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Monday, July 8, 2019

Notes from the Portland Craft Beer Festival

As with almost everything else connected to beer, we continue to see an evolution in beer festival format. Organizers are working to satisfy shifts in preferences that have as much to do with event amenities as with beer. Craft beer's growing mainstream status is part of that.

The Portland Craft Beer Festival is a good example, I think, of what's happening. I'd heard good things about it, but had no personal point of reference because I'd never attended. That changed last week.

This is the fifth year of the festival, which is held at comfy Fields Park in Northwest Portland. The Park is a significant selling point. It's of modest size, but located in a populated area that has great transit access. Getting there is easy and The Fields actually feels like a park, with thick green grass, great views.

Organizers are creative with the layout and it works well. The taps are positioned in the middle of the park under a tent. There are taps along the length of the tent on each side, allowing patrons to approach from both sides. It's an efficient use of the space consumed.

With the beer in the middle, there's ample room for tables with and without umbrellas a short distance from the beer tent. A variety of vendors and marketing demos are set up around the fringes of the park. Perhaps best of all, the layout allows for a large gaming area, which was set up for multiple lanes of corn hole. The venue didn't feel packed, despite a pretty good crowd.

This isn't an overly expensive event. For $30 (a little less online), you got a glass and 10 tickets. Each ticket yielded a 4 oz taste, unless you splurged on a full glass for tour tickets. Those first 10 beers might not be a great deal; but the next ones are because additional tickets are a buck, which translates to a $4 pint (four tastes). That's virtually unheard of at contemporary beer festivals.

They were pouring more than 100 beers, ciders and wines during this event. The beers were a mix of standards and one-offs. I was sharing tastes and sampled around 25 of them. There were far more misses than hits and most of the best beers were standards from known breweries. Several beers I tasted had obvious and significant defects. Not good.

I'm not sure beer quality is all that big a deal at an event like this. In some ways, it reminded me of what festivals were like 15-20 years ago, when patrons were more interested in drinking interesting beers in a unique setting than they were in obsessing over those beers. At some point, we crossed a bridge into bizarro geekdom. This, to me, seemed like a step back in the direction of sanity.

One thing I never thought I'd see at a beer festival is a gaming area. But the young crowd wants that and festivals are responding. This wasn't the first time I'd seen a corn hole being played at a beer event, but this was certainly the largest use of space. I was tempted to regard this as a generational shift in preferences, but it isn't that. When I was younger, we always played games in bars and taverns. Gaming at beer fests simply means craft beer is attracting the mainstream audience that wants that experience while drinking a few beers.

There was no live music. Instead, they provided some sort of piped in music playing on not huge speakers near the gaming area. I'm a fan of live music at these events, but the reason fests are moving away from it is that patrons don't pay attention. A little buzz in the background is all they want. You'll see a similar approach at the Oregon Brewers Festival in a few weeks.

What organizers have done is put together an event with wide appeal. They chose a relatively intimate venue in an easily accessible location. They designed a layout that provides easy access to beer and space for seating and gaming. And by not catering to the geek crowd that chases rare and expensive beers, they've made the festival attractive to a mainstream audience that just wants to have a few beers while enjoying the scene.

There are some things that need to be fixed. The lack of readily available drinking water is at the top of my list. Beer consistency could definitely be better. But all-in-all, the Portland Craft Beer Festival is a nice example of what a modern beer festival should be.

Friday, June 28, 2019

Portland's Provincial Past is Slipping Away

People look at Portland's craft beer scene and they wonder how it happened here. Well, that used to be a popular question. It was certainly a question posed to a lot of people when I was doing interviews for Portland Beer a few years back.

There is no simple answer. However, one of the things almost everyone mentioned in some way was that Portland is highly provincial. If you look up provincial, you'll find some interesting definitions. "Narrow minded," being one of them.

What these folks were saying about Portland is that people here have tended to value local products over things imported from other areas. There's also an implied nod to do-it-yourself values. Historically, this was a blue collar city where residents learned to do things for themselves. That general notion has carried forward.

When it comes to craft beer, virtually all of the founding brewers, and many who stepped into the scene later, started out as homebrewers. That's related to the strong DIY culture that dates back more than a century to the city's blue collar past.

As homebrewing transitioned to pro brewing back in the 1980s, a benefit of provincial attitudes was that people were willing to try local craft beers. It didn't matter that they were happily sipping or guzzing their macro lager. They were willing to try the early craft beers at least partially because they were local. The looming shadow of Henry Weinhard undoubtedly contributed to that mindset. Anyway, it turned out that, in a lot of cases, consumers liked what they tasted.

One of the other interesting effects of provincialism, as it pertains to Portland's affection for craft beer, is that brands from outside the area have had a tough time attaining traction here. Countless times you'd see a brand appear in a big splash, only to be gone in less than a year. This was true as recently as a few years ago.

But things have changed. One sign of that is our attitude toward Washington beers. Not so long ago, Washington beers had no standing in Portland. Oregon beer was popular in Seattle and elsewhere, but Washington beers had no clout here. That's not so today. A number of Washington brands have gained a foothold here, including Fremont, Georgetown, Chuckanut and others.

We see further breakdown of provincial Portland in the form of carpetbaggers from out of state (or country) who have or will soon open pubs. There's a big difference in commitment, by the way, between selling your beer in stores or bars and opening a pub or brewpub.
  • San Diego-based Modern Times opened in the former Commons space on Southeast Belmont and has gained a solid, apparently lasting following. 
  • Denmark-based Mikkeller recently opened in the vacated Burnside Brewing space and seems to be doing well, despite mediocre beer and overpriced everything. Proof positive that P.T. Barnum was right. 
  • There's word that Iceland-based KEX Brewing will set up shop in Portland. KEX beers will be featured at a hotel and restaurant being built on Northeast Martin Luther King Boulevard.
Obviously, out-of-state chains aren't new here. Colorado-based Rock Bottom has been around for many years. California-based BJ's Brewhouse at one time had several Portland-area locations and contributed some amazing brewers to our scene. Pittsburgh-based Fatheads earned a sold following when it opened in 2014 and has continued to do well since rebranding as Von Ebert Brewing.

But it seems to me that we've moved into uncharted territory. The growing acceptance of out-of-state beer bars, pubs and brands means more of them will be showing up here, that provincial barriers are breaking down, at least as they apply to beer.

Why would that be the case? There are probably several reasons. I suspect the most significant one is that we've seen and are continuing to see an influx of people from around the country and world. They have little connection to Portland, except that they now live here, and they are far more accepting of outside brands than Portlanders were 10 or 20 years ago. In effect, we're losing some of our ancient heritage as we become more diverse.

This was probably inevitable, given migration, and maybe it isn't such a bad thing. It's unlikely to be reversed, so best get used to the idea.

Thursday, June 20, 2019

Edgefield to Tap 2nd Annual Brewfest

It's the season of outdoor festivals in Oregon. The summer calendar is packed with events. So packed that beer fans will have to make choices. Next week's Edgefield Brewfest presents an interesting possibility due to the setting and the long tap list.

First, the list. They'll be pouring more than 100 Northwest beers and ciders. I tasted through a few of the offerings at a poorly attended media preview Monday afternoon. People who attend this event will have access to some great beers and ciders.

Besides the well-known breweries listed on the event webpage, every McMenamin's brewery will be represented at the event. That's a first and it's interesting because most of these breweries are tiny and the beer they produce is served across only one or two pubs. McMenamin's ciders, some really interesting ones, will also be poured.

Beyond the beers and ciders, there's the venue. Pay no mind to the bland photo above, shot when no one was around. The fest will be held in the amphitheater where Edgefield Concerts happen. That's a sizable area where folks can set up chairs of blankets near the taps. They'll have food nearby and music on several stages through the afternoon.

To me, a significant point of interest is Edgefield itself. It's a sprawling property where there's something for pretty much everyone. One can easily get lost or disoriented roaming the grounds, seeing the different buildings, soaking up some of the history.

This was once the County Poor Farm, opened in 1911. It was a place for destitute folks to live and work. The farm ultimately consumed 345 acres. On it, they raised hogs and chickens, grew produce, operated dairy and a meatpacking plant.  That rendition of the property ended in 1964.

Soon thereafter, the main building was named Edgefield Manor and became a public nursing home. It stayed that way until 1982, when the nursing home closed and the property was abandoned. The area fell into disrepair, as vagrants and vandals trashed structures. By 1985, Multnomah County was planning to demolish everything and sell the land. 

The Troutdale Historical Society intervened, claiming the buildings were historic and should be saved. The bleeding hearts delayed demolition for nearly five years, at which point Mike and Brian McMenamin bought the property. They were going try the hotel business. 

Their first order of business was to find the seventy-odd buildings on the property, many of which were covered by blackberry thickets. They planted a vineyard and established Edgefield Winery that first year. The old cannery turned out to be a great spot for a 20-bbl brewery, which has been expanded in more recent times. Edgefield has become a destination.

Apologies for the walk through history. The point is, Edgefield is an interesting place with a rich history. And it's located only minutes from the heart of the city, making it easily accessible to city slickers who need a bit of country respite from time to time. 

The upcoming Edgefield Brewfest, happening Saturday, June 29th, is a great chance to appreciate an historic property while enjoying good beer and cider. Visit the event site for more information and to buy advance tickets. It's sure to be a pleasant day in the sun and shade. 

Sunday, June 16, 2019

Barrel-Aging Programs Buck Trendy Industry

One of the realities of modern craft beer is fads and trends. There are so many breweries that it's tough to get noticed. In that scenario, a lot of consumers are fixated on what's new and shiny. Maybe this was the inevitable result of a maturing industry. Maybe.

You see the theme playing out in beer bars, bottleshops, taprooms and pubs. Customers who pass through those doors commonly ask for the newest thing, whether it's a fruit infused hazy, a kombucha pilsner or some other strange one-off.

Most brewers, whether they like it or not, have little choice in the matter. If they want to stay in business, they've got to play the game. That means spending an exorbitant amount of time focused on developing fancy new beers and the packaging that sells them. 

What suffers is the work that once went into refining beers over a period of months and years. When you're focused on keeping abreast of the coolest new trend, you don't invest the time or energy in messing around with what we once knew as reliable standards. 

It's not so hard to see why flagship beers are an endangered species. There are still quite a few of them around, but they don't have the appeal or command the sales numbers they once did. A big part of the reason established craft breweries are suffering is that people don't buy flagships anymore. That stuff is old hat, not cool. 

All of this vaguely became part of the discussion at Thursday evening's Barrel-Aged Beer and Whiskey Seminar at House Spirits/Westward Whiskey in Southeast Portland. It was one of four seminars held as part of Portland Beer Week. Breakside's Ben Edmunds led a group discussion that included Matt Lincecum, founder of Seattle's Fremont Brewing, Daniel Hynes, manager of Breakside's barrel program, and Andrew Tice of House Spirits. 

Barrel-aged beers definitely have a place in the trendiness of craft beer. They're rare and usually expensive, prerequisites for capturing the imagination of craft fans who sneer at stuff that's easy to find and cheaper. That $20 four-pack of hazy IPA isn't as good as an established IPA that sells for $12 a six-pack. But never mind. It's new and rare and spendy. Gotta have it. 

A big difference between the flood of trendy stuff being dumped on the market is that barrel-aged beers are hard to make. They require meticulous planning, time and expertise to pull off well. Even then, they sometimes bomb. Expensive equipment and a nice facility are great, but you simply cannot make these beers easily. Putting beer in a barrel can produce great or dreadful results. 

Some of the considerations involved include the type and quality of barrels used, sugar content of the beer, type of yeast, aging time, temperature, monitoring while aging to evaluate progress, knowing whether to blend vintages and so on. Barrel-aged beers are a highly artisan endeavor, requiring skills and knowledge acquired over many years. They also require a lot of patience. 

Contrast that with your average trendy beer, often a half-baked concept. They can be highly creative, but usually aren't very refined. They're here today, gone tomorrow, so they never really have a chance to mature. Barrel beers can also be creative, even half-baked, but they usually aren't a one-and-done proposition and actually do grow up in a lot of cases.

It wasn't so long ago that brewers focused on producing a few flagship beers to sell in their pubs and maybe in packaged form. There weren't a lot of choices, which meant the primary differentiating factor was the quality and evolution of the beers. We've lost a bit of that in the frenzy over what's new and trendy, I think.

But I take pleasure in knowing there are barrel aging programs out there that have something in common with the focus on quality that once dominated this industry. Maybe we'll at some point return to a situation where that's the industry norm, not the exception. Maybe.

Note: Special thanks to Ezra Johnson-Greenough, who offered me a place in the seminar and encouraged me to attend. 

Wednesday, June 5, 2019

Portland Beer Week: The Educational Seminars

One of the most amusing things I experience on my beer travels is beer fans who know little or nothing about the beers they are drinking, the breweries where the beers were made or the processes involved in making them. What these folks need is a little education.

There are a variety of ways to get education, including brewery tours, homebrew clubs, etc. Some festivals include an element of education, often on how the brewing process works. Portland Beer Week has featured educational seminars for several years. That effort continues in 2019.

"I love making education part of Portland Beer Week," event organizer, Ezra Johnson-Greenough, told me by email. "It's always fun to learn more and hear brewers and other experts bounce thoughts and ideas off each other. I also think it helps make Beer Week more than just a drinking exercise."

Portland Beer Week is, of course, mainly a drinking exercise. Ten days worth of drinking and partying, June 7-19. Check out the calendar. Each day is packed with excursions into the bowels of the local craft beer scene. Don't drink too much!

The educational piece is represented by a series of seminars spaced more or less evenly during the first week. They are:

Future of the Craft
Sunday, June 9th, 7-9 pm
Migration Brewing, 2828 NE Glisan St.
This seminar will consider the state of the industry, which is being bounced around by changing consumer demand, increasing competition, flat or declining growth, hostile distribution systems, corporate buyouts and even cannabis. Where does the industry go from here?

Panelists will include Tony Roberts (co-director of the Oregon Brewers Guild), Sam Holloway (Crafting A Strategy), Ben Edmunds (Breakside Brewery), Ben Parsons (Baerlic Brewing) and Jason Notte Flint (beer biz writer).

"I designed this seminar to create a discussion/debate that I would personally like to hear," Johnson-Greenough said. "It should be lively."

Tickets are $12 and include a Migration beer. Get them here.

The Branding Bunch: Here's a Story
Tuesday, June 11th 5:30-8 pm
Function PDX, 919 Northwest 23rd Ave
A look at brewery branding and storytelling, as practiced by industry marketing pros. Get insight from designers and brand managers on how to develop your brand's story from social media to point-of-sale.

Panelists will include: Briana Romancier (Coates Kokes & Pelican Brewing Co.), Jeremy Backer (Level Beer & Ex Novo), Michelle Humphrey (pFriem Family Brewers), Ashley Jhaveri & Chrispy (ZZEPPELIN). Moderated by Michael Perozzo.

"This particular seminar is really about how breweries are learning to leverage their unique stories into a brand, and then how to communicate that effectively through social media and branding," Johnson-Greenough said. "Michael will do a great job guiding the discussion."

TIckets are $12 and include a drink ticket for a Baerlic Brewing beer at the bar. Buy them here.

Barrel-Aged Beer and Whiskey Seminar
Thursday, June 13th, 5:30-8 pm
House Spirits Distillery, 65 SE Washington St
House Spirits and Westward Whiskey present the annual Barrel-Aged Beer Seminar, which veers into whiskey, its similarity to beer and how integral it is in barrel-aged beer production. Attendees will get an inside look at the process from whiskey wash to barrel-aging.

Special guests/panelists: Ben Edmunds (Breakside Brewery), Matt Lincecum and Matt Lincoln (Fremont Brewing) and Andrew Tice (House Spirits/Westward Whiskey).

"This is going to be really fun," Johnson-Greenough said. "Making a barrel-aged beer isn't as simple as filling a barrel with beer. Also, many don't realize how similar whiskey is to beer or that House Spirits is really a brewery first. Anyone who geeks out about this stuff you will enjoy this class."

Tickets are $35. Attendees will sample two barrel-aged beers from each brewery and single malt whiskeys from Westward. Buy tickets here.

Sour & Wild Ale Seminar: Coolship Edition
Friday, June 14th, 5:30-8 pm
Von Ebert Brewing Glendoveer, 14021 Northeast Glisan St
This annual tasting and educational event explores the process of making sour beer with wild yeasts and bacteria. The focus this year is on brewers who use coolships...open-top vessels made to cool wort (unfermented beer) out in the open where live yeast and bacteria found in the environment can make its way into the sweet wort.

Joining Von Ebert's Sean Burke: Trevor Rogers (De Garde Brewing), Shilpi Halemane (Logsdon Farmhouse Ales) and Garrison Schmidt (Block 15 Brewing).

"I'm always interested in how brewers produce so-called "sour" beers," said Johnson-Greenough.  "There are multiple methods, theories and techniques. Why is coolship beer trendy? Why are brewers increasingly drawn to local flora and fauna? I'm not sure all consumers care how their beer got to taste sour or funky, but connoisseurs of the style do."

Tickets are $35 tickets and include rare/premium beer tastings with De Garde, Logsdon and Block 15. Get them here.

I'm not generally a fan of overpriced festivals, beer dinners and related events. There are more than enough of those kinds of events around. But these educational seminars offer worthwhile content for what seems like a reasonable cost. I hope people will support these things.

As for ticket availability, I understand they will have tickets available until the last minute, unless an event sells out...which evidently isn't likely. The exception to that rule may be the Sour & Wild Ale seminar, which has been fairly popular and may sell out. A word to the wise. 

Friday, May 31, 2019

Craft Beer's Ultra-Competitive, Jelly Bean Reality

Before I launched this blog in 2011, I had observed the trajectory of craft beer dating to the 1990s. Those were quaint times, thinking back. There weren't that many breweries and, to a large extent, you mostly knew who they were and what they were good at.

That began to change after the financial crisis of 2008. It was around that time that the brewery count started to tick upward wildly. One of the stats I included in Portland Beer was that Portland's brewery count had increased 40 percent between 2009 and 2012. It continued to rise from there.

The national numbers are similar. Between 2009 and 2012, the total craft brewery count rose from 1,698 to 2,420, according to the Brewers Association. Between 2012 and 2015, the count nearly doubled, ending at 4,628. Between 2015 and 2018, another 2,718 opened. Total craft breweries at the end of 2018: 7,346.

Those stats, unless you look at the detail, obscure something significant about the structure of the current market. Between 2009 and 2018, microbrewery growth was off the hook....more than 4,000 opened during that period. Framed differently, for every microbrewery that existed in 2009, there were roughly eight by the end of 2018.

Brewpubs, which had formed the backbone of the industry for several decades, saw subdued growth by comparison. Between 2009 and 2018, around 1,500 brewpubs opened, an increase of about 150 percent. Regional brewery growth was miniscule, an increase of less than 200.

In effect, the craft beer landscape was transformed. Today's industry is dominated by small breweries that focus almost exclusively on beer. Brewers Association stats have shown that those breweries are creating the bulk of industry growth. What they share is that they rely on beer sales to stay in business.

That scenario has made differentiation the name of the game. You have to make yourself known somehow. That's one reason we're seeing packaging with wildly colorful labels and creative designs. If your packaging is dull and unengaging, consumers are less apt to notice you next to other shiny stuff on shelves.

There's also the beer itself. Differentiation means playing around with experimental ingredients and names. Where it once meant using different hops or malts, it now means almost anything. Have you tried Fudgesicle Ale? How about Fruit Loops IPA? What about Donut Lager? You simply must.

The result is that shelves in beer stores have turned into jelly bean showcases featuring wild packaging, experimental ingredients and crazy beer names. The fact is, a lot of consumers are simply looking for what's trendy and new. Anything to capture their interest.

What's hot today probably won't be hot tomorrow. Brand churn is in overdrive. If you're a brewer, you best be thinking about the next wacko beer you plan to produce and market. It better have unusual ingredients and a fancy name. The packaging better be eye-catching.

The result of the new reality is that craft beer is increasingly fad-driven and trendy. Social media has helped with that, for sure, by facilitating the spread of images and banter. The question is, do these themes add up to this being a healthy or unhealthy market? Asking for a friend.

The answer depends on your point of view, I suppose. To me, it looks like an increasingly saturated market in which many (perhaps most) of the players are desperately vying for the same customers by tossing all kinds of ideas out there and hoping something sticks, if for only a minute..

How's that going to work out? We shall see.

Friday, May 24, 2019

And Now, Here They Are...The Beatles

Although I was a bit young to be much of a fan when they first appeared on the scene in the United States, I became a serious fan of the Beatles by the time I was 12 or 13. I have a ridiculous collection of singles, LPs, EPs and CDs to prove the point.

So I wanted to visit the Oregon Historical Society, where they have a Beatles exhibit showing through Nov. 12. It's an impressive exhibit, given the amount of floor space involved. They've curated a number of fascinating items from the Beatlemania period.

I should note that there's also an Oregon Beer history exhibit showing through June 9. That exhibit is packed with enticing artifacts from 200 years of Oregon beer, though I discovered errors in some of the displays and found the exhibit as a whole to be light on substance. Could be I know too much.

Staging a Beatles exhibit alongside one that delves into Oregon's craft beer revolution is instructive, intentional or not. Why? Because Beatlemania and contemporary craft beer represent cultural shifts. The demographics might not line up exactly, but the fan bases share a certain freneticism. I'll have something to say about freneticism, cultural shifts and craft beer in a future post.

I was the oldest sibling in my family, yet not old enough to understand what was happening when the Beatles appeared on the Ed Sullivan Show in early 1964. But I vividly remember the merchandise. Kids I knew had Beatles-branded lunch boxes, pins, jewelry, games, cards, etc. Everyone wanted a piece of the Beatles, even if they knew little or nothing of the music. The lunch box is an especially strong memory, bringing back visions and smells of my grade school cafeteria.

My eastern Washington hometown and age meant there was very little chance I could have seen the Beatles live. Seattle and Portland had shows, but I was too young and too unaware to have been interested. Anyway, Seattle and Portland might as well have been the surface of the moon...entirely too far away and a little scary for a young country bumpkin.

My wife, a couple of years older than me, lived in the Bay Area and was lucky enough to see the Beatles at the Cow Palace in August 1964. It was the first stop on that tour. She went with five girlfriends and remembers it was very hard to hear the music over the shrill screaming of pre-adolescent girls, a signature feature at Beatles' shows.

The Beatles passed through the Northwest several times during the three years they toured North America. They played several shows in Seattle, but played Portland only once, two shows on August 22, 1965 at Memorial Coliseum. The OHS exhibit does a nice job of documenting that visit. For instance, they've got a show ticket and a copy of the show contract on display. The Beatles weren't all that demanding, particularly compared to what rock bands would demand down the road.

However, one of the clauses in the contract required that the audience not be segregated, a response to situations they had run into in the South. Tickets were priced at $4, $5 and $6. That top dollar ticket computes to around $50 in 2019 dollars. There were apparently a number of free pink tickets issued for the upper level nosebleed seats. About 20,000 saw the two shows.

The set list is disputed. Twist and Shout opened most shows on that tour and is listed as the opening song on a handwritten list recently published in the local press. But John Lennon was having voice problems and apparently didn't sing Twist and Shout at the afternoon show. Folks who were there remember the band doing their standard abbreviated version of the song to open the evening show.

Following the Portland show, the Beatles flew to Los Angeles and enjoyed a few days off in a rented home off Mulholland Drive. They then played two shows at the Hollywood Bowl, which were considered to be some of their best. The primitive tapes from those shows became the basis of the 1977 album, The Beatles at the Hollywood Bowl. More recently, music from those performances was sonically enhanced and used in Ron Howard's documentary, Eight Days a Week.

The Beatles returned to the United States in 1966. By then, they had grown weary of touring and fans who screamed their way through shows. The shows had become increasingly dangerous for the boys, as crowds were huge and unmanageable. Anyway, the group wanted to further develop their writing and recording and opted to stop touring.

As most know, the final live performance happened at San Francisco's Candlestick Park in late August 1966. The Beatles, who were by all accounts an incredible live band (listen to Eight Days a Week if you don't believe it) went on to create their most popular and critically acclaimed music in the studio. They never appeared in front of a paid live audience again.

The OHS Beatles exhibit is well worth seeing. Keep in mind that Multnomah County residents have access to all exhibits free of charge. What was known as Beatlemania quieted down after The Beatles stopped touring, but it lives on in exhibits like this one.

Thursday, May 16, 2019

AB Purchase of CBA Imminent

The Craft Brew Alliance held its annual shareholder meeting Tuesday at the shuttered Widmer pub. Shareholders got to hear about the state of the company and pick up their free beer. Yeah, if you own stock, you get a free case of beer each year. You don't have to drink it.

I've been watching the CBA story for several years. If you've been following along, you probably know we're approaching the contractual deadline by which time Anheuser-Busch must make a qualifying offer to purchase the CBA. The date is August 23.

That timeline is based on a contract (actually several) signed in 2016. The details are fairly well-known. For the unaware, the agreement(s) covered contract brewing, domestic and international distribution. It also set deadlines for outright purchase at a set minimum price per share in successive years, the last of which comes in August at a minimum offer price of $24.50.

When the agreement was announced, many viewed it as a framework for a slow moving buyout. Craft beer was growing steadily. People who owned CBA stock figured to cash in. Investors on the outside, if they were paying attention, saw the chance to make some easy money.

Yet the stock price languished, staying well below the required buyout price. Yesterday, CBA stock closed at $15.33. Simple math. That's $10 less than the required 2019 offer price, which suggests the investment community isn't confident a deal will happen by August. If there was confidence, the stock price would be north of $20.

Why the lack of confidence. For one, the craft beer landscape looks a little sketchy. Established brands are suffering as a sea of newcomers sucks up market share. In the case of the CBA, its former flagship brands, Widmer and Redhook, are in dramatic decline and a drag on profitability. No need to delve into the details. Craft beer doesn't look like a great investment right now.

The CBA remains a buyout target only because of Kona, which continues strong growth in a fragmenting industry. Kona has been carrying the CBA for several years. It's a unicorn brand, seemingly impervious to volatility in the market. Kona lost a bit of momentum in Q1, but appears poised to rebound strongly heading into the busy summer beer season.

Virtually everything the CBA leadership has done in recent times was done to make the company a juicier buyout target for AB. The shuttering of unprofitable pubs looked awkward, but removed overhead and costly benefit packages from the ledger. Closing the Widmer tasting room, where they briefly showcased experimental beers, saved barely any money, but signaled that they were abandoning any effort to rebuild local brand status. And so on.

Those who own CBA stock have been patient. Current and former employees who hold stock quietly hope for a payday. However, those who invested because they perceived that the 2016 agreement set the stage for easy money are getting restless.

Fast forward to yesterday. That's when Boston-based Midwood Capital Management sent a public letter to CBA leadership effectively demanding that they complete a sale to Anheuser-Busch or, failing that, to an unspecified third party investor or company.

This is great stuff. It turns out Midwood Capital loaded up on CBA stock in early 2017 and today sits on about 2 percent of the outstanding shares. Needless to say, they were counting on a financial windfall and aren't happy with the downward trajectory of the stock price. They want action.

What these folks correctly realize is that CBA stock is undervalued on the public market. That's largely due to its grubby appearance. When Wall Street looks at the CBA, it sees the complete package and the complete package doesn't look all that appealing thanks to the dying brands and other drags on profitability.

What Midwood Capital also realizes, correctly it seems, is there is no way shareholder value will be maximized if the CBA stays independent (AB owns just 31 percent). They see the value of Kona, but believe fulfilling that potential will require investment and strategic know-how an independent CBA can't deliver. Again, they're surely right.

With that in mind, Midwood urges the CBA board to accept the qualifying offer if it comes. Further, it wants the board to do whatever it can to encourage AB to make a qualifying offer. If no offer comes, they want quick action to stabilize the stock price and sell the company to another suitor.

Listen, CBA leadership is bent on selling. They can't force a deal, but they want one and have been scheming for several years to make one happen. The idea of staying independent, which they've floated, is a ruse. They know what Midwood knows...that they don't have the horsepower to fully realize Kona's potential. 

For its part, Anheuser-Busch can't afford to pass on this opportunity. Letting Kona fall into the hands of someone else would be a disaster. That's partly because Kona has terrific global potential. But mostly it's because AB would be stuck honoring some pretty unpalatable contractual obligations in a scenario where it didn't own CBA/Kona. Zero chance of that happening.

The clock is ticking, obviously. Buyout details are almost certainly being finalized and a deal will be announced shortly. Expect AB's offer price to exceed the required $24.50 by a dollar or two. They don't want to look cheap. There's no running out the clock on this.

Wednesday, May 8, 2019

When Print Was Fab

When I first started writing about beer-related topics nearly a decade ago, one of my goals was to eventually write for a nationally distributed publication.  I wanted to be part of that brotherhood, if that's the appropriate descriptor.

That didn't prove to be quite as easy as I hoped and imagined. There was a lot of competition for that work and not all that many outlets. Some of my earliest pitches happened before I started this blog in 2011, and well before Portland Beer was published in 2013.

Having a book opens doors that might not otherwise open and I suppose Portland Beer helped with that for me. That's not to say getting beer writing assignments was ever easy. It most certainly was not.

I had subscribed to Beer Advocate for several years by the time I submitted my first pitch. Planning a trip to Kauai, I pitched an article on the Kauai Beer Company, a new brewery there. This was early 2014. I had been to KBC in late 2013 and expected to visit again in the spring.

Then-editor Courtney Cox was interested in the story. But she was transitioning to a different role and there was a new editor taking over. She asked me to pitch the idea again in a month or so, after he had settled in. I was skeptical.

When I pitched the article again, I got a quick reply from incoming editor, Ben Keene. He was interested. I believe he had been to or had knowledge of the Kauai Beer Company, which is located in what is best-described as a "beer desert." We essentially agreed that visitors looking for a decent beer might be interested in a story on this brewery.

That's how I got started writing for Beer Advocate. I would go on to work with Ben on a small collection of articles covering de Garde, Bale Breaker and Cascade. The Cascade article, which wound up being a cover story, appeared as Portland was hosting the Craft Brewers Conference in 2015. That was pretty cool.

In my work with Ben Keene, I found him to be a demanding editor. He wasn't about to accept copy that wasn't well-refined and efficient. Instead, he would offer suggestions for how to improve the content or flow of an article. I seem to recall a fair bit of back and forth in that first article, but we got it dialed in and it presented well when published.

It's easy to complain when you perceive an editor being overly picky. You're getting paid by the word and a lot of writers figure they're done when they submit an article. But I never felt that way with Ben. His suggestions were always on point. He wanted every piece of information to be clear and concise. You can't argue with that. He made me a better writer, for sure.

Anyway, most who stop by here know Beer Advocate has ceased publication. I'm not sure what will become of it. Although print is being eaten alive by digital and social media, Beer Advocate might have survived with better management. The brothers who ran it were sloppy. They relied on talents like Ben and Courtney to produce quality content, but they failed to effectively manage the financial end of the business. Well, that's my take.

I stopped pitching articles after it took six months to get paid for one. It was clear to me that they were struggling financially and that I might never be paid for future articles. Sure enough, I heard rumors of writers not being paid for work submitted long ago. Soon, BA went to quarterly publication; then they announced they were shutting things down. No surprise.

One of my writing friends suggested to me that craft beer fans in general are "post-literate." Not bad, right? Because the dramatic decline of print beer publications (Oregon Beer Growler, Celebrator News, etc.) makes sense if you believe the average fan doesn't read much...or at all.

I tend to think craft beer fans are younger, more dependent on social media and digital information streams than older craft fans, who are fading into the background as I write. The industry saw that trend and has increasingly looked to newer platforms to reach prospective customers. Fine.

The demise of Beer Advocate is especially disappointing due the people and the quality of their work. I'd like to believe there's a place for traditional beer publications. But I'm not at all sure what one looks like in an industry increasingly driven by social media and short attention spans.

Tuesday, April 30, 2019

OBF Becomes a Chameleon at 32

The 2019 Oregon Brewers Festival is three months away. Once upon a time, that reality would have generated considerable interest. Once upon a time, there weren't a gazillion beer festivals crammed onto the annual calendar.

This will be the OBF's 32nd year and they've gone chameleon in an effort to reverse the declining attendance of recent years. There was a time when this event could do whatever it pleased. A lot of harebrained ideas were tried over the years. But things are different now. They've got to sharpen their game.

One of the big changes this year is that all the beers will be from Oregon. Yup. They'll be serving 101 products from 93 breweries and eight cideries. I'm guessing you'd have to go back to the very early days to find a year in which all the beers came from Oregon. This to me is a smart move. It is, after all, the Oregon Brewers Festival.

These will mostly be one-off and experimental beers made for the event, according to a press release. That's in keeping with the current rage for small batch stuff, a strategy that's in place at most successful festivals and similar events. Of course, the quality of experimental beers can be all over the place. But it hardly matters. Festival goers demand unique beers. The list is here.

Event organizers, responding to declining attendance, cut the event to four days last year...dropping Wednesday. That seemed a little odd because stats showed Sunday was the dead day. They've adjusted appropriately for 2019. Wednesday is back; Sunday is gone, gone, gone.

The popular Brewers Brunch that kicks off the festival moves to Ecliptic Brewing this year. Brunch tickets go on sale on the OBF website Wednesday morning (May 1) and cost $49. That includes brunch, two beers, a souvenir T-shirt and an OBF tasting mug.

Brunches have historically been held reasonably close to Waterfront Park. Not this year, as Ecliptic is located a good distance from the Park. That becomes an issue for the Oregon Brewers Parade, which departs Ecliptic following the brunch at 11 a.m. and hoofs it to the Waterfront. Anyone can walk in the parade, by the way. That will be interesting. It's a long walk.

Another change related to making the event more user-friendly involves comfort. One of the best spots in the Park on hot days is under the shade trees at the south end, an area typically occupied by beer trailers. Not this year. The trailers will move to the river side, leaving the shade for mingling and drinking. (The map on the website hadn't been updated when this post went live.)

You may remember that the printed program was dropped last year. They were evidently not being picked up by patrons (who don't read, anyway) and thousands wound up being recycled. Organizers launched what seemed to me to be a pretty decent smartphone app in 2018. Surprise...the printed program is back this year. No word on the app. Bizarre.

New and old features for this year include a Meet the Brewer Tent, a Brewer Dunk Tank, games, food vendors, homebrewing demonstrations, plus the Crater Lake Soda Garden offering complimentary craft soda to designated drivers and minors. Sadly, surprisingly, live music is gone, to be replaced by DJs in different parts of the park. That sounds like a hoot.

I've always argued that the Oregon Brewers Festival is a pretty good value. You enter the venue for free. To drink beer, you buy a mug and tokens. It's four tokens for a full mug of beer or cider, one token for a taste. No big, upfront charge to enjoy a few beers. The changed beer lineup might actually make this year's event more appealing to some.

But the strategies don't all mesh. The press release says attendees must purchase a $20 tasting package this year. The package includes a mug and 10 tokens, which means you're paying $10 for a throwaway plastic mug. That's not the worst deal in a city saturated with overpriced festivals and beer dinners, but it seems vaguely at odds with the goal of boosting attendance.

Some of my older friends who haven't attended OBF recently say declining attendance might get them interested again. But the biggest changes outlined for this year suggest organizers are targeting younger patrons, which makes good sense, actually. We'll see how that works out for them.

Visit the OBF website here for a rundown of festival dates, times, etc.

Monday, April 22, 2019

Constellation's Billion Dollar Boondoggle

A lot of eyebrows were raised in 2015, when Constellation Brands ponied up a $1 billion to buy Ballast Point. The price amounted to $3,500 per finished barrel, about $2,000 per barrel more than other buyouts of that era.

Still, the craft beer world had a heady mindset in 2015. Volume had grown steadily from 6 percent in 2008 to 18 percent in 2014. The industry was on a roll with no apparent end in sight. Ballast Point had itself been growing nicely and expected more of the same.

The thinking at Constellation was that craft beer's 11 percent share of the overall beer market would expand further as mass market lagers lost market share. They wanted a piece of the craft market, feared not having one, in fact. Ballast Point, which possessed a broad portfolio, was distributed in more than 30 states and had a small number of pubs, looked like a perfect partner.

Of course, we now know it was all a big miscalculation. Constellation last week announced that it will close two Ballast Point facilities in Southern California and drop a plan to open a brewpub in San Francisco's Mission Bay neighborhood, where the Golden State Warriors will soon have a venue. Sales positions in the South and Midwest will be eliminated, apparently.

In fact, things had been going poorly for a while. Production (which was approximately 280,000 barrels when Ballast Point was sold in 2015) peaked at about 403,000 barrels in 2016, then dropped to 377,000 in 2017. Off-premise sales declined 3.4 percent in 2018, according to IRI data published in Brewbound.

There's more. Constellation recorded an $87 million impairment charge to the Ballast Point brand in June 2017, effectively admitting it overpaid. It recorded an additional $108 million impairment charge just two weeks ago, more evidence that the Ballast Point purchase price was a major boner.

Never say never, but there appears to be little possibility that the Ballast Point experiment will ever pan out, though Constellation continues to push forward. Craft beer volume growth slowed to 12 percent in 2015 and has continued a downward slide since. Growth dipped to 4 percent in 2017 and 2018, representing the lowest rate in 20 years.

Where that growth is occurring is a major harbinger of concern for the likes of Ballast Point. The Brewers Association recently reported that more than 50 percent of craft volume growth in 2018 belonged to breweries that opened within the last three years. Breweries that opened in 2014 or earlier (Ballast Point dates to 1996) accounted for less than 1 percent of growth. Yikes.

The operative question, given the obvious realities, is this: How did Constellation, a successful organization that markets Corona, Modelo and Pacifico, flub so badly in the case of Ballast Point?

The answer, it seems to me, is they assumed large craft breweries would be the main beneficiary of the collapse of mass market lagers. They wanted to be positioned to take advantage of that scenario. Half of what they expected to happen actually has happened...mass market lagers have continued their decline.

What they did not predict, what has been a thorn in the side of Ballast Point and virtually every big craft brand, is the extent to which several thousand new, small, local breweries would attain a position of power in the market. But that's what happened. Craft beer, to a large degree, has become a local commodity, as opposed to a regional or national one.

Plenty of people will happily tell you they knew Constellation overpaid for Ballast Point. Fine. But I wonder how many of those folks believed the explosion of small, local breweries would wind up being a crucial factor. Few saw that coming, I think.

Monday, April 15, 2019

Wrapping Up the Can Phenomenon

Several years ago, I met with the owner of an established local brewery to discuss the trajectory of that brewery. It had struggled to stay relevant in a market increasingly packed with shiny new breweries. This was and is a serious issue among older breweries in craft heavy areas.

A recent wrapped can
Brewery consulting isn't something I do. I'm much more an observer of this industry than a part of it. I met with this guy because I knew him and had a mostly cordial relationship with him. I'm sure he consulted others. There was no compensation involved, other than a beer or two.

At the time, we were entering a period in which tried and true brands were struggling. This brewery had several well-known brands that previously had a solid following in retail, pubs and specialty shops. They were declining in popularity and he wondered what they should do about it.

This brewery didn't have any beer in cans at the time. Just 22 oz bombers and six-packs. It was just beginning to become apparent that cans were going to be a thing going forward. One of my suggestions was that they start canning some of their standards. Easy enough.

But there was more to it than that. Another challenge established places have grappled with dating back several years is the flood of small batch, new stuff. They were accustomed to fielding a few standards, which were getting stale and lost in the sea of rotating beers offered by newer places trying to make a name.

That trend had not yet reached the crushing crescendo it has attained today. I suggested they start playing around with creative new names for existing brands and slightly modified versions of those brands. In short, create buzz mainly via the use of fresh new names. My feeling was that the beers themselves probably didn't need to change that much, that altered naming would be enough.

They eventually started canning. More recently, they began to build a portfolio that includes standards, one-offs and rotating seasonals in cans. I don't know how many, but they are, in effect, emulating what many newcomers are doing. There's surely still a relevance issue due to the "establishment" history, but at least they're working a plan.

I have to admit I did not anticipate the latest craze: the wrapped can. It somehow signifies the nearly complete insanity that has engulfed craft beer. You know what I'm talking about. These are the cans that often feature catchy artwork on labels affixed to (typically) 16 oz cans that sell for (typically) $20 (or more) per four-pack or $5 to $7 per can. The beers may be one-offs or rare species from nearby or outside the area. They create automatic interest, intrigue and sales.

But wrapped cans didn't originate as part of a profit motive. They started out as a way for small breweries to get their beer into cans without having to order a semi load of pre-printed cans. Instead, they buy blanks and use limited run label wraps. Along the way, wrapped cans morphed into a sort of code for rare and special among craft beer fans. I suspect that was accidental; I could be wrong.

My experience is that wrapped can beers aren't always great. In fact, they often aren't very good at all. But the artwork and the custom label convey the illusion of something special, in much the same way that wax dipped bottles create the impression of quality and value. As someone may have once said, when you resort to selling packaging, you've entered a new dimension.

No matter. Imitation being what it is in craft beer, the wrapped can phenomenon is spreading like a virus. Seeing consumers willing to spend megabucks on packaging that creates an aura of rarity and value, large and small breweries everywhere are anxious to enter the fray. That's why we see constant wrapped can brand churn in bottleshops and specialty stores.

When will this nutty fad run out of gas? Possibly when consumers become skeptical of packaging gimmicks and overpriced beer. Or maybe when the frenzy swirling around craft beer subsides or collapses. Which happens first? We shall see.

Thursday, April 4, 2019

The 2018 Craft Beer Stats and the Road Ahead

On cue with the start of next week's Craft Brewers Conference, the Brewers Association released its 2018 industry growth report. There are some intriguing and also somewhat troubling stats contained in that report, if you read between the lines.

Volume Share
Craft volume growth slowed down again last year, dropping to 4 percent from 5 percent in 2017. Growth has declined steadily in recent years after peaking at 18 percent in 2013 and 2014. Nonetheless, BA-defined craft increased its share of category volume to just over 13 percent.

Look, it will be virtually impossible to return to the growth numbers of 2013/2014. For one, it's harder to achieve huge increases once you reach a certain size. Keep in mind that craft is competing with a growing list of other options, like spirits, cannabis and hard seltzers, and that the beer category itself is slowly shrinking (down 1 percent by volume last year).

Dollar Share
The good news is that craft dollar share rose to an estimated $27.6 billion last year, representing a 24 percent market share and 7 percent increase over 2017. It's a little scary, though, because it appears small, fast-growing breweries are responsible for almost all of that. Think four-packs of hazy IPA in wrapped cans selling for $20 direct to consumers or in specialty stores.

Indeed, with so much growth coming from up-and-comers, many of the big regionals continue to suffer. Harpoon, Boston Beer, New Belgium, Deschutes and Brooklyn Brewing, among others, were all down. That trend began a decade ago and shows no signs of abating. The share of craft volume produced by the largest 39 breweries in the country declined from around two-thirds in 2008 to half in 2018. Virtually all 2018 volume gains came from the other 7,200 beer makers (source).

The small brewery phenomenon is clearly causing significant disruption. In fact, the independent regionals are stuck in the middle, struggling to get traction with the crowd that seeks speciality beers in taprooms and being knocked around in retail by the Baby Buds, many of which showed big growth last year. This scenario is going to create further instability moving forward.

One of the most-often touted Brewers Association stats is the brewery count. We ended 2018 with a record 7,346 breweries (brewpubs, micros and regional breweries). The number has continued to creep upward over the last decade. The overall count grew by 1,049 last year, a slight increase over the 951 that opened in 2017. How many is too many? No idea.

Closures are a less popular stat at the Brewers Association. There were 219 closures in 2018, an increase from 165 in 2017. Openings are still happening at significantly higher rates than closures, though it pays to watch the latter number. As the landscape gets more crowded, we should expect to see the closure rate ramp upward as a percentage of openings.

There are still parts of the country that are woefully underserved, typically in the suburbs and rural areas. There's decent potential in those places. Craft heavy areas, like Portland, are so overcrowded that the closure rate is likely to increase there. It's hard to know exactly what that looks like, but the closures of Bridgeport, Burnside, Alameda, and the Widmer and Portland Brewing pubs, may be instructive.

Don't expect openings to drop off significantly anytime soon. Craft beer's cult of personality means there's an almost endless number of optimistic souls who want to open their own brewery. Whether these folks open in underserved or overcrowded areas, their success will depend on their ability to do a lot things well. The era of the successful amateur owner/brewer is over and out.

The Road Ahead
Looking at the landscape, true craft appears to be decentralizing. Its current strength is coming primarily from smaller breweries that sell directly to consumers and in specialty stores and bars. If you're a regional brewer, you're mostly locked out of any meaningful place in that scene, while also being squeezed out of mainstream distribution. It's not a pretty picture for most of the big guys.

An obvious result of the current situation is spectacular brand churn. Smaller locals have built their following around revolving new brands that often come and go within weeks or months. Consumers want something new every time they drink or shop. Established, long running brands have no future in that scenario, a big problem for awkward regionals. It's beyond ironic that iconic brands like Sierra Nevada Pale Ale built the foundation for what we have today. Oh well.

A less-appreciated result of industry decentralization is the evolving demolition of traditional beer media. The small breweries driving growth have embraced social media as a means of reaching consumers and creating buzz. Larger breweries that once supported traditional media are struggling and backing away, producing a significant shift from a few years ago when it was fashionable to support print publications.

It's not at all clear that this shift matters. Reading has become such a lost art that the loss of BeerAdvocate, the Oregon Beer Growler and similar publications may not matter so much. Beer consumers are apparently comfortable getting small snippets of information from social media on their mobile devices, as opposed to more detailed presentations. We'll have to wait and see how that pans out. A lack of quasi-objective content may not be an issue. Or it will be.

All in all, these are fairly volatile times in craft beer. The sky isn't necessarily falling, but there's significant uncertainty on the road ahead.

Monday, March 25, 2019

The Widmer Way: Boys Make Good

In an annals of Oregon brewing history, there are a few names that come instantly to mind. Henry Weinhard is automatic. He wasn't the first to brew here, but he was so significant that his legacy endured for more than a century. Arnold Blitz is another icon and a part of the Weinhard story. Then there's Kurt and Rob Widmer.

The Widmers were members of the group that launched the craft beer revolution in Oregon. They might well be the most successful of the founding brewers. It's a tough call only because the McMenamin's collection of properties is sprawling. Kurt and Rob Widmer built a beer brand that captured the imagination of mainstream craft fans in Oregon and beyond. None of the others managed that.

Jeff Alworth's new book, The Widmer Way: How Two Brothers Led Portland's Craft Beer Revolution, charts the Widmers' course from their relative youth to the conception and realization of their brewery to the partnership with Anheuser-Busch, Redhook and the formation of the Craft Brew Alliance.

I might have chosen a different title. The Widmers no more led the craft revolution here than did Bridgeport or Portland Brewing or McMenamins. Each of the founding breweries played a unique role. Widmer's key contribution was Hefeweizen, which set a standard in bars and popular restaurants, lending the craft movement an aura of status and credibility at a crucial moment.

Much of the story reported here is not new to me; I knew some of it thanks to my work on Portland Beer. But Jeff's book goes into much greater detail, which figures since Kurt and Rob are the main subjects. Their story is intriguing and instructive. Nothing came particularly easy for these guys. They meticulously built their business on hard work and remained true to that value long after they had achieved great success.

Putting together a craft brewery in the early 1980s was no easy task. The challenges were significant and are fairly well appreciated today. Jeff outlines issues the Widmer's faced as they assembled their brewery and began brewing. The makeshift system was a menagerie of pieces that weren't designed to function together. That meant brewing was arduous, requiring extensive time and labor. It meant jumping through a lot of hoops to get the job done.

Kurt and Rob were young, hardworking and dedicated to quality. Having started out as homebrewers, they put up with crappy ingredients and somehow managed to make decent beer. The initial batches of beer produced in their brewery were much better than their homebrew. But they sewered the first 10 brews, anyway, considering the beer not good enough to sell.

It's a pretty good guess that the Widmer dream would have failed had it not been for their father, Ray. Ray grew up on a farm and knew how to fix things and solve quirky problems, the kinds of problems you're apt to find in a cobbled-together brewery. He was retired by the time Kurt and Rob began working on their brewery. But Ray joined the fun and provided crucial assistance as the boys navigated numerous challenges.

A prime feature of the story is the cautious approach the Widmers took to everyday business. Once they landed on Hefeweizen as their flagship beer, orders poured in so fast they couldn't keep up. A small brewery at B Moloch's in downtown Portland provided brief respite. When they finally moved to Russell Street, they installed a 30-barrel brewery. Incredible. That brewery should have been at least twice as large...just one case of the thriftiness wired into the Widmer DNA.

The most fascinating part of the book involves how the partnership with Anheuser-Busch was formed in 1997. At the time, the Widmers needed to expand again, but were also looking for a partner that could help them reach a wider audience. They discovered they had a lot in common with August Busch III, then the CEO of Anheuser-Busch. The AB partnership evolved largely out of a shared set of values. The Widmers were widely criticized within the growing craft community at the time, but the partnership with AB was one of the smartest decisions they ever made. More than cash to finance expansion, they got access to the nationwide AB distribution network.

Out of the arrangement with AB (which purchased 27 percent of Widmer) eventually came the partnership with Redhook and formation of what became the Craft Brew Alliance in 2004,  as well as the decisive purchase of Kona in 2010. Jeff covers these developments nicely, but wisely avoids investigation of the modern CBA, which is run by sociopaths and only indirectly germane to the Widmer story. Small favors.

If there's a weakness here, it involves the circumstances under which the book was written. Kurt and Rob trusted Jeff to accurately tell their story and paid him to do so. The problem is that paid-for biographies often tend to be too friendly to their subjects. While he was writing the manuscript, Jeff asked me to read several chapters and provide comment. Knowing me to be an honest asshole, he figured I'd provide an honest assessment. I did.

How much of my advice he took is unclear. The flaws in this book are largely related to words here and there that might have been chosen differently. What those occasional words do is create a more friendly, pandering picture than is needed. You'll see what I mean. That approach explodes Aliens-style in the final chapter, the Legacy of Beer, which is full of loving anecdotes from friends and family, and way too syrupy. I would have dispensed with that chapter or toned it down.

Another shortcoming involves the photos, which are small and murky. The Widmer archive contains a lot of photos and it's unfortunate that they aren't handled better here. It's not clear who made the decision to present the photos in this way. Jeff didn't have access to them, so this isn't his doing. Either the publisher, the Ooligan Press, or the Widmers, who negotiated to have the manuscript printed, made the call on the photos. This isn't a disaster, just an opportunity lost.

Even with the noted flaws, I give this book very high marks. The occasional bits of pandering are offset by a story that is expertly written, illuminating and essential reading for fans of craft beer and Portland history. Hiring Jeff to write their story, similar to their decision to partner with Anheuser-Busch, was a wise move on the part of the Widmers.

The book is available through area bookstores and on Amazon. There's an audio version in the works, but I don't know when it will drop. I urge interested readers to purchase a copy at a local bookstore. Doing so won't help Jeff, who got his money up front. But it will help those retailers and let the publisher know that books like this do have an audience. For those who want to read the book without owning it, the Multnomah County Library has 21 copies that can be checked out.

For hardcore fans, Jeff has set a local launch event for Tuesday evening, April 2, at the former Widmer pub on Russell Street. He'll do an introduction, possibly a short reading, and Kurt Widmer will be on hand to talk. Rob is unavailable, apparently hiking the Pacific Crest Trail, which is perfectly appropriate. A list of related events can be found here.

You can indirectly support your local beer writer/author and historical inquiry in general by buying a copy of this book. Just do it.

Tuesday, March 19, 2019

Plight of the Oregon Beer Growler

The recent demise of the Oregon Beer Growler wasn't a huge shock. It was the victim of a changing culture, a culture in which print publications are having an increasingly difficult time surviving. Attention spans are short. Smartphones are king.

A little background. I wrote a number of articles for the OBG during the past two or so years. Under Andi Prewitt's editorial leadership, the Growler made significant progress. The focus and content sharpened over what it had been prior to Andi's arrival. Well, that was my perspective.

Writing for the Growler was never a lucrative proposition. I wrote mainly because I liked working with Andi and thought the publication might evolve into something bigger and better than what it was. I thought it might turn into a publication that paid. Supporting it seemed reasonable.

When Andi left for Willamette Week last fall, I initially figured I would continue to write for the Growler. I had never met incoming editor, Matt Meador, but he had the background to carry on in Andi's sted. I figured to connect with him and continue to write occasional articles. Then I saw the new format, which they introduced just as Matt took over. Instead of the semi-tabloid newspaper, they squished the thing into what looked like some sort of pamphlet. It looked like a big step backward to me. I took a wait and see attitude, didn't pitch any story ideas.

The announcement that the Growler was closing up shop did not come as a surprise. Print is in trouble. Beer-centric publications may be more vulnerable than mainstream vehicles due to the nature of the beer culture, which is younger and fully immersed in the digital space. Many publications are moving to digital and scaling back or eliminating print production.

One of the problems for print is that people no longer read. We've become accustomed to consuming snippets of written and visual content, as opposed to detailed presentations. Social media didn't start that process, but it has made things worse. The Smartphone, of course, has made it possible to access information about breweries and beers and events from anywhere at any time. As a result, a lot of breweries have turned to social media as their primary means of advertising.

That reality definitely hurt the Growler. A popular storyline swirling around its demise is that the industry failed to support the publication by purchasing ads. That was a deal killer for the Growler, which relied almost completely on advertising revenue to pay its bills. Don't get caught up in the notion that being a subscription-based publication would have saved it. Ask the folks at BeerAdvocate how their subscription-based model is working out for them.

Keep in mind that the OBG was always mostly a promotional vehicle. It sold ads on the premise that it was promoting breweries, events and beers. There was never any attempt to offer controversial or critical content. That kind of thing doesn't sit well with the people paying the bills. So the Growler read like an industry PR rag, which is what happens when you don't want to offend anyone.

In the articles I wrote for the Growler, I never made disparaging comments about breweries, beers or whatever. If I repurposed story content here, which I did a few times, I generally added a prying question or comment to give the story some edge. Readers expect that here and I don't have to worry about advertisers getting bent out of shape.

Thinking about what happened with the Oregon Beer Growler, I considered the possibility that it lost readers because the content was too fluffy. But that's not what happened. Because the OBG never pretended to be anything more than a promotional publication, dependent on the industry's goodwill for survival. Edgy content was never part of the plan and readers didn't mind. What happened is that promotional content moved to different channels.

In effect, the industry deserted the Growler because the beer crowd that once read it moved on to social media and sites like UnTappd. Seeing that, the industry shifted its focus and the Beer Growler was a casualty. That's how these things work.

The people who published the OBG are apparently looking to sell it. But to whom? There's no viable path forward as a print publication. I suppose you could go digital only, but there are blogs, websites and social media channels that cover much of what a digital Growler would cover.

So this looks like a dead end. It's unfortunate because the OBG was really the only print piece that covered Oregon craft beer on a regular basis. There are no winners now that it's gone. None.

Sunday, March 10, 2019

CBA Positioned for Whatever Comes Next: 2018 Report

The Craft Brew Alliance issued its Q4 and overall 2018 financials the other day. There's good news and bad news if you absorb the full report. Mostly, though, the numbers paint a fairly positive picture of the CBA's position moving forward.

The bad news in the report, which I shall get to, apparently cooled investor interest in the CBA. Its stock price opened the week at over $17 and closed Friday just above $15. Investors may be missing the boat. Because there's a chance the CBA will be gobbled up in its entirety by Anheuser-Busch at $24.50 per share by next August.

Much of the CBA's good news relates to Kona, which grew 8 percent for the year, 11 percent during Q4. There's a bit of bad news associated with that growth, which is that Kona made up 63 percent of the CBA's total shipments. It's a little scary to be so dependent on one brand, although Kona is thus far proving itself to be immune from the fragmenting, flattening craft market.

The bad news involves the CBA's problem child brands, Widmer and Redhook. The former declined 20 percent, from 123,300 to 98,700 barrels. The latter lost 24 percent, from 94,200 to 71,200 barrels. Imploding sales of Widmer Hef and Redhook Longhammer IPA and ESB were identified as the primary reason for the decline. The two legacy brands, once strong growth engines, are losing the competitive battle in a market increasingly driven by smaller local breweries.

A few juicy tidbits from the report:
  • Despite the continued success of Kona, total CBA shipments, including beer produced under contract at its facilities, declined by 700 barrels, to 747,600 barrels in 2018 versus 2017. Nonetheless, net dollar sales increased 1.3 percent, to $182.2 million, the result of stronger pricing.
  • Total net sales were $206.2 million, a 1 percent decrease from 2017, primarily due to a $3.4 million shortfall in contract brewing fees received from Pabst in 2017 that did not recur in 2018. The decrease also reflects lower 2018 pub sales, mainly due to the absence of the Woodinville pub, which was closed at the end of 2017.
  • As part of its agreement with AB, the CBA can brew up to 300,000 barrels a year at AB's plant in Fort Collins, Colorado at a net savings of $10 per barrel. They evidently came closer to realizing the $3 million in annual savings that arrangement could have brought in 2018.
  • Partially as a result of production shifted to Fort Collins and other AB factories, capacity utilization at CBA facilities declined to 57 percent over the last two years. That's a lot of underutilized tank space and it happened despite the fact that Goose Island beer and Virtue Cider is being produced by the CBA in Portland and Portsmouth.
  • Like its parent-apparent, the CBA is fixated on cost cutting and improving gross margins.Through strong revenue and rabid management, it delivered a 2.6 percent increase in total revenue per barrel, which led to a 5.6 percent improvement in beer gross profit and record full-year beer gross margin of 36.8 percent.
  • Finally, shipments of the Omission, Square Mile Cider, Appalachian Mountain Brewing, Cisco Brewers, and Wynwood Brewing families grew by a combined 4,700 barrels to 93,200 barrels. That portion of the CBA’s portfolio now accounts for some 13 percent of total shipments.
What the CBA has effectively done by leveraging its arrangement with AB and aggressively tightening up underperforming aspects of its business is improve its position for the future, regardless of whether it becomes a fully-owned subsidiary of Anheuser-Busch. Investors, for the moment, appear to be too fixated on the bad news in the 2018 report to see that the prospects of a buyout at $24.50/share remain quite strong.

CEO Andy Thomas set an aggressive tone in comments made during the conference call, reminding shareholders that the CBA position is strong even if the possible takeover by AB doesn't happen. In the absence of a qualifying offer, he noted that the CBA will be entitled to a $20 million international incentive payment and AB could not terminate any part of the current agreement.

Further, Thomas went on, if AB fails to make a qualifying offer, CBA could continue to operate independently or come under the control of another entity. In either case, AB would be required to honor all agreements, including payment of the $20 million international incentive, continuation of the master distribution agreement at $0.25 a case, continuation of the international distribution agreement and fulfillment of the contract brewing agreement.

It's difficult to fathom the extent to which the current contract, signed in 2016, favors the CBA. What were the folks at AB smoking when they signed a deal that would allow the CBA to be taken over by another entity while Anheuser-Busch is forced to fulfill the terms of the agreement? The likely answer is the people who negotiated the agreement believed the CBA would be purchased during its term. There can be no other explanation.

Of course, the craft beer landscape has changed dramatically since the 2016. Competition is fierce and most large craft breweries are suffering. Yet Anheuser-Busch recently reported that the High End (craft line) is its top growth engine, accounting for 30 percent of the company’s worldwide revenue growth and 10 percent of its total revenue in 2018. Why would AB want or need the CBA?

The answer is Kona, which continues to thrive in a flat overall market. Keep in mind that Kona beers, unlike some of craft's more nuanced offerings, can be brewed virtually anywhere, even in a factory brewery. Acquiring Kona, of which AB already owns nearly a third, would cost around $300 million. That's pocket change for a brand that has apparently unlimited potential.

Flies in the ointment are the CBA's declining brands, Widmer and Redhook. Anheuser-Busch, should it make a qualifying offer, will have no interest in salvaging those brands. They might be killed or sold in a buyout. In fact, you have to wonder what would become of CBA properties in Portland and Portsmouth. Those breweries, not as big or efficient as AB's giant factories, might well be closed and sold in the wake of a buyout to recoup some of the investment in Kona.

Inquiring minds keep asking what's so special about Kona. In my mind, there's nothing particularly special about any of the Kona beers. But Kona is a lifestyle brand with a strong connection to a place consumers identify with. It hardly matters that Kona beers have been brewed in Portland and elsewhere on the mainland for years. The brand is Hawaiian.

Honestly, there's a lot not to like about the CBA, an organization whose leaders appear to be fixated on numbers. This company ceased being about craft beer long ago. By cutting costs and leveraging their agreement with Anheuser-Busch to the hilt, executives have positioned the CBA to be bought lock, stock and barrel. The chances of that happening look to be better than 50/50 from here.

Then the fun begins.

Thursday, February 28, 2019

Anheuser-Busch, Breakside Dominate Oregon Beer Awards

Tuesday evening's Oregon Beer Awards provided a nice lesson in what happens when big beer gets serious about making good beer. Anheuser-Busch, dba 10 Barrel, captured 10 of 75 medals awarded in 25 categories. Breakside Brewing was close behind with 9 medals. No one else was close.

I suspect those involved in jumpstarting what became craft beer in Oregon are either rolling over in their graves (Fred Eckhardt, Don Younger) or shaking their heads. Because Anheuser-Busch was possibly the most significant obstacle faced by early craft brewers. For decades, AB had been drowning American palates with tasteless swill thanks to tweaked manufacturing processes and a massive distribution network.

The big fellas started to mingle in craft beer during the 1990s. Deals with Redhook and Widmer helped them get their scruffy foot in the door. They couldn't figure out craft beer on their own. Attempts at making beer of substance flamed out. It worked out better to invest in craft breweries and learn from them while distributing their beer.

Indeed, the foray into craft beer was largely a "wait and see" proposition. Many at Anheuser-Busch thought the craft movement would run its course and collapse. The relatively small investments they made in the likes of Redhook and Widmer were seen as insurance policies against the worst case scenario, the one in which craft beer gained a significant, lasting foothold.

The worse case scenario eventually materialized, of course, which prompted AB to take the craft movement more seriously. It then began purchasing craft breweries, of which Goose Island was the first in 2011, a story nicely documented in Josh Noel's book, Barrel-Aged Stout and Selling Out. 10 Barrel joined AB's collection of craft breweries when it was purchased in 2014.

With Tuesday's medal take, Anheuser-Busch stepped to the forefront of craft beer in Oregon. It's a surreal development. Some may take exception to that characterization of the situation. But there is no 10 Barrel. It ceased to exist when it was bought by AB five years ago. What we have is Anheuser-Busch doing business as 10 Barrel in Oregon (and beyond). And winning medals.

I bear no ill will toward the folks who work at 10 Barrel. But I've always believed 10 Barrel and the other Baby Buds have advantages over independent breweries and that the playing field isn't exactly level. I'd be more comfortable with Tuesday evening's results if I thought Anheuser-Busch winning OBA medals was a good thing for independent brewers. I don't

Anyway, congrats to everyone who won medals or received related recognition. There were nearly 1,100 entries submitted in the 25 categories, which means the chances of winning were slim. A win is a big deal in that scenario. The overall results are posted in various places.

Breakside Beer Awards
As noted, Breakside won 9 medals this year, and also was named Large Brewery of the Year. Some have joked that the Oregon Beer Awards would be more aptly called the Breakside Beer Awards. I never suggested that. But it isn't just the medals that suggest it. Breakside brewmaster Ben Edmunds runs the OBA judging competition.

I've talked about this before. Everyone knows Ben. He's a good guy, has great integrity. But the optics are bad. The Oregon Beer Awards have evolved to the point where the director of competition should not also be the brewmaster at a competing brewery. It's the perception of possible impropriety that suggests the need for a change, not the existence of actual impropriety.

Hall of Fame
A month or so ago, members of the Oregon Beer Awards voting academy were asked to nominate people worthy of induction into the Oregon Beer Hall of Fame. The final list of nominees appeared a few weeks later. It included Art Larrance, Fred Bowman, Kurt and Rob Widmer, Brian and Mike McMenamin, Gary Fish, Karl Ockert and several others.

Around the time final votes were being collected, Jim Parker passed away following a stroke suffered in November. I knew Jim, but not well. He was a fountain of information, a character and a positive force in craft beer. I don't believe I've ever run into anyone who didn't like Jim. He touched a lot of lives in and out of craft beer.

So I'm fine with Jim being inducted into the Hall of Fame. He belongs. But I do question how it was done. The decision was evidently made by small group of people, perhaps one person. The voting academy wasn't surveyed or alerted. Keep in mind that Parker, for better or worse, wasn't on the final list of nominees. It seems like this could have been handled differently.

Speaking of the Hall of Fame, I continue to be shocked that virtually the entire generation of founding brewers has been passed over (John Harris is the exception). The academy vote for this year's HOF inductee hasn't been revealed, but the failure to induct our founding brewers in a timely manner is, in my view, disgraceful. I hope they don't have to die to get in.