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Tuesday, January 24, 2017

Oregon Beer Awards Judging, 2017

Fresh from nine days in Hawaii (yes, I missed the snow), I found myself sampling beer at the Oregon Beer Awards judging on Saturday and Sunday. Though the Awards have been around for a few years, this is just the second year in which blind judging was used.

Stuff you may already know if you watch these things: There were 974 beers entered by 112 Oregon breweries this year. That's up from 525 beers and 78 breweries last year. It's the only double-blind tasting competition in Oregon.

Although the event is sponsored by Willamette Week, the competition is run by Breakside's Ben Edmunds. Judges are mostly brewers, publicans and others who work in or around the industry. They invite a few local writers just for kicks, I suppose.

One of the wise things they did this year, having learned something last year, is reduce panel size to three or four in the prelim rounds. They also kept panels mostly together. The panels were larger last year and judges switched panels a lot. The result was that things bogged down and we got way behind schedule. Much, much better this time around.

Medal round panels, at least the ones I was part of or witnessed, were larger. That also makes sense because you want more palates to draw from when you're trying to pick the top three beers from a flight of 10 or so beers that are all really good. It was very tough to pick winners in the medal flight I participated in.

A few people have asked me how drunk judges get. Not very, I'd say. The beer is served in small plastic cups and judges rarely consume all of the beer in any of the cups. Most who judged full days this year reviewed six flights of roughly 10 beers each per day. The ounces add up fast, but food and water was provided and there were breaks. I saw no stumbling.

After judging a full day last year, I opted to change things up this year. I judged beer Saturday morning and Sunday afternoon (allowing me to fully miss the dreadful NFL conference championship beatdowns). I did the split because I felt like my palate got pretty fatigued in the afternoon session last year. Avoiding that prospect seemed like a wise move and it was.

The first thing you realize in these tasting excursions is how much differently brewers evaluate beers than most of us who write or watch the industry. Jeff Alworth has a lengthy and informative post about this. In a nutshell, brewers often taste and identify imperfections in brewing processes and ingredients. They do the same thing with good beers. Their comments tend to be fairly objective.

Meanwhile, I can identify good and flawed beers. During each flight, I'd take notes on each beer and identify the ones I thought  flawed or not quite right. I'd also choose my top three or four in the flight. My choices generally jived with the brewers on the panel. But my opinions tended to be subjective, not objective. Which means I usually couldn't objectively describe why a beer was flawed or near perfect.

Thanks to the folks at Willamette Week for sponsoring the competition. Special thanks to Steph Barnhart of WW and to Ben Edmunds, both of whom worked tirelessly to make this event work. Thanks are also due the countless volunteers who helped in a variety of ways. Finally, Widmer Brewing generously hosted the judging and provided lunch both days. Thanks, folks.

Medal winners in 22 categories, as well as a host of other awards, will be announced during the Oregon Beer Awards ceremony at Revolution Hall on Feb. 28. Tickets are available here. There will undoubtedly be some surprises. Why? Because the beers were evaluated blindly and honestly. Brewery stature meant nothing. Only the beer mattered.

See you at Revolution Hall.

Sunday, January 15, 2017

Kauai Beer Company Grows Up

I first visited the Kauai Beer Company back in the fall out 2013. They had opened their doors about a month earlier and the place was pretty stripped down. Owner Jim Guerber had a plan to build the business piece by piece, and that's exactly what he's done.

Back in those early days, they were pouring only four of their own beers. The flagship Black Limo, a schwartzbier, was at the top of the list, and a nice interpretation of the style. Except for a crock pot containing some chili or stew, there was no food. That and more beer was yet to come. The original post is here.

I returned to KBC the following April, commissioned to cover the brewery for a BeerAdvocate piece. That's when I had the chance to sit down with Guerber and his compatriots...his son and head brewer, Justin, marketing director, Larry Feinstein, and brewer, Eric Burda (who recently left the building).

I don't know how many times I've listened to brewers describe grandiose plans that sounded totally delusional. More times than I want to think about. But I never had that feeling with Guerber and his crew. Their plans to brew more beer, bring food into the mix and expand the operation in various ways sounded pretty reasonable.

That was likely because I could see Guerber was taking a cautious approach to the business. An accomplished homebrewer and owner of a custom software company, he thought his brewery could be successful. Having made the substantial original investment required to get the doors open, he was determined to build things out as the business grew.

When I next visited in late 2015, it was clear that things were evolving. There were more house beers pouring and they had expanded from food trucks (which appeared on special nights) to an in-house kitchen serving lunch and dinner several days a week. The space still had something of an unfinished look, but they had made good progress.

This week's visit confirmed what I suspected all along, which is that these guys would build a thriving business. I walked in during a weekday lunch hour. The place was buzzing with activity, many of the tables and most seats at the bar taken. The place now looks like an established brewpub, with a good selection of beers, a locally-sourced menu, friendly ambiance and schwag.

Most KBC beers are designed for the tropical climate. They tend to be fairly light on the ABV scale. The flagship Black Limo (5.0%) continues to be a favorite of locals and tourists. Lihue Lager (4.9%) is essentially a co-flagship with a strong following. My clear favorite from the rest of the list this time around was a robust India Pale Lager (6.5%), loaded with hop flavor and aroma.

The menu is island fare, a mix of sandwiches, salads, soups, entrees and appetizers. Lunch and dinner options are slightly different. They also have Truck Stop Thursdays, in which two or three food trucks pull up out front and sell their stuff to patrons. This is how KBC initially brought in food, considered a special event. It continues on in that form and is well-supported.

I didn't expect any special treatment. But Jim and Justin came round to talk and gave me a renewed tour of the facility. They revealed new plans for expanded brewing capacity, a larger kitchen and a beer garden, all of which will require removal of the current roof (Jim owns the building) and considerable renovation. These upgrades will undoubtedly happen in due time.

My comment to Jim when he initially stopped to talk to me at the bar was that his little brewery has grown up. And it most certainly has. From nothing more than a shell several years ago, Kauai Beer Company has evolved into a solid business. My guess is it will continue to move forward as each upgrade is considered, planned and implemented.

In case you're wondering, Kauai is still very much the beer desert I described in earlier posts. It isn't easy to find authentic craft beer here. The big beer companies seem to have a lock on the market, particularly in the resort areas. Which makes Kauai Beer Company an oasis for locals and tourists, mostly grown up and ready for future adventures.

Thursday, January 12, 2017

Tracking Craft's Emerging Mass Market Status

It's vacation week for me. While my Portland friends are stuck shoveling snow and braving treacherous roadways and walkways, I'm enjoying a week in the tropics. It's a tough job, but I guess someone has to do it. Might as well be me.

These respites away from the real world give me a chance to think about beer, something I seem to spend less and less time on these days. I've been trying to connect the dots between two articles I read on this trip. One by Andy Crouch, the other by Jeff Alworth.

Crouch's piece is in this month's BeerAdvocate, a publication I read sparingly these days. (There is no current web version of the article that I can find.) His basic premise is that our fixation on chasing multiple exotic beers at pubs and bars has ruined the simple experience of enjoying beers with friends. He describes a setting outside the U.S. in which all patrons are drinking one beer and having great conversations unrelated to beer.

Alworth's piece appeared on the Beervana blog, though it probably should have appeared in formally published form somewhere. His premise is that stratification is occurring in craft beer and that the largest brewers, though they continue to pander to the specialty audience, are aggressively going after an emerging mass craft market with trendy, disposable brands.

I'm not really sure Americans can ever return to a situation where we're satisfied drinking a single type or brand of beer in an evening. That was certainly the reality 40 or more years ago, when most of us drank tasteless industrial lager. There were a lot of different brands, but we were drinking basically the same beer and there wasn't much conversation about it.

Even in the early days of craft, there was nothing like the promiscuous market we see today, with folks striving to drink exotic variety. In those days, people were often satisfied to spend an evening drinking pitchers of the same beer. Breweries and bars typically had only four or five brands, so options were limited. It was a different world.

The specialty craze ramped up over the last 10 or so years, driven by breweries in an increasingly crowded market wanting to differentiate themselves and by a small, but aggressive crowd of geeks that became virtually addicted to exotic beers, pretty much regardless of cost. This crowd, though small, helped push craft dollar volume growth into the double digits in recent years.

What the large craft brewers have come to realize is that the specialty crowd is not the future. They recognize that the mainstream popularity of craft beer has created a huge pool of consumers who enjoy good beer, but aren't really interested in chasing exotic styles. That mass market is craft's future and that's where the large brewers are turning.

There's nothing, really, to add to what Jeff wrote in his piece. His notion that large brewers are targeting the mass market with trendy, disposable brands is absolutely correct. Consumers currently demand zesty IPAs and that's what brewers are delivering. They will easily move on to the next trendy thing when it comes along with new disposable brands. And so on.

Will we ever get to a scenario in which consumers drink a single type of beer, such as Crouch describes? Some might argue we've already crossed that bridge in some sense with the popularity of IPA. Even here, there's demand for numerous brands...Lagunitas, Ballast Point, Goose, etc. Spoiled Americans will probably always demand multiple brands of any trendy style.

The most intriguing thing about what's coming will be seeing how the big craft brewers implement a mass market strategy. My guess is the tactics will look something like those used in the past by macros to tap broad regional and national audiences. Irony abounds.

This transformation is gonna be comical and messy, I suspect. I look forward to watching it unfold.

Sunday, January 1, 2017

The Sketchy Beer Year Ahead

We can all agree that 2016 was a tough year. That was particularly true in the entertainment world, where we lost a number of high profile folks. You know who they are. It's also been a tough year for craft beer. I've talked about that in several posts and it's been talked about by others.

Recent reports suggest the slowdown we saw for most of the year continued into the holiday season. Volume growth continued its downward spiral. There was very little good news in the beverage industry as a whole, and beer is obviously part of that.

Everyone in the know wonders if the trends will continue into 2017. That would be fairly bad news for a lot of brewers, but especially for those who hope to score big via distribution. I continue to believe brewpubs and smaller breweries that serve local clienteles will mostly be fine. Retail distribution is another matter.

Softening Market
Now that Anheuser-Busch's merger with SABMiller is complete, many believe brewery acquisitions will slow. Or stop. Heightened DOJ scrutiny is part of that logic. There are also those who think AB and MillerCoors have carved out geographic territory and will now go about the business of building those brands out.

My view is that there will almost certainly be additional acquisitions. DOJ isn't going to be much of a drag on deals. They already waved through a buyout that happened as Mega Brew was being finalized. In the loosened regulatory schematic of the Trump era, it seems unlikely that DOJ is going to be active in blocking mergers and buyouts.

Another factor is overall market weakness. As recently noted here, craft dollar growth dropped dramatically in 2016. It is now barely ahead of volume growth. That means much of the volume growth we are seeing is the result of discounting. The growing popularity of cheaper imports is more evidence that craft beer is hitting a wall on price.

What does that mean? In an overcrowded, increasingly competitive marketplace, breweries that counted on double digit growth and easy profits are vulnerable. They will struggle to make it in a soft, discount-driven market, and be more likely to sell to big beer or private equity. Not all who want to sell will be good targets, so I suspect we'll see closures increase in 2017.

Brewery closures, if they happen, will have an impact similar to the housing market crash a few years back. All of a sudden, we may see breweries (and brewing equipment) available for pennies on dollar of initial investment. That's not good news for the equipment market. We certainly don't want that to happen, but it may be the logical result of an overheated, bloated market.

There is relative safety, if not independence, in selling out. That was surely part of what motivated the folks who sold out to big beer in recent years. If you want to insulate yourself in an overcrowded market, partnering with the deep pockets of big beer isn't a bad idea. Those who sold may have been among the first to see the prospect of oversupply, overpricing and a softening market.

Other Concerns
Despite the probability of more buyouts and consolidation, there are other serious concerns out there. On the distribution side, Anheuser-Busch has been buying up distributors much faster than craft brands in recent years. The ongoing plan is to leverage the power of distribution in every way possible.

That means cutthroat pricing of AB-owned High End brands via AB branch distributors. That type of vertical integration is actually illegal in some states. Where it is legal, like Oregon, the idea is to undercut independent craft brewers and gain access to tap handles and shelf space. It's not a bad strategy in a market where rising prices are a concern. Worry.

There's also the brewpub angle. Reports say AB intends to greatly expand its brewpub portfolio in 2017. We've already seen this with 10 Barrel, which now operates pubs in several cities. Word is, AB plans to take Goose Island national and international. The big idea is to compete with independents and build credibility in key markets everywhere.

What of the IPA craze? Craft's most popular style shows really no signs of slowing down. The downside of that fixation is it has overflowed into other styles, which have gotten hoppier. That's the result of brewers chasing consumer tastes. It's gotten tough to find beers that aren't hoppy.

Now comes news that non-craft IPAs (Goose Island, among others) saw stupendous sales growth last year. Some of that is undoubtedly the result of distribution reach and leveraged pricing. That tactic on the part of big beer will surely escalate. To maintain their edge, independent brewers are finding new ways to differentiate their beers, leading to wilder interpretations of the style.

Specialty beers are a final area of interest. High-priced, specialty beers have attracted a huge following in recent years among geeks, a crowd that has shown a willingness to pay exorbitant prices for a rare experience. Brewers pander to that crowd because it's easy money. Will it continue? Undoubtedly. These beers seem pretty immune to price pressures for now.

Whatever happens, it's sure to be a wild year ahead. Get ready.