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Monday, April 6, 2020

Larrance Sells Cascade; Will Carry on with OBF

The sale of Cascade Brewing to a group of local investors, announced by press release last week, is one of the bigger beer stories of the pandemic. It puts an end to a part of Art Larrance's beer legacy in Oregon. He received a lifetime achievement award from the Oregon Brewers Guild in February, but his final legacy is yet to be written because he'll continue to be part of the industry for now. 

In fact, the terms of the deal, described as a "phased transition sale," will require Larrance to remain involved in Cascade's business in an advisory capacity pending regulatory review, and to provide assistance to the incoming ownership. I'm not sure if there's a contractual time limit or if it depends on how long it takes to jump through regulatory hoops. Anyway, it ought to be an interesting arrangement.

The sale did not come as a much of a surprise to many who follow the industry. Cascade has been slipping for several years. A Brewbound story reported that annual barrelage declined 21 percent 2017-2018. Those are the most recent Brewers Association numbers. If you look at Oregon stats, the output of Cascade's blending house, where the lucrative sour beers are produced, was down 27 percent 2018-2019. Even more depressing.

Why would the business be tanking? Maybe because the market for specialty sour beers has become increasingly crowded and competitive. When Cascade launched its sour project in 2002-03, the resulting beers were a novelty. Today, sour beers are widely available. It may be that Cascade didn't keep up with the curve of what others were doing. I don't know if that's an accurate point. I do know my geek friends who currently chase sours have a lot of choices and most prefer beers from breweries other than Cascade. 

Cascade's trajectory is the key to understanding why Larrance decided to sell, though the pandemic may have made the sale more urgent. The curious thing to me, when I read the press release, is how the new owners intend to restore Cascade's status in a crowded market. The incoming team has experience in brewery, restaurant and taproom management, but does not appear to have knowledge of the niche industry Cascade is part of. That makes the sale intriguing.

When I spoke to Larrance on the phone, he told me it was time for him to step aside and let new owners write the next chapter in the Cascade story. "I'm getting old," he said. "I need to retire and let younger folks take on the challenges of today's industry." That's a pretty standard response in situations like this. If he were a politician, he would have said he wanted to spend more time with family. The deal had evidently been in the works for a while and now was a good time to finalize it. 

With Brian Yaeger at the Barrel House, 2013
The seeds of Cascade's story go back to Larrance's days at Portland Brewing. Recall that he and high school buddies Fred Bowman and Jim Goodwin co-founded Portland Brewing in 1986. They and the other founding brewers were instrumental in getting Oregon's Brewpub legislation passed in 1985. The Brewpub Bill (aka SB 813)  allowed breweries to sell their beer directly to consumers and essentially launched the craft beer revolution here.

Portland Brewing was highly successful in its original location on Northwest Flanders. It later moved to a much larger facility in industrial Northwest Portland. Soon thereafter, Larrance was tossed to the curb when the founders lost control of the company, a story detailed in Portland Beer. Being forced out unceremoniously provided the motivation that resulted in the founding of Cascade Brewing and, eventually, the opening of the Raccoon Lodge in 1998. 

The Raccoon Lodge has always been an enigma. It failed to ever build much of a following. The beers, which were always branded as Raccoon Lodge products, were serviceable, if not exciting. But the location in Raleigh Hills was problematic from the start. The reason is that beer fans from Beaverton and the westside have no problem traveling to the city core, where the craft beer scene has always been centered. But folks from the core rarely return the favor by traveling to the westside. So the Lodge was not a winner. 

Larrance built the Lodge with help from associate Ron Gansberg, who left Cascade suddenly a couple of years back. Gansberg alone brewed the Raccoon beers for many years. From the start, he and Larrance were determined to come up with what they referred to as a "magic elixir." They did not want to be part of what they called the "hops arms race" that was then underway. That didn't seem like a viable business strategy. Instead, they wanted to develop a product that could be produced on a small scale and sold at a premium price. 

People forget, but the sour program they landed on did not come about by way of an established concept. It was the result of creative experimentation. They saw people like Alan Sprints producing small batch specialty beers. They saw brewers playing around with barrel aging. Gansberg's initial experiments involved putting an English-style IPA in wine barrels. They then tapped a barrel every month over a four month period to see how the beer had evolved next to the same beer from stainless. 

Those experiments fueled their interest in the idea of barrel aging and bacteria. In the end, they chose to produce Northwest style sour beers featuring Oregon fruit, a style that didn't exist previously. They chose lactobacillus for fermentation because they felt it was a unique option. It took some trial and error to get the beers where they wanted them to be, but eventually Cascade was winning medals in competitions and praise from a variety of publications. Larrance has always claimed that he provided Gansberg with the tools needed to build a successful program and otherwise stayed out of the way. 

The Barrel House in 2011
Of course, medals and national recognition failed to solve the Raccoon Lodge problem. They needed a location in the city core. Larrance finally found the space on Southeast Belmont, where Cascade Brewing's Barrel House opened in 2010. The area around the pub has morphed considerably since then, with trendy shopping and residential spaces. But the Barrel House was a gigantic hit from the start. It made Cascade beers readily accessible to the crowd that wanted them and would likely not travel to the westside. It also allowed for easy tourist access and the Barrel House in its heyday always attracted visitors from afar.

The success of the beers created a new problem: they did not have enough production space. That's what led to the opening of the Blending House off Highway 217 several years ago. The climate-controlled space quadrupled the available room for blending and aging from 5,000 to over 22,000 square feet. That facility is pretty amazing to behold. Larrance spent a bundle. 

In the face of declining business, Cascade did not stand still. They rebranded several years ago, introducing refined labeling appropriate for beer that sells at wine prices. They also moved away from the large format bottles to smaller ones. More recently, the Raccoon Lodge was rebranded as The Lodge at Cascade Brewing, an overdue ploy to leverage the Cascade name. It will be interesting to see what the new ownership group does to reverse the downward momentum, given what has already been done. 

Art Larrance, who turned 76 in February, will carry on as director of the Oregon Brewers Festival. an event he helped found in 1988. Once the premier beer event of the year in Portland, OBF has seen declining attendance in recent years. It now runs three days in late July, down from five a few years ago. The coronavirus pandemic may force its cancellation this year. Organizers will make a decision on that in early May, Larrance told me. Industry friends tell me OBF is for sale, has been for a while. 

I met Art Larrance a quarter century ago when I started volunteering at OBF. Our relationship was cordial, but remote until 2010 or so. That's when I first started talking to him about the book I hoped to write on Portland's beer history. He provided gracious assistance, connecting me with people from the old days and sharing his collection of historical materials. The book could not have been written without his help. 

What does the future hold for Art Larrance? I last saw him last summer at the Lodge, where we had arranged to meet to talk about something. I wound up riding along as he delivered a keg to a pub in Hillsboro. Yup, one of the founders of Oregon's craft beer movement was selling and delivering Cascade beer. Retirement, whether full or partial, won't change him that much. He knows a lot of people and likes to jabber about the business. He'll be around.

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