Acquisition marks another example of mega-brewers trying to counter declining sales
BEND, Ore.—The Facebook page of a local brewery lit up with condemnations: Loyal beer drinkers said the brewers were greedy “sellouts.” Some fans threatened to boycott the brand. One declared he would stop wearing a T-shirt promoting the beer.
What did the brewers do to provoke such a backlash? Change the hops or yeast? Abandon a favourite ale recipe?
Nope. The furor erupted after 10 Barrel Brewing announced last month that it was being bought by the world’s largest brewer, Budweiser and Bud Light brewer Anheuser-Busch InBev, to the horror of craft-beer enthusiasts.
The acquisition was another example of mega-brewers trying to counter declining sales by tapping into the growth of small craft breweries. And it drew the ire of devoted customers who blasted the corporation as an enemy of the craft beer industry and “the worst guys in the game.”
People in and around Bend take their beer seriously. Since its first craft brewery opened in 1988, this city of 80,000 has grown from a struggling timber town to a trendy destination featuring skiing, golf, fly fishing and mountain biking, all of which can be capped off at the end of the day with a fine, locally brewed craft beer.
The city and the surrounding area now claim nearly 30 breweries, many with owners looking for fulfilment in the beer, not the bottom line.
The owners of 10 Barrel, twin brothers Chris and Jeremy Cox and Garrett Wales, say Anheuser-Busch was already handling their distribution. The idea of selling their operation came up over a few beers.
They promise nothing will change.
“We are really good at some things, like brewing cool beer and having fun,” Chris Cox said. “Other things, businesswise, we are not so great at. So it’s going to be a great partnership.”
Terms of the deal have not yet been disclosed.
Along with the criticism, the brewery’s Facebook page also offered sincere congratulations from fans happy to see a local institution strike a lucrative deal.
While nationwide beer sales declined 1.9 per cent last year, craft beer sales rose 17.2 per cent, according to the Brewers Association, which represents craft brewers. The industry’s two giants, Anheuser-Busch and MillerCoors, have lost a total 20 million barrels in sales since 2008, said Bart Watson, an economist for the group.
Anheuser-Busch craft beer CEO Andy Goeler said the company wants 10 Barrel to “continue to do more of what they are doing” and praised the brewery’s “amazing portfolio of beers.”
Other brewers are wary, especially in Oregon, which has 181 breweries and where craft beer accounts for 40 per cent of beer consumed _ tops in the nation. They’re especially leery in Bend, where the town’s beer-themed creation story is recited by native and newcomer alike.
Located in sunny central Oregon and framed by the snow-capped Cascade Range, Bend was laid low in the 1980s by logging cutbacks to protect the northern spotted owl and salmon.
Gary Fish was a California restaurateur looking for a new cool place and landed in Bend. He opened a brewpub in 1988 that quickly became the after-fun place of choice. It evolved into Deschutes Brewery, Bend’s biggest, producing more than 300,000 barrels of beer in two dozen varieties. It distributes coast to coast.
10 Barrel started out with a bar on the outskirts of downtown. In 2006, its owners started a small brewery under the motto: “Brew beer, drink beer and have fun doing it!”
Their beers became a hit, and their new brewery produces 42,000 barrels sold in Oregon, Idaho and Washington state. Their pub on the trendy West Side of Bend turned into one of the hottest spots in town, where people wait 90 minutes for a chance to sit at the bar watching the snow gently falling through an open garage door behind the bartender. They also have a pub in Boise, Idaho, and another opening in Portland’s hip Pearl District.
“The craft brewers came to the rescue of beer in the world,” said Larry Sidor, who served a stint as brew master at Deschutes, then started Crux Fermentation Project, where he is experimenting with extreme strains of yeast, hops and other ingredients. The acquisition deals “are really about trying to make beer a commodity again. They are sucking the life out of the brands.”
But as the craft beer market matures and the original brewers get older, Fish said he expects many to look for someone—even a giant like Anheuser-Busch—to take over.
“I think you’re going to see more of this for sure,” Fish said.
Anheuser-Busch made two earlier craft acquisitions: Goose Island Beer Co. in Chicago and Blue Point Brewing Co. on Long Island, New York. InBev also has a one-third share in a Northwest group that produces Red Hook, Widmer and Kona beers.
Philip Gorham, a senior equity analyst at Morningstar Inc., said he expects the portfolio of multination brewers to eventually “look like a patchwork quilt,” with different brands for different markets and more national distribution.
In Bend, Patric Douglas sipped a Deschutes Jubelale at Crow’s Feet Commons, which sells beer, bikes and snowboards. He said the entrepreneur in him cheers 10 Barrel’s success. The beer lover in him worries.
“If we start selling our identity whole cloth, we are going to lose it,” Douglas said.