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Thursday, December 31, 2015

The Good and Bad of 2015

Until Tuesday, it had been 25 years since I last visited Battle Ground. Back in the day, I frequented the area as a substitute teacher. Tuesday's trip was a beer excursion. I was checking out Barrel Mountain Brewing for an upcoming review.

Battle Ground was a pretty quiet town in the old days. The population in 1990 was less than 3,800 according to Census numbers. The estimated population in 2014 was nearly 19,000. Obviously, a lot has changed. There's a growing, bustling business district now. There was nothing like that in 1990. 

Barrel Mountain Brewing is a pleasing and, I'm quite sure, welcome addition to the local scene. Since opening last summer, they've built a following with a nice selection of beers and a menu I'd describe as standard-plus pub fare. 

I'll have more to say about Barrel Mountain in Willamette Week's 2016 Beer Guide, which hits news stands in February. For now, it serves as an example of possibly the most positive trend of 2015, that being the trend of small breweries expanding into suburban and rural settings. 

Having worked in Clark County from 1990 to 2009, I watched a few breweries come and go. But it was mostly a dead zone. Over the course of the last few years, things have turned. Residents are no longer forced to traverse the Columbia River to find good beer. They can find it closer to home. 

The current trend was obviously a long time coming. For many years, you had to wonder when it would happen, if it would happen. There are a lot of underserved areas, like Battle Ground, that are starved for good beer and ready to support a brewery or breweries. Finally, it's happening.

Of course, the trend isn't strictly confined to suburban or rural areas. Many underserved boroughs in cities are also getting breweries or craft-centric pubs. What's different and especially positive is that the craft movement is spreading to suburbia and the countryside. 

Some fear the US brewery count, which now exceeds 4,000, is untenable. For production breweries, there surely is a limit. But there are an almost endless number of viable locations available to small, brewpub-type operations. Expansion into these areas will likely continue in 2016. 

That's the good news.

On the Other Hand
Probably the most negative aspect of the current craft beer scene is the accelerating pace of sellouts to big beer. The list for 2015 is long and includes Elysian (Washington), Four Peaks (Arizona), Golden Road, Ballast Point and Lagunitas (California), and Breckenridge (Colorado),

No one I know expects the pace of acquisitions to slow. Big beer market share is plummeting. Craft beer market share is growing. Big beer recognizes that tasteless, mass market lagers don't have a bright future. So they're investing in the guys they can't beat. 

I have to admit being less bothered by the buyouts, which I expect, than by the reaction to them by some in the industry. There are those who see the buyouts as nothing more than some sort of natural progression in which big beer embraces craft beer as it's own and moves on.

Nothing could be further from the truth. Big beer, particularly Anheuser-Busch, is buying craft brands so it can use them to leverage its position. They want to blur the perception of what craft beer is and squeeze market access via vertical integration wherever possible, to the detriment of independent craft brewers. 

I'm truly astounded when I hear people praising what the acquired breweries are doing. "Look at all the creative beers they're brewing." It doesn't matter in the least. These breweries enjoy significant advantages over independent craft brewers. It isn't close to an even playing field.

As noted, I fully expect the buyouts to continue. What I'd like to see in 2016 is more widespread recognition of what the buyouts mean for the industry as we've known it. I doubt it will happen, but I can always hope.

There's every reason to believe 2016 will be another highly interesting, entertaining year in beer. I look forward to watching it unfold. Happy New Year to all!

Saturday, December 26, 2015

Anatomy of a Buyout...and Buyouts to Come

After the buyouts of 10 Barrel in 2014 and Elysian in early 2015, I figured Anheuser-Busch would soon add California and Colorado breweries to its trophy case. There was nothing sophisticated about that supposition. It was based on the fact these are top tier craft beer states.

Of course, the California buyout happened a while ago, when AB purchased Golden Road Brewing of Los Angeles. That was out of nowhere because there are fatter targets in the Golden State. The more recent buyout of Arizona-based Four Peaks Brewing was another surprise. But never mind.

The buyout of Colorado's Breckenridge is different. Perusing some of the published and proprietary reports, the acquisition makes a lot of sense for Anheuser-Busch. It represents a significant effort to improve a dreadful ground game and end a lengthy downward spiral.

Since 2007, AB has seen it's business decline by 17 percent in Colorado. Put another way, it lost 263,000 barrels in volume. I don't have the detailed numbers, but you know the losses, like those they've suffered in other states, are in the premium segment. The entire Budweiser family is in free fall, getting beaten to a pulp by craft beer. Not exactly breaking news.

The addition of Breckenridge is a plausible antidote. Colorado's fifth largest craft brewer will stop and potentially reverse nearly a decade of negative AB momentum. The brewery reportedly does 45 percent of its business in Colorado, selling around 30,000 bbls in a state of over 3 million bbls, and grew 10 percent in-state this year.

Breckenridge also has reach and potential outside Colorado, Although it is distributed in 35 states, it does 60 percent of its total business in Colorado, Texas and Ohio. So it's spread thinly in the remaining 32 states. Which means there is significant potential to expand on those numbers via the AB network in those states.

That's all real nice, but there's more going on here. AB's grand strategy is connected to how it is leveraging its business in Oregon, Washington and California, where lax laws allow it to vertically integrate via the ownership of breweries, distributor and retail outlets. That's what it's doing in Colorado.

The stats are clear. Prior to 2015, AB owned a brewery in Fort Collins and a distributor in Denver. During 2015, it acquired Breckenridge (a deal that won't close until 2016) and two additional distributors (Standard and American Eagle). As part of the Breckenridge deal, AB gets two breweries and two retail locations. Plus, it will open a 10 Barrel brewpub in Denver in 2016. By the end of next year, AB will own four breweries, three distributors and three retail locations in Colorado. They have dramatically expanded their footprint across the three tiers in the state.

What does this gibberish mean? It means that if you want to know where the next AB acquisitions are likely to occur, look for high-growth breweries that produce 50K or more barrels a year, have pubs and, perhaps most importantly, reside in states where the laws allow AB to operate in all three tiers.

The suits in St. Louis may very well look outside areas where they already have a craft presence in 2016. But my guess is they aren't done in Colorado, California, Oregon or Washington. Unless the three tier laws are firmed up in those states, there are too many fat targets to ignore.

Thursday, December 17, 2015

Indiana's Goofy Cold Beer Law Lives On

When you look out on the beer landscape, you see a lot of crazy shit. Some states have relaxed their laws and made it easier for small breweries to do business. But there are other states where the laws remain as antiquated as ever. Like Indiana.

It turns out the Hoosier state is one of the few places in the country where you cannot buy cold beer in grocery and convenience stores. That's right. If you want cold beer to go in Indiana, you have to buy it in a liquor store. Beer bought in standard stores is not chilled.

This policy has been a thorn in the behind of the Indiana Petroleum Marketers and Convenience Store Association, which has lobbied for years to get the law changed. Frustration reached the point where they filed suit against the state in May 2013, claiming the law to be discriminatory because it allows cold beer sales in some stores and not in others.

The retailers did not win. This past Monday, the 7th Circuit Court of Appeals upheld Indiana's goofy law. A three-judge panel unanimously ruled that the state has broad authority to design regulatory systems for alcohol distribution. In siding with the state, the panel said retailers would have to demonstrate that Indiana's cold-beer regulatory scheme treats members differently for no rational reason related to the state's legitimate interest. 

What "state interest" are we talking about? Funny you should ask..or wonder. Indiana's goofy law is fear-driven. Indiana officials are afraid that relaxing it would result in many more outlets selling cold beer, thus making it easier for minors to buy beer and more difficult to enforce the law.

This is a little hard to fathom, actually. Most states have some pretty simple laws on the books requiring store owners to check ID before selling alcohol to anyone who looks to be under a certain age. They obviously have that in Indiana, but they evidently feel retailers must be closely watched to make sure they enforce the law. And the state just doesn't have the manpower.

But, hey, Indiana isn't the only state with bizarre laws. Much of the old South is still fighting the Civil War while maintaining bizarre alcohol laws written long ago. Closer to home, Utah and Colorado have some rather odd laws regarding the sale of beer that clocks in above a certain ABV. This is what you get when you put the states in charge of regulating alcohol inside their borders.

Here in Oregon, our laws are pretty soft, but it hasn't always been so. For 50 years following Prohibition, we had a bizarre law that made it illegal to sell unpasteurized beer in stores. You could sell it in restaurants and bars, but not in stores. The law was ruled unconstitutional in 1985, around the same time brewpubs became legal.

I do not know how or if Indiana's goofy law affects craft beer or beer in general. They've got 100 or so craft breweries, so they're doing reasonably well in that department. But I have to believe allowing the sale of cold beer in all stores makes sense. It's been fairly successful elsewhere.

The only thing they have to fear is fear itself. And the bogeyman.

Saturday, December 5, 2015

Good News and Elephants in the Living Room

These are wild times in the craft beer industry. That's not exactly front page news, but growth and change is happening at such a shocking pace that heads are spinning. The elephant in the living room is the ongoing challenge represented by big beer.

On the plus side, we recently learned the US brewery count surpassed the old record of 4,131. Perhaps most interesting about that revelation is that the old record was set in 1873, and was followed by a period of intense consolidation, then Prohibition, then more intense consolidation. The shift back to growth began roughly 30 years ago and it's been a crazy ride ever since.

There's more. For example, IPA continues to be the dominant craft style. Big surprise. In fact, one could easily argue the popularity of IPA has overflowed into other styles, many of which are hoppier than ever. And despite the ascending brewery count, there are still thousands of communities that are large enough to support a brewery and don't yet have one.

In the midst of all the good news for craft beer is the black hole of consolidation. The billion dollar Ballast Point buyout is the lead in that part of the story, and has more than a few craft brewers wondering what their place might be worth. Breweries that sold earlier, like 10 Barrel, Elysian and Goose Island, look at the Ballast Point deal and wonder where they went wrong.

Of course, the larger story on the consolidation front is the impending buyout of SABMiller by Anheuser-Busch/InBev. The multi-billion dollar deal has the potential to turn the entire beer world upside down. That reality has raised the hackles of regulatory types and a few yet-to-be-bought politicians.

Now there's news that a group of citizens from Oregon, Washington and California has filed suit in US District Court challenging the ABI/SABMiller deal on the grounds that it will hurt consumers by restricting competition and choice. No kidding. The plaintiffs aren't asking for any money. What they want is the merger stopped.

There's about zero chance of that happening in our current political climate. They'd have about as much luck getting assault rifles banned. There's little doubt the AB/SABMiller merger, which is largely a global play, will wind up being bad news for America's independent craft brewers. But there's no feasible way to stop it. All you can realistically hope to do is mitigate the impact.

The primary threat to independent craft brewers is only indirectly related to AB's acquisition of craft breweries. You can't get too excited about that because they will never own more than a small percentage of the total number of breweries. The threat is on the distribution side, where Anheuser-Busch is working to leverage its influence and limit independent craft brewers access to market.

That's not a joke. A Wall Street Journal story outlines an AB incentive plan that rewards distributors who focus primarily on AB brands. A couple of anonymous distributors spilled the beans, telling the WSJ they can receive incentive payouts of as much as $1.5 million annually if 98 percent of their volume is in AB brands. A distributor in St. Louis just dropped Deschutes because it had to choose between the incentive program and craft.

Look, Anheuser-Busch will never own or have influence over every distributor in this country. There will always be independents that go their own way. But AB has the power, via its owned and affiliated distributors, to make things difficult for independent craft brewers. The strategy outed in the WSJ article is just one part of that effort.

Many casual and some serious beer fans have their heads in the sand, more or less refusing to see the danger. Fine. Those who do see the threat can act against it by refusing to spend money on AB products, including acquired brands like 10 Barrel, Elysian, Goose Island, etc. There's nothing personal about this. It's business. Giving good money to Anheuser-Busch helps fuel the effort to undermine independent craft brewers.

Enough already.

Sunday, November 29, 2015

Holiday Ale Festival's Lump of Coal

Given the rapidly changing aspects of the media landscape, I've wondered for a while which of the various beer festivals would be the first to pull the rug on broad media support. Almost on cue, I learned the Holiday Ale Festival will not issue media credentials this year. Viola!

For the unaware, a "media credential" is just a fancy way of saying the event provides writers and reporters with a small subsidy in the form of a glass, tokens and (in this case) comped entry as an incentive to attend. The package is best viewed as a sort of starter kit. Most buy additional tokens once inside.

In exchange for the freebies, media outlets provide coverage in the form of previews and reviews. What the Festival is saying by not issuing credentials is that it no longer needs the support of smaller outlets, particularly blogs.

You may fairly wonder why I say blogs are the primary target. It's pretty simple. Most blogs, even those that have a lot of followers, don't make money. So if you want bloggers to attend your event and write about it, you ought to provide a small subsidy. Reporters for larger media outlets don't rely on that kind of support because they typically have expense accounts.

In case you're wondering, subsidies were once considered unethical. Yep. One of the things you learn in journalism school is that reporting should not be tainted or perceived to be tainted by gifts or benefits. In essence, restaurants, bars, beer festivals, etc., shouldn't be able to pay for good reviews or to avoid bad ones. Makes sense, eh?

The practice of providing subsidies to blogs became fairly common over the last 10 or so years mostly due to the collapse of traditional media. The decline of mainstream print and electronic media and the rise of digital and, eventually, social media, ushered in the need to recognize the promotional value of all outlets, including blogs like this one.

Some regard event subsidies as a form of payola. The Federal Communications Commission, which supposedly governs these things, has regulations that require the disclosure of these kinds of benefits. But media outlets, including blogs, rarely disclose such benefits. Why? Because the monetary value of the benefits received is typically small.

If there's a problem with that arrangement, it occurs when event organizers demand positive coverage in exchange for freebies. That's certainly the case with many beer festivals. Organizers can be thin-skinned and intolerant of negative reporting. That can and does lead to some fairly mealy-mouthed, worthless reviews. You've read them, I assure you.

In the case of the Holiday Ale Festival, they provided no explanation for the policy change. But it isn't that hard to figure out. The festival has grown to the point that organizers see no need for broad media support. As far as they're concerned, folks who normally rely on blog coverage of the event can look elsewhere...to TV or radio, perhaps.

The change won't prevent anyone from covering the event, though most local blogs seem to be ignoring it. Some may pay their way in for the privilege of mingling with brewers and tasting from a list of one-off beers. Theoretically, the credential situation could lead to more honest, critical reportage. But don't hold your breath. This is a major league brofest.

For my part, I've been increasingly uncomfortable with the recent direction of the Holiday Festival. The price of admission has spiraled upward ($35 this year, for a skimpy package) and the multi-token beers and VIP scenarios suggest the event has jumped the tracks. And don't get me started on the juvenile pin-up girl marketing graphic. What the hell are they thinking?

Organizers have generously offered media folks who pay their way in the opportunity to mingle with the festival's Great Oz, Preston Weesner, for special tastes and stimulating conversation. I suppose some will take them up on that offer. But I'll pass. And I urge others to do the same. Festival organizers handed blogs and their followers a lump of coal. We need to return the favor.

Wednesday, November 25, 2015

Annual Holiday Toy Drive in Motion at Laurelwood

As we enter the season of giving and charity, it's always great to hear about businesses that are stepping up to help the community. Craft beer is part of that. As has been the case for many years, Laurelwood Brewing is again sponsoring its annual Doernbecher Holiday Toy Drive.

Between now and Dec. 20, patrons can drop off a new and unwrapped toy at Laurelwood's Sellwood or Sandy Blvd. location. In exchange, donors may purchase a pint of Laurelwood brew for $1 or enjoy a non-alcoholic beverage for free.

"We have always been dedicated to helping area youth,” said Desi Riscol, Laurelwood Public House and Brewery Area Manager. "This year, it feels especially important to extend the power of kindness. We’re excited to help give the gift of a magical holiday season to the children and families spending it at Doernbecher."

Laurelwood is no stranger to fundraisers, having sponsored benefits for schools and a variety of related community causes dating back to 2001, when it launched Dine Out to Wipe Out Cancer.

"We've never viewed fundraisers as an obligation," said Mike De Kalb, Laurelwood founder and co-owner. "We do them to give back to the community, to support the people who support us. Schools are desperate for funds. Some kids and families need help at Christmas. [My wife] Cathy and I have lived in this community for almost 25 years and this is our way of giving back."

Of course, Laurelwood is far from the only craft beer-centric business that supports the community. Belmont Station routinely has benefits, such as the Black Friday Sneak Preview. The list goes on. Ninkasi, Widmer, Breakside and a host of others give back to the community regularly.

You'll find details related to the Doernbecher Holiday Toy Drive on the Laurelwood website here. It's sure to be another big success this year thanks to support from the community. The chance to enjoy good karma and a tasty beverage at a bargain price are just added benefits for those who donate.

Friday, November 20, 2015

Black Friday Preview at Belmont Station

One of the things you don't see much of here is promotional content. There's a reason for that, which is there are so many competing events happening all the time that I mostly choose to stay neutral. That doesn't make me very popular in some circles. Oh well.

But there are events that deserve mention. Next week's Bourbon County Stout Sneak Preview at Belmont Station is just such an event. It's happening Wednesday, the day before Thanksgiving from noon to 9 p.m. in the bier cafe at the Station.

Attendees will be tasting four rare versions of Goose Island's most renowned beer: 2015 Bourbon County Stout; Bourbon County Stout Barley Wine; Bourbon County Stout Regal Rye and Bourbon County Stout Coffee. These beers will be available in flights only for ticket holders.

Tickets are limited and must be purchased in advance at Belmont Station. The cost is $30 per ticket, which might seem like a lot until you consider how rare these beers are, You can purchase up to four tickets in advance, but you can only redeem one per person on the day of the event.

The cool thing is that $15 of every ticket sold will benefit the Oregon Food Bank. This is another case of Lisa Morrison and the crew at Belmont Station giving back to the community. They do something similar with the annual Pliny the Younger release. It's damn good stuff.

Just so I don't get called out for hypocrisy, I'm well aware of the fact that Goose Island is wholly owned by Anheuser-Busch. You won't typically find me supporting events or breweries connected to the evil empire. But this event is different. It transcends the beer wars.

Tickets to the Sneak Preview will almost certainly sell out. Keep in mind that you will only be able to taste the beers in question if you purchase a ticket in advance. Tickets will not be sold on the day of the event.

This is a great opportunity to enjoy some great beers while helping out the Oregon Food Bank, which needs all the help it can get this time of year. Kudos and thanks to my friends at Belmont Station for hosting this great event.

Tuesday, November 17, 2015

Ballast Point and the Homogenization of Craft Beer

Yesterday's news that Ballast Point Brewing is being bought by Constellation Brands sent shock waves through the industry. These were different waves than the ones we've seen with other buyouts. It's a sign of the times than few are shocked when craft breweries are bought by big beer.

What shocked people about the Ballast Point buyout is the price. Constellation will reportedly pay a cool $1 billion for the privilege of owning the San Diego brewery. That number surely has more than a few craft brewers wondering what they might sell for. Everyone has a price.

On its face, the valuation seems a little crazy. Ballast Point will sell about 280,000 barrels this year and expects revenue of $115 million. The 20-year-old company has shown solid growth in recent years. Still, Constellation paid a premium, roughly $3,500 per finished barrel. Earlier buyouts were in the $1,000 per barrel range.

Keep in mind that all of these buyouts are a two-way street. Constellation, the keeper of Corona and Modelo, was shopping for a strong craft partner. Ballast Point. which launched an IPO in October at least partially to finance further expansion, was ripe for a big money partner. Both are getting exactly what they wanted.

For its part, Constellation is looking very much to the future with this deal. Craft beer owns 11 percent of the US beer market, but Constellation expects that number to grow as mass market lagers decline. Don't downplay the importance of the Anheuser-Busch/SABMiller merger as motivation. Constellation wanted to secure its place at the craft table and saw Ballast Point as a plum.

Some have poo-pooed the value of Ballast Point. That's crazy. Located in one of the nation's best beer cities, BP has a broad portfolio of beers, many of which are well-regarded outside California...they distribute to more than 30 states. They also have a small collection of pubs. The stature of the brand and their expertise at running pubs means Ballast Point could conceivably open these things all over the country. And those are serious cash machines.

What we may be starting to see with these buyouts is the coming homogenization of craft beer in this country. In the same way that fast food and a multitude of other things have been homogenized over the last 40 or so years, we may well be seeing something similar with craft beer.

When I was a kid, the national chains didn't own the fast food market. There were still a lot of independently owned and operated, mom and pop places. The big chains were around, but independents were easier to find. Since that time, the big shots have almost completely taken over the fast food landscape.

Most of today's craft breweries and pubs are independent. Imagine for a moment what happens when you have well-financed chains operated by the likes of Ballast Point and 10 Barrel opening pubs everywhere. The pubs would be backed by packaged beer in stores. Remember, these operations will enjoy huge purchasing and logistical advantages over independent pubs. Well?

Even if the homogenization doesn't happen quite as I envision, these buyouts are changing the nature of craft beer. The lines are blurring. Regardless of what you or I or the Brewers Association thinks, Ballast Point and the other purchased brands will continue to operate as craft breweries.

What everyone needs to recognize is that these breweries, by way of their connection to big beer, enjoy substantial advantages over independent brewers. The craft beer playing field is in the process of becoming a lot less level than it has been. In a nutshell, that is the risk to independent craft brewers.

Friday, November 6, 2015

Laurelwood Moving 'Contract Brewing' to Full Sail

I'm not the type to troll the OLCC website looking for information on new breweries and pubs. It isn't worth my time because I don't care if I'm first to cover a story. I prefer to provide some perspective that often isn't part of breaking coverage.

Friday afternoon, one of my industry contacts gave me a heads up that Laurelwood has applied for a brewpub license in Hood River. "What could that mean?" he wondered. I immediately thought it might be related to the contract brewing situation. Sure enough.

"We're in the process of switching our contract brewing partner closer to home," Laurelwood owner Mike De Kalb told me via email. "The Craft Brew Alliance wants to get out of the contract brewing business and Full Sail has extra capacity, so it seemed like a natural fit."

Recall that the CBA has been brewing Laurelwood Workhorse and Free Range Red at its Woodinville, Wash. facility since 2013. That arrangement has been a big winner, getting those beers into six-packs of 12 ounce bottles, beer's most popular packaging. As well, the deal freed up production capacity in Portland, allowing brewers to focus on developing more specialty beers. The Full Sail partnership may be a further step in that direction.

"We expect the arrangement with Full Sail to give us added flexibility," De Kalb said. "We'll have more control of the processes and outcomes. The details are still being worked out, but I expect us to to be able to release seasonal beers in six-packs, something we couldn't do with the CBA."

Some are wondering why, if it's a contract brewing situation, Laurelwood applied for a brewpub license. There are reasons for everything.

"This is common in Oregon. Most breweries have a brewpub license," De Kalb said. "With Full Sail, we've worked out an alternating proprietorship agreement. It's a little technical and slightly different than contract brewing. As I said, the details are still being hammered out."

Moving their production brewing closer to home offers benefits. For starters, 75 percent of the Laurelwood beer produced in Woodinville (estimated at 18,000 barrels for 2015 earlier this year) returns to Oregon. Brewing that beer here means reduced shipping costs and fresher beer. It also means easier access to the day-to-day brewing operation.

In case you're wondering, production of Red Elephant cans will continue at the Portland brewery. I assume Full Sail does not have a canning line. At present, Laurelwood uses a mobile canning system for Red Elephant, which has been well-received since its release in cans last summer.

As for the CBA, you have to wonder why they would want to abandon contract brewing. Maybe they need the capacity for the popular Kona beers. No way do they need additional capacity for Redhook, a craft flat-liner. Perhaps they've contracted with Anheuser-Busch to brew wholly owned brands like Goose Island or 10 Barrel for the Northwest. Any such arrangement would be top secret, of course. 

In the case of Laurelwood, they expect to issue a formal press release when the details are fully worked out. The switch to Full Sail won't happen overnight. They anticipate Spring 2016.

Wednesday, October 28, 2015

Paradise by Buyout Light

There's nothing like a junket to the tropics to improve mental and physical dexterity. Wishful thinking, you know. These trips are more or less a regular thing, which means I've talked about the beer scene out here on many occasions. "Out here," of course, is code for Kauai. And it's a veritable desert in beer terms.

Looking at my social media and blog feed, I can't help but be amused and annoyed by some of the reporting. There are those in the blogging and writing community who continue to pander to and coddle breweries that are wholly owned by Anheuser-Busch. They know who they are and you know which breweries I'm talking about. This isn't rocket science.

I take a dim view of buyouts and sellouts and of AB's efforts to leverage its position globally and in the United States. Not everyone agrees or cares, but I think these buyouts are bad for craft beer, whatever that is these days. Anheuser-Busch hopes to purchase enough breweries and distributors to squeeze craft beer out of the comfort zone it enjoys today.

Upon arriving in Kauai, I got a firsthand snootful of what a buyout looks like to consumers. This happened at the car rental joint. I reserved a car several months ago via a website that offers options from among all or most of the car rental vendors here. I've used this approach to rent a car here for many years. This time, we rented from Thrifty.

It was pretty apparent we were in trouble the instant we got to the rental office. There was a line of customers and only two people behind the counter. Outside, a skeleton crew prepped cars that were going back out. Nearby, folks who had checked in and were ready to go waited patiently their vehicles. And waited.

As I reached the front of the line, a gent appeared from outside the ropes and told the agent he would need another car...that the car they gave him had a mechanical problem.  The agent smiled and said he would take care of that momentarily. There were a lot of vacant stares on the faces of people waiting in line. Expectations for a positive experience took a dive.

The agent taking care of my reservation had been to Portland a year or so ago and we struck up a friendly conversation. As he was finishing things up, I discreetly asked him what the hell was going on with Thrifty. I'd rented from them before and never seen a disaster like this.

"We were bought out by Hertz," he said. "A few weeks ago, they came in and switched us to a new computer system, cut staffing and made a mess." He had told me at the start that he had to access another site to find the details of my reservation. The entire process took nearly an hour, for something that typically takes 15-20 minutes in Kauai. Not good.

Of course, there's more to the story. The Hertz buyout of Thrifty didn't just happen. It happened in 2012. But Hertz has been busy dealing with the anti-trust issues that came out of its purchase of Thrifty and Dollar. Hertz had to offload domestic locations of subsidiary Advantage. It evidently took them a while to bring the various locations into the Hertz orbit. Small favors.

In fact, only three companies–Hertz, Avis and Enterprise–control 94 percent of the car rental industry in America. Recent consolidation in the industry, including Hertz' buyout of Dollar and Thrifty, has led to dramatic price increases, as discussed here. Funny how reduced competition leads to fewer choices, higher prices and less attentive service. Huge surprise.

Could this kind of scenario occur in the beer world? Maybe not. But Anheuser-Busch's strategy of buying craft breweries and distributors is alarming. It will enable them to limit access to the market for non-AB brands while their owned "craft "brands, brewed in factory breweries, become readily available. If there's an upside, I don't see it.

Obviously, the significant question is how many people know or care about what's going on in the beer wars. Here on Kauai, I see plenty of people drinking Bud Light or similar garbage. I wonder if they know or care what that choice means. Sounds like a topic for future discussion.


Sunday, October 25, 2015

Oregon's First Brewpub Turns 30

Today marks in important milestone in Oregon history. But you aren't likely to see any coverage in the mainstream media. Why? Because it has nothing to do with the Kardashians or Star Wars or Back to the Future or a mass shooting. Nope.
Mike and Brian with Ron Wolf

Thirty years ago today McMenamins brewed the first batch of beer at their Hillsdale pub. Why is that significant? Because it made Hillsdale the first brewpub in modern Oregon history. The Brewpub Bill, passed in June 1985, paved the way for them to establish a brewery in an existing pub.

It may be instructive to recall that Bridgeport and Widmer were both brewing at that point. Bridgeport was actually selling beer by late 1984. The Widmers were right behind them and began selling beer in April 1985. But neither had a pub. Hillsdale was the first.

Those early Hillsdale beers were brewed with malt extract and other suspect ingredients. Not the best approach and, in fact, the beers were not especially good. Don't take my word for it. I didn't get here until 1989. Brian McMenamin provided his thoughts during a 2013 interview.
We weren’t really sure what the Brewpub Bill meant at first. Did it mean cooking beer on a stove in the kitchen? We knew we could use old dairy equipment. So we went down to Tillamook and found some tanks, jerry-rigged some stuff and it worked. We started making beer and it wasn’t good beer. We hired some people to help with it and we eventually had some decent stuff.
One of the people they hired was John Harris, who would become one of Oregon's iconic brewers at Deschutes and Full Sail before launching Ecliptic in 2013. By 1985, Harris had done some homebrewing, but had no pro experience. There were very few pro craft brewers in those days.. Head brewer Ron Wolf hired him, anyway. Harris recalled his experience in 2013.
On my first day at Hillsdale, I was supposed to bring rubber boots…but I forgot to buy them. I had to wear my hiking boots, which didn’t work very well. Fortunately, they didn't fire me. The system was tiny…about seven kegs. We had no temperature control and we used open fermenters. Consistency was a problem. Beers sometimes got a little sour. The whole concept of small breweries was revolutionary. The brewers at Henry Weinhard considered us renegades because our brewery was so primitive. We got some respect and the beer got better after we started mashing. 
The brewpub concept didn't take off instantly. But combining food with beer produced in tiny, on-site breweries eventually became a thing. Bridgeport established a pub and Portland Brewing opened on Northwest Flanders in March 1986. McMenamin's eventually established breweries in a number of their pubs, which became destinations because you could always find good beer there.

In the greater scheme of things, brewpubs were crucial to the development of our beer culture because they exposed people of all ages to craft beer in a friendly environment. If not for brewpubs, craft beer would have been relegated largely to the dark shadows of taverns and bars, and it's visibility would have suffered. We would not be where we are today.

To celebrate 30 years, a commemorative version of Hillsdale Ale will be poured at all McMenamin's locations today. No, this won't be a malt extract beer. They've examined the brewing notes from that original beer and recreated it to the best of their ability in an all-grain format. Pints of Hillsdale Ale will go for $4. Growler fills will be $8.

As most who follow the local beer scene know, the McMenamins pursued a different course than virtually all of the other craft or micro breweries. They never had any desire to distribute their beer beyond their own pubs and assorted properties. Their plan was wildly simplistic.

"Instead of buying it from someone else, we wanted to brew the beer to sell in our pubs," Brian McMenamin recalled. "If you haven't figured it out, we're stubborn Irish people. We like doing things ourselves."

You might say that stubborn, do-it-yourself approach has served and guided the brothers well over the years. And if you did, I'm pretty sure you'd be right.

Monday, October 19, 2015

Local Relevance: the Latest Catchphrase in Craft Beer

It can easily be argued that local appeal was a huge part of what got the craft revolution off the ground. The demand for locally grown and processed food was underway by the 1980s and it extended to beverages, including coffee and, yes, beer.

The way the movement presented itself early on, at least in beer terms, was a vibrant homebrewing culture. The beers being made were local and that became a big part of their identity when those homebrewers opened breweries. You know who they are.

It's largely a forgotten detail now, but Portland's early craft (then known as micro) breweries leaned heavily on the local angle to sell their product. Doing so fit nicely with the highly provincial nature of Portland. Customers, drinkers in this case, were increasingly attracted to local beers.

As time went by and the early breweries became successful and grew, they looked outside Portland and the Northwest. We saw this with Widmer, Portland Brewing and Bridgeport. In fact, the urge to explore lucrative markets outside core areas has been a theme in the craft beer industry of late. These efforts are not without risk and they don't always pan out. But they are a reality.

So I have to admit I was surprised when I interviewed the folks at Bale Breaker Brewing a couple of months back. They were determined, as part of their business plan, to own their core market in rural eastern Washington prior to chasing the lucrative Seattle-metro market. Some told them there were nuts, that people "out there" don't drink craft beer.

As it turns out, Bale Breaker has been highly successful with their core market strategy. They were unable to keep up with demand for their beer from the day they opened in 2013, and the great bulk of that beer was sold locally. They've since moved into Seattle and the rest of Washington and Oregon is on the horizon. But they say their greatest strength is their home market.

It seems some of the larger breweries are starting to come full circle on the local concept. There's some definite irony attached to that notion, given the fact that all of these guys started out small and local before expanding into distant markets. But never mind.

For many years, Portland Brewing/Pyramid largely ignored its core market on the West Coast and focused on building its brands elsewhere. Those efforts netted mixed results for a variety of reasons. Now they're shifting direction.

When I interviewed Rob Rentsch, the new general manager at Portland Brewing/Pyramid, he talked about the strategic importance of reviving the relevance of his brands in the local and regional market. He was hired specifically to make that happen, and it's a difficult task given the extent of the neglect over so many years. We'll have to see how it goes.

Now I see, via an article in Brewbound, that the Craft Brew Alliance is also focused on the local angle. As you likely know, the CBA is comprised of Widmer, Redhook, Kona and Omission, as well as some partner brands. In the case of Widmer and Redhook, both legacy Northwest brands, the CBA hopes to achieve greater local relevance.

This is a fairly interesting development. Recall that CBA brands enjoy access to the nationwide Anheuser-Busch distribution network. You're app to find at least some CBA beers almost anywhere in the country thanks to that arrangement.

What they've evidently learned is that only Kona has broad national appeal. Perhaps this is because so many smaller breweries are opening up and attracting locals. In that scenario, the people buying Kona are buying an image. It's similar to Corona, which sells well due to its connection to place. Anyway, the CBA will continue to support Kona nationally via a strong advertising campaign. Makes sense.

Widmer and Redhook are where the big local/regional action is. The approach to seasonal releases will be refined with both brands. Widmer Hefeweizen will hit Oregon shelves in cans next March, a move they hope will boost interest in their flagship beer. There's no hint of it in the article, but Widmer will likely do more with its specialty program, which is under-appreciated.

Redhook is a more substantial challenge. Established in 1982, it is the oldest surviving Northwest craft brand. And it has been neglected and mismanaged for years. Part of the plan to revive the brand is retro packaging, an effort to remind consumers of what Redhook once was. Lipstick on a pig, if you will. Then there's American Pale Ale, set to be released nationally. What?

As with Widmer and Portland Brewing, Redhook's path to local relevance will demand effort on the specialty front. Today's vibrant brands are built in beer bars and at festivals and tap takeovers. You cannot reach that audience with mainstream brands. And you have to understand that grassroots marketing like this is intended to generate buzz and credibility. Sales will take time.

Do the established brands have the dexterity and the commitment required to execute the kind of plan that will result in renewed local relevance? I have my doubts, But we shall see.

Tuesday, October 13, 2015

Kurt Widmer's Departure and the Future of the CBA

Yesterday's big news on the impending retirement of Kurt Widmer from the Craft Brew Alliance hit like a ton of bricks. The story popped up on the news wire in the late afternoon and mostly took the form of a regurgitated press release with little or no analysis. It's the "new" journalism, you know.

End of an era
Kurt Widmer will step away from his role as chairman of the CBA board at the end of the year. He expects to spend more time with his wife and family and hopes to write new chapters while there's time. He's a young 63, so there is certainly time for a novel or two.

For a while now, I've been wondering when something like this might happen. Believe me, I have no inside sources at Widmer or the CBA. I'm not even on their media list, so I didn't receive the press release. But I've been thinking this might be a good time for one or both of the brothers to move on. More on why in a minute.

This is a big deal. If you're making a list of the most important folks in Oregon brewing history, Kurt Widmer is on it. He's right there with names like Saxer, Weinhard, Coury, Larrance, Ponzi, McMenamin, Bowman, Eckhardt, Younger, Fish, Joyce and, of course, Rob Widmer.

When the Widmers launched their little enterprise back in 1984, their expectations were modest. Like most of the early craft brewers, they didn't expect to make a lot of money. They were doing something they enjoyed and hoped to make a living at it. It sounds quaint and naive looking back, after they've made millions, but that's how it was in the beginning.

Kurt Widmer was the idea man. He's the one who had experience with European beers, having lived there. He's the one who saw the rising popularity of imports and thought that market could be tapped with beers made here. He's the one who got Rob on board, which took about a nanosecond. And he was at the helm navigating the significant challenges during the formative years.

Things are much different today. The partnership with Anheuser-Busch, announced in 1997, and the formation of the CBA in 2008, have pushed Widmer and affiliated brands Redhook and Kona into markets around the country. This ceased to be a small, self-contained business many years ago, but the transition to a highly structured corporate organization occurred in just the last few years.

When you look at what they've built and what Widmer and the CBA are today, you really have to wonder what Kurt and Rob have left to accomplish. Nothing, I think. That may be particularly true of Kurt, the thinker and idea man who directed traffic for so many years and now finds himself watching as others call most of the shots.

The press release says Kurt will stay on until the end of the year and help identify a successor as chairman of the board. Rob Widmer, who has never held a spot on the eight-person board, has no plans to leave the organization and the brothers will retain their ownership stake in the company. Together, they own nearly 12 percent of CBA common stock. 

Given the current pace of buyouts and mergers in the beer world, I can't help but wonder if the CBA will be fully absorbed by Anheuser-Busch in the near future. Could Kurt Widmer's departure be a precursor? AB owns roughly a third of the CBA and holds two seats on the board. How many of the remaining board members favor a sale? I don't know, may not want to know.

It seems to me the CBA brands, particularly Kona and Widmer, fit perfectly with AB's strategy. If it acquires the CBA, AB can mass produce those beers in factory breweries and flood the market, undercutting independent craft brewers around the country. If that's what's coming down the pike, I'd say this was exactly the right time for Kurt Widmer to get out. 

As with so many things, time will tell.

Wednesday, October 7, 2015

No Safety in Numbers: Understanding the Buyouts

The recent announcement that Golden Road Brewing is being acquired by Anheuser-Busch raised some eyebrows, but didn't produce the flood of negative responses that we saw with 10 Barrel and Elysian buyouts. Like mass shootings, we're getting used to these things.

There were a number of comments made by Golden Road co-founder, Meg Gill, who got a fairly soft grilling by the media. Reading through the quotes, I began to gain a new perspective on why these buyouts are happening...and why they will continue to happen.

This isn't a situation where Gill is cashing out. Even though Golden Road was built to sell, as one article suggested, she isn't going anywhere. It also wasn't a scenario where they needed an infusion of capital to expand production. Golden Road has access to private equity capital.

It's quite clear that she was looking for security. She sees big advantages in being part of the AB family, which she describes as the "winning team in craft beer." There are decent reasons for this. Being on the team gives Golden Road access to a supply chain that will reduce production and packaging costs. The extensive AB distribution network factors in, as well. Gill described AB craft CEO Andy Goeler as a "brilliant marketer." Seriously.

Not to get too far afield, but I'm not sure I would describe anyone at AB as brilliant when it comes to craft beer marketing. Building craft brands isn't and hasn't been their claim to fame. They're mostly good at cutting costs through economies of scale and leveraging advantages built since the end of Prohibition. But never mind. Be my guest if you think these guys are brand builders.

In fact, it appears Gill decision to partner with AB may have been driven by the escalating craft brewery count. She sees an increasingly crowded marketplace where competition is getting brutal. She came to doubt Golden Road's ability to stay relevant in that environment on its own. So she phoned Anheuser-Busch, the only entity she deemed capable of providing the needed help.

Many assumed AB would target a California brewery this year. The surprise with Golden Road is its size...projected around 45,000 barrels this year. Most thought AB would go bigger. There's also the price. Experts believe they paid $100 million ($2,000 per barrel), significantly more than they are thought to have paid for 10 Barrel or Elysian.

But there's a method to AB's madness. They wanted a presence in the LA market. With this buy, they will own breweries in the nation's three largest metro areas...New York (Blue Point), Chicago (Goose Island) and LA (Golden Road). Add the top two craft beer cities to that list with Portland (10 Barrel) and Seattle (Elysian) and you've got a nice little collection. With more to come.

It may not have been on Gill's mind, but AB is leveraging its position in ways that go well beyond standard marketing. As discussed here in the past, the company is actively working to enable vertical integration of markets similar to what existed prior to Prohibition. Demolition of the three-tier system is part of that effort.

For now, this is happening primarily in states where the laws are flimsy. The Golden Road deal, once finalized, means Anheuser-Busch will operate in all three tiers (owning brewers, distributors and retailers) in California, Oregon and Washington. Only California, via the DOJ and state attorney general, is looking into AB's activities. Oregon and Washington are, so far, mum.

You really can't fault Meg Gill for selling Golden Road. I've seen a number of reports suggesting Golden Road's beers aren't that great. If you want to improve a mediocre product and push it out to an increasingly competitive market, maybe leaning on AB's distribution network and supply chain efficiencies is exactly the right move.

Given the state of craft beer, where new breweries continue to open virtually by the day, I expect to see more established breweries looking for ways to insulate themselves from the brutality of the marketplace. Selling to AB is one way to do that so there's no telling how many of these folks will wind up in the hands of big beer. To be continued...

Friday, October 2, 2015

Bale Breaker Brewing: Supplemental

The October issue of BeerAdvocate magazine includes my profile of Bale Breaker Brewing, which is located on a hops farm in the Yakima Valley. As is always the case, the published version of the story leaves out a few details that may be of interest here.

Bale Breaker opened in 2013, the creation of three siblings who grew up on Loftus Ranches hops farm, and another partner who married into the family. The kids had gone off in their own directions after high school and returned to the farm when it occurred to them that a craft brewery might go over well there.

More than a few people thought they were nuts. Even though the Yakima area produces hops that fuel brewers all over the world, rural areas like eastern Washington have been slow to catch the craft beer wave. Enough people in the industry told them they would fail that it caused a bit of self-doubt.

Nonetheless, they forged ahead. The team of Patrick Smith, Kevin Smith, Meghann Quinn and Kevin Quinn (married to Meghann, the sibling of Patrick and Kevin Smith) put together a business plan that included some interesting details.

The brewery would share ownership with the hops farm, but be operated as a separate business. They did not want either business to be tied to the success or failure of the other. As well, they did not want other craft brewers to see Bale Breaker as competition.

As it turned out, they needn't have worried about competition. Craft brewers don't operate like that and never saw Bale Breaker as competition. Keeping the businesses separate was mostly designed to insulate the successful hops business from the brewery, which might well fail.

Due to their rural location, many assumed Bale Breaker would focus on building their brand in the lucrative Seattle market. They rejected that thinking. Instead, they were determined to build their brand in the local area and expand out from there.

A few industry friends recommended that path. Kevin Quinn had worked in the franchise business and got a firsthand look at the problems associated with being spread out and not having a core market. He was convinced that they should start local and build from there.

Cans vs Draft 
It's pretty common for new craft breweries to focus on draft sales. Bale Breaker had other ideas. Early on, they decided their flagship beers (two brands) would be packaged in cans and that packaged product would be their main focus.

Looking out on the bar landscape, the Bale Breaker kids saw rotating tap handles as a dead end. A keg blows and something else goes on, no matter how fast the beer sold. They came to see shelf space in stores as the new permanent tap handles. If your beer moves, you keep your spot. Thus, filling cans is their priority, even if that means not filling kegs.

The proof is always in the results. Bale Breaker has been embraced by the rural community. The distributed beers, Top Cutter IPA and Field 41 Pale Ale, sell so well that they are challenged to keep up with demand...despite expanded production capacity.

If you're wondering, Bale Breaker beers are now available in most of Washington. Portland residents can find Top Cutter and Field 41 in many Vancouver stores and pubs. An in-progress expansion project at the brewery may allow them to tap Oregon in the next year or two. Hopefully.

The full story is in the BeerAdvocate piece. There's no online version, though you can buy the issue on Google Play if you don't subscribe and don't want to. Cheapskates will seek copies in local pubs.

Tuesday, September 29, 2015

Rentsch Tasked with Lifting Portland Brewing/Pyramid

One of the big challenges in craft beer today is staying relevant in a hyper-competitive marketplace. That reality has driven some breweries into the arms of big beer, hoping to tap the benefits of economies of scale. Of course, that's not an option open to all.

As I've suggested in prior posts, the need to appear relevant falls heaviest on established breweries that don't have the sex appeal of new kids on the block. It's an ironic twist of fate, I think, and also a fine example of the ADD beer culture that values and pursues anything new.

Two established Oregon breweries that have done a decent job of staying relevant with the beer crowd are Widmer and Deschutes. Even though they sell an enormous amount of beer in mainstream stores, both produce specialty and experimental beers that keep them relevant in the beer geek community. It's smart business.

The flip-side of that story is Portland Brewing, a nice example of an established brewery that has not migrated with the times. It sells a decent line of beers in grocery stores and, in fact, I would argue these beers represent some of the best values in the marketplace. But Portland Brewing and its parent/partner Pyramid have almost no standing when it comes to experimental and specialty brews. They are effectively irrelevant within the beer geek community.

Some brief history. Portland Brewing was founded in 1986 by 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.

Portland Brewing experienced financial distress early on. The founders sold common stock to finance expansion. Around the time they moved to new digs, local legend and investor Mac MacTarnahan gained control of the company. Yes, their most popular beer, McTarnahan's (the original spelling) Amber Ale, was named for him.

By the early 2000s, Mac was in failing health and so was the company. The MacTarnahan family, tired 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. Sensing the error of the MacTarnahan's branding, the parent company changed the name back to Portland Brewing in 2013.

Needless to say, heads have been spinning at Portland Brewing for years. The lack of ownership continuity may help explain the failure to follow industry trends and develop a portfolio beyond the standard beers. OLCC stats suggest they've been doing just fine with their beers and the pubs certainly make money. It appears no one was paying serious attention to the big picture.

Hoping to enhance recognition of the two brands, North American Breweries recently hired Robert Rentsch as general manager of Portland Brewing/Pyramid, a newly created role. Rentsch has a solid brand building background, most recently at the Craft Brew Alliance, where he drove the national expansion of Kona and helped launch Omission.

We talked over a beer the other day at the Portland pub. Rentsch has been on the job only a few weeks and isn't quite sure how he'll attack the challenge he took on because, "It seemed like the right opportunity at the right time." It's not that he was unhappy at the CBA. He just wanted to take full ownership in something, which is what this gig offers.

The press release announcing Rentsch's hiring is pretty vague. It talks about creating a localized, community-based approach and building on the heritage of Portland Brewing and Pyramid. That's all real nice, but I had to ask, "Where's the beef?"

"At this point, there isn't much to tell," Rentsch said. "I'm still evaluating things and developing a plan. I can say North American Breweries is committed to supporting the program we put together. Nothing will happen overnight, but I'm confident in the team here and our ability to build on what we have with the two brands."

It will definitely take time. They will have to create an aggressive specialty program, among other things. Portland Brewing doesn't have the means or dexterity to do that quickly. A fresh hop rendition of MacTarnahan's Ale at the pub was pretty lame. Pyramid does have a small batch series, and I've tasted a least one terrific beer from it. But that program is small and they will have to do a whole lot more in this area. To say nothing of the guerrilla marketing campaigns they will have to launch in support of the beers.

Rentsch knows he faces a big challenge. He apparently liked that about this role. In a community where new breweries open regularly and instantly attract the interest of the beer crowd, long-established brands are, he realizes, up against significant obstacles.

Whatever happens with Portland Brewing will be a work in progress. It ought to be interesting. Good luck to Rentsch and the crew there. I'll be circling back at some point.

Thursday, September 24, 2015

Zoiglhaus Hopes to Reboot Lents Neighborhood

Portland brewery and pub openings have become so commonplace that they're hardly worth reporting. These things tend to run together after a while. But all brewery openings aren't created equal. Now and then, a new one stands out.

Zoiglhaus Brewing, which opened this week in the Lents neighborhood, is an interesting case. The folks who run Pints Brewing in Old Town put this place together. In actual fact, the brewery isn't even installed yet. It'll be along in a month or so and in-house beers are likely two months away. At least.

Everything Zoiglhaus has on tap will be brewed at Pints until the brewery is ready. That's not such a bad thing. Brewer Alan Taylor has classic European training and his beers are solid. It's worth wondering how they were able to brew enough beer on the small Pints system to supply the beers for both joints. Taylor told me they brewed around the clock for weeks.

The pub itself is spacious, with abundant seating, a kids play area and some comfy sofas away from the buzz. The bar lives beneath a large skylight that bathes the area in light during daylight hours, giving the place a roomy feel you won't find in many brewpubs. There are several TVs hanging out, but this isn't a sports bar by any means.

The beers are Pints beers renamed for the Lents neighborhood. They could have possibly had some fun with those names, given the connection to the Felony Flats crime motif. Probably just as well they kept it subtle. Oh, the menu is a mix of traditional pub fare and authentic German cuisine. You won't confuse Zoiglhaus with Stammtisch, but it's a decent effort.

What this place is in terms of beer, food and ambiance isn't the most interesting thing about it. Nope. What's particularly interesting is where it is and why. This isn't exactly a posh area. The New Copper Penny and a number of other dives dot the landscape. It's a downtrodden land of shootings, stabbings and related crime. Maybe not the best place to open a new business.

In fact, the bombed out nature of the neighborhood is precisely why Zoiglhaus is here. The project, on the drawing board for several years now, is a partnership between the Portland Development Commission, Taylor and real estate developer Chad Rennaker. Taylor and Rennaker operate Pints and a brewpub in Albuquerque, New Mexico. There's more on that here.

The PDC believes a brewpub will help lift the fortunes of the Lents area. They're betting a pile of money on the project. Yep. The PDC invested more than half a million bucks to renovate the building and prepare the space for Zoiglhaus. Zoiglhaus partners have made a large investment, as well. Rennaker will reportedly invest in affordable housing nearby.

If things go as planned, the brewpub will help attract additional investment to the area. Why would the partners think that? Well, it's happened before. Brewpubs often act as community hubs that make areas or neighborhoods more attractive to businesses and families. In the end, that's what they've hoping for with Zoiglhaus.

So beyond the beer and the food and the ambiance, it will interesting to see what happens with Zoiglhaus. Will it help Lents climb out of the abyss?  We can only hope.

Sunday, September 20, 2015

Foyston's Follies and the Imploding Oregonian

John Foyston has left the Oregonian. Rather, he was shown the door over what the paper describes as a breach of journalistic ethics. Hmmm. I'm actually surprised to learn the Big O knows anything about journalistic ethics, but I'll get to that issue in due time.
Foyston foto

In a story published on the Oregon Live website the other day, editor Mark Katches explains why the paper cut ties with Foyston. It's a simple business, really. Foyston lifted passages from press releases and brewery websites and included them in posts without attribution. Very shoddy.

Not to get too far afield, but let me just say that what John did is fairly common among beer bloggers. We get a lot of press releases. Many who blog simply regurgitate these releases on their sites verbatim or with minimal change and without attribution. That's not to say it's okay. It isn't. But it's common.

I've actually talked about the fact that many bloggers are nothing more than shills for the industry. You write friendly stuff and you get free beer. Viola! It gets better. Some hacks write about breweries and events in which they have a financial interest as if they're objective observes. That's the virtual black hole of beer writing. But never mind.

I make no excuses for Foyston, And neither does he. In a Facebook post, he took responsibility for errors in judgement. There was a mitigating circumstance in the case of the piece that got him axed, but nothing excuses the pattern of lapses described by Katches.

In case you're wondering, and you should be wondering, I've known John for five or so years and consider him a friend. He's your prototypical nice guy and also a renaissance man,..a painter, writer, musician, motorcycle mechanic and more.

More to the point, Foyston is easily the most read beer writer in Portland. He built a following over the years by updating readers on the local scene and storytelling. John knows everyone in the industry and is much beloved, partly because he doesn't write critical pieces.

The riff between John and the Oregonian is bizarre. Sure he violated the rules of journalism, apparently more than once. But why sever ties with the area's most renowned beer writer? Why not issue a firm reprimand and move on?

The answer is simple enough. The Big O has been in deep decline for many years. As Jeff Alworth suggests in his take on this mess, out-of-state owners mostly botched efforts to join the digital revolution. With print in free fall, they have been hemorrhaging cash hand over fist.

As a result, they've been dumping senior level talent as a way to stay afloat. If you wonder why the paper's content is wafer thin, look no further than the fact that they no longer have the people to investigate and report. Talk about a lapse in journalistic integrity.

Foyston spent 28 years with the paper. He suffered the indignity of being demoted from staffer to free lancer as the Oregonian began to circle the drain a while ago. He bit the bullet and carried on. That's the kind of guy he is.

It wasn't a match made in heaven, that's for sure. For that last few years, Foyston has been writing blog posts and occasionally for print, essentially loaning his name and following to the Oregonian in exchange for next to nothing.

You might say dumping Foyston says a lot more about the paper than it says about him. The big shots probably think they have or can easily find someone who will write flashier copy and better click bait for the website and social media. That's the way of the digital world these days.

But you really can't replace a guy like Foyston. No one has his connections or his depth of knowledge. As one of my media friends quipped, "John's replacement won't even know which press releases to copy and paste." Pretty funny, but sadly true.

Foyston was one of the few bright spots at the Big O. His columns drew traffic to the clunky Oregon Live website and kept some reading the decrepit print version. Getting rid of him was a dumb move. He can write for anyone now and his readers will follow.

It won't take long for the paper to realize it needed John more than he needed them. But fading media outlets are prone to dumb moves like this. Oh well. Time moves on.

Monday, September 14, 2015

Sellouts and the Transformation of Craft Beer

Last week's news that a couple more craft breweries have been acquired by big beer caused shock waves throughout the industry. You'd think folks would be getting used to this kind of thing, but no such luck, apparently.

Some of the sharpest attacks were reserved for Lagunitas founder Tony Magee, who sold a 50 percent share in his company to Heineken. Many were offended by Magee's long-winded remarks justifying the deal and what it means for Lagunitas. By comparison, MillerCoors purchase of San Diego-based Saint Archer produced a fairly subdued response.

My view of these arrangements is simple. The Lagunitas deal looks mostly like an opportunity for the company to expand internationally. It may well be a prequel to a full sale to Heineken, but that remains to be seen. MillerCoors hadn't bought a craft brewer since 1988 and they want a piece of the action. No surprise.

Admittedly, I would have hated these agreements had they involved Anheuser-Busch. As noted countless times, I dislike them because they leverage their position via ruthless cost-cutting and through vertical integration of markets where they own breweries, distributors and retailers. None of that is okay with me, so I beat them up whenever possible. Heineken and MillerCoors aren't in the same league.

In my mind, the people bashing Tony Magee are doing so because they don't like his verbosity or how he does business. Many referenced the case he brought against Sierra Nevada involving Lagunitas IPA. Some incorrectly said he was trying to patent "IPA." Not so, He merely wanted to patent the typeface used on Lagunitas IPA. As most know, he subsequently dropped the case when people beat him up on social media. But never mind.

With respect to buyouts and partnerships, there will be more of them. Many more. Mass market lager is imploding and there's a lot of money out there looking for a place to go. And the most logical place for it to go is craft beer, which continues to see dramatic growth. This is not rocket science.

There's more, of course, Craft beer has gone faddy on us. Once upon a time, music fans hankered to be the first to see a new artist live or purchase a new release by this or that artist. Exclusivity was a badge of cool. In today's world, beer fans hanker to be the first to taste or own bottles of specialty beer. That exclusivity has been a boon for brewers, distributors and retailers.

It gets more complicated. We've reached the point where new breweries easily attract press and clientele, while established breweries are often relegated to secondary status. "New and cool," is the theme. Staying relevant in a scenario where you have new breweries opening all around you is tough. So I have been told by owners of established breweries who struggle with this reality.

In this warped environment, no one should be surprised when a craft brewery sells full or partial ownership to big beer. As Jason Notte said in a column last week, it's time to discard any pretense of idealism or integrity in craft beer. It doesn't exist. The fact is, each and every brewery is for sale to whomever has the cash to buy it.

Craft beer is big business. Nothing more, nothing less. Sooner or later, money changes everything.

Tuesday, September 8, 2015

Berryessa Brewing, Winters on Growth Trajectory

Getting out of Portland for a few days can be a worthwhile endeavor. The endless number of things going on constantly in the city creates a sort of numbness. A week in the rural, ag-heavy California gives you an entirely different perspective.

I've been to Winters several times and written about it here. My take on the town and the area changes slightly with each visit. That includes the brewery here, Berryessa Brewing, which has changed considerably since my first visit in 2013.

Let's start with the area. There's a ton of agriculture here. They grow nuts, fruit, rice, olives, and there's a fair amount of ranching, too. Like much of California, the area has suffered though severe drought conditions in recent years.

It's far from a desert, but that's where the area is headed if the rains don't return.  There were large wildfires this summer and last. It's dry and water is an issue. With surface water in short supply, many farmers are using well water to stay afloat. A 2014 study found that groundwater levels have declined dramatically throughout the state since 2008. The area around Winters is no exception.

Everyone seems to realize the wells aren't forever. Once you pump the wells dry and other water sources mostly vanish, then what? It's a question that hasn't been seriously addressed anywhere in the arid west, perhaps because the only answers are tough ones. I digress.

In fact, Winters has worked hard to become a destination community. The city wants to stay small while reaping the economic benefits provided by visitors. It's a viable strategy. The historic downtown area is charming, with artisan shops. That's in stark contrast to the rat race in nearby Vacaville, which is saturated with big box businesses. Including an In-N-Out Burger.

Berryessa Brewing fits nicely into Winters' plan. Craft breweries have a way of attracting people. The place opened in 2011 and has seen steady growth. When I first visited two years ago, I found a quaint tasting room with a few outside tables. Since then, they've expanded the seating area considerably and added food cart fare to address the need for on-site food.

It's a little hard to fathom, but Berryessa's tasting room is only open Friday-Sunday. That likely ties in with the theme of Winters as a destination. There are far more people cruising around looking for things to do or drink on weekends than during the week. The folks at Berryessa are maximizing their take per open hour based on traffic.

Their success wouldn't be possible if not for the beers, which are solid. Co-founder and brewmaster Chris Miller has built a nice following for his beers. He's known for hoppy beers, but he isn't strictly a hophead. He actually brews a wide variety of stuff. A lot of patrons wonder why Berryessa doesn't expand production and reach for a wider audience. It's a fair question given the extent to which this area is underserved.

But overly rapid growth can bring problems. Miller and his wife, Lori, have taken a gradualist approach, preferring moderate and controlled growth to something that might spin out of control and damage what they've built.

Chris recently discussed the pitfalls of fast growth with the Sacramento Bee. He apparently obsesses over the quality of his beer, probably the most common concern among brewers. Miller worries that distributing it too widely in retail packaging is a risky proposition because you don't know how the beer will be handled. A valid concern.

Nonetheless, Berryessa is moving forward with an effort to distribute a few of its beers in 16 oz cans and 22 oz bottles. I found no evidence of that in any of the stores here, but they were selling pre-filled 32 oz crowlers of several styles in the taproom. These things were being gobbled up by patrons and the idea makes good sense to me.

I'll be interested to see what's changed on my next trip to Winters. They just demolished part of a city block to make way for a new hotel. That's going to help make the area more attractive as a destination because the lack of lodging has been an issue. As for Berryessa, I have a feeling the brewery will be a big part of transition that's happening here.

Monday, August 31, 2015

OLCC Evolves with Plan to Add Portland Outlets

The OLCC announced last week that it intends to expand the number of liquor outlets in the Portland area. Demand for spirits is growing and Portland is woefully underserved in terms of store numbers. There's also the train wreck in Washington to consider.

Green front liquor store, circa early 1950s. (OLCC photo)
If you didn't see the news release, you can read it here. To summarize, the OLCC is looking to add up to 17 liquor outlets in the Portland area. It currently operates 248 liquor stores across the state, but has only 68 in the metro area. The exploding population here means one store per 26,000 people, the OLCC says. Not nearly enough.

They're calling this a "recruitment" and use of the term "outlet" is not accidental. The OLCC is desperate enough to get these places up and running that it is willing to consider "innovative" approaches that would improve convenience for customers. It will be interesting to see what form these outlets take.

For those interested in applying for a license, the news release contains a handy cheat sheet of zip codes that are significantly underserved...places with large populations and no liquor outlets. Citizens in Gaston, Fairview, Hillsboro, North Plains, for example, do not have easy access to liquor.

In case you're wondering, the OLCC hasn't always been quite as motivated to make liquor readily available. In fact, the agency was once a whole lot more concerned with restricting access to booze. It was a mindset that came straight out of the 1920s.

When Prohibition ended in 1933, states were given the power to regulate alcohol sales within their borders. In Oregon, the legislature passed the Liquor Control Act, which created the Oregon Liquor Control Commission and gave the state the exclusive right to sell hard liquor. Beer and wine were to be handled differently.

Under the arrangement, liquor was sold via state-run, "green front" grocery stores that were open limited hours, (typically noon to 8:00 p.m.) and days. Taverns, restaurants, bars and clubs were also licensed by the OLCC, but they were not authorized to sell booze. Huh?

It's a forgotten detail, but you could not walk into a restaurant or bar and order hard liquor of any kind for many years. Instead, you bought a bottle at a state store, brought it to the establishment and had it checked in. The bartender would label the bottle and pour your drinks from it for a fee. Bar hoppers often drove from bar to bar with open liquor containers. Seriously.

Needless to say, the law helped foster vibrant bootlegging. Given the limits of the state stores, it was much easier to buy booze from bootleggers when you needed it. And they were everywhere...cab drivers, bartenders, club owners, waiters, pimps, bell hops, etc. When there's money to be made, entrepreneurs will jump at the chance.

State investigators worked undercover to chase down and arrest bootleggers. Almost like Prohibition. The efforts of several agents are nicely documented in: "Enforcing Oregon's State Alcohol Monopoly," in the Spring 2014 issue of the Oregon Historical Quarterly. The exploits of these agents, who functioned with limited resources, are fairly entertaining.

After 20 years of inane policy, things changed in 1953, when Oregon voters passed the "liquor-by-the-drink" law. Oregonians could finally walk into a bar or restaurant and order hard liquor. The state maintained it's booze-selling monopoly, but now sold to licensed establishments which then sold drinks to patrons. This put a damper on the bootleg trade and the need to investigate it.

It's instructive to consider the evolutionary curve of the OLCC. In the immediate aftermath of Prohibition, it was focused on restricting access to liquor by making the stuff difficult to get. Voters reigned in that effort with the "liquor-by-the-drink law" and the agency has become increasingly interested in making access to booze more convenient in recent times.

One can easily argue the OLCC's current efforts are driven by fear and self-preservation. The state does not want to lose its monopoly on liquor sales. It does not want a repeat of the privatization law that passed in Washington state. So the OLCC is working to make consumers happy.

And that isn't a bad thing, unless you think Prohibition was a good idea that worked.