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Sunday, May 14, 2017

Portland Beer Week Features Events Blitzkrieg

Portland Beer Week returns for 2017, its seventh year, with a veritable blitzkrieg of events, as well as some new twists. The 11-day fest runs June 8-18. It's coming up faster than you think.

This year’s official beer is Hop Berry IPA, brewed with marionberries by Culmination Brewing. It will be available on draft and in limited edition bottles at Whole Foods Markets and other beer-centric retailers in the Portland area.

Although beer is its main focus, Portland Beer Week extends that theme. It features numerous activities that happen alongside opportunities to enjoy great beer. The event is effectively a celebration of Portland’s beer, food and arts culture rolled into one.

“Our goal is to showcase the world of beer in the greatest beer city on earth,” event founder and czar, Ezra Johnson-Greenough, told me. “We do that through brewer’s dinners, tastings, educational seminars, festivals, games and more.”

One of the big additions (actually an expansion, since there was a kickoff event last year) this year is the Kickoff Party on June 8th. There will be breweries, along with food and merchandise vendors. The party is being held in the Exchange Ballroom and on the Cascade Rooftop (top of the Exchange Building), which features spectacular views of the city.

“I’m really excited that folks like the Oregon Cheese Guild are joining us and our collaborative beer and food project vendors like Salt & Straw Ice Cream and Blue Star Donuts,” Johnson-Greenough said. “Kickoff attendees can sample spirits, chocolate, jerky, hop candy we’ll have beer schwag, too.”
 
Another addition this year is the Dinner Series, which features a handful of collaborations between top local breweries and chefs. Organizers have built the schedule so they don’t have dinners piling up on the same date.

“I’m looking forward to Firestone Walker at Hair of the Dog, Culmination Brewing at The Woodsman, Block 15 & Ruse at an Imperial Session pop-up dinner and Modern Times at Pizza Jerk,” Johnson-Greenough said.

Returning this year is the Seminar Series, presented by Oregon State University and the HR Group. Several seminars will explore subjects like beer industry branding, starting and building a brewery from Nano to production, sustainability in brewing, barrel-aging beers and sour and wild ales.

The beer event schedule jumps into action shortly after the Kickoff Party with the Fruit Beer Festival at Burnside Brewing, June 9-11. Billed as a premiere showcase for fruit beers, the event also features local vendors, food, DJ's and non-alcoholic drinks. It's the marquee event of Portland Beer Week.

“We’re back to Burnside after last year’s experiment in the Park Blocks,” Johnson-Greenough said. “We’re spreading the beer stations out and the venue will have more shade and seating than in previous years at Burnside. We’ll also have more help at check-in to speed entry.”

The Fruit Beer Fest and fruit beers, generally, have gained favor in recent times. It's a little perplexing because  fruit beers run counter to tradition in this country, tradition being infested mainly with light beers made with malted grains. 

Local writer/blogger/author Jeff Alworth (Beervana, The Beer Bible) gave me this quote regarding the historical relationship between fruit and beer:
Fruit has been used since the Sumerians and Egyptians. As far as I know, every culture on earth has used fruit. Beer was, until fairly recently, a product of the farm, and farmers dumped whatever they had in it, including fruit. Medieval accounts list things like tree bark, hen bane, eggs, beans, honey, chimney soot and ashes as ingredients. Except for lager-brewers in Bavaria, basically no one in the history of civilization ever thought using just grain was somehow "proper."
So what's happening in American craft beer is that we are expanding our tastes to include ingredients that have been used for centuries. The Fruit Beer Festival has helped with that. And, of course, the official Portland Beer Week beer, mentioned earlier, is made with fruit. Symmetry.


The next big event of Portland Beer Week is Masters of IPA, an invitational showcasing America's best brewers of IPA's and hoppy beers. It moves to a larger venue with a curated selection, glassware and meet the brewers’ sessions on Friday, June 16th at Ecliptic Brewing.

The annual Rye Beer Fest, in its sixth year, returns with a new date and venue, moving to the Happy Valley Station indoor/outdoor food cart pod and taproom on Saturday June 17th. The all-age fest will pour more than 20 rye beers and have 18 food carts.

Portland Beer Week’s official finale, Snackdown, returns for a second year on Sunday, June 18th, noon to 4 p.m. Presented by Gigantic Brewing and taking place in The Evergreen ballroom above Loyal Legion, it features more brewer and chef pairings.

“I expect another great year,” Johnson-Greenough said. “We’re reaching out to tourists and casual beer fans in our marketing efforts and it seems like we’re getting more of those folks. Attendance has been increasing every year and I’m confident it will again.”

Stalk Portland Beer Week’s social media channels on Twitter, Facebook and Instagram for updated news and information. Advance tickets for most events are available online.

Monday, May 8, 2017

Shock and Awe in Craft Beer

Last week was not a great one for craft beer industry news. Despite all the good stuff going on, it does occasionally seem like the industry is under siege. Things figure to get more complicated and convoluted as we move forward. We aren't in Kansas anymore, Toto.

Wicked Weed
The first bad news was the sale of North Carolina-based Wicked Weed to Anheuser-Busch. Some, (I include myself), assumed the big boys would stay fairly quiet on the acquisition front after MegaBrew was finalized and given apparent volatility in the industry. Not so.

Wicked Weed is evidently a bit of an odd duck. They've grown fast since opening in 2012 and expect to produce 40,000 barrels this year. They package 85 or so beers annually and their flagship is an IPA (Pernicious), But sours make up 40 percent of their dollar sales. Yup.

Wicked does something like 35 percent of its sales in North Carolina, and also distributes to a handful of other states, including Georgia, Massachusetts, Colorado and parts of Texas. They will certainly expand that footprint as they extend capacity and gradually get immersed in the AB network.

There's a bit of an alignment smash-up coming, say industry sources. It turns out most of Wicked Weed's distribution network, including in North Carolina, is non-AB. That has the makings of a nice little disaster as AB works to align Wicked with its network. Good stuff.

Heineken and Lagunitas
The announcement that Heineken has fully acquired Lagunitas wasn't a huge surprise. Things have evidently gone pretty well since Heineken became 50 percent owner in the company back in 2015. This is the consummation of that momentum.

When considering the deal, it pays to ignore anything Lagunitas founder Tony Magee says or has said. When the original deal was announced two years ago, Magee said he would never sell the whole company to Heineken. So much for that. And Magee's credibility.

The new arrangement is mainly an international play. According to industry sources, Lagunitas will continue to operate as a separate business entity in the US. Magee will stay on as head of the company and will serve in an advisory role on Heineken's global team.

What's going to happen is Heineken will ramp up the expansion of Lagunitas into new markets around the world. That business has grown dramatically during the past year and has huge untapped potential. That's what motivated Heineken to pull the trigger on full acquisition.

Some craft beer geeks won't look at Lagunitas quite the same going forward. But the reality is, Heineken isn't in the same league as Anheuser-Busch, particularly in the US. It doesn't operate a vast distribution network here or have a collection of craft breweries. No comparison, really.

Craft Brew Alliance
Our friends at the Portland-based Craft Brew Alliance announced their Q1 results late last week. There was good and bad news.

The good news is that Kona was up 14 percent for the quarter, and continues to drag the company forward. CEO Andy Thomas also said Widmer is growing again in its home market, though overall shipments of both Widmer and Redhook were down.

The biggest bombshell was news that the agreement with Pabst to contract brew and eventually purchase the Woodinville brewery has been terminated. That means the brewery will close and be put up for sale within a couple of months.

Realistically, there wasn't much of a chance the purchase was ever going to happen. It's an antiquated brewery and was/is overvalued on the CBA balance sheet. Selling it will be a chore because the buyer, assuming one steps up, will also have to invest in making the place usable.

Of course, Pabst's position has become tenuous. It brewed mostly Rainier Mountain Ale in Woodinville. But the launch of that brand was botched out of the gate and expected volumes never materialized. Brewing capacity wasn't being used. Then Pabst got itself ensnared in lawsuits over distributor terminations (covered here last week) in Washington. A nice little mess.

The Woodinville closure means more CBA employees will be laid off or re-purposed within the company. Reports put the number at about a dozen. That's on top of the 15-20 who were laid off last year due to lower than expected Pabst volumes and declining production of CBA brands there.

In fact, most of the CBA's Woodinville production moved to the more efficient brewery in Portland. That rush to efficiency and greater profits is a slipper slope. The CBA will soon move some production to AB's Fort Collins plant to improve efficiency. That will mainly affect City Brewing in Memphis, but a reliable source tells me layoffs in Portland are imminent. We shall see.

On the heels of the CBA's Q1 report and the sale of Wicked Weed, there was renewed speculation on the possibility of AB completing a full purchase of the CBA. As noted above, the Wicked Weed sale has some people thinking more deals are in the wind. And maybe they are. Or not.

As discussed here numerous times, Anheuser-Busch covets Kona, but has no interest in Widmer or Redhook. It's hard to imagine a scenario in which the CBA strips Kona from its portfolio and sells it to AB separately. So it looks to me like the CBA will at some point be purchased and become a subsidiary of Anheuser-Busch, with Kona as the crown jewel.

Motivating Factors
For those who want a better understanding of craft brewery acquisitions, there was a fine article exploring that topic last week. Author Chris Herron suggests the primary motivation has more to do with preserving macro brand equity than with wanting to be in craft beer. That's vaguely at odds with what most of us have generally assumed.

Herron's article is terrific stuff and required reading. Trust me.


Tuesday, May 2, 2017

Turnover and Turmoil at Pabst

There's a whole lot of crazy in the beer industry. Then you look at Pabst, which is setting new standards for crazy in the Eugene Kaspher era. Someone ought to throw together a script and turn this wacky story into a reality TV hit.

Last week, we learned that nine top level folks were shown the door. They included chief growth officer, Rich Pascucci, with the company since 2011, and chief sales officer, Bruce Muenter, there since 2010. These moves come on the heels of significant restructuring last September.

The thing is, the pattern of turnover and turmoil at Pabst is legendary, established even before Kaspher took over in 2014. Between 2009 and 2014, there was a virtual revolving door of CEOs coming and going. Great way to build confidence in your brands.

Some of the more recent moves are the result of ups and downs in the business. Since taking over, Kaspher has rolled with the punches, adding people during the rapid rise of Not Your Father's Root Beer, laying them off when the brand tanked. Shit happens.

The moves they made last week are evidently part of an effort to streamline and build the organization according to the visions of Kaspher and new CEO, Simon Thorpe. They want to eliminate redundant management responsibilities and make themselves agile.

In fact, Pabst's fortunes aren't looking so bad. After some lousy years, trends for 2017 are moving in the right direction. Overall sales are up 1.7 percent. PBR shipments were up nearly 6 percent in Q1 and regional brands Lone Star, Old Style, Stroh and Olympia all showed growth.

The Pabst portfolio, in case you're wondering, includes a boatload of legacy brands. Besides those listed above, Pabst owns Colt 45, Old Milwaukee, Old Tankard Ale, Rainier, Schlitz, Blatz, Schmidt's, St Ides and others. Fine stuff, ya know.

Anyway, things were evidently looking so good for Pabst that leaders decided to incite more turmoil. They did so by abruptly terminating three Washington wholesalers in February and transferring their brands to Columbia Distributing statewide.

The terminated distributors are Odom Corporation, Stein Distributing and Marine View Beverage. They were each sent letters terminating distribution rights without cause and directing them to transfer existing inventory to Columbia. You can't make this stuff up.

It's an unusual situation. Suppliers rarely terminate distributors without cause. Why? Because that kind of move tends to lead to lawsuits that cause messy, expensive court battles and massive payouts. You're generally wise to avoid such scenarios.

But not Pabst. The terminations are apparently part of its realignment strategy. They want to have their beer distributed exclusively by Columbia in the state. It makes sense, right? Working with a single wholesaler fits with their agenda of simplification and efficiency. Terrific.

The problem is, they're now entangled in lawsuits. The terminated distributors quickly sued Pabst in federal court seeking damages. They, the distributors, fully believe the law favors them and that they are entitled to significant financial damages.

Soon thereafter, Pabst filed a motion to dismiss. It claims Washington law allows termination without cause and, in such cases, that terminated distributors' sole financial remedy is from the successor distributor, in this case Columbia.

For its part, Columbia is playing along. It has connected with and made financial offers to the terminated distributors. It says it is willing to arbitrate with the individual distributors if acceptable terms can't be reached via negotiation.

But no settlements are imminent. Not until the court makes a ruling on the law. Is Pabst right? Are the terminated distributors right? For now, the parties are immersed in a rolling dispute over the law, with motions filed and words flying.

My guess is Pabst has stepped into a quagmire. Its pattern of impulsive behavior is simply being acted out on another stage. The legal argument Pabst is making is a supple one. Chances are, they aren't going to win, which means they'll be forced pay the terminated distributors.

Lawyers and judges will figure this out. However things turn out, the saga makes for entertaining theater. Thanks a lot, Pabst.