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Thursday, February 22, 2018

Golden Road and the Abyss Ahead

It's funny how dots sometimes connect themselves when thinking about beer and, more specifically, the beer business. Thinking up things to write about isn't always easy. Then you get slapped in the face and a point comes instantly into focus.

Long ago, I set up a Google alert that funnels beer industry news into my inbox. That intel is typically pretty light compared to the pro newsletter stuff I occasionally receive and read thanks to generous "friends" in the business. But sometimes the Google bots surprise.

The other day, into my inbox came a Sacramento Bee article outlining Golden Road Brewery's plan to open a brewpub in Sacramento. You may be aware that Sacramento is somewhat behind the craft beer growth curve in California. The state has more than 900 breweries, but just 58 of those reside in the Sacramento area and roughly 50 of those have opened since 2009.

If you pay attention, you likely know Golden Road does not exist, at least not in its original independent form. Just as 10 Barrel, Elysian and Goose Island no longer exist. All of these breweries were subjugated by Anheuser-Busch in recent years and are, in effect, baby Buds, members of the High End portfolio. Denials are alternative facts.

It's not hard to figure out why Golden Road is opening in Sacramento. It's an underserved market with a lot of low hanging fruit. Golden Road, which originated in LA, is arguably a better fit for Sacramento than 10 Barrel or Elysian, both founded in the Northwest. They'll go in there and market themselves as a California brand. Consumers will descend like swarms of locusts.

Pubs are just one prong of Anheuser-Busch's strategy to shove independent craft brewers into the shadows. With its mainstream brands mostly in freefall, AB had to come up with a viable survival strategy. The strategy, which came into focus over a period of several years, was to partner with and, eventually, buy a collection of craft brands.

By the way, AB now owns enough craft brands to create significant disruption in the market. It need not buy any more, though I continue to believe it will buy the Craft Brew Alliance, of which it is already a partner, before late summer. As discussed here more than once, that is strictly about Kona, which has huge national and international potential. But never mind.

The primary reason AB wants pubs is to establish strategic outposts in areas where the captured brands are not readily known. That's why 10 Barrel has pubs in Denver, Boise and San Diego. Pubs help lend local legitimacy to brands. Consumers in many cases don't know or don't care that 10 Barrel or Golden Road are part of big beer.

Of course, the pubs are largely a sideshow. The main thrust of AB's strategy is being played in retail, primarily grocery stores. That's where the majority of beer is sold in this country and that's where Anheuser-Busch is diligently working to reduce independent craft brands to secondary, redheaded stepchild status. And the strategy is unfolding nicely, unfortunately.

I got a nice reminder of that in the beer aisle on a recent trip to Fred Meyer. What's occupying
the prime shelf space? Golden Road, 10 Barrel, Elysian and other zombie AB brands. Beer from independent craft breweries was relegated to a small area off the beaten path, where it's less likely to be seen or grabbed impulsively.

Sad to say, this is the future of retail beer. With its High End brands and the power it wields in grocery via distribution, pricing, etc., Anheuser-Busch aims to gradually squeeze independents out. Except for beer specialty stores, this is the emerging reality.

Otherwise known as the abyss ahead.

Thursday, February 15, 2018

Reeling in One of Portland's Finest Dive Bars

The great bulk of contemporary craft beer consumers are too young to have any inkling of what Portland's beer world looked like before the late 1980s. There were taverns and bars, but nothing like the beer bars and brewpubs we have today.

Things gradually began to change after passage of the Brewpub Bill (SB-813) in June 1985. That moment presaged what was arguably the greatest victory of the craft era: the notion that beer needn't be sequestered in dark, grimy establishments.

The brewpub and beer bar scene we have today owes its existence to the Brewpub Bill. These places are often, though not always, welcoming to adults and minors. They are well-lit and typically (though not always) less grubby than the dive bars and taverns of yesteryear.

Sometimes I wonder if maybe we lost something in the bargain. I can well recall going to grubby bars and taverns when I was younger. Strictly for fun. There was no rush to sample or discuss the latest new beers. In fact, there were no such offerings. These were bar excursions.

My favorite grimy bar as a young drinker was The Cellar in Lewiston, Idaho. It was a dark, dingy dump in a downtown basement. They served pitchers of swill and patrons lapped it up graciously. There was foosball, pinball and other gaming. A simple experience with rugged charm.

Of course, even with the advent of fancy beer bars and brewpubs, grubby dive bars never went away. There are plenty of them, even in beer-wonky Portland. It's just that beer snobs (like me and most of my friends) tend to steer toward fancy, beer-centric bars and pubs. No offense to the dives. We chase nerdy beer.

Several weeks ago, I asked a friend in the know where to find the best deep fried chicken and jojos in Portland. He advised me to visit the Reel M Inn Tavern on Southeast Division. A quick trip verified the accuracy of the chicken and jojo advice. But there was more.

This is your quintessential dive bar. According to legend (and the internet), a great dive bar has certain characteristics. Firstly, and maybe most importantly, it has to walk a fine line between being a standing health code violation and the place you want to be on any given night. Check.

The Reel M Inn is dimly lit, dingy and filled with apparent regulars. It has free pool and other gaming, plus a spunky bartender who chats it up with customers she mostly knows by first name. Reel M Inn gets bonus points for the marked up ceiling beams, mounted deer racks, multiple neon signs and related grubby charm. Even the out of order men's toilet was a nice touch.

One way the Reel M Inn doesn't fit the dive bar shoe is food. An authentic dive bar ought to have crappy frozen pizza or some sort of stale packaged snack that patrons order only when drunk out of their gourds and desperate. Not the Reel M Inn, whose terrific chicken and jojos make it a destination for a lot of people...my wife, for example.

Since that initial visit, we've been back a couple of times. Those trips have been for the chicken and jojos, but I've come to appreciate the place for what it is. On the most recent trip, my wife wanted to play pool. The gents manning the table graciously invited her to play. There's a casual friendliness here that you don't find in most snobby beer bars.

Part of what's different is socioeconomic, I think. This isn't the same crowd you find at your typical pub or beer bar. A lot of these patrons are looking for drink deals, which come in the form of can prices and shot specials. There's a decent, if compressed, draft list. But Rainier and PBR pounders look to be the fastest movers. Along with low tier liquor. Big surprise.

The Reel M Inn lives down the street from where Division turns into an upscale arcade. The chatty bartender told me they get a fair number of tourists, folks who are evidently headed to the fancy digs a few blocks away and stumble in. Some of them must be shocked when they see this joint. If that keeps them from moving here, mission accomplished.

The thing is, this is what bars have always been about. We've lost sight of that a bit in our craft beer obsession. There's a warm camaraderie that isn't remotely concerned with beer at the Reel M Inn. It's based on conversation and community. Regulars migrate here daily, yet welcome visitors. You can be a pint drinking champion or a pool shark here. Or you can melt into the woodwork.

No way will the Reel M Inn become my Cheers bar. I'm fine where I am. But I'm glad I found it and I look forward to occasional visits. Because it reminds me of what's great about neighborhood dive bars and taverns.

Thursday, February 8, 2018

For Widmer, the Future is Innovation

Monday evening, I attended an event at Widmer Brothers Brewing Pub, formerly known around these parts as the Gasthaus. A bunch of folks from the Portland beer community, mostly brewers, were invited to stop by, sample the beers and see the place Widmer now calls home. Fun evening.

I'd been there ahead of the event. Several weeks ago, I stopped by on the advice of someone who said the innovation program, lead by Thomas Bleigh, is putting out some nice beers. Sure enough, the beers were pretty good on both occasions.

The innovation and small batch program is almost certainly Widmer's future. Soon enough, the parent CBA will become a fully owned subsidiary of Anheuser-Busch. That deal, as I've suggested here and elsewhere, will probably happen by summer for contractual reasons. I'll be shocked if it doesn't.

The CBA made its shift in focus official the other day when it announced that John Glick, vice president of its emerging business unit, is quitting to pursue "other business opportunities." The emerging business unit, launched in 2015, was responsible for acquisitions (just one) and forming strategic partnerships. With a buyout imminent, there's nothing for Glick to do. He's gone, golden parachute pending.

At the same time, the company formalized its intent to refocus on innovation. It named Karmen Olson, the former director of emerging partnerships under Glick, as director of innovation. She promises an aggressive approach to innovation across the CBA portfolio. It's open season on that in this wacky beer climate, so she'll have some fun.

The innovation strategy first began to emerge a couple of months ago, when the CBA abruptly shuttered the Gasthaus Pub. That was mostly a cost-cutting move, intended to create a leaner CBA that would be more attractive to AB. But the underside of that move was and is the new Widmer Pub, which opened a few days later and features mostly small batch, specialty beers.

The CBA brass naturally denies that shutting down the emerging business unit and shifting to aggressive innovation signals that a buyout is on the horizon. That's par for the course, though. Buyouts in craft beer are always never going to happen until they're announced. Until then, operatives on both sides stonewall. You know the drill.

As I've detailed and you may know, AB's sole interest in the CBA is Kona, which is growing rapidly and has huge national and international potential. Given its current trajectory, I don't see how AB can afford not to have Kona. Widmer, along with its longtime Northwest stablemate, Redhook, will be altogether dispensable once the buyout happens. 

It's hard to say what will happen to Widmer in the wake of the deal. Whether it continues on as part of Anheuser-Busch's High End portfolio or is spun off as a separate entity, Widmer will have to feature a strong local and regional focus. Its national appeal has declined in recent times, thanks largely to the influx of new local breweries, but Widmer still has potential here. 

The key to getting some traction is going to be innovation. Small and inventive is the current buzz. Some would say Widmer has been innovating for years. If that's the case, those activities have gone largely unnoticed by those who follow local beer trends. Widmer has been widely regarded as a declining quasi-national brand without a future, the dysfunctional older sibling of Kona.

Nonetheless, they're on the right track. Pushing ahead aggressively with the innovation program is good business. The folks involved are doing a nice job and it provides a path forward, regardless of how things turn out. Stay tuned.