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Friday, December 22, 2017

Trends and Bends in the Year that Was

As is the case every year, we're beginning to see the usual end-of-year reports summarizing what happened. It was another interesting year in beer. There were some positive and problematic developments. Below are some of the most significant ones in my view.

Craft Cans
I first mentioned the benefits of cans here several years ago. At the time, cans represented a fraction of what was showing up on store shelves. Six-packs of 12 oz bottles and 22 oz bombers dominated the retail market. That's changing.

What started as a trickle became a tsunami in 2017, as more and more craft brewers adopted aluminum cans. Bombers, once the chosen packaging of small craft brewers, are the biggest losers in this transition. Their shelf presence is in decline. Even 12 oz bottles are taking a hit.

While it was once difficult and costly to can beer, mobile canning systems and generic cans that can be labeled on site are making canned beer economically attractive. Brewers see that cans are less expensive to ship, less susceptible to breakage and better at protecting beer than glass.

Of course, what's good for brewers isn't always accepted by consumers. Cans, once the dominion of crap macro beer, for decades carried a negative stigma. That's changed, in large part because cans are now filled with quality product. It's also true that the cans themselves are better, not to mention lighter, less bulky and easier to transport than bottles. Consumers are seeing the light.

The growing popularity of cans will likely continue, arguably a good thing. That doesn't mean bottles are going away entirely. I suspect 12 oz bottles will be around for quite some time and some beer styles are a better fit for large format bottles due to conditioning and cellaring considerations.

Local Beer
The Brewers Association just reported that there are now more than 6,000 breweries in the United States, some 98 percent of them small and independent. More consumers have access to locally made beer than at any time in our history. Period.

While that's been good for consumers and small breweries, it has not been good news for large craft brewers. National and regional stats through the year suggest that many, though certainly not all, large craft breweries lost sales volume in 2017.

Here in Oregon, we see that in dramatic losses by Deschutes, Portland Brewing and Bridgeport (see Jeff Alworth's recent post on this subject). If we could see the numbers for Widmer, they would depict a similar story of significant decline with no end in sight.

Why are large craft brewers having a tough time? It's quite simple, I think. Not that long ago, beer consumers bought the bulk of their beer in grocery stores. We just didn't have great access to quality, local beer. It wasn't widely sold in stores and there weren't that many breweries.

Things have flipped. With so many more breweries, local beer is far more accessible. That's not just draft beer. Thanks to better packaging options, like cans, local beer is now available in more places, even stores. Given the choice, consumers seem to prefer buying local. That has hurt many large craft brewers.

This trend is likely to continue for the time being. But big beer is working to push all independent craft beer out of mainstream retail channels. If that happens, consumers who want local beer will be forced to buy it directly from breweries or at taprooms and specialty shops.

Price Escalation
Every year I see reports suggesting that craft beer prices have been relatively stable. Every year my personal travels tell me prices are rising, virtually across the board. I suspect this has a lot to do with consumers being willing to pay more for perceived quality. But there's clearly more involved.

The other night, I saw an $18 four-pack (16 oz cans) for the first time. This was a hazy IPA. Nearby, single cans of similar beers were available for more than $7 each. Various barrel-aged and mixed fermentation beers are regularly priced at $25 and above. The $12 six-pack is a regular thing.

Part of me wonders if the escalation, particularly with cans, is somehow connected to the raging fad that is hazy IPA. Since they started showing up en masse, hazies have been expensive. But seeing an $18 four-pack was shocking. Can a $20 four-pack be far behind? Shhhh!

Anyway, there's clearly an escalation happening. Consumers are dumb enough to pay crazy money for beer; breweries and retailers are more than happy to take advantage. The higher profit per piece shelved and sold is nice for everyone...except dumb consumers.

Will this trend continue? Craft beer has achieved cult of personality status in recent years. It occupies cultural space once owned by music and film. That won't last forever. Eventually, consumers are going to reject exorbitant prices. Eventually, the haze craze will moderate or go away. Eventually.

Event Madness 
Back in the dark ages, about five years ago, a few of us were talking about event fatigue. Beer centric events were happening at a rate of one or two a week and it was getting hard to keep up. Little did we know what was coming.

Driven largely by social media, the pace of events has turned into a tsunami. Release parties, tap takeovers, festivals and mini-festivals litter the calendar. Breweries and pubs are constantly looking for ways to promote their beers and brands. Someone stub their toe in the brewery? Organize a party to celebrate their return to action. Festival hype is off the charts.

You can't fault breweries, pubs and festival organizers for using social media. Traditional print and electronic media are virtually worthless as a means of promoting beer brands and events at the local level. Social media can reach a targeted audience in minutes.

My problem with this arrangement is that these events often aren't events at all. In many cases, they're a joke. Yet you have event whores who organize their schedules around scurrying from place to place fixated on what's next. Attention spans and conversational drinking take a beating.

The event crush and social media circus will certainly continue into 2018 and beyond. In fact, they're likely to intensify. Sad to say, this is the nature of craft beer until a new way of promotion comes along. When will that be? Sorry, I don't have a crystal ball.

Happy Holidays!

Tuesday, December 12, 2017

Portland's Plot to Steal the Old Town Stag

The ongoing battle between Old Town Brewing and the city of Portland continues. Officially, the city says it's working to resolve the dispute amicably. Behind the scenes, it's scheming to bully Old Town into eventually giving up the fight to preserve its legally granted trademark,

As pissed off as folks in and around the brewing community are, everyone needs to understand that this is mostly a matter of negligence and stupidity on the part of the city. Yeah, there's a hefty bit of greed mixed in, but this is mostly about stupidity and negligence.

Let your mind wander back to 2010, when the city of Portland bumbled into acquiring the White Stag sign in Old Town. Had it not acquired the sign and agreed to pay for annual maintenance and such, the old sign would have apparently wound up at the dump.

Once the city gained ownership, it took a rather sloppy approach to protecting what it had. Instead of registering the sign and the stag with the U.S. Patent and Trademark Office, the city obtained rights to use the image on a variety of products, including clothing and footwear, but not beer products, from the state. That was in 2011.

A year later, in 2012, Old Town Brewing registered the stag image with the U.S. Patent Office, securing the sole right to use the logo on beer-related products. That mark became "incontestable" recently, having been active for five years. Keep in mind that a U.S. trademark carries significantly more weight than state protection.

The city eventually did get around to registering the stag image with the U.S. Patent Office in 2015, allowing use on clothing, tote bags, cycling jerseys, etc.. However, it failed to obtain a trademark that would allow it to use the stag on beer products, or to license the image to beer companies.

Perhaps recognizing its negligence, the city made three attempts (2015, 2016, 2017) to acquire a federal trademark that would allow it to use or license the image for beer. The Patent Office refused the city's application each time. Actually, the city's request was initially approved in 2016, then revoked after Old Town filed a letter of protest.

Today, city officials whine that the stag is part of the city's identity. "It's our Space Needle, our Golden Gate Bridge, an iconic representation of Portland," so they say. They argue the city owns the sign and, as such, must have the right to use or license it any way it wishes.

Strange, though. If the stag and the sign were such an important part of Portlandia culture, you wonder why the city wasn't more proactive in 2010 or 2011. That's when it could have filed for and surely secured a federal trademark allowing it to use the stag as it pleased. Bunch of bunglers.

Having failed to make a broad trademark application in a timely fashion, the city is now attempting to bully Old Town into surrendering its trademark by forcing it to spend thousands of dollars on attorney fees and related legal expenses.

Make no mistake. This is all about squeezing a local business that has limited resources. Were this Nike or Intel, the city would be treading lightly, knowing full well those companies have fleets of attorneys and ample budgets to defend trademark infringement. Not so with Old Town.

You may wonder why the city would do such a thing. Old Town is, after all, a local business in good standing. Officially, the city wishes Old Town well...all the while sneaking around in the background and plotting to undermine it.

The answer is that the city plans to license the stag image to our old friends Anheuser-Busch for a king's ransom. It hardly matters who they have to run over in the process. City officials want the money and know AB will pay plenty for the right to connect its shoddy products to Portland.

You almost feel bad for the stooges at city hall. Almost. Had they not been negligent in protecting the iconic stag, their greed wouldn't be out in the open. The city would have a federal trademark and be free to do as it pleases. But officials blundered and the mistake is now obvious.

Maybe city officials should get a grip on reality. They blew it. Time to move on.

Wednesday, December 6, 2017

Fat Heads PDX will Transition to Von Ebert Brewing

There will be another "new" brewery in Portland early next year. Fat Heads Brewing, launched in 2014, will close in January. It will be replaced sometime in the first quarter of the year by Von Ebert Brewing, which will be operated by current Fat Heads franchisee, Tom Cook.

When news of Fat Heads closure hit beer media email boxes and social media Tuesday evening, a lot of people wondered why the apparently successful brewpub would close. In fact, the closure has nothing at all to do with the business here.

What's actually at work is that corporate Fat Heads, based in Ohio, has a lot going on in its home market. Rather than continue to focus on its remote Portland outpost, the company and Cook mutually decided to end the franchise arrangement.

"I know it sounds like spin," Cook said via email. "But that's exactly what happened. They wanted to focus on the Midwest, where they have a lot going on with a new production brewery and the new Canton brewpub. I wanted to focus on Portland. We decided it's probably best for them to continue in the Midwest and for me to do my own thing out there."

He admits it wasn't an easy decision. The franchise has been highly successful here. Indeed, the success of Fat Heads surprised more than a few in the beer geek crowd. Many thought an out-of-state chain would quickly collapse in beer wacky Beervana. Didn't happen.

"I think we succeeded here because we built a great team and gave it the right tools," wrote Cook. "There's no way I would be doing what I'm doing with Von Ebert if my team here wasn’t staying and fully behind me. This wasn’t an easy decision, but I think it's the right decision for everyone."

Von Ebert, when it opens, will specialize in hoppy brews from Head Brewer, Eric Van Tassel. Sean Burke, formerly of The Commons, is also part of the Von Ebert Brewing team. Burke's talent for brewing uniquely interesting beers is well-known. Cook expects they will release 100 or so unique beers per year, including American, German, Belgian and barrel-aged beers.

"Von Ebert Brewing is a new concept, where northwest family traditions meet bold new ideas in craft brewing,” said Cook in a press release. "We’re excited to unveil a completely new experience for customers, blending our brewing expertise with the adventurous flavors Portland has come to love."

The pub will feature what he refers to as "elevated American pub food." Items will include traditional German pretzels with beer cheese, stone-oven-baked pizzas, cheeseburgers stacked high with locally sourced meats, decadent sandwiches and smoked wings.

"True to our character, our menu will combine classic pub fares with the kind of top-tier quality, local ingredients you can only find in Portland," Cook said.

Those in the know are aware that Cook had quietly planned to open a brewpub in the vacated Ringside Steakhouse space adjacent to Glendoveer Golf Course in east Portland. Evidently, those plans will be more or less on hold until he clears some regulatory hurdles.

"There's more to come on this," he wrote. "I don’t want to comment or give a timeline until I finish with the City of Portland. I would hate to promise something and then learn we can’t do it."

If you're like me, you wonder about the Von Ebert name and logo. There was nothing about its origins in the press release announcing the plan. So I had to ask.

"My great grandmother came to the United States from Germany and her last name was Ebert," Cook wrote. "She gave up quite a bit in Germany to bring my family here, so I wanted to pay some respect to my immigrant family. "Eber" in German means boar, thus the boar in the logo."

Good answer.