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Thursday, September 28, 2017

Fresh Hop Season, 44 Years Ago

It's fresh hop season, part of the beer cycle we've somehow managed to construct in recent years. These beers aren't my favorite, though I seem to like them better now than I did a few years ago. Anyway, I'm not here to talk about fresh hop beers. Because it's also football season.

Sooner or later I had to get around to talking about football. Not the modern game, with its multiple game costumes and giant disparity at the college level. Or the NFL's problems managing the behavior of its players (no, I'm not referring to the national anthem protests).

Some 44 years ago this fall, I was closing out my high school football career. You might say football was in my DNA. My dad was a dedicated fan until the day he died. The first TV we had in my family when I was a small child was purchased so my dad could watch football games.

Later on, my dad took me to football games at Kezar Stadium in San Francisco. Maybe you remember that place, now gone, from the first Dirty Harry movie. When we moved to the Inland Northwest, I became a fan of nearby Washington State, where I eventually attended college. Later, we got the Seahawks.

Growing up in smalltown Clarkston, Washington, I fully expected to play high school football when it was my turn. Somehow I never played Pee Wee football. That was an inexcusable oversight because a lot of my friends played. I mingled in non-organized games.

My freshmen year of high school was an awkward time for sports in my school. I don't recall the details, but the school district was short on funds. As a result, there was no freshmen football. If you were a freshmen and you wanted to play football, you had to make the junior varsity.

Coming into three-a-day practices without any formal football experience was a shock. The running, the calisthenics, the weight of the equipment and the August heat combined for not a lot of fun. But I wanted to play and I stuck with it, somehow making the team.

I don't remember playing much that first year. There were freshmen who did play, mostly guys who had played Pee Wee and had experience and talent. I was probably fast enough and agile enough, but I was behind the development curve of organized football.

By the time I was a junior, I had caught up a bit. Off-season practice, weights and beer helped. You laugh, but you knew beer would be mentioned. One of our coaches quietly advised some of us to drink beer and work out in the off-season. He said we'd gain strength and stay quick and agile. Some of us did our best to accommodate his suggestion and, honestly, it was good advice.

I started out my junior year playing quarterback. During the season, I eventually played wide receiver, running back, safety and a few other positions. It was defense where I probably played the best football of my life. I was on the field a lot, playing both ways and getting exhausted. There were certainly a few concussions. But I'm fine now. Trust me.
Preparing for my senior season, I lifted a lot of weights and drank a lot of beer...Lucky Lager, Hamm's, Schlitz, Coors. Only the best. I figured to play defense, but worked on improving my throwing accuracy in case I got the opportunity to play quarterback. We had a new coach coming in and expectations were high.

One reason we had a new coach is that Clarkston had failed to beat cross-river rival Lewiston for more than a decade. Lewiston was then and still is considerably larger than Clarkston. But Clarkston had quite a few good teams that couldn't find a way to beat Lewiston. So our veteran coach resigned or was forced out. Sometimes, you just gotta go.

Of course, beating Lewiston had been a goal of my class since grade school. We had watched a string of really good Clarkston teams lose to Lewiston for years. It seemed like there was some kind of jinx at work. We figured we would somehow beat the odds and the jinx. I'm sure we weren't the only bunch of kids packing around that idea in Clarkston schools.

The 1973 season was an up and down affair. We won a game, lost two, won one, lost one, won two. Facing Lewiston in our last game, we were sitting on a 5-4 record. Our rookie coach didn't hesitate to remind us on several occasions before the game that 6-4 was going to sound a lot better than 5-5 when we recounted the season in future years. Sure enough.

For its part, Lewiston had suffered through a bad year under a flashy new coach. As always, they had a ton of talent. But the guy hadn't figured out how to use it. That led to dissention in the ranks and some good players had quit the team. It looked like they might be an easy mark. We knew better, though. We'd seen too many sketchy Lewiston teams beat good Clarkston teams.

To make a long story short, we wound up winning the game 13-7. The margin of victory would have been greater, but one of our wacky star players tossed the ball in the air short of the goal line on what would have been a touchdown. Dumb. Anyway, the long Lewiston drought was over and Clarkston finally had bragging rights for a year. There was celebration. And beer.

As luck would have it, my own senior season was TKO'd before it started. Working on a piece of farm machinery over the summer, I suffered a hand injury that required surgery. It was my right hand, my throwing hand. The caste came off just before fall practice began. I would not be playing quarterback. Indeed, it was a stretch to think I could play defense with that hand. But I tried.

So that's the way it was 44 years ago. The fresh hop beers we're all drinking today have almost nothing in common with the junk I and my jarhead friends drank way back when, either to bulk up or to celebrate. My how times have changed. For the better, at least in beer terms. 🏈

Friday, September 22, 2017

Kona and the Case for Transparency in Beer Labeling

The case of some Californians who filed suit against Kona and the Craft Brew Alliance for deceptive labeling is emblematic of a problem that isn't new in beer or craft beer. Consolidation, marketing and the chase for production efficiencies have undermined honest labeling.

You may be aware of Kona's plight. Earlier this year, two California beer consumers filed suit against Kona and corporate parent, the CBA, charging they had been tricked into thinking Kona is made in Hawaii.

In fact, all packaged and draft Kona sold on the mainland is brewed at CBA facilities in Portland, New Hampshire and Tennessee. (With the closure of the old Redhook brewery in Woodinville, packaged Kona is no longer produced in Washington, if you're wondering.)

There's a bit of a back story, if you don't mind a slight detour. Years ago, before it became part of the CBA, Kona began using Widmer and Redhook to brew its bottled beer for the mainland and Hawaii. Whether you were buying bottled Kona on the Big Island or in Phoenix, it was produced on the mainland. Yup.

Brewing for the mainland on the mainland makes sense, right? Much more efficient. The Hawaii strategy was evidently driven by production efficiencies here and the fact that Hawaii at the time (perhaps still) had a 50 cent per case tax on empty bottles entering the state. It was apparently more efficient to brew and package the beer here and ship it to Hawaii.

I don't have the labels to prove it, but my recollection is that Kona has always represented itself as being produced in Hawaii, regardless of where the beer was actually produced. I'm always amazed that many are unaware of that deception, even in the beer geek crowd.

In recent times, Kona has increasingly cashed in on its connection to place, in much the same way that Corona and other Mexican imports benefit via that connection. As referenced many times in these pages, Kona is the only brand floating the CBA boat at the moment. Consequently, it has been useful to maintain the fiction that the beer is produced in Hawaii.

Back to the lawsuit. The plaintiffs claim the Hawaiian imagery found on the packaging, the map of Hawaii and address of Kona's Hawaiian brewery, as well as the invitation to visit said brewery, qualifies as false and deceptive advertising.

I went to my nearby ghetto Fred Meyer to investigate. Sure enough, there's a map of Hawaii and invitation to visit the brewery on the 12-pack box. There's also nothing on the packaging to suggest the beer is produced anywhere other than Hawaii. Once you open up the box (or six-pack), labels on the bottles list the various places where the beer may have been produced.

The CBA pointed to the bottle labels in an effort to get the lawsuit dismissed. No dice. The judge noted that the labels are not visible on the outer packaging and ruled the map of Hawaii and invitation to visit the brewery are enough to make a reasonable consumer believe the beer is produced there.

This case is now headed to the discovery phase of litigation. Kona and the CBA will soon be forced to decide if they will risk a court case or negotiate a monetary settlement. The expense involved in such cases typically causes defendants to pursue a settlement at this point, sources say.

Whatever happens, the CBA will surely revise Kona packaging to avoid similar legal entanglements going forward. It would be nice if the entire industry would take a look at labeling practices. Because Kona is far from the only example of intentional chicanery.

The Baby Buds come instantly to mind. Some portion of their beer is now produced in giant factory breweries, yet they maintain the fiction via labeling and advertising that they are still small local brands. Some legacy macro brands, now owned by big beer, do something similar.

Transparency in beer labeling and packaging is good for consumers. The reason we don't have it is there's money to be made in not being transparent. Regulations preventing the practice either aren't stiff enough or aren't seriously enforced. That leaves lawsuits as the lever of change.

How many lawsuits will it take to affect change? Maybe a lot of them. Fine with me. Nothing wrong with challenging misrepresentation and duplicity.

Saturday, September 16, 2017

Big and Old Craft Brewers Grapple With Sour Times

You've heard the bad news. Craft growth is slowing. Heads are spinning trying to figure out how to jumpstart an apparently sagging industry. Places are closing their doors or begging to be graciously bought out by big beer. Gloom and doom.

Except maybe things aren't quite what we've been led to think they are. It's true that overall craft growth is slowing, down to something like 5.5 percent year to date. Also more failures. What many don't realize is that big craft is dragging the rest of the industry down. Yup.

If you exclude the imploding sales of brands like Blue Moon, Sam Adams and Sierra Nevada from the picture, you discover craft dollar sales are up more than 11 percent on the year. Including those players puts growth at the already noted 5.5 percent.

Those are national numbers, but the picture in Oregon isn't much different. Deschutes, our top brewery by volume, experienced an 18 percent decline in sales June 2016 to June 2017. Full Sail, Rogue, Portland Brewing and Bridgeport are all down. Widmer, if it's production showed up in OLCC stats, would certainly show the same trajectory.

In actual fact, the trend goes beyond a turn away from big craft. We see it in industry stats due to its impact on big craft, but it is affecting established craft breweries widely. Once respected local brands are seeing declining numbers as consumer tastes shift to what's new and shiny.

That's not something you can verify with national stats. But there's plenty of evidence in Oregon stats. For the same June to June period mentioned above, a number of older local breweries, including Lompoc (-12 percent) Laurelwood (-15 percent), Double Mountain (-8 percent) and Alameda (-20 percent), are losing ground.

Over that same period, you see significant growth for relative newbies Pfriem (+55 percent), Crux (+127 percent), Ecliptic (+81 percent), Block 15 (+63 percent), Sunriver (+54 percent), Buoy (+38 percent) and Breakside ((+22 percent). Several established breweries, including Pelican and Silver Moon, show solid growth, clearly outliers among the older set.

"Younger drinkers increasingly view legacy brands as stodgy or uncool," says Andy Crouch in this month's BeerAdvocate magazine. "A new disruptive wave of young brewers, keen on brewing to their own tune, entered the marketplace with little care or respect or concern for their elders."

The result is that older craft brands large and small are being displaced. Craft beer has become a part of pop culture among the younger generation, which views established brands like Deschutes, Sierra Nevada, New Belgium and Sam Adams as ancient and irrelevant. It's similar to disrespecting the music of a prior generation because it's old. You know the drill.

One could easily argue that small, local brands have more flexibility in addressing the current trend than big craft. After all, it's easier to alter the course of a small boat than that of an ocean liner. In beer terms, changing course means embracing trendy styles like hazy IPA and refreshing a antiquated brand identity with local consumers. It's not easy, but not impossible.

Big craft is in a more awkward position. We're talking in about beer portfolios that are well-known across countless markets and in many cases hopelessly outdated. It's not that easy to erase embedded brand identities and rebuild cool with the young audience that's driving craft beer's growth.

There's desperation out there, as outlined in Crouch's column. New Belgium released a disastrous line of fruit flavored IPAs and plans to extend the Fat Tire line with a Belgian-style white ale. Yummy. Sam Adams is hawking a line of alcoholic seltzers. Embarrassing.

Price is one area where big craft might attack. They're big enough that they could reduce retail prices in an effort to win back business. But reducing prices is more likely to further damage already imploding brands. And you aren't going to win over millennials who regard you as out of touch with discounting. Is there a Plan B?

For a while I've wondered if big craft will follow the example of big beer and start buying up smaller breweries. There's been some of that already. Green Flash bought Alpine a while back. New Belgium recently bought San Francisco's Magnolia Brewing. Should we expect to see more deals like that down the road? I haven't a clue.

The only thing I do know is these are tough times to be a legacy craft brewer.

Tuesday, September 5, 2017

The Commons: When Things Go Wrong

When Portland Beer was published back in 2013, I held the release party at The Commons original location on Southeast Stephens. That place had become a regular stop on my travels and I knew Mike, Josh, Sean and Travis well. Despite dreadful weather, the party was a success.

Following several years of solid success, the collective decided to move to a significantly larger space where they could increase production and seating capacity. I don't recall anyone in the beer community questioning that decision. It seemed to make sense, given their apparent trajectory.

Of course, we now know things didn't work out. When news broke that The Commons would close and relinquish its space to San Diego's Modern Times Beer, the hyenas began howling about why this had come to pass. Poor planning, poor execution, poor strategy. Pick your poison.

But these situations are rarely as cut and dried as some would have us believe. In the case of The Commons, I suspect there are variety of explanations for the calamity. And not all of those explanations are readily visible, even to folks in the beer community.

I first sensed that things were not quite right when I visited The Commons soon after they opened on Belmont in 2015. The main pub area had an unfinished feel. A satellite seating area upstairs was off limits to the public due to fire code. Without expensive sprinklers, the area was unusable.

During a visit several months later, it was clear to me that the building did not have sufficient ventilation. I eventually learned they couldn't put commercial rooftop units on the building without reinforcing the infrastructure, a monumentally expensive undertaking.

More recently, I learned they had brewed an IPA. Say what? That came as a shock to me because I knew it was something Head Brewer Sean Burke never wanted to do. Soon enough came news that Burke himself had bounced from the company. I guessed the IPA wasn't his idea.

The early intel told me the guys were overextended and at risk. Sure, businesses often function at a basic level when they're new or making a big transition. You put some things off until you have a cash flow. But appropriate ventilation and seating are requirements, not luxuries.

Then came the seemingly endless construction in the area. Several nearby buildings were leveled to make way for condos or apartments. An area that was busy and congested before the construction became increasingly problematic in terms of access and parking. Bad for business.

There are those who believe they needed a full kitchen and pub food to make the space viable. That was never part of the plan. The Cheese Annex, operated out of a tiny kitchen on a lease basis by Steve Jones (Cheese Bar), was a makeshift arrangement with limited offerings.

The food argument segues into another facet of The Commons masterplan. Until late in the game, they did not offer mainstream beers. So offering mainstream pub fare probably wouldn't have done much for them. They certainly knew this, which is why a kitchen was never part of the plan.

Not offering mainstream beers may have been a fatal error once they moved to the larger space. I took non-geek friends and family to The Commons on several occasions. There was nothing for them on the beer menu. Food choices wouldn't have mattered. They wanted to go elsewhere.

There's an argument floating around that The Commons should have jacked up prices to make their beers seem more special, such as Cascade, Hair of the Dog and others do. The idea is that they might have changed the perception of their beers by charging more.

The problem is, the beers probably could not have fetched significantly higher prices. That's not to say they weren't and aren't pretty great. Are they in the same league as the fruit-infused, barrel-aged stuff offered at high price points by others? I'm not so sure.

There are unknowns. Owner Mike Wright evidently got divorced a while back. We don't know what effect that had on the business or its cash flow. It's also true that craft beer is slowing and many brewers are showing flat or declining sales. Did that play into what happened? Hmmm.

By all accounts, The Commons was highly successful in its original location. The space was smallish, but friendly and homey. Wright didn't own the building, but the overhead had to have been low. Enjoying their eccentric beers while perusing the brewery had a definite cool factor.

Everything flipped in the move to Belmont. They got more production space, but expenses increased dramatically and the new place never lived up to the charm of the old one. Which left them stuck with a boutique product in a much larger space with much higher overhead.

To make a go of it there, they needed to sell a whole lot more of their beer or cater to a more general audience. That would have meant mainstream beers and food. Except for the 11th hour foray into IPA, they did none of those things.

People sometimes become rigid in business. Overconfidence, ego or lack of capital are some of the reasons. I don't know what happened at The Commons. But a new space with significantly higher overhead likely required a different approach than the one they had used on Stephens.

The cautionary tale, for anyone who cares, is that taking on significant debt in an industry prone to shifting tastes and fickle patrons is a risky business. If you're going to go down that path, build some flexibility into your plan so you don't find yourself in a financial rabbit hole.

It isn't clear what will happen to The Commons. Beginning in January, Modern Times will lease the space from Wright, presumably shielding him from mortgage payments. Once the dust clears, he may decide to reinvent the business in a smaller venue similar to the old place.

A lot of people would gather around that. 🍻