State of Micros in Oregon

[burgermeister]

Don't know if many are interested here but I thought I'd reproduce an article from the Oregonian talking about the state of the beer market in Oregon.

Oregon brews bubble while giants are flat
Thursday, March 31, 2005
JOHN FOYSTON, The Oregonian
Sales may be flat at the nation's biggest beer companies, but they continue to be frothy for Oregon's fast-growing craft brewers.
The state's predominantly small breweries sold 18.3 million gallons of beer in 2004, nearly 10 percent more than 2003, and craft brewers nationwide posted a 7 percent gain, making it the fastest-growing segment of the beverage alcohol industry.
Total sales by U.S. beer companies, dominated by mega-brewers such as Anheuser-Busch Cos., fell 1.6 percent during the year. Counting imports, overall beer sales nationally inched 0.6 percent higher.
While the biggest brewers continue to merge and consolidate and reposition themselves in response to lackluster sales, Oregon brewers and brewpubs are in many cases taking advantage of their good fortune to increase production and revamp facilities.
"It's a pretty heady market," said Jim Parker, director of the Oregon Brewers Guild. "It's extremely upbeat because all segments are up -- it's hard to find bad news anywhere."
Cascade Lakes Brewing Co. may have reported the best news of all, selling twice as much beer in 2004 as it did a year earlier.
The Redmond company doubled its production last year to almost 75,000 gallons and grew to become the eighth-biggest brewer in the state. The company also opened the Lodge, a new 6,000-square-foot flagship restaurant and taproom in Bend. It's the company's fourth pub, said partner Chris Justema. "We're really a hospitality company that happens to own a brewery," he said.
Two breweries, actually. After the Lodge opened, the company closed and razed its original retail outlet, the Seventh St. Brewhouse. When it reopened, it was freshly remodeled and bigger, plus it now has a small brewing system -- an Oregon law allows brewpubs to supply beer to only one subsidiary pub without going through outside distributors.
Even with the added production, the brewery is hard-pressed to keep up with demand these days. "When our Portland distributor asks for 100 units," said Justema, "We'll send them 75 -- they understand that we have to keep our area supplied first."
All Oregon's 70 or so beer-making facilities are considered "craft breweries," a catch-all phrase for regional, microbreweries and brew pubs that avoid generally low-cost corn, rice or sugar fillers common in mass-produced beers.
The craft segment nationally accounts for just 31/2 percent of the beer market -- Anheuser-Busch and Miller Brewing Co. spill more beer in a year than American craft brewers produce, according to the Brewers Almanac. But in Oregon, craft beers account for 11 percent of all beer sold and 38 percent of draft beer sales, the highest percentages in the country.
According to Oregon Brewers Guild figures, craft brewers directly employ 3,000 people and provide thousands more jobs in distribution, retail, agriculture and supply. All told, the guild estimates that Oregon craft brewing has an annual economic impact of $2.24 billion.
This is not the industry's first growth spurt. Craft brewing took off like a bottle rocket in the mid-1980s. But sales flattened a decade later, and the bursting of the beer bubble left some companies saddled with expensive new breweries that couldn't pay for themselves. In Oregon the shakeout led to the closure of several breweries, including Star Brewing, Nor'Wester and Saxer.
Recent growth has been more manageable, said Parker. He said he's not worried the latest increases will somehow lead to another spate of over-optimism.
"In the first boom, everybody figured the sky was the limit," he said. "Anybody who went through that time knows that there are clouds up there. There were some people with really grandiose visions as craft brewing took off. I think that everybody is much wiser now."
Gary Fish, president of Deschutes Brewery in Bend, agreed. "Thanks to that learning curve, the beer is better, the companies are better and the marketing is better now," said Fish.
Deschutes' sales grew more than 13 percent in 2004, to almost 4.2 million gallons. That number was partly the result of recent investment at the brewery to open some production bottlenecks.
Capital improvements include a new, larger German-built brewing system, upgrades to the bottling line and lab, new malt silos and 40,000 square feet of new warehouse space. Fish said that by adding fermenting tanks as needed, the company should be able to meet demand for several years to come.
Other signs of the good beer times in Oregon:
Widmer Brothers increased production in 2004 by almost 10 percent to 6.17 million gallons and brewers are brewing as many as nine 7,750-gallon batches of beer five and six days a week. "We're running at nearly current capacity," said vice president Rob Widmer.
Full Sail Brewery in Hood River recently overhauled its labels and graphics. The new look is less corporate, more quirky and, thanks to old postcard images of Oregon and the Columbia Gorge, emphasizes the sense of place that's one of craft beers' strongest selling points.
Portland-based BridgePort Brewing's production grew by 6 percent this year, to 1.3 million gallons. The brewery has bolstered its fermentation capacity and in late 2004 embarked upon a year-long $3-million revamp of its brewery pub, one of Portland's first. The makeover will include a real restaurant, an atrium, an upstairs bar and meeting rooms.
Production at Rogue Ales in Newport grew by more than 33 percent, to 1.2 million gallons. "We didn't add geography in 2004," said Rogue Ales president Jack Joyce. "International sales were down, we raised prices by 5 percent and we didn't have any new products. What's happening is that more people are taking our beer off the shelf."
Joyce said "The industry as a whole is up." He reckons that Rogue's main brewery has sufficient capacity for the next several years, and the company recently opened its second satellite brewery -- a brewpub in Eugene that joins one opened five years ago in Issaquah, Wash. In 2003, Rogue opened its San Francisco Public House, bringing the tally to four pubs and two brewpubs -- plus a micro-distillery making rum at the Portland pub on Northwest Flanders Street.
Terminal Gravity grew by nearly 30 percent to more than 72,000 gallons in 2004. The Enterprise brewery is bottling for the first time -- rather than selling only at the tap. Its draft beers continue to be popular in pubs around the state, which is why partners Dean Duquette and Steve Carper went to Northern California to buy a larger brew system and mechanical plant -- all five semi-loads of it -- from a closed brewery there.
"We had to make a decision last June whether we wanted to keep growing," Carper said, "and we decided that we did." The new system will permit the company to brew 560-gallon batches instead of the current 155 gallons. That will make a big difference, Carper said. "Right now, we must be the busiest five-barrel brewery in the state -- we did 22 brews in one recent week."
The boom continues unabated in the Portland area: Amnesia Brewing opened last year, Roots Organic Brewing Co. opened earlier this month, and at least three more brewpubs are scheduled to open later in 2005.
The New Old Lompoc Brewery in Portland has trouble keeping up with demand as it supplies its own brewpub and a sister establishment, the Hedge House, which opened in late 2003. "For the last six months, we've always been out of at least one of our three most popular beers," said co-owner Jerry Fechter.
He's been looking for space for a new, larger brewery, boutique distillery and full service bar for more than a year, but remains philosophical. "I guess if we can't brew enough beer, we're doing something right."

[old faithful]

I spent some time in Oregon recently and can attest to the popularity and quality of the craft and regional-brewed beers there. But of one thing I am sure: their beers are not better overall than Ontario's micro beers - if anything I feel ours are better because (and I don't want to get into that Headstrong beer style debate) ours do not vaunt as much the U.S. hop influence. Our beers tend to be more nuanced in the use of that hop and also use English and English-style hops to get an overall better palate. So in other words we are positioned here to have every bit as much growth as they have in Oregon if not more. I know there are differences in the market particularly in distribution but in the end that should not block public demand for craft beers (and to a certain extent they are assisted by that distribution set-up, not that I am a fan of the Beer Store system).

Gary

[burgermeister]

Yes, Oregonians and Washingtonians do tend to lean rather heavily on their hops. Given that the area is a major hop growing region, it's not surprising really. They also tend to drift away from convention when it comes to beer styles and create things very unique to the area. Their ales can't really be compared to English styles, nor can the really be compared to ales produced further east or in Southern California.

I rather doubt that Ontario will ever approach the level of Micro friendliness of the Pacific North West. Folks in the region are much more focussed on "natural" products - have been for years (lots of birkenstock wearing folks wandering downtown) and support the small guy much more so than we in the Big Smoke. They also strongly support locally produced products, be that wine or beer, both for a consumer perspective and a tax perspective. Just a more beer friendly culture in general.

[esprit]

I spent a week in Oregon last year and was incredibly impressed. One can get good craft beer almost anywhere. Even the one bar in the small Portland airport had 15 micros on tap...makes Pearson look like a wasteland by comparison. I won't get into a style debate but if you give people what they want, they will come and you can find incredible beer and incredible coffee in every corner of Oregon...when I retire, it's a place I would seriously consider.

[Josh Oakes]

I spent a week in Oregon last year and was incredibly impressed. One can get good craft beer almost anywhere. Even the one bar in the small Portland airport had 15 micros on tap...makes Pearson look like a wasteland by comparison. I won't get into a style debate but if you give people what they want, they will come and you can find incredible beer and incredible coffee in every corner of Oregon...when I retire, it's a place I would seriously consider.

Pearson is a wasteland. My carry-on bag consisted of one can of Hockley Dark and that made ME the best source for good beer in Pearson! And Oregon rocks.

[old faithful]

Where I think Oregon trumps us is in the high strength and otherwise wild and wooly beer style category - they have way more Imperial Stouts, Imperial IPA's, chile beers and other generally inspired styles. But in the circa 5% category I find our ales, certainly our pale ales and IPA's, better because that up front Cascades or Centennial taste is less common here. E.g. Josh that Hockley Dark Ale, I found nothing in Oregon as English-tasting as that, or as English even as Wellington County. I would say Elysium ESB (which locals told me is a connoisseur favourite) is more typical of the West Coast ale style with its big aromatic almost piney hops, that is a common taste (with variations of course) out there. Liberty Ale set the tone for American Pale Ale years ago and I admire Anchor but that is one Anchor beer I never really warmed to. Although I do like Celebration Ale and Red Tail Ale (of course Californian), Bridgeport IPA and the Widmer beers (generally Germanic in orientation). I liked also Lompoc's beers and in general I had to admire the craft of the small, generally country brewers, I liked in the bars ordering samplers, to see the range particularly amongst the very small brewers and I developed an admiration for their craft and dedication even though I might not choose always to order a pint of those beers.

Regarding Pearson it is just so conservative in beer choice, the food too is not that great and too expensive, so the bar just follows in being similarly uninspired. A pity, I guess when they know x number of people will go through these places it is easier to stick to the tried and true. I have never even seen Keith's IPA at Pearson and I personally do not care for the Rickard's range, the Pale Ale is an occasionaly choice but generally when at Pearson I have a Moosehead lager and Crown Royal.

Gary

[Jon Walker]

In my opinion this province is awash in medicore lagers, cream ales and tepid pale ales many of which do little to significantly distinguish themselves from the macro swill that dominates sales here. Too many brewers are playing it safe in a market that appears stuck twenty years in the past. But the problems go beyond that. Considering Toronto's population there's almost no brewpub culture, few bars with more than half a dozen true micro taps, provincial and federal laws that throttle both innovation and profitability, a populous with a general lack of desire to support local micro beers, almost no home brew culture or Brew On Premise infrastructure, a terrible beer festival that allow Macro's to not only attend but dominate the event AND rarely if ever do brewers attending offer beers that aren't already widely available (Scotch Irish and Black Oak being noteable exceptions)...I could go on. How exactly will these conditions foster "growth" in the Ontario micro market that could surpass that of Oregon as Old Faithful suggested?

Without the aformentioned factors Toronto can't suddenly become a beer mecca with the kind of significant growth Oregon has experienced. I don't care how much you like the local pale ales, interchangably taste-alike micro beer isn't going to change the growth of the micro market. Until Toronto has more than four brew pubs, a decent festival, more innovation by brewers, more support from government (less regulation and taxation) and a public desire for quality and variety this region will continue to be the very polar opposite of Oregon. I wish it weren't true but...it is.

[old faithful]

Jon, all well-expressed, but I don't agree. Our beers are (in general) as good or better than Oregon's craft offerings, and certainly are not more interchangeable than theirs. Taste is relative, I found a numbing sameness there of Cascade, "fir-accented" beers; here, someone might think our beers show a sameness but in a different way; in fact there are material differences (in both places) the devotee can detect.

We have the beers, it is the will to try something different (amongst the larger population) that is slower to follow than their example - but it will come, we are getting there, but more slowly..

Gary

[Beer Geek]

few bars with more than half a dozen true micro taps

rarely if ever do brewers attending offer beers that aren't already widely available

Jon I think you may be contradicting yourself here.

I would agree with Gary, we’ve got some amazing beer and people are slowly coming around. All we have to do is look at the five Good Beer Festivals that are doubling in attendance every year. I agree that the Fort York festival is macro dominated, but the Winking Judge sells out two festivals a year, sounds like the C’est What? festival the other night had a line up at the door. The Winking Judge is advertising “14 breweries unveiling their new beers” for their upcoming festival. I think the industry is turning a corner and we all need to keep supporting this growth, not running it down.

[Rob Creighton]

No doubt that the Ontario micro scene started differently than in any State of the Union. Frank Heaps (Upper Canada), Jim Brickman (Brick), Evan Hayter, Allen Sneath (Algonquin) and John Sleeman all started breweries targeting growth to over 100 000 HL. The US brewpub scene controlled micro growth simply because a commercial brewer could create cash flow through having a bar/restaurant. Cashflow is important. Portland is a classic example of pubs that grew wild. Every one I visited there had a feel of brewpub gone mad including Widmer and Portland Brewing.

As to beer styles, their devotion/loyalty to hops is a bit overwhelming. After a week, my tongue and lips were hop burnt and swollen. While waiting at the airport on the way out I had an Alaskan Amber which was balanced and truly a relief. I think the US growth pattern makes for more individuality but Ontario has provided a number of small breweries over the years and some have survived even without the cash support of a pub.

Our most unique products come from small business' taking big chances. That doesn't mean that Brick or Sleeman can't survive making discount beers.

[Jon Walker]

Well, you guys are loyal I'll give you that. But your arguements ignored the basic premise of my point...Ontario is a very unsophisticated market with little innovation and risk taking, hampered by a restrictive government that stifles both innovation and profitability. Oregon is hop centric...agreed, but they still have a diversity and an adventure about their business models that eludes most, if not all, micro brewers in this province.

A friend of mine once described the difference between the Canadian business model and the American...and I think it applies here too. In Canada we like to invest a dollar in a low risk account in the hopes that the interest rate means we make five cents over a year. In America the business ethic is to GAMBLE the dollar. You might lose it but you might also make $5 for every $1 you gambled. Herein lies the difference...who is really trying to gamble on breaking new ground and opening the very conservative beer maket in Ontario to new and unique beers? There are very few and without support from the general public, government and the bar and restaurant establishment that isn't likely to change any time soon.

I never argued that good beer wasn't being made here at all, I simply feel this market will never be Oregon in terms of growth until some very important factors shift at every level.

[Manul]

I am not even sure why this discusssion is taking place. Most of the Ontario ales are NOT american style. They use different hop combinations, as you said they are generally lower in alcohol. As for quality comparison, it's a matter of preference. I tried every single Ontario beer and every time I end up in California and Oregon I feel sorry I live in Toronto. Then look at the prizes won by these west coast breweries at different competitions and compare... We just have Unibroue, basically... And Jon you're right, the lack of innovation and the profitability issues are dominating our beer scene right now. We have LCBO and an ignorant consumer to thank for that.

[Josh Oakes]

I am not even sure why this discusssion is taking place. Most of the Ontario ales are NOT american style. They use different hop combinations, as you said they are generally lower in alcohol. As for quality comparison, it's a matter of preference. I tried every single Ontario beer and every time I end up in California and Oregon I feel sorry I live in Toronto. Then look at the prizes won by these west coast breweries at different competitions and compare... We just have Unibroue, basically... And Jon you're right, the lack of innovation and the profitability issues are dominating our beer scene right now. We have LCBO and an ignorant consumer to thank for that.

Ten years ago, San Diego was a beer wasteland. Now everybody knows the names of their breweries. Five years ago, would you have pegged that Hamilton would be the driving force behind the hoppiest beers in Ontario? It is not a matter of "sophistication", it's a matter of giving people the push. The so-called ignorant consumer is an excuse used by risk-averse breweries to justify their timid products.

The LCBO and other effluvia of the legislator's mind, on the other hand, are legitimate obstacles that can stymie the best in the business. But, you've got to play with the hand you're dealt, unless you can convince the dealer otherwise (like enforcing kickback laws and eliminating the unibottle policy).

[Rob Creighton]

[quote="Josh Oakes]The LCBO and other effluvia of the legislator's mind, on the other hand, are legitimate obstacles that can stymie the best in the business. But, you've got to play with the hand you're dealt, unless you can convince the dealer otherwise (like enforcing kickback laws and eliminating the unibottle policy).[/quote]

Yup, our system is a big hassle but God - or whoever Pope Benedict XVI supports - forbid that we ever end up with a US styled 3-teir system...it blows and has no logic! The LCBO & TBS are just easier targets for our wrath!

[midlife crisis]

We just have Unibroue, basically

I think that's a bit over-dramatic. We also have Mill Street, Black Oak, Scotch Irish, King, F&M and Durham making some very very fine beers. First rate brew pubs in Toronto (Granite) and Burlington, too.