little sitting space, but that sort of fits with the GABF being more of a trade show than an actual festival.

The Awards
I wasn't sure what to expect at the Saturday morning awards ceremony. They eventually handed out medals in 99 style categories, plus the awards for breweries the year in several sizes. I'd watched the GABF awards before via streaming and still had no idea how they would handle the girth of the competition in a realistic amount of time.

Things got off to an awkward start when a large contingent of folks couldn't enter the ballroom because there wasn't enough seating. A number of these folks were hungover or still drunk from a night of imbibing. But never mind. Some stayed in the outer concourse, where the awards presentation could be seen on a screen. Others came in and stood or sat on the edges of the room. Not ideal.

The 99 categories have some redundancy. Follow this link and sort by style if you want to get a feel for that. It's over-the-top to me. But I get it. The Brewers Association wants to keep everyone interested even as the brewery count skyrockets. To do that, they spread the love by adding style categories. There were 12 in 1987, 34 in 1994, 70 in 2006. You get the idea.

It reminds me of my tournament racquetball career. In the old days, you played A, B, C, D or Open. Maybe there was a Masters division. Later, tournament directors added A/B, B/C and a hoard of age group divisions. More people got medals, which kept them playing and coming back. But tournaments became unmanageable. Craft beer appears headed down a similar path.

Navigate to the Beervana site if you want more detailed info on entries by state and winning percentages. There's no reason for me to redo or rethink what Jeff has already done. His piece is based on numbers the Brewers Association grudgingly provided and that were incomplete. There's a bizarre aura of secrecy permeating this organization, unfortunately.

Oregon's big winner was Sunriver Brewing, which collected gold medals for Cinder Beast Red and Fuzztail Hefeweizen, as well as Small Brewery of the Year. Breakside, as usual, entered the fray with four bronze medals, including a bigly one in the IPA category, which had 408 entries. Sort the winners list by state if you want the complete story.

The Miscalculations
When I received the invitation to apply for GABF media credentials, I didn't think much of it. Only after I gave it some thought did I decide to apply. After my application was approved, I had to decide if I would actually go. A credential only gets you into the festival. The main cost is getting and staying there. Is it worth it?

A friend and fellow writer advised me that he had been to GABF twice, which he figured was one time more than required. I laughed. But I hadn't been and always wanted to go, so I started looking at airfares and hotel rates. Shortly, travel arrangements were made; later I altered them so I would have two full days in Denver. That seemed about right.

There were misques. I didn't coordinate schedules with anyone and I wasn't staying close enough to the Convention Center to randomly join in. I hoped to enjoy some events outside the festival and maybe visit some breweries. Didn't happen. When you don't know your way around, you need to hook up with a group or have a specific plan of action. Significant whiffs on my part.

Of course, it likely didn't matter. The GABF crowd, the industry part of it, anyway, is considerably younger than me. Most places were routinely packed with kids. Although I don't have anything against them, I don't really fit in. That's become more and more apparent over the course of the past year for reasons I don't need to get into here. Nothing to do about it.

Would I return to GABF? Unlikely. If I did, it would only be as part of a group of like-minded folks staying in relatively the same area with plans to attend specific events and visit a list of places. The reality is, much of the action at GABF takes place outside the Convention Center. You need to set yourself up to experience at least some of that stuff.

Regardless of my experience, I have no problem recommending GABF to anyone who hasn't gone. Denver is a terrific city and the spectacle that is GABF is worth seeing. Once, if not twice. 🍻

Monday, October 9, 2017

Gene Clanton, Mentor and Friend

I was slightly woozy Sunday evening, having just returned from a long weekend at the Great American Beer Festival in Denver. I'll be posting a commentary on that experience in due time. Because something more important happened and my priorities changed.

Spooling through social media posts, I learned my old friend Gene Clanton passed away Sunday morning. I was surprised, not shocked. Gene was 83, but I knew he had moved from Pullman to North Carolina earlier this year. He had family there. I never asked, but I suspected he was ill.

I first met Gene in 1976 while an undergraduate at Washington State University. He became one of the most significant influences in my approach to thinking and writing. If you see anything you like in these pages or in the articles I write for various publications or in my book on Portland's beer history, it's largely due to Gene's influence. He did not teach me how to write. That I learned. He taught me something far more important...how to think.

He was teaching a History 210 class on the JFK assassination when we met. I was as intrigued by the topic as he was and we quickly developed a rapport. I would stop by his office to talk even after the semester ended. Two years later, I took an upper level class focused on the same topic.

We lost touch after I graduated in 1979, but renewed our connection when I entered graduate school in 1983. The History graduate program was quite small, which gave students the opportunity to become well-acquainted with professors. Having known Gene before, we took up right where we left off.

As I navigated the program, I eventually chose to work with another professor, Ed Bennett, on a diplomatic topic for my Masters. Gene was on my MA committee and never voiced a concern about that choice, though I'm sure he thought I should have delved into something more serious. It was his style not to meddle.

I finished my MA in 1986. Soon thereafter, I had to decide what to do about a PhD. I decided I would work with Gene on an unspecified Cold War topic. We had many discussions about possible research paths and scenarios. But I became wary of the projected PhD job market and realized I would probably never complete the program. Gene had to have known, but he never said a thing.

While I was bumbling on in the PhD program, I decided to circle back and get a high school teaching credential. Gene, who had taught at the high school level and knew the downside, told me what to expect, but refused to push back. When I started writing opinion pieces for the Daily Evergreen, he frequently hit me up with suggested topics. Here and there, I chose to use them.

Gene was a gentle soul, but he was not a wimp. They had a policy of reviewing the work of graduate students in the History department each semester. At the end of one semester, someone in the department issued an unfavorable review of my work. The problem was, I had only worked with Gene that semester. It was a "scandalous normality," he said. The negative comment, we knew, was political, an inappropriate reaction to my opinion writing in the Evergreen. We challenged the Director of Graduate Studies, who hid like a baby behind his desk and refused to explain.

After I left WSU at the end of 1988, my PhD plans were shelved, for good as it turned out. But I kept in touch with Gene through his retirement in 1997 and beyond. We exchanged letters, phone calls, emails and, eventually, social media banter. I visited when I was in the Palouse country and he once flew his plane to Vancouver for lunch.
Senior picture, 1952
I had a particularly poignant visit in September 2008. Gene and his wife, Jane Ann, were living in a duplex in Northwest Pullman. She was ill with some form of dementia and he was determined to care for her as long as he could. I had met Jane Ann during my graduate school years, but she didn't know me well. While Gene was off collecting some item, she whispered to me, "He's a really good guy." Of course. Jane Ann passed away in 2014 and I don't think he was ever the same.

Sadly, I didn't see Gene often enough in recent years. My trips to the dry side were reduced after I was laid off in 2009. I met him at a Pullman watering hole several years ago and we had a great conversation over several craft beers (this is a beer blog, after all). One of my biggest regrets is missing a planned meetup with him last October. I misjudged my arrival time at the pub where we were to meet and he had gone. Efforts to connect by phone flamed out. Now he's gone. Damn.

Gene's published works on the Populist movement of the late 19th century, his specialty, are highly regarded in the academic community. He was a meticulous researcher and thinker, and I believe his body of work is and will remain relevant to historians investigating Populism or that period of American history. I believe Jane Ann assisted him in that work. That's how they rolled.

I never met Gene's two kids, Spencer and Kimberly. They would have been young adults during the years when I was closest to Gene. There are apparently grandchildren and great grandchildren. To the family, to the former students and colleagues he touched during a celebrated teaching career and to the friends he leaves behind in Pullman and elsewhere, we are left with only the memories.

We've lost a fine man.

Thursday, October 5, 2017

Questions, Thoughts on the Road to GABF '17

I'm packing my bag for a few days in Denver and wondering what the Brewers Association will have to say about the challenges facing craft beer. The industry is still growing, but growth is slowing and there are some dank undercurrents swirling around in the background.

One challenge is the blurring of what craft beer is, a reality in the wake of buyouts that have happened over the last few of years. It used to be easy for consumers to identify and differentiate craft beer and fake craft beer.

Things have gotten more complicated as craft beer has gone mainstream. We now have a large pool of craft consumers, many of them not particularly experienced or knowledgeable, looking at shelves and tap handles with almost unlimited choices. It's easy to get lost.

Obviously, the Brewers Association has rules about what constitutes independent craft beer. But those rules are relatively unknown outside the geek crowd and, anyway, a lot of consumers couldn't care less about who owns the brewery that makes the beer they drink.

The Brewers Association's recent response to this quandary is the Independent Craft seal shown above. Qualified breweries can acquire the seal and put it on packaging, post it around their pub or brewery and use it in other ways. Some 2,000 independent craft breweries are evidently using the seal, according to this report.

Naturally, there are differences of opinion regarding the value of the seal. Some don't like the design. They wanted something fancier. Terrific. For its part, big beer complains that consumers don't care who makes their beer as long as it's quality. Dandy. And not really a surprise.

I'll be interested to hear what more the BA has to say about the seal and their continuing effort to promote independent craft beer by making it easier for consumers who care to differentiate between independent and non-independent craft. Enough said.

A far more serious issue is the slowdown that's currently in motion. I'm reading reports of significant cutbacks and restructuring of sales organizations at regional and larger craft breweries. These reports are appearing in some of the pro newsletters and are pretty reliable.

The slowdown at larger craft breweries is a symptom of the explosion in the number of breweries...more than 5,000 by the end of 2016. Craft beer, which derived fast growth largely via large regional breweries for many years, has gone local. Consumers can in many cases find the beer they want in or near their neighborhood.

I'm not sure many of us predicted that trajectory. Not that long ago, we were watching big craft brands like Sam Adams, Sierra Nevada and others put up exponential growth numbers. There was no apparent end in sight. But things have shifted, driven by consumer tastes for local beer.

This development has put a squeeze on large breweries and, as discussed here recently, extends to some established, smaller breweries. One of the reports I'm reading says New Hampshire-based Smuttynose, which sold 51,000 barrels in 2015 and invested $18 million in a new brewery to support additional growth, has laid off staff and encouraged others to pursue other opportunities.

The theme at work is that large and small breweries are having a tough time selling their beer in distant markets, where we have to assume new, local breweries are soaking up share. Smuttynose is responding to that challenge by actively shrinking its distribution footprint. It isn't alone.

This situation is creating anxiety in the industry. What's going to happen to breweries that assumed debt to finance the brewery expansions that are now underutilized due to declining sales volumes? That's certainly the case with Smuttynose. What happens to that capacity? What about the debt, in cases where that's an issue?

I'm not sure the Brewers Association will have much to say about the emerging reality. It has actively encouraged the culture of new breweries, despite the fact that large regional breweries have been the primary growth drivers. Now things have shifted and some in the industry have painted themselves into corners. Not ideal.

Maybe there's a masterplan I'm unaware of. We shall see. For now, it's time to finish packing my knapsack and prep for travel. I understand the beer in Denver is lovely this time of year. 🍻

Thursday, September 28, 2017

Fresh Hop Season, 44 Years Ago

It's fresh hop season, part of the beer cycle we've somehow managed to construct in recent years. These beers aren't my favorite, though I seem to like them better now than I did a few years ago. Anyway, I'm not here to talk about fresh hop beers. Because it's also football season.

Sooner or later I had to get around to talking about football. Not the modern game, with its multiple game costumes and giant disparity at the college level. Or the NFL's problems managing the behavior of its players (no, I'm not referring to the national anthem protests).

Some 44 years ago this fall, I was closing out my high school football career. You might say football was in my DNA. My dad was a dedicated fan until the day he died. The first TV we had in my family when I was a small child was purchased so my dad could watch football games.

Later on, my dad took me to football games at Kezar Stadium in San Francisco. Maybe you remember that place, now gone, from the first Dirty Harry movie. When we moved to the Inland Northwest, I became a fan of nearby Washington State, where I eventually attended college. Later, we got the Seahawks.

Growing up in smalltown Clarkston, Washington, I fully expected to play high school football when it was my turn. Somehow I never played Pee Wee football. That was an inexcusable oversight because a lot of my friends played. I mingled in non-organized games.

My freshmen year of high school was an awkward time for sports in my school. I don't recall the details, but the school district was short on funds. As a result, there was no freshmen football. If you were a freshmen and you wanted to play football, you had to make the junior varsity.

Coming into three-a-day practices without any formal football experience was a shock. The running, the calisthenics, the weight of the equipment and the August heat combined for not a lot of fun. But I wanted to play and I stuck with it, somehow making the team.

I don't remember playing much that first year. There were freshmen who did play, mostly guys who had played Pee Wee and had experience and talent. I was probably fast enough and agile enough, but I was behind the development curve of organized football.

By the time I was a junior, I had caught up a bit. Off-season practice, weights and beer helped. You laugh, but you knew beer would be mentioned. One of our coaches quietly advised some of us to drink beer and work out in the off-season. He said we'd gain strength and stay quick and agile. Some of us did our best to accommodate his suggestion and, honestly, it was good advice.

I started out my junior year playing quarterback. During the season, I eventually played wide receiver, running back, safety and a few other positions. It was defense where I probably played the best football of my life. I was on the field a lot, playing both ways and getting exhausted. There were certainly a few concussions. But I'm fine now. Trust me.
Preparing for my senior season, I lifted a lot of weights and drank a lot of beer...Lucky Lager, Hamm's, Schlitz, Coors. Only the best. I figured to play defense, but worked on improving my throwing accuracy in case I got the opportunity to play quarterback. We had a new coach coming in and expectations were high.

One reason we had a new coach is that Clarkston had failed to beat cross-river rival Lewiston for more than a decade. Lewiston was then and still is considerably larger than Clarkston. But Clarkston had quite a few good teams that couldn't find a way to beat Lewiston. So our veteran coach resigned or was forced out. Sometimes, you just gotta go.

Of course, beating Lewiston had been a goal of my class since grade school. We had watched a string of really good Clarkston teams lose to Lewiston for years. It seemed like there was some kind of jinx at work. We figured we would somehow beat the odds and the jinx. I'm sure we weren't the only bunch of kids packing around that idea in Clarkston schools.

The 1973 season was an up and down affair. We won a game, lost two, won one, lost one, won two. Facing Lewiston in our last game, we were sitting on a 5-4 record. Our rookie coach didn't hesitate to remind us on several occasions before the game that 6-4 was going to sound a lot better than 5-5 when we recounted the season in future years. Sure enough.

For its part, Lewiston had suffered through a bad year under a flashy new coach. As always, they had a ton of talent. But the guy hadn't figured out how to use it. That led to dissention in the ranks and some good players had quit the team. It looked like they might be an easy mark. We knew better, though. We'd seen too many sketchy Lewiston teams beat good Clarkston teams.

To make a long story short, we wound up winning the game 13-7. The margin of victory would have been greater, but one of our wacky star players tossed the ball in the air short of the goal line on what would have been a touchdown. Dumb. Anyway, the long Lewiston drought was over and Clarkston finally had bragging rights for a year. There was celebration. And beer.

As luck would have it, my own senior season was TKO'd before it started. Working on a piece of farm machinery over the summer, I suffered a hand injury that required surgery. It was my right hand, my throwing hand. The caste came off just before fall practice began. I would not be playing quarterback. Indeed, it was a stretch to think I could play defense with that hand. But I tried.

So that's the way it was 44 years ago. The fresh hop beers we're all drinking today have almost nothing in common with the junk I and my jarhead friends drank way back when, either to bulk up or to celebrate. My how times have changed. For the better, at least in beer terms. 🏈

Friday, September 22, 2017

Kona and the Case for Transparency in Beer Labeling

The case of some Californians who filed suit against Kona and the Craft Brew Alliance for deceptive labeling is emblematic of a problem that isn't new in beer or craft beer. Consolidation, marketing and the chase for production efficiencies have undermined honest labeling.

You may be aware of Kona's plight. Earlier this year, two California beer consumers filed suit against Kona and corporate parent, the CBA, charging they had been tricked into thinking Kona is made in Hawaii.

In fact, all packaged and draft Kona sold on the mainland is brewed at CBA facilities in Portland, New Hampshire and Tennessee. (With the closure of the old Redhook brewery in Woodinville, packaged Kona is no longer produced in Washington, if you're wondering.)

There's a bit of a back story, if you don't mind a slight detour. Years ago, before it became part of the CBA, Kona began using Widmer and Redhook to brew its bottled beer for the mainland and Hawaii. Whether you were buying bottled Kona on the Big Island or in Phoenix, it was produced on the mainland. Yup.

Brewing for the mainland on the mainland makes sense, right? Much more efficient. The Hawaii strategy was evidently driven by production efficiencies here and the fact that Hawaii at the time (perhaps still) had a 50 cent per case tax on empty bottles entering the state. It was apparently more efficient to brew and package the beer here and ship it to Hawaii.

I don't have the labels to prove it, but my recollection is that Kona has always represented itself as being produced in Hawaii, regardless of where the beer was actually produced. I'm always amazed that many are unaware of that deception, even in the beer geek crowd.

In recent times, Kona has increasingly cashed in on its connection to place, in much the same way that Corona and other Mexican imports benefit via that connection. As referenced many times in these pages, Kona is the only brand floating the CBA boat at the moment. Consequently, it has been useful to maintain the fiction that the beer is produced in Hawaii.

Back to the lawsuit. The plaintiffs claim the Hawaiian imagery found on the packaging, the map of Hawaii and address of Kona's Hawaiian brewery, as well as the invitation to visit said brewery, qualifies as false and deceptive advertising.

I went to my nearby ghetto Fred Meyer to investigate. Sure enough, there's a map of Hawaii and invitation to visit the brewery on the 12-pack box. There's also nothing on the packaging to suggest the beer is produced anywhere other than Hawaii. Once you open up the box (or six-pack), labels on the bottles list the various places where the beer may have been produced.

The CBA pointed to the bottle labels in an effort to get the lawsuit dismissed. No dice. The judge noted that the labels are not visible on the outer packaging and ruled the map of Hawaii and invitation to visit the brewery are enough to make a reasonable consumer believe the beer is produced there.

This case is now headed to the discovery phase of litigation. Kona and the CBA will soon be forced to decide if they will risk a court case or negotiate a monetary settlement. The expense involved in such cases typically causes defendants to pursue a settlement at this point, sources say.

Whatever happens, the CBA will surely revise Kona packaging to avoid similar legal entanglements going forward. It would be nice if the entire industry would take a look at labeling practices. Because Kona is far from the only example of intentional chicanery.

The Baby Buds come instantly to mind. Some portion of their beer is now produced in giant factory breweries, yet they maintain the fiction via labeling and advertising that they are still small local brands. Some legacy macro brands, now owned by big beer, do something similar.

Transparency in beer labeling and packaging is good for consumers. The reason we don't have it is there's money to be made in not being transparent. Regulations preventing the practice either aren't stiff enough or aren't seriously enforced. That leaves lawsuits as the lever of change.

How many lawsuits will it take to affect change? Maybe a lot of them. Fine with me. Nothing wrong with challenging misrepresentation and duplicity.

Saturday, September 16, 2017

Big and Old Craft Brewers Grapple With Sour Times

You've heard the bad news. Craft growth is slowing. Heads are spinning trying to figure out how to jumpstart an apparently sagging industry. Places are closing their doors or begging to be graciously bought out by big beer. Gloom and doom.

Except maybe things aren't quite what we've been led to think they are. It's true that overall craft growth is slowing, down to something like 5.5 percent year to date. Also more failures. What many don't realize is that big craft is dragging the rest of the industry down. Yup.

If you exclude the imploding sales of brands like Blue Moon, Sam Adams and Sierra Nevada from the picture, you discover craft dollar sales are up more than 11 percent on the year. Including those players puts growth at the already noted 5.5 percent.

Those are national numbers, but the picture in Oregon isn't much different. Deschutes, our top brewery by volume, experienced an 18 percent decline in sales June 2016 to June 2017. Full Sail, Rogue, Portland Brewing and Bridgeport are all down. Widmer, if it's production showed up in OLCC stats, would certainly show the same trajectory.

In actual fact, the trend goes beyond a turn away from big craft. We see it in industry stats due to its impact on big craft, but it is affecting established craft breweries widely. Once respected local brands are seeing declining numbers as consumer tastes shift to what's new and shiny.

That's not something you can verify with national stats. But there's plenty of evidence in Oregon stats. For the same June to June period mentioned above, a number of older local breweries, including Lompoc (-12 percent) Laurelwood (-15 percent), Double Mountain (-8 percent) and Alameda (-20 percent), are losing ground.

Over that same period, you see significant growth for relative newbies Pfriem (+55 percent), Crux (+127 percent), Ecliptic (+81 percent), Block 15 (+63 percent), Sunriver (+54 percent), Buoy (+38 percent) and Breakside ((+22 percent). Several established breweries, including Pelican and Silver Moon, show solid growth, clearly outliers among the older set.

"Younger drinkers increasingly view legacy brands as stodgy or uncool," says Andy Crouch in this month's BeerAdvocate magazine. "A new disruptive wave of young brewers, keen on brewing to their own tune, entered the marketplace with little care or respect or concern for their elders."

The result is that older craft brands large and small are being displaced. Craft beer has become a part of pop culture among the younger generation, which views established brands like Deschutes, Sierra Nevada, New Belgium and Sam Adams as ancient and irrelevant. It's similar to disrespecting the music of a prior generation because it's old. You know the drill.

One could easily argue that small, local brands have more flexibility in addressing the current trend than big craft. After all, it's easier to alter the course of a small boat than that of an ocean liner. In beer terms, changing course means embracing trendy styles like hazy IPA and refreshing a antiquated brand identity with local consumers. It's not easy, but not impossible.

Big craft is in a more awkward position. We're talking in about beer portfolios that are well-known across countless markets and in many cases hopelessly outdated. It's not that easy to erase embedded brand identities and rebuild cool with the young audience that's driving craft beer's growth.

There's desperation out there, as outlined in Crouch's column. New Belgium released a disastrous line of fruit flavored IPAs and plans to extend the Fat Tire line with a Belgian-style white ale. Yummy. Sam Adams is hawking a line of alcoholic seltzers. Embarrassing.

Price is one area where big craft might attack. They're big enough that they could reduce retail prices in an effort to win back business. But reducing prices is more likely to further damage already imploding brands. And you aren't going to win over millennials who regard you as out of touch with discounting. Is there a Plan B?

For a while I've wondered if big craft will follow the example of big beer and start buying up smaller breweries. There's been some of that already. Green Flash bought Alpine a while back. New Belgium recently bought San Francisco's Magnolia Brewing. Should we expect to see more deals like that down the road? I haven't a clue.

The only thing I do know is these are tough times to be a legacy craft brewer.

Tuesday, September 5, 2017

The Commons: When Things Go Wrong

When Portland Beer was published back in 2013, I held the release party at The Commons original location on Southeast Stephens. That place had become a regular stop on my travels and I knew Mike, Josh, Sean and Travis well. Despite dreadful weather, the party was a success.

Following several years of solid success, the collective decided to move to a significantly larger space where they could increase production and seating capacity. I don't recall anyone in the beer community questioning that decision. It seemed to make sense, given their apparent trajectory.

Of course, we now know things didn't work out. When news broke that The Commons would close and relinquish its space to San Diego's Modern Times Beer, the hyenas began howling about why this had come to pass. Poor planning, poor execution, poor strategy. Pick your poison.

But these situations are rarely as cut and dried as some would have us believe. In the case of The Commons, I suspect there are variety of explanations for the calamity. And not all of those explanations are readily visible, even to folks in the beer community.

I first sensed that things were not quite right when I visited The Commons soon after they opened on Belmont in 2015. The main pub area had an unfinished feel. A satellite seating area upstairs was off limits to the public due to fire code. Without expensive sprinklers, the area was unusable.

During a visit several months later, it was clear to me that the building did not have sufficient ventilation. I eventually learned they couldn't put commercial rooftop units on the building without reinforcing the infrastructure, a monumentally expensive undertaking.

More recently, I learned they had brewed an IPA. Say what? That came as a shock to me because I knew it was something Head Brewer Sean Burke never wanted to do. Soon enough came news that Burke himself had bounced from the company. I guessed the IPA wasn't his idea.

The early intel told me the guys were overextended and at risk. Sure, businesses often function at a basic level when they're new or making a big transition. You put some things off until you have a cash flow. But appropriate ventilation and seating are requirements, not luxuries.

Then came the seemingly endless construction in the area. Several nearby buildings were leveled to make way for condos or apartments. An area that was busy and congested before the construction became increasingly problematic in terms of access and parking. Bad for business.

There are those who believe they needed a full kitchen and pub food to make the space viable. That was never part of the plan. The Cheese Annex, operated out of a tiny kitchen on a lease basis by Steve Jones (Cheese Bar), was a makeshift arrangement with limited offerings.

The food argument segues into another facet of The Commons masterplan. Until late in the game, they did not offer mainstream beers. So offering mainstream pub fare probably wouldn't have done much for them. They certainly knew this, which is why a kitchen was never part of the plan.

Not offering mainstream beers may have been a fatal error once they moved to the larger space. I took non-geek friends and family to The Commons on several occasions. There was nothing for them on the beer menu. Food choices wouldn't have mattered. They wanted to go elsewhere.

There's an argument floating around that The Commons should have jacked up prices to make their beers seem more special, such as Cascade, Hair of the Dog and others do. The idea is that they might have changed the perception of their beers by charging more.

The problem is, the beers probably could not have fetched significantly higher prices. That's not to say they weren't and aren't pretty great. Are they in the same league as the fruit-infused, barrel-aged stuff offered at high price points by others? I'm not so sure.

There are unknowns. Owner Mike Wright evidently got divorced a while back. We don't know what effect that had on the business or its cash flow. It's also true that craft beer is slowing and many brewers are showing flat or declining sales. Did that play into what happened? Hmmm.

By all accounts, The Commons was highly successful in its original location. The space was smallish, but friendly and homey. Wright didn't own the building, but the overhead had to have been low. Enjoying their eccentric beers while perusing the brewery had a definite cool factor.

Everything flipped in the move to Belmont. They got more production space, but expenses increased dramatically and the new place never lived up to the charm of the old one. Which left them stuck with a boutique product in a much larger space with much higher overhead.

To make a go of it there, they needed to sell a whole lot more of their beer or cater to a more general audience. That would have meant mainstream beers and food. Except for the 11th hour foray into IPA, they did none of those things.

People sometimes become rigid in business. Overconfidence, ego or lack of capital are some of the reasons. I don't know what happened at The Commons. But a new space with significantly higher overhead likely required a different approach than the one they had used on Stephens.

The cautionary tale, for anyone who cares, is that taking on significant debt in an industry prone to shifting tastes and fickle patrons is a risky business. If you're going to go down that path, build some flexibility into your plan so you don't find yourself in a financial rabbit hole.

It isn't clear what will happen to The Commons. Beginning in January, Modern Times will lease the space from Wright, presumably shielding him from mortgage payments. Once the dust clears, he may decide to reinvent the business in a smaller venue similar to the old place.

A lot of people would gather around that. 🍻