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Wednesday, May 30, 2018

Hopworks Retains Balanced Vision at 10

I first met Christian Ettinger about 15 years ago. He was head brewer at the original Laurelwood at the time. I stopped in to get a corny keg filled and we chatted informally. Several years later, he left to found Hopworks, which opened in 2008. I've interviewed him several times since. It's always an education.

On the occasion of Hopworks' 10th anniversary, I talked to Ettinger about where they've been and where they're headed. He's proud of the business they've built and the sustainable model they've followed since day one. He looks forward to the next 10 years.

"We folded the European balance of food and family and beer together at Hopworks and it's been a success. We have three pubs with another one coming on at the airport. I'm happy with where we are and looking forward to what's coming."

Ettinger can't decide which of the three pubs is his favorite, whether the original in Southeast Portland, the Bike Bar on North Williams or the Vancouver location. It figures.

"I think they balance and reinforce each other," he says. "The pubs are our best sampling point. People have a good experience there and it makes them more likely to pull our beer off a store shelf. The taprooms are a bit of a chore because they have food. I think food is important, but it isn’t completely necessary. It’s just what I believe in."

They're holding a few events to celebrate a decade in business, if you're wondering. The first of those, a retrospective event for family and friends, happened on Earth Day. Coming up in August, they'll host a Salmon-Safe IPA fest on the 25th, followed by a Dark Beer Festival in November.

"The IPA fest is going to be fun," Ettinger said. "We invited 20 breweries to imagine what IPA will look like in 10 years. Hazies kind of came out of nowhere. Now there's Brut IPA. That's today. It's going to be interesting to see what kind of vision these folks have for the future."

Of course, Hopworks has its own collection of standards and seasonals, including the recently released Totally Chill Hazy IPA (can shown above). The beer is available around town and fits in perfectly with the raging haze craze, like it or not.

The viability of the original Hopworks' concept was anything but assured. The flagship pub is located in an area many did not think ideal. There were a lot of rundown and seedy businesses nearby. It was a gamble purchasing the building and making a sizable investment in renovating it.

"Powell Blvd was probably not the most obvious place for a brewpub," Ettinger admits. "Strip clubs, check cashing businesses and convenience stores. But 45,000 cars cruise by here every day. And Eastbound traffic makes a right-hand turn into our parking lot. It's worked out nicely."

A big reason Hopworks wound up on Powell is that Ettinger was determined to purchase a building for his brewery and pub. He wanted plenty of space to grow into and didn't want to get stuck with a lease that could be pulled or increased. The place on Powell looked good to him.

"Maintaining our independence was another important factor," he said. "We had some goals with respect to sustainability and social responsibility that weren't necessarily conducive to quick profits. I figured the key to achieving those goals was independence."

Protecting that independence meant tapping into friends and family for financing early on. There was never any outside control connected to that. After a few years, early investors were paid back and Ettinger has moved on to traditional financing in recent times.

"One of the reasons our growth curve has been fairly gradual is we didn't get caught up in taking on substantial debt to expand. Sure we could have grown faster. But 30 percent growth, which you see a lot, is scary. I'm more comfortable with 10-15 percent, which is about where we are."

They intend to make some investments that will help drive future growth. In the pub, they're expanding the number of booths to make people more comfortable. They'll also introduce more vegetarian menu options. The brewery will get more efficient, not bigger.

"We'll bring in a system that extracts fermentables from any grain," Ettinger said. "It's not cheap, but it will allow us to produce wort in substantially less time, with less energy and water consumption. Plus, we get 20 percent more out of the malts we use. It will be a great upgrade."

Many will recall that Hopworks was an early adopter of aluminum cans. That may be seen as part of an innovative mindset, but Ettinger doesn't see it quite that way.

"Sure, we adopted cans early," he says. "We saw cans emerging as the most popular beverage container in the world. It may have been somewhat innovative in craft beer, which wasn't putting a lot of beer in cans when we started. Ultimately, it’s the beer that matters, not the packaging, though I do think the environmental footprint of cans is somewhat less than bottles."

The ultra-competitive market has Ettinger contemplating reasonable goals for beer production volumes. Does Hopworks need to substantially increase annual barrelage to stay relevant or is a moderate approach more realistic and ideal?

"We could simply choose to produce 14K of the best and most efficient barrels possible," Ettinger said. "That's about where we are now. I mean, 30K barrels is a neat target, but I'm not sure we need to get there anytime soon. Our focus on sustainability and social responsibility is more important."

That focus has sharpened as a result of becoming a B Corporation three years ago. Early on, the approach to sustainability and social responsibility was fairly basic. They had a green building, focused on organic sourcing and featured a variety of environmental efficiencies.

"When we became a B Corp, we found we weren't doing some things," Ettinger said. "We've had to tighten things up in some areas. We had to look more seriously at our governance and the work/life balance of employees. In some ways, things are simpler now."

As with any business, there have been twists and turns. Hopworks started out quite small and has made the transition to a much larger operation with countless employees and a reach that extends well beyond the Portland area.

"There are always challenges," Ettinger says. "I love coming to work. Building the team may be the most rewarding thing. As we've grown, the team has changed at each level. You discover you need people with expertise in different areas as you grow. For instance, we didn't think about the details of distribution in the early days. Now we have to."

I've not always been the biggest fan of Hopworks beers, which have evolved and improved. But I've always appreciated their mission. Maybe the most unique thing about Ettinger is that he's always thinking, always trying to figure out ways to do things smarter, more efficiently.

It's a vision thing. The next 10 years are sure to be interesting.

Friday, May 25, 2018

Review: Barrel-Aged Stout and Selling Out

I first caught wind of Josh Noel's book months ago. It peaked my interest because I've followed the antics of Anheuser-Busch in craft beer space for many years. You know this if you stop by here occasionally. I preordered the book on Amazon and it arrived just prior to last week's trip to Kauai. Perfect timing.

The book is not yet in full release. That evidently happens on June 1. It looks like Amazon is still handling it as a preorder, though, as I say, the copy I ordered months ago arrived in my mailbox about two weeks ago. Whatever.

First, I don't know Josh Noel and was not interviewed for his book. One of my blog posts from several years ago is referenced, but that's it. My friend, Jeff Alworth, received an advance copy a while ago and told me it was great reading. He was right, a rarity. (I kid.) Read Jeff's review here.

Noel, who writes about beer and travel for the Chicago Tribune, interviewed seemingly hundreds of people and consulted a pile of print, electronic and related sources while prepping for the book. As with all such projects, the research likely took significantly longer than the actual writing. Situation normal.

I don't want to give too much of the book away. Please support the author by purchasing a copy. The tale is essentially divided into two parts. Most of the first half of the book focuses on how John and Greg Hall (father and son) built Goose Island Brewing into a highly respected craft brand. The second half covers the aftermath of Goose Island's sale to Anheuser-Busch in 2011.

It's clear early on that John and Greg Hall are polar opposites. John is the steady, conservative hand steering the company; Greg is the wildly creative, undisciplined and unstable force who invented a great line of beers, including Bourbon County Stout, a beer that transformed the way we think about barrel beer in this country.

By 2010 or so, Goose Island was at a crossroads. It simply could not keep up with the demand for its mainstream beers, while also maintaining production of its high end specialty beers. They needed money in some form to expand. John Hall, 45 when he launched the brewery, was nearly 70. Thinking about the next 10 or 20 years wasn't in the cards.

There was no succession plan at Goose Island. While many employees and outsiders assumed Greg Hall would eventually take control of the company, that was not the plan. Some will consider Greg to be the tragic figure in this story. In fact, it's fairly clear that he was was not suited by temperament to run the company. He was strictly a creative guy.

The result of that reality is that John Hall elected to sell a controlling share in Goose Island to Anheuser-Busch. Portland-based Craft Brew Alliance, which owned a 42 percent share in Goose, eventually sold its share for $16 million in cash, plus reduced distribution fees worth millions more (the CBA was a third owned by AB at the time).

In the wake of the buyout, Noel shifts to covering multiple facets of what transpired. The Brazilians running Anheuser-Busch (absorbed by InBev prior to the Goose Island deal) had no idea how to operate a craft brewery. They bullied employees, bungled marketing tactics and generally mangled the Goose Island brand.

But Goose Island served as a sort of test case. As Anheuser-Busch bought more craft breweries, its experience at Goose was significant. The cautionary tale for craft beer fans is that the Brazilians have been good learners. They've modified and refined their approach with the acquired brands. To a significant extent, they actually know what they're doing now.

It seems to me that Noel's views on big beer vs craft are readily apparent. But you'll have to read the book and judge for yourself. If you care about the beer industry and the future of craft beer, you'll enjoy this book. Please buy of copy at your local independent bookstore or online, if you must. It's well-worth the investment.

One area where Noel jumps the track along the way is in describing Portland's early craft beer history:
By 1984 the city of fewer than four hundred thousand was home to a handful of breweries, including what would briefly become three of the nation's ten largest: Portland Brewing Co., Full Sail Brewing Co., and Widmer Brothers Brewing. Widmer, in particular, generated buzz with its odd choice of a flagship: hefeweizen...
Actually, Portland had only one operational brewery at the end of 1984. That was Bridgeport Brewing, known at the time as Columbia River Brewing. Portland Brewing didn't open until March 1986. Full Sail (originally Hood River Brewing) didn't open until 1987, and not in Portland; Widmer was prepping to open in 1984 and eventually did in April 1985. But Hefeweizen was not the Widmer Brothers intended flagship. That honor belonged to Altbier, which proved to be a hard sell. Hefeweizen became the Widmer flagship largely by accident a year or two after they officially opened.

Regardless of that misstep, Noel has put together an excellent book that will be of interest to craft beer fans and industry observers. I regard it as essential reading.

Sunday, May 20, 2018

Beer on Kauai: 40 Years Later

My first trip to Kauai was 40 years ago. It's shocking to realize that. I was about to start my senior year of college and my mom talked me into joining her. She had been here several times prior to that 1978 trip and knew the lay of the land. The place had an unfinished look in those days; it's a little different today.

I wasn't particularly interested in the beer scene in 1978. Tennis was my addiction. For beer, about all you could find was standard issue macro brew. Kauai and the rest of the Hawaiian Islands did have Primo, a novelty we coveted at home mostly because we couldn't get it there.

If you're wondering, Primo is still around. Production on Oahu ended shortly after my first trip and the brand hopped from Schlitz to Stroh to Pabst, which currently owns it, in the intervening years. But it's still out there somewhere. It isn't worth the trouble, if you're thinking of looking for it. No.

My second trip to Kauai came in 1996. This was just four years after Hurricane Iniki turned the island upside down, and things were still a little sketchy. I had started homebrewing around that time, so I was more interested in the beer scene. We drank a lot of Kona Fire Rock Pale Ale on that trip. There were some imports, as well. The scene was mostly unchanged when I returned in 2001.

There have been a string of Kauai trips since. I've lost track of how many. At some point, I discovered decent beer at Waimea Brewing. That place, located next to the Plantation Cottages in Waimea and billed as the Westernmost Brewpub in the World, moved to Port Allen and became Kauai Island Brewing in 2012. It continues to attract locals and tourists.

Kauai Beer Company opened in 2013 in Lihue. I visited the brewery not long after it opened. The place was a shell, basically a tasting room. Owner and co-founder Jim Guerber, an avid homebrewer, got mixed up in craft beer when friends kept telling him his beer was too good to stay a secret. Owner of a software company, he didn't need the money or the headache. But he liked good beer. He took the plunge.

The transformation of KBC since 2013 is amazing. From basically nothing, they now have a variety of beers on tap and a full kitchen. They are open for lunch and dinner and they continue to do a Thursday evening promotion with local food trucks. The place was buzzing when I stopped in at lunchtime the other day.

I wrote about KBC for BeerAdvocate in 2014. They have a copy of the article framed and mounted in the pub. I've seen Guerber at beer events here and there. He was mingling with patrons when I visited the other day and I didn't speak to him. But I tapped him on the shoulder as I was leaving. He opened his arms wide and spun around like Vanna White, as if to say, "Look what we've built!"

It's true. KBC has gone from nothing to something. They've done it in what remains a craft beer desert. Most bars and restaurants in the resort areas are dominated by Kona and macro. The beer selection in grocery stores is shameful, dominated by AB swill. My beer of choice here is Maui Brewing's Bikini Blonde. It fits nicely with the tropical weather and Maui is independent.

I don't know how many small breweries Kauai could support. The emerging strong preference for local beer on the mainland may not translate here. Some (heavy) styles don't really jive with the climate and the full-time population (around 72,000) may not have caught the craft beer bug like people have at home. Maybe two craft breweries is enough here.

Regardless, it's great to see independent breweries doing well. I'm especially impressed with what they've done at Kauai Beer Company because they started with not much more than a plan and built it out from there. Plus, I watched the transformation, intermittently.

After 40 years, Kaua's beer scene is evolving in a positive way. Keep it up, folks.

Monday, May 7, 2018

Long Odds at Portland Brewing

Bringing a brewery back from the edge of oblivion is a tough assignment. But that's exactly what's been going on at Portland Brewing, where management has been diligently working to return the once respected brand to relevance. The odds are stacked against them.

The situation at Portland Brewing is not good. OLCC stats, which are woefully unreliable in a lot of ways, show the brewery dropped 3,700 barrels in volume last year. That translates to a 13 percent decline. Those are Oregon only, if you're wondering. Of course, Portland Brewing isn't the only loser. Bridgeport, Oregon's oldest existing brewery, suffered a 30 percent decline in volume. Yikes!

When you're trying to revive a collapsing brand, the simplest thing you can do is refresh its visuals. So you put some time and effort into redesigning the packaging and graphics. Portland Brewing has done just that, says a recent press release. It's a different look, for sure.

Part of that strategy includes applying "Portland Originals" status to MacTarnahan's, the brewery's flagship amber ale, and Portland IPA, which has been renamed Ink & Roses IPA. The idea is to connect with the brewery's ancient past, when those beers were well-regarded around the city and region. I think applying Originals status to a beer that has been renamed and redesigned (see below) is curious, but never mind.

Yesterday, I picked up bottles of MacTarnahan's and Ink & Roses. Mac's was one of my go-to beers back in the day. We once consumed a pony keg of it at a dog birthday party. The modern rendition seems fine to me. No complaints. Even the IPA, which was altered from its original form to accentuate hops flavors and aromas, was decent, if not spectacular.

The big picture strategy driving the rebranding project is to create a link between Portland Brewing and the city's iconic brewing history. They're doing that by emphasizing the brewery's place in local craft beer history and, hopefully, the industry's future.

Setting aside the packaging and the beer, the strategy is slightly disingenuous. In actual fact, Portland Brewing, like 10 Barrel, Bridgeport and others that have been absorbed by big beer, no longer exists as an independent entity. That's been Portland Brewing's fate since 2004.

A little history. Portland Brewing was founded in 1986 by buddies, Art Larrance, Fred Bowman and Jim Goodwin. It was the last of Portland's four founding breweries to open. The pub on Northwest Flanders was too small virtually from the outset and the brewery eventually moved to its current location in industrial Northwest in 1993.

To finance the move and expansion, founders sold common stock. Soon after they arrived in the industrial area, the company was in financial distress. Local legend and mega investor Mac MacTarnahan soon gained control of the company. But it wasn't a picnic. By the early 2000s, Mac's health was failing and so was the company.

The MacTarnahan family, weary of financing a losing proposition, sold to Pyramid in 2004. Portland Brewing was soon rebranded as MacTarnahan's Brewing. In 2008, Pyramid was acquired by Magic Hat, which was itself acquired by North American Breweries in 2010. Then Costa Rica-based Florida Ice and Farm bought North American Breweries in 2012. Soon thereafter, someone had the good sense to change the name back to Portland Brewing.

Layers of ownership stifled creativity and Portland Brewing drifted aimlessly. The pub stayed busy, but the beers collapsed into irrelevance. It wasn't long before bombers and six-packs of Portland Brewing beer were showing up heavily discounted in grocery and c-stores. You rarely sniffed the stuff in self-respecting bottleshops and beer bars.

That was the situation Robert Rentsch walked into in 2015. Rentsch, a successful brand builder at the Craft Brew Alliance, was hired as general manager of Portland Brewing. His task was and is to rebuild and reinvigorate the brand. When I talked to him shortly after he was hired, he didn't have a full picture of what he would do, but admitted it would be a challenge.

Frankly, I think the attempt to wrap Portland Brewing up with the city's brewing history is a mistake. It might work with drinkers who don't understand why the connection is a fraud, but it won't be enough even if it does get traction. In fact, I believe the chances of returning Portland Brewing to any kind of relevance are sketchy, at best.

The problem is the industry has changed dramatically in recent years. We're seeing craft beer become hyper local. With more than 6,000 breweries, consumers across the country have access to local beer. As a result, they're buying local and turning away from beer made in distant places. That's why regional craft breweries are struggling (see Deschutes, Green Flash, etc.)

Portland Brewing is desperately trying to recapture its local identity because it believes that identity will buy it a piece of the action. But that's largely a mirage. The people who happily stand in line to buy Great Notion beers are never going to buy or order a Portland Brewing beer. They want something local, trendy and preferably one-off...something that carries cool brand status.

For established breweries like Portland Brewing, that kind of product simply isn't very attainable. The places most able to make those kinds of beers are independent, nimble and comfortable making rotating small batches of innovative beers.

Long odds, for sure. But good luck to them.