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Monday, August 9, 2021

Henry Weinhard Story Comes to a Close

Last week's announcement that Molson Coors (MillerCoors in the US) will discontinue production of Blitz-Weinhard brands effectively closes the book on Portland's most iconic brewing entity. The brands being discontinued are Old English 1200 (originally 800) Malt Liquor and Henry's Private Reserve. 

The Blitz-Weinhard story dates to 1856, when Henry Weinhard arrived in the Portland area and began to build a brewing empire. His first stop was Vancouver, but he soon crossed over into Portland and his brewery became a regional power within a decade or so. In fact, the existence of a notable brewing empire created a sort of aura that craft brewers benefited from as Blitz-Weinhard began to fade in the late 20th century. People were ready and willing to try local beers.

The demise of the Weinhard brands comes as no surprise. Both were launched in the 1970s, a time when BW was losing share to national brands. Fifty years later, the industry is in a completely different place, with craft beers, light beers and seltzers slugging it out for market dominance. Molson Coors simply saw no place for the awkward, ancient brands. 

How the ancient brands came about is an interesting story. Bill and Fred Wessinger, great grandsons of Henry Weinhard, were attempting to lead the company through the challenging seventies, a time when consolidation and pressure from invasive national brands put Blitz-Weinhard in a tenuous spot. Business was decent, but the brothers could see a time when they'd be out of business if they didn't do something. 

The strategy they landed on is one craft brewers would ride to success nearly a decade later. In effect they invented the idea of going after segments of the market that big beer had abandoned or never really entered. Old English 800 and Private Reserve were the result.

Ironically, it was the success of Old English Malt Liquor that gave them the idea for Private Reserve. Malt liquor was an area that had been entered and largely abandoned by the national brands. The entry of Old English 800 was a big hit in the Northwest and even in a few markets outside it.

As they looked at the slipping volume of the mainstream Blitz brand, the Wessingers decided against fighting a losing battle for a shrinking share of the industrial lager segment. It would have been impossible to compete with the advertising assault being carried out by the national brands. They opted to enter the super premium market. Henry Weinhard's Private Reserve was the result.

The super premium market was, in those days, occupied by the likes of Michelob and Lowenbrau, along with imports if you could find them. The Wessingers reasoned that the segment could be exploited with the right product. Private Reserve proved them right.

When launched in 1976, Private Reserve had some unique attributes: First, it was based on a 19th century recipe and (purportedly) brewed strictly with malted barley, hops and water. That was a shot at the adjunct-heavy lagers of the day. Second, it was initially packaged in longneck bottles that were popular in bars and restaurants, but not generally sold in stores. Third, bottle labels carried batch numbers for many years, suggesting limited production. Finally, (cases of) bottles were packaged in wooden crates, a practice that didn't last long, but suggested something special.

Make no mistake, Private Reserve was a good beer. It was arguably Oregon's first craft or semi-craft beer. More importantly, it suggested the idea of using quality ingredients to make beer that was cleaner and with more sophisticated flavor profiles than what was being offered by the industrial lagers of the day. 

Private Reserve built a solid following in the Northwest and eventually in California. Along with Old English 800, it helped revive Blitz' flagging fortunes. By 1977, Private Reserve and Old English Malt Liquor accounted for 40 percent of BW's total sales. Growth of the two brands continued, but it wasn't enough to offset what they were losing in their mainstream brands. 

By 1978, the Wessingers were looking for a partner to expand their production and distribution footprint beyond the West Coast. That's apparently how the conversations with Pabst commenced. The deal to sell was announced at a press conference on Jan. 31, 1979. The Wessingers continued to manage the Portland facility and the Blitz portfolio, though they had sold to Pabst. 

On the heels of the success of Private Reserve, the Wessingers planned to launch a second super premium beer, Henry Weinhard's Blue Boar Irish-Style Pale Ale. The beer wasn't an ale, but nevermind. Pabst was cool on the idea. Instead, it wanted to expand the reach of Old English 800 Malt Liquor, which it evidently saw as easy money. And that's what happened. 

The marriage to Pabst was somewhat dysfunctional and lasted only three years. Anyone who conducted a cursory review of Pabst's situation at the time of the sale should have seen reason for concern. Company profits declined from $21 million to $11 million, 1977-1978. Barrel sales declined by 600,000, more than Blitz produced. Pabst was hemorrhaging cash.

Nonetheless, Private Reserve continued to do well. After Blitz was acquired by G. Heileman in 1982, the outlook improved. It turned out G. Heileman liked the idea of specialty products that could compete in space vacated by the national brands. It signed off on the idea of a successor to Private Reserve. But it wasn't Blue Boar. Instead, it was Private Reserve Dark. 

"We've noticed that the discerning beer consumer has displayed a growing interest in various types of beers, particularly imported dark lagers in the last two or three years," Fred Wessinger told The Oregonian. Kurt Widmer, in the midst of launching Widmer with his brother and father, was thinking almost exactly the same thing. 

Private Reserve Dark was released in 1983 and did reasonably well. The Irish Ale was launched two years later and also did well. By that time, Blitz' standard lager had imploded and accounted for a fraction of sales. The company was almost completely dependent on the premium brands for cash flow at that point. 

The arrangement with G. Heileman lasted until 1996 and it's a bizarre story. Heileman came under the control of Alan Bond, an Australian businessman who supposedly wanted to build a brewing empire, in 1987. Bond financed the acquisition with junk bonds, thus saddling Heileman with $800 million in debt. The company was forced into bankruptcy in 1991. 

Three years later, Heileman was purchased by a private equity firm, which sold it to Stroh in 1996. But Stroh itself was soon in financial distress, losing several million dollars per quarter by 1998. The hammer fell in early 1999, when Stroh announced it would sell some of its brands. The Blitz-Weinhard portfolio was sold to Miller.

Production of Blitz' super premium brands continued at the Portland brewery until it closed in August, 1999. It then moved to Olympia in Tumwater, which was a larger and more modern brewery. When Miller closed the Olympia brewery in 2003, production of the Private Reserve brands moved to Full Sail in Hood River on a contract basis. Ten years later, production shifted to Colorado. 

There's no mention of Private Reserve Dark or Blue Boar in the stuff I've seen announcing the end of Private Reserve. But I assume production of the entire family is ending. Private Reserve was surely the best selling of the three brands and MillerCoors has no use to the other two given that reality. 

As I said earlier, this development is no surprise. These beers had a good run and they provided a sort of bridge to the craft movement that started in the early Eighties. If you weren't quite ready for craft beer during that era, any one of the Henry's beers could help you get there. There's no doubt in my mind that those brands helped lure a lot of beer fans to craft.

I drank all of these beers in the early days. For me, the quality remained solid through the Nineties. I think it was even okay after production moved to Olympia and Hood River. But quality slid down a rabbit hole in recent times. The last time I took a chance on Private Reserve, it was a hot mess. That wasn't a surprise. Once big brewers latch onto brands and shift production to giant factory breweries, quality invariably declines. 

Given the state of the industry and where the Private Reserve family fit into the contemporary scheme of things, these beers aren't going to be missed. They were as irrelevant as any of the various industrial lagers, which is what they had essentially become. But the retirement of these brands does bring closure to the Weinhard story. And what a story it is.


Thursday, January 14, 2021

End of the Road for Portland Brewing

In the olden days of craft beer, one of the first beers that interested me was Bert Grant's Scottish Ale. It was available in Pullman, where I was in graduate school and also one of the few craft beers you could get in a bottle at the time. There weren't that many around and most were draft only.

Of course, that Scottish Ale was one of the beers Portland Brewing began producing for the Portland market when it opened in March 1986. Contract brewing the Bert Grant beers helped get Portland Brewing off the ground. It gave them a reliable cash flow and, just as important, allowed them to tap into Grant's brewing expertise. 

When Grant increased the size of his brewery in Yakima, Portland Brewing lost the contract to brew his beers for this market. But the Grant beers lived on under different names with slightly tweaked recipes (note that Grant wasn't so sure about the tweaking). The Scottish Ale later morphed into McTarnahan's (the original spelling) Amber Ale, the brewery's most popular beer. 

If you're keeping track, Portland Brewing was the last of Portland's founding breweries to open. It was preceded by the short-lived Cartwright, Bridgeport, McMenamins and Widmer. Of those, only McMenamin's survives in more or less its original form. Cartwright lasted two years, Bridgeport closed in 2019 and Widmer (part of the Craft Brew Alliance) recently sold to Anheuser-Busch. 

We learned last week that Portland Brewing will cease operations in early February. The reasons apparently have nothing to do with the raging pandemic, which has caused widespread disaster in craft beer. That makes sense. Portland Brewing closed its pub two years ago and they were strictly production brewing here since. So its demise has more to do with the state of the industry than the pandemic.

High school buddies Art Larrance, Fred Bowman and Jim Goodwin founded Portland Brewing  The original pub on Northwest Flanders (most recently occupied by the now defunct Rogue) instantly became a popular watering hole and night spot. The space was too small virtually from the start and the brewery eventually moved to industrial Northwest in 1993. The problems began there. 

To finance the significantly larger pub and brewery, the founders sold common stock, They had done that since virtually the beginning and there were many smalltime investors who enjoyed owning part of something exciting. Benefits included a free daily pint. But not all investors were small. Local legend Mac MacTarnahan was a major investor. He gained majority ownership soon after the brewery opened in the new place. By 1998, the MacTarnahan name was used on all branding. 

A few years later, Mac was in failing health and so was the company. The MacTarnahan family, tired of pumping cash into a sinking proposition, sold Portland Brewing to Seattle-based Pyramid in 2004. Minority shareholders, including the founders, were shocked and disgruntled when they received pennies on the dollar for their shares while the MacTarnahan family sucked up the bulk of the proceeds. All's fair in war and business.

The real fun started in 2008, when Pyramid was acquired by Magic Hat. Magic Hat itself was acquired by North American Breweries in 2010. Then Costa Rica-based Florida Ice and Farm (FIFCO) 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.

I always assumed the ownership changes and remoteness led to a muddled strategic vision. That judgment may have been incorrect. It's apparent looking at Oregon numbers (graph courtesy of Jeff Alworth) that Portland/Pyramid was growing its business in the immediate aftermath of the ownership turmoil. During a time when the craft brewery count was escalating rapidly and smaller breweries were beginning to lead the industry, Portland/Pyramid was apparently doing just fine.

The size of the brewery likely made that possible. When the founders moved to industrial Northwest, they installed a 130-barrel brewery. It was a costly leap of faith. They thought they would be brewing large batches of standards like MacTarnahan's for the pub and for distribution. The brewery could efficiently produce a variety of different beers in large quantities. Indeed, the size of the brewery is likely what attracted Pyramid and the other buyers. 

As the brewery count exploded and small batch, experimental beers captured the hearts and minds of craft drinkers in more recent times, Portland Brewing's large brewery became an anchor, not an asset. If they wanted to brew something, they had to make a lot of it. I'm guessing that's why they never really competed for drinkers looking for small batch beers. Instead, they relied on beers that sold well in grocery and c-stores, often at sub premium prices.   

Even though things were going relatively well in 2015, North American Breweries wanted more...or possibly realized what was coming. They hired Robert Rentsch as general manager of Portland Brewing/Pyramid. It was a newly created role and Rentsch seemed like a good fit. He had a solid brand building background at the Craft Brew Alliance, where he worked on the national expansion of Kona and helped launch Omission. 

I talked to Rentsch at the pub one afternoon over a beer. He hadn't been on the job long and wasn't sure or wouldn't say how he was going to attack it. The press release announcing his hiring was vague. It talked about creating a localized, community-based approach and building on the heritage of Portland Brewing and Pyramid. But that kind of approach wasn't really in Rentsch's wheelhouse. He had been successful expanding the reach of brands regionally and nationally. 

But I figured he was a smart guy and he'd find a way to make things work. Things clearly didn't go as he hoped. The brewery saw a decline in barrelage each year after 2014, until it finally hit the skids completely in 2020. When I visited the pub for a corporate event in the summer of 2017, I could tell that things were not going well. It was no surprise when the pub closed in late 2018. 

The impending closure of the brewery evidently means Portland Brewing's brands will soon be history. Production of FIFCO brands will move to New York and shipping beers from there to Oregon probably isn't in the cards. I suspect only MacTarnahan's would have any commercial value and perhaps someone here will gobble it up if and when the trademark lapses. That's what happened when Portland Brewing let the Portland Ale trademark lapse. Art Larrance snapped it up and started brewing it at Cascade. Could that happen with MacTarnahan's? Time will tell.

The demise of Portland Brewing effectively closes the book on the early craft brewing days here. For sure, McMenamin's carries on. But McMenamin's is known more for its grandiose properties and the events it hosts than it is for its beer. It's somehow fascinating to me that the big three will all have vanished on about the same 35-year timeline. Bridgeport, 1984-2019; Widmer, 1985-2019; Portland Brewing, 1986-2021. 

My memories of Portland Brewing, outside MacTarnahan's, are vague. I visited the original pub on Flanders only a handful of times after I arrived here in 1989. I spent far more time at Bridgeport during that era. My fondest memories of Portland Brewing include an Octoberfest celebration held in the area around the pub circa 1995-96 and also of going there for lunches and dinners in the 2000s. 

Besides being on the ground floor of the craft beer movement in Portland and Oregon, the most significant contribution of Portland Brewing and the other founding breweries is that they were a learning and proving ground for brewers and others who subsequently contributed to the industry's development in a variety of ways. 

So long, Portland Brewing. Thanks for the memories.