By Anthony St. Clair
For the Oregon Beer Growler
Buyouts. Closures. Startups. The roller coaster of Oregon’s brewing industry has seen more twists and turns than ever lately. As we start 2018, it’s time to take a good hard look at what this year and the next few might look like for craft beer in this state. And there’s no better person to talk with than Patrick Emerson. The Oregon State University economist also produces and co-hosts the “Beervana” podcast with Jeff Alworth, and his research focuses on development, labor economics, industrial organization and applied microeconomics. He offered his thoughts on where the industry is going — and whether or not there’s cause for alarm.
What is your outlook for 2018 through 2020, especially for Oregon’s craft beer industry?
The future is still very bright, but markets are now maturing — particularly Oregon — and in these markets competition is increasing and the pressure that this creates is starting to result in exits from the market. I expect this dynamic to increase in the next few years. There are still a lot of new breweries opening up, but not all will be successful and some more established breweries will exit as well. A good example is The Commons Brewery in Portland, an established brewery with an excellent reputation recently called it quits.
Why are new Oregon craft breweries growing more than more established ones?
In most industries, smaller businesses tend to have faster growth than bigger, more established ones. In craft beer there is definitely a novelty effect where new breweries have a certain buzz, which helps propel sales and growth. What we are seeing more and more nationally is the larger legacy craft brewers like Sierra Nevada, Widmer and Boston Beer Company are finding it harder to sustain sales, let alone continue to grow as they face intense local competition from newer brewers. The old model of growing through the focus on a flagship beer is starting to fade as the industry becomes more and more fad-driven.
What is driving craft beer’s current growth?
Innovation and novelty is a big part, but the artisanal nature of craft beer plays a big role, too. Consumers want some kind of personal connection to the beer. They want to know about who makes it, are proud of local beer and are interested in new and unique experiences. Macro brewers cannot offer any of that.
What does the merger-and-acquisition trend of the past few years portend?
The hurricane has subsided as the overall growth has slowed a little and as the macro brewers have grown fairly large portfolios of regional craft breweries. There is less of an incentive for venture capital and less of a need for companies like AB InBev to find more breweries to acquire.
How much do people care about who owns a brewery?
It has less to do with ownership and more to do with beer. Yes, there is a small percentage of consumers who really care a lot (and know enough about the industry to know who owns whom), but I don’t think this is very significant. More significant is great beer at a good price. If breweries with large corporate owners can maintain quality while leveraging the scale and distribution that corporate ownership can provide to keep prices low, I think the consumers will be there.
Are we reaching a point where there will be a brewery shakeout? What factors do you think will cause craft breweries to close up shop in the next couple of years?
I would not characterize it as a shakeout, but there will be a lot more breweries going out of business simply due to the maturation of the market. The breweries that are more likely to close are those with inconsistent quality, poor business acumen, are overly leveraged and/or fail to gain traction with their brand. All pretty standard factors, but the window for really gaining traction with a brand is becoming smaller and smaller as so many brands proliferate. It is going to become more and more important that brewers do the job of telling their stories and helping consumers connect with their brands.
How is increased shelf space competition forcing breweries to rethink distribution?
When there is a distributor in the middle, many breweries are relying on these folks to tell their stories and try to get shelf space and tap handles. But distributors represent many brands now. Breweries are really going to need to do more personal outreach to retailers and pubs. Distribution is tricky, but many breweries are doing self-distribution for this reason.
Should Oregon expect to see more growth in urban markets, such as Portland or Eugene/Springfield, or are we going to see more breweries opening in rural areas and small towns?
We will see both. Smaller towns have relatively untapped markets (pun intended). Bigger cities have established markets and are exciting places for brewers to be — not to mention all of the brewers currently getting on-the-job training whose dream is to have their own brewery someday.
How much attention will Oregon craft breweries give international markets?
This will continue to be a very minor market for most craft brewers, especially as transport costs are high and local craft beer is growing in those markets as well.
Is the industry healthy, and how should breweries steer the ship?
People should not view brewery closings as a sign of a market in trouble, but the sign that the market has matured. This is good for consumers: it will result in higher average quality and consistency and lower prices. For breweries, however, the market is going to demand a high degree of discipline: good and consistent beer, good brand management, good business acumen and tighter margins.
Great American Beer Festival Oregon Winners 2017
The Great American Beer Festival awards are some of the most coveted in the industry and Oregon continued to perform well in 2017. There are 96 style categories and the possibility of winning gold, silver or bronze in each. The following is a list of local recipients from this year’s competition, which were announced Oct. 7 in Denver:
BRONZE American-Style India Pale Ale: Breaskide Brewery & Taproom, Breakside IPA
SILVER American- or International-Style Pilsener: Full Sail Brewing Company, Sesion Cerveza
BRONZE American- or International-Style Pilsener: Elk Horn Brewery, Lemon Pils
GOLD American-Style Sour Ale: Flat Tail Brewing, DAM Wild Hops and Lemon Verbena
BRONZE American-Style Strong Pale Ale: Breakside Brewery + Beer Hall, Breakside Stay West
GOLD American-Style Wheat Beer: GoodLife Brewing Company, Sweet As Pacific Ale
GOLD American-Style Wheat Beer with Yeast: Sunriver Brewing Company, Fuzztail
SILVER Belgian-Style Fruit Beer: Logsdon Farmhouse Ales, ZuurPruim
BRONZE Brett Beer: Alesong Brewing & Blending, Touch of Brett Mosaic
SILVER Double Red Ale: ColdFire Brewing Company, St. James
BRONZE Fruited American-Style Sour Ale: Breakside Brewery & Taproom, Breakside Passionfruit Sour Ale
GOLD German-Style Pilsener: Zoiglhaus Brewing Company, Zoigl-Pils
GOLD Gluten-Free Beer: Ground Breaker Brewing, Dark Ale
GOLD Imperial Red Ale: Sunriver Brewing Company, Cinder Beast
BRONZE Rye Beer: Breakside Brewery, Breakside Rye Curious?
BRONZE Session Beer: Three Creeks Brewing Company, Stonefly Session Ale
GOLD Specialty Saison: Base Camp Brewing Company, Rye Saison
SMALL BREWING COMPANY AND SMALL BREWING COMPANY BREWER OF THE YEAR: Sunriver Brewing Company, Sunriver Brewing Team
North American Guild of Beer Writers Oregon Winners 2017
Brewers weren’t the only ones honored during the Great American Beer Festival in Denver. The North American Guild of Beer Writers recognized the best beer and brewing industry coverage in 11 categories, ranging from newspaper and magazine stories to podcasts. The following list is composed of Oregon award recipients:
FIRST PLACE Best Beer Book: Jeff Alworth, Secrets of Master Brewers
SECOND PLACE Best Beer Blog: Jeff Alworth, Beervana
THIRD PLACE Best Beer and Travel Writing: Brian Yaeger, Beer at the End of the World
SECOND PLACE Best Local Reporting: Andi Prewitt, Brewers Make Foray into New Areas of Fungi Kingdom
THIRD PLACE Best History Writing: Jeff Alworth, Bourbon County Brand Stout: The Original Bourbon-Barrel-Aged Beer
HONORABLE MENTION Best History Writing: Ezra Johnson-Greenough, An Oral History of the Horse Brass
SECOND PLACE Best Technical Writing: Brian Yaeger, Savoring Acidity: The Quest to Explain Sourness in Beer
By Patty Mamula
For the Oregon Beer Growler
Sometimes a great business idea hangs heavy in the air, just waiting for the right person to pluck it down and run with it. That’s what happened with Portland’s BREWVANA tour company and Ashley Rose Salvitti, a high-energy ambassador for Oregon’s craft beers.
The young entrepreneur started BREWVANA, an obvious nod to Beervana, six years ago with one bus and one employee. In April, Salvitti and friends celebrated the touring company’s anniversary at Breakside Brewery’s new Northwest Portland location.
Ashley, who added Rose to her first name because she liked it, established her LLC in November 2010. “My first tour was on April 8, 2011,” she said.
Today BREWVANA has grown to include public and private tours, bus and walking, with three small buses and one large one, for a total of nine weekly tours that include 26 breweries. And the excursions go beyond just bar hopping. For example, the “Behind the Scenes” tour provides a tutorial on the brewing process with stops at Breakside and Unicorn Brewing Company/Portland U-Brew. “Beers and Barrels” highlights breweries and a distillery where barrel aging takes place. There are now even walking tours where guides talk about neighborhoods and their histories in between brewery visits.
The seeds for Salvitti’s beer-related business took root in college when she started working at Liberty Steakhouse and Brewery in High Point, N. C. She was attending the nearby University of North Carolina at Greensboro and her dad, who was a mug club member at Liberty, suggested she should get a job there. Once she hit 21, she got behind the bar to serve.
Salvitti moved to Portland in 2007 after graduation. “I wanted to go where young people go to retire,” she said. Naturally, she gravitated to beer and her first job was at Laurelwood Brewing Co. Then she moved to Hopworks Urban Brewery when the brewpub opened in 2008. “Christian had a huge following then,” she said.
Salvitti’s sunny personality quickly made her a favorite with guests and those interactions helped her quickly fall in love with Portland’s craft beer industry. “I found that in Portland you would greet a table and people clearly wanted to drink beer and they were very knowledgeable about it,” she said.
The brew tour idea came together after a trip to Puerto Rico with her family. “We wasted a lot of money trying to find fun things to do. On our last night, we met a server at a bar who said she did tours on the side. She could have shown us all the places to go and things to do,” she said.
Salvitti had also encountered a few other local tours that didn’t seem to have a strong connection to the breweries.
“I thought I could do it better. I was optimistic and ready to take a risk with no husband, no kids, no big responsibilities,” she said.
Salvitti wrote up a business plan and took the Business Foundations course through Mercy Corps Northwest and participated in the nonprofit’s matching savings plan. Her initial investment was $20,000 — a $16,000 loan from her father and a $4,000 loan from her best friend’s parents. “That was enough to buy a buy a bus and get my website done,” she said. “I didn’t quit my day job.”
After her first tour, she was on an amazing high after experiencing the success of her idea. But she also worked very hard in the beginning since she was the one and only employee. After seven months, she hired her first tour guide, but continued to work full-time at Hopworks for two more years.
“BREWVANA was created to provide an all-inclusive VIP access fun and educational touring experience,” she said. “We’re working with the breweries. BREWVANA is nothing without the relationship we have with the breweries. It’s our mission to support them,” she said. Because of her background as a server, she is also very focused on the guest experience. You can’t board a BREWVANA bus without smiling—the vehicles are covered in beer-centric graphics both inside and out that beckon passengers to “come join the fun.”
Brewvana has three short 14-passenger buses for the public tours, named Angel, Georgie and Lil’ Johnny, and one standard large school bus, named Pam, that seats up to 44. That vehicle is also used to shuttle people to and from out-of-town festivals like Fort George Brewery’s Festival of the Dark Arts in Astoria.
Salvitti said they got “Pam” because they spent $14,000 during the last couple years to rent buses that arrived dirty, smelly and in unacceptable condition for hosting guests. She wanted a bus that represented the BREWVANA ethic. The buses are one of the company’s biggest challenges because of the constant maintenance needs and the fact that they are all used vehicles with some pre-existing conditions.
While the buses get much of the attention, the heart of the tours are the guides. Salvitti still hosts some tours, but she recently hired four guides. Her challenge with guides is finding the right people and making their jobs sustainable throughout the year. Guides must be multitasking masters, so the training process is lengthy and complex. In addition to studying the training manual, guides learn about local history, undergo bus driving training, and then shadow existing tours before assisting and practicing with an experienced guide.
On a recent “Pacific Northwest is Best Tour” that visits Baerlic Brewing Company, Hopworks, Migration Brewing and Scout Beer, 13 of us were entertained by guides Liz Shihadeh and Kelene Stinson. The easy-going duo had an engaging routine that went from the ridiculous (they gave us the no-vomiting-on-the-bus talk) to the educational when we tasted different malts and passed around samples of hops. In the space of four hours, we became friends — sharing pretzels from our pretzel necklaces and stories about our lives.
Business continues to grow and Salvitti said that demand for private tours is stronger than ever. She also has more responsibility now that there are 10 employees, a fleet of vehicles, a husband, a daughter, a house and a dog.
“We’re proud that we have many repeat customers. On one recent tour with 14 people, six had been on a tour before, and several had been on more than one.” Repeat customers can join the Brew Veteran program.
Salvitti was recently featured on “Start Up,” a series that tells the stories of entrepreneurs. You can watch her segment at pbs.org/video/2365903935/. For tour information, check out brewvana.com.
By Kris McDowell
For the Oregon Beer Growler
With the explosion of craft beer, so too has come an explosion in beer writers who are celebrating the industry through the publishing of books, articles and blogs. One of those beer writers is Fred Eckhardt, who started tackling the subject when the founders of the craft beer industry were still homebrewing. His "A Treatise on Lager Beers" was published in the early 1970s, followed by books on beer styles and sake. His extensive career also includes writing for The Seattle Times and The Oregonian as well as magazines like All About Beer.
Before he began his writing career, he was in the Marines and one of the impacts the Bay of Pigs invasion had on him was to make him ponder life after a nuclear holocaust. According to an interview with John Foyston, Fred said, "I realized that if you could brew alcohol you would be welcome in whatever shreds of civilization might remain after a nuclear war, so I took a good homebrew recipe and made my first batch of beer." Whether he was being entirely serious or not, his early forays in homebrewing were the beginnings of a career that would impact the craft beer world for decades.
Since those early days, beer writing has gathered steam with technical books like Fred's to ones telling the stories of the folks living their brewing dreams. The stories behind how each person came to be a beer writer are as varied the number of beer styles. Brian Yaeger, who wrote "Red, White, and Brew: An American Beer Odyssey," didn't know he was going to write a book until he announced it to a classroom during the pursuit of his master’s in professional writing. Once it was out of his mouth, he couldn't take it back. And before he knew it he'd secured a media pass to the Great American Beer Festival. From there he embarked on a six week road trip across the country. He describes the book as being "about the people, less so the beer."
Brian knew he'd write a second book but it wasn't until his publisher proposed "Oregon Breweries" that he knew what it would be. As luck would have it, he had already created the outline for it during the road trip that brought him and his wife from California to their new home in Portland. After retrieving the handwritten journal, he began two years of work during which the number of breweries in Oregon was growing exponentially. In the end, he had gathered the details on 190 breweries and brewpubs and was even more qualified to show visitors around, one of the things he loves most about being a beer writer.
Pete Dunlop, author of the 2013 book "Portland Beer: Crafting the Road to Beervana" started writing for the daily paper at Washington State University during graduate school. He went on to teach high school journalism and then had a career in marketing communications before going freelance. As opposed to Brian's books that are more contemporary, Pete's book is primarily historical in nature, no doubt influenced by his master’s in history.
When asked about his favorite part of being a beer writer, he replied that, "Beer people are easy to talk to," noting as well that he enjoys being able to write about the good in the industry (and sometimes bashing AB InBev). On the flip side, he noted that making money as a beer writer can be challenging. For him, publishing articles and authoring a beer blog were steps that led up to the realization that getting a book published was an important next move to make progress in this career. He's found magazine work easier to come by after publishing his book and is looking forward to writing a second historically based book.
Newer to the craft beer world is Steven Shomler, author of the just-released "Portland Beer Stories." Before 2007 he was not a beer drinker, having tasted the "crap beer" his dad drank and hating it. It wasn't until he was filming a hop harvest that he experienced what he described as "a life-changing experience." Smelling the hops in the field, during processing and in the drying room, opened his eyes and "stupid palate" to a world he didn't know existed. Later that day, he tried his first triple IPA and a whole new world opened to him, a world that he was able to write with a newcomer's perspective. However, he was new only to craft beer, as this would be his second book, following one about Portland's food cart scene. The realization that he was not going to be able to do a comprehensive piece was his biggest challenge so instead he focused on a mix of the old (McMenamins and Widmer) and the new (PINTS and Culmination). Finding stories to write about was easy as the brewers made themselves accessible, a sharp contrast to his experience with the wine industry.
The forthcoming "The Beer Bible" by Jeff Alworth is a product of his travels during two years visiting an array of amazing breweries overseas. It wasn't something that he had planned on writing; instead it was at the request of Workman Publishing, who had turned down his pitch for another book. They were looking for a follow up to "The Wine Bible" and sent him a copy, requesting he submit a table of contents as his "pitch." It was perhaps an unconventional way of finding the right author, but Jeff "didn't have anything to lose." After all, they were approaching him instead of the other way around and so he didn't stress about it.
Workman was happy with the table of contents Jeff submitted and after more than a year in contract negotiations, Jeff began the task of researching and writing his book that is broadly divided by beer styles. Since beginning work on the book in 2011 he has accumulated countless hours of stories about brewers all over the world, facilitated largely by making contacts with importers. Some countries he could have navigated on his own, the ones where English is commonly spoken, but it was destinations like Italy where he would have struggled without help arranging visits and translating.
Unlike Steven, Jeff had been a huge beer fan for years, having downed plenty of Henry Weinhard’s back when it was big, attending graduate school in Wisconsin when New Glarus Brewing opened and producing his own beers. That background, and having written ever since he was a kid, was the perfect combination that helped him begin his writing career, which started when he took over the beer column at Willamette Week following William Abernathy's departure. He went from there to write countless pieces for other publications.
Whether you prefer shorter pieces or books, historical or contemporary topics, there's something for everyone when it comes to beer writing. The best part is that they celebrate the day in and day out work that brewers do to fill our glasses. Cheers to the pioneering writers who first took it up and those who have followed in their steps!
Beervana Buzz http://www.beervanabuzz.com/
Portland Beer Stories https://www.facebook.com/PortlandBeerStories/
At the 2015 Craft Brewers Conference, stainless steel was the order of the day for brewing tanks, bottling machines and tap systems that were on display at the trade expo. Exhibitors came from the United States, Germany, Canada, Chile, China, Italy, the Czech Republic, France, Belgium, the United Kingdom, Denmark and Spain. Photo by Patty Mamula
By Patty Mamula
For the Oregon Beer Growler
If the size of and attendance at the 32nd annual Craft Brewers Conference indicate the health of the industry, it’s thriving. The largest-ever event drew more than 11,000 brewing professionals and 600 exhibitors to Beervana in April for discussion, education, off-site events and tours.
Craft brewing continues its impressive surge. Benj Steinman, president of Beer Marketer’s INSIGHTS, said that 2014 was the fifth straight year of double-digit growth.
Craft breweries opened at a rate of 1.7 per day -- 615 for the year — with 2,051 breweries in planning stages, according to Bart Watson, chief economist for the Brewers Association. He and Paul Gatza, the association’s director, presented an optimistic outlook at the opening session.
Total sales of craft beer were at 22.2 million barrels last year. Growth of 18 percent from the previous year continues to build as does pricing, which increased 3 percent. In fact, last year was the first where case sales increased by more than $1.
To further segment the market, brewpubs are leading the growth at 20 percent with incredible diversity in the brewpub model.
Steinman in his seminar “Halfway Home? Craft Continues Climbing, but Ascent Gets Complicated” said the hottest trend in craft right now is hyper local.
As examples he mentioned GoodLife Brewing Company and Worthy Brewing Company in Bend.
There are marked regional differences across the country, with Portland being the most developed (craft is nearly half of the market here), San Diego being the hottest (craft gained five shares for a total of 30 market shares) and Florida coming in as the most underdeveloped.
The consumers’ love affair with IPA continues. Half of craft growth was IPA and 20 of the top 50 brands are IPAs.
Storm clouds are brewing. Steinman noted that the first big shifts in the craft industry happened last year with several deals and acquisitions. “Growth is still turning the industry upside down. Big brewers and big money see this,” he said.
He counted 12 deals in the past 15 months with Anheuser-Busch InBev buying up Seattle-based Elysian Brewing Company, Blue Point Brewing Company out of Patchogue, N.Y. and, of course, Oregon’s own 10 Barrel Brewing. Steinman projected himself inside the mind of A-B InBev, a $47 billion dollar company, and figured their logic was pretty simple — something along the lines of, “if you can’t beat ‘em, buy them” or even more transparent, “drop the price.”
Private equity groups accounted for six of the deals over the past year with several notable breweries selling part of their company -- Founders Brewing Co., Sweetwater Brewing Company, Oskar Blues Brewery and Southern Tier Brewing Company.
“Many crafts are starting to make real money. They can project future earning streams. They might potentially even go public. Craft is cool and investors see this and the prospect of outsized returns,” he said.
“Eventually, this could change the meaning of craft,” Steinman said.
He feels big brewers and big money are a disruptive force in the craft segment and wonders if the “soul of craft” is starting to erode.
Other concerns, said Watson, are overexpansion with the consequent issue of keeping beer in stock and distribution problems with more reports of wholesale difficulties. The U.S. Food and Drug Administration created a fuss over spent grain last year that fizzled out and mostly went away, but the big issue now is menu labeling, which is required for all chain restaurants with 20 or more outlets. The concern is that small breweries will be responsible for providing the required nutritional components of their beers.
Long-term environmental conditions, like climate change and water availability, are a concern for brewers and all food producers. “The movement of hop breeding from public to private” is another red flag, said Watson.
Although Gatza said craft brewers are the “belle of the ball” with state legislators, Steinman cautioned that craft brewers still don’t rule politics, especially not the feds, and he does not think the Small BREW Act, which seeks to reduce the federal excise tax rate on the first 60,000 barrels by 50 percent, is likely to pass.
Still, craft is well on its way to putting up another year of strong double-digit growth.
Steinman proposed a couple of things to watch. First, it’s possible that those who sell a share to private equity could, because of the infusion of cash, do even better. Second, there’s also a chance the small, independent craft brewer retains an image advantage.
Watson noted some promising trends, including an overall growth of off-premise sales at places like sporting events, growing production of sessionable beers, convenience stores starting to figure out craft and a prevailing emphasis on quality.
Stories from the print edition of the Oregon Beer Growler.