Rob Widmer provided his assessment of changes in the brewing industry during the last 30 years. His take on brewery acquisitions: “Make sure you’re making the decision that you’re still making the best beer that you can. That’s what we’ve done. Haters gonna hate. Whenever I’ve had the opportunity to explain the relationship to A-B, I rarely have anybody walk away with a continued negative attitude.” Photos courtesy of Widmer Brothers Brewing
By Anthony St. Clair
For the Oregon Beer Growler
Oregon’s brewing industry is changing faster than ever, and few people have seen as many changes as Rob Widmer, co-founder of Widmer Brothers Brewing in Portland. In this conversation, Rob looks back to his early days with his brother and fellow co-founder Kurt, discusses the industry and looks ahead.
Q: It’s been 30 years since you and your brother introduced Widmer Hefe. What has kept you engaged in this industry all these years?
A: Kurt and I started as homebrewers. It’s been our love and passion for brewing. For me, that extends to how I love pubs and pub culture. I enjoy the people who drink beer. I haven’t lost that love and passion for beer. It’s one of the things that makes life worth living.
Q: Is the bubble going to burst, or is there enough market for growth to continue?
A: Things were so different when Kurt and I started in the ‘80s. The term craft beer hadn’t been coined. No one knew brewers or homebrewers. People didn’t talk about style. Now there are people who never knew any other time. It’s amazing to me. Back in 1985 when we were trying to sell beer, at first pub owners thought it was illegal. Second they thought it would make people sick.
It’s a great time to be a beer drinker. Oregon is probably the best place in the world to live if you’re a beer lover. You can get examples of any style you can imagine. The pace of breweries opening has actually been accelerating. There’s a ton of run room for people, maybe not so much in the Pacific Northwest, but where people haven’t been introduced to it before.
Q: If you and Kurt were starting now, what would you do differently?
A: There’s always going to be room for a small brewery: nano, less than 10 barrels, with a pub. If you were trying to start a larger size, you’d have to have something pretty special or it’d be a tough go. The farther we got from Portland in the ‘90s, the harder it was to get distribution. The Anheuser-Busch arrangement is how we solved it. It’s a distribution agreement, though people have tried to paint it negative things.
People ask if I thought it could grow like it did. I say that our original plan in 1984 — 10 pubs pouring our beer and had our own tasting room — was to sell enough beer that he and I could make a living in Portland.
There were things we needed: really good people, we did that. We had to have excellent brewing, we did that. We had to have access to capital, we had that. But one of the things key to growth was access to market. Distributors are the unsung heroes of the beer business.
Q: What would you say are the top three most notable changes in the industry this year?
A: In no particular order:
Ballast Point selling for a billion dollars. That was breathtaking. It’s an indication of how hot the industry is.
The acceleration of brewery openings.
The retirement of Kurt Widmer was a pretty big deal, at least for me.
Q: Since your brother retired, how has your day-to-day work changed?
A: It really hasn’t. He was doing his thing, I was doing my thing, and that just continued. Where I bring the most value is to be out in the trade, as we say, and that goes back to how I love pubs, I love drinking beer with people, and I get to do that. It’s an important part of my job. There aren’t a lot of breweries where the founder still gets out, and I like to do that. When Kurt retired, I said, “Don’t expect me to work overtime. I’m one of the industry elders at this point. Take it easy on me.”
Q: How has CBA evolved over the years?
A: Being too big for your britches is something that we’ve been hearing since back in 1986, when Hefe was taking off. But growth enables you to do things, like attract really talented people, get better training for your staff. Growth enables you to afford really great equipment, all those things.
As CBA has evolved, we’ve grown and I couldn’t be more proud of the crew we have — our breweries. If it was still me and Kurt, jumping in and out of tanks, I don’t think I could physically do that anymore. I don’t try to lift kegs anymore. CBA has really been awesome. Brewing on a small scale is really physical. I don’t know any brewer who doesn’t want from growth the ability to do things like automate, get a forklift, ease the physical side.
Q: Advice for new breweries?
A: Make sure your beer is good. Don’t put out anything you’re not proud of.
Q: What do you want the new Innovation Brewery to accomplish?
A: We had a small 10-barrel brewery in the Rose Quarter in 1996. Every brew then was an innovation. The Rose Quarter brewery was 20 years old, worn out and it was difficult to operate, a half-mile away.
Innovation has been the essence of craft brewing and at Widmer since we started. I like to remind people that beers like Hefe blew people’s minds in 1986. No one had ever seen a cloudy beer or cloudy wheat domestically. A lot of what we’ve done over the years has been overshadowed by Hefe. We were one of the first to do hop-forward beers, Cascadian dark styles, but Widmer and Hefe are so synonymous that it can be hard for people to think of us as innovative.
Q: Why did CBA decide to pursue contract brewing with Anheuser-Busch breweries?
A: We wanted to have that door opened should the need arise. For Widmer specifically, we just completed a major expansion in Portland. We have a lot capacity to do Widmer beers and do them here in our backyard.
Over the past 20 years, we’ve taken a lot of heat for our relationship with A-B. A lot of breweries see the large breweries as the enemy. We see them as fierce competitors, not enemies. I’m pretty beer geeky, but there are times where I like to have a domestic lager. I admire how well they’re made.
Sometimes people find it fashionable to bash the large companies. Any kind of negativity around beer is a bad thing. Beer is a positive thing that brings people together, and that’s the spirit that should pervade the industry.
Q: What is your advice to breweries as they weather negative feedback from the public when their brewery is bought by or takes investment from a larger brewery?
A: Make sure you’re making the decision that you’re still making the best beer that you can. That’s what we’ve done. Haters gonna hate. Whenever I’ve had the opportunity to explain the relationship to A-B, I rarely have anybody walk away with a continued negative attitude.
Our deal was strictly about distribution. They’ve never been able to tell us how to brew, what to brew, how to market. It’s a quirk in our society that big is bad. But when you pursue people on why it’s bad, it becomes an emotional thing, and they can’t put their finger on it. But then they’re carrying an iPhone, drive a Toyota and are wearing Nikes.
The good news is that beer is really emotional for people. It’d be worse if people didn’t care at all. We’re still doing what we were doing in 1985. There hasn’t been any boogeyman. I met some of the top folks at A-B InBev here in the U.S. They’re like us. They love beer, they love to learn, they’re really nice.
Q: What is one of your favorite fall beers?
A: A lot of my favorite beers right now come from the homebrew community. Homebrewers set the stage for what’s coming.
Q: What are some of your outlooks for the industry?
A: This infatuation with hops is peaking. The next big thing is people are going to discover the flavors of malted barley, and it’ll be coming back to helles, pils, and styles like that. I’m seeing that in the homebrewing community.
Q: What are some things in the works for Widmer?
A: After 30 years, I’m still working on getting people to pronounce Hefe correctly. [Editor’s note: it’s “hay-fuh,” by the way].
A discussion on brewery distribution took place during Portland Beer Week in June. Panelists included (from left to right) Derek Hass from Columbia Distributing, Eric Banzer-Lausberg from Migration Brewing, Marty Ochs from E3 Craft Strategies and Bob Repp from General Distributors. Photo by Patty Mamula
By Patty Mamula
For the Oregon Beer Growler
Any brewer who’s considering distribution needs a solid plan, said Derek Hass, director of craft and import at Columbia Distributing. Hass was one of four panelists at the “Distribution: The Struggle is Real!” workshop, held at The Labrewatory in Portland during Portland Beer Week in June.
More than 40 people crowded into the brewery testing lab and bar to get the inside story on distribution. About half the brewers there were self-distributing, while others had a distributor or didn’t distribute at all. Several were in the planning stage of a brewery and four of them were anywhere from a few months to a year away from opening.
Panel moderator Marty Ochs was the vice president of sales at Ninkasi Brewing Company and now heads up E3 Craft Strategies to help startups with marketing and distribution.
Ochs works with 10-15 breweries a year. “Not one has an operating budget,” he said. “You can’t go to market if you don’t know what you’re going to spend when you go to market.” He emphasized that brewers should conduct a thorough market survey when considering entry into a new market. “Spend weeks, months figuring where you want to sell, what the competitions looks like, determining a budget.”
Bob Repp, vice president of craft/specialty beverage for General Distributors, also stressed the importance of planning. “What’s your budget? Capacity? How will you differentiate your brand? When looking at opening a new market, vet the distributor there. Go out and talk to buyers at bars and retailers,” he said.
Eric Banzer-Lausberg, co-owner of Migration Brewing, represented the small, independent brewer and self-distributor. “We opened in 2010 without a budget when the economy was shit. We did all the buildout ourselves. We knew we could succeed and our beer got better and better. After a year or so, we started to distribute kegs in an old 1983 Mercedes with a door that didn’t work. It was an exciting time because it was our own beer and our own investment in distribution,” he said.
Ochs asked Hass and Repp, “How do you walk new breweries through the process, step by step?”
They said there was no formula, no handbook.
Hass said, “Every brewery we talk to is a different situation. You might have good beer, but shitty packaging or vice versa. We help you navigate the waters of the beer business.”
Repp said, “Know what your distribution and volume goals are. Do you want to be mainstream or entry level? What does success look like for you?”
Migration’s Banzer-Lausberg said, “Know who you are and where you want to go. Everyone was chasing IPA when we started. We decided to make pale ale our niche. That was our starting point. We focused internally and worked on the pub first and self-distribution second.”
Ochs said there’s a perception you’ll make tons of money self-distributing. There are, of course, advantages but also some disadvantages. Pros to self-distributing are close control of product and message, said Repp. “You can control all aspects, including when and where you will grow. And you retain your margins.” Cons are trucks, storage, cash, accounts receivable, liability, kegs and the labor to move them around. “When you’re brewing and distributing, you’re running two breweries. Still, if your goal is hyper-local, go for it,” he said.
Hass agreed and said that the mechanics, the delivery and the labor all cost money. With distribution you lose some — around 30 percent — but that’s the cost of doing business.
The watchword for the group was planning.
Ochs said, “Come to a distributor with a plan, a vision. Be honest about it. What support tools do you have? Ask what you might be missing? Tell me what you’re looking for in a brand.”
Repp said, “Know what your pricing will be. Know how much your beer costs to make. Take that pricing and build a calendar of brands with several seasonals and one-offs. Communicate to the distributor what the release calendar looks like. What incentives will you use to get the sales reps to sell your beer?”
“Know your business. We won’t be experts on your business,” said Columbia’s Hass.
Migration’s co-owner told participants the beer has to be good when building your brand. “Do not send out mediocre beer. Make sure you have ingredients. Hops. Everyone wants Northwest hops. You have to secure them now. We have ours contracted for five years. Yes, it’s scary to think this is what we’re going to make for the next five years. Cooler space is crucial. If we have a bad week of sales and don’t have cooler space, we’re in trouble. If we brew and keg it, we have to sell it.”
Sales and distribution is connected to everything, said Ochs. “Know what success is to you. Oakshire Brewing was going down a rabbit hole for eight years. Then they realized they didn’t want to be Ninkasi. Get to the level that’s right for you. Volume is not the metric. It’s about the gross profits that you bring in on the beer.”
The final tip, and maybe the best in keeping with the adage of saving the best for last, was to invest in your brand. Hass said, “Invest like you want your distributor to invest in you. Put some feet on the street.”
Ochs elaborated on this idea. “The brewery’s job is to create customers at two levels, the end consumer and the retailers.” He advised hiring someone to make marketing calls.
Hass described this as a partnership. “We need you, the brewer, to educate — to tell the story. That way you can tell the distributor that the bars want your beer. The customers want it.”
As the craft beer field becomes saturated with more and more choices, it’s increasingly important to find ways to stand out in a crowded field. Working with your distributor to market your beer will help you both sell more beer.
Q: As a brewer in Portland, why would I make another double IPA?
Migration: Because they sell. IPAs sell 4 to 1. That’s why we do it.
Columbia: Do we want more IPAs? Not necessarily. We don’t want to sell an IPA-only brewery. We can’t predict the future and it’s tricky to know. Not a lot of breweries have a flagship beer that’s an imperial expensive IPA.
General: Find your niche. Everybody comes to us with IPAs. We’re a small distributor. We work with 50 breweries now. Bar owners now are looking for sessionable beers.
Moderator: Don’t follow the market. If you’re following the market, you’re too late.
Q: Can you do some self-distribution if you have a distributor?
Moderator: Yes. Your agreement with a distributor might define an area that you want to self distribute and the area you want them to distribute. Ninkasi self-distributes in Eugene. You can have distribution by county.
Organizers of the Selfie Fest Road Show gathered with brewers at Untapped in Portland in June. The series of events is being held to highlight smaller breweries who self-distribute. Pictured, from left to right: Rik Hall, Baerlic Brewing; David Lederfine, Awesome Ales; Jim Parker, Selfie Fest organizer; Ben Parsons, Baerlic; Alex Kraft, Feckin Irish Brewing. Photo by Jim McLaren
By Jim McLaren
For the Oregon Beer Growler
Traffic on North Interstate Avenue in Portland was crawling through a light drizzle when a guy on a Vespa motor scooter jumped the curb and squeaked to a stop on the sidewalk in front of Untapped, a self-described “craft beer fill house.” Sliding off the scooter, he pried the helmet from his head and headed for the door. Once inside he stood back from the bar and began scanning the big board menu hovering over 38 tap handles. He wasn’t paying any attention to the two guys sitting at a high-top table talking to a writer. And he wasn’t there for the Selfie Fest either.
Ben Parsons and Rik Hall are both wearing short-billed, black bicycle caps with Baerlic Brewing Co. logos. They’re the owners and they know something most people ignore: Oregon’s craft beer explosion is not just about making beer. It’s also about DISTRIBUTING beer.
“It’s a really big story,” Hall says, “but it’s one people don’t really focus on. They see a beer, they like it, they drink it, regardless of who distributes it.” While Parsons nods in agreement, Hall continues, “to us, self-distributing is part of the craft of beer.”
Self-distributing? Part of the craft of beer? Get comfortable and let me explain. Once Oregon craft brewers learned how to make good beer, their next problem was how to get it to you. Under the old three-tier distribution system, beer went from brewery to distributor to retailer and then you. Like most economically productive systems, this one was efficient, but also stifling.
Distributors often tried to influence what a brewer made because, they claimed, they knew best what would sell. The brewers listened because the law did not allow them to go out and fight for the limited space on store shelves or in taverns with limited tap handles.
In 2001 things began to change with a strong lobbying push for a series of bills defining who could distribute beer. Jim Parker, former executive director of the Oregon Brewers Guild explains, “The first nod went to breweries with very small production, up 500 barrels a year. The next session the limit was pushed to 1,000 barrels. The law now allows self-distribution for breweries making up to 7,500 barrels per year.”
The self-distribution law has democratized the beer industry. Big distributors still sell the most beer, but smaller breweries with hustle can work their way into places like Untapped. Owner Lisa McArthur says the benefit is that “their beer doesn’t get lost in the portfolio of the big distributor reps. It’s nice that they [small brewers] come in and tell me about their beer. And it’s nice dealing directly with the breweries. You get to know them, you kind of get to know the brewery’s personality … so yeah I like getting to know them.”
This past March, the Imperial Bottle Shop & Taproom took a chance on something else coming from a small brewery — the Selfie Fest Road Show. It was Jim Parker’s idea to draw attention to small beermakers who build their business on a foundation of self-distribution. Parker works for Baerlic Brewing, a five-person operation.
“They make the beer, they sell the beer, they pick up the empties,” Parker says by way of explaining long hours and a weak social life, “in that way people will begin to think about the small, independent breweries doing everything by themselves.”
The Selfie Fest, which went to the Uptown Market in April but was canceled in May before resurfacing in June at Untapped, is designed as a tap takeover by several breweries at the same time. Alex Kraft of Feckin Irish Brewing Company favors the concept.
“It’s cool to have these beers together. It’s not the easiest way to go, but in the long run it can help small brewers who want to go their own way. In the long run it can help a brewery — being self-distributed, you don’t have to brew a specific thing because the distributors told you we want you to make this particular style. Half of the fun of brewing is just trying something out.” Kraft doubts a large distributor would have taken a chance on Feckin’s Top o’ the Feckin Mornin’ porter. Now it’s a mainstay of what the 3-year-old brewery sells.
About that point during the interview, a few people wandered into Untapped. They’d gotten off work, survived traffic jams and were looking to relax. But because this was not a standard meet-the-brewer event or tap takeover, they didn’t seem aware of what was going on — the Selfie Fest.
Ben Parsons says social media hasn’t caught up with a selfie that isn’t about taking a picture. “This is an uphill battle because most people just don’t understand distribution. It is a very complicated thing. But I would argue that the beer industry is more about distribution, about power and quantity. We’re trying to celebrate the revolution”.
“I listen to my customers” says Lisa McArthur. And while those customers might not be ready for a Selfie Fest or understand distribution systems, they unwittingly appreciate what it’s done for beer. Lisa continues, “Being a small neighborhood bar, we get a lot of repeat customers, so customer recommendations I take very seriously. I’ll throw a keg on and see how it goes.”
The sun has followed the afternoon drizzle and more people are stopping in on their way home from work. Walking away from the bar, the motor scooter jockey tucks a small growler into his messenger bag, pushes his way through the door, squeezes his head into his helmet, climbs onto his scooter and fires up the hidden engine that powers him down the street.
The next Selfie Fest stops will be at McMenamins 23rd Avenue Bottle Shop in Portland in July and then Oregon City Brewing Company in August.
Lawyers Anda Lincoln, left, with Lincoln Law Office in Fort Collins, Colo., and Melinda Sellers with Burr and Forman in Birmingham, Ala., presented information about selling beer, working with distributors and keeping things legal in their seminar at the Craft Brewers Conference, held in Portland in April. Photo by Patty Mamula
By Patty Mamula
For the Oregon Beer Growler
The 2015 Craft Brewers Conference, held in Portland in April, covered virtually every aspect of craft brewing and brought in people from every state, the District of Columbia and Guam, and 54 countries. The global reach and appeal of craft beer was evident. The numerous seminars were equally as diverse. Two presentations neatly bookended the spectrum of topics.
Steve Parkes, owner and lead instructor at the American Brewers Guild, presented a session entitled “Going Pro: Making the Transition From Home Brewing to Professional Brewing and the New Challenges That Await.”
Anda Lincoln and Melinda Sellers, lawyers from Fort Collins, Colo. and Birmingham, Ala., respectively, presented a session called “Can We Do That? Common Questions Facing Brewery Owners in Working With Retailers and Wholesalers.”
With an introductory disclaimer that he was NEVER a homebrewer, Parkes drew on his early brewing experience in the U.K. before coming to the U.S. to “join the revolution.”
“Homebrewing is a hobby. Craft brewing is a business,” he said.
He emphasized the importance of mastering the craft -- of taking the time to learn how to brew a style and become consistent at brewing high-quality beers. “John Coltrane took years to master his craft,” said Parkes, referring to the legendary saxophonist. “Don’t rush. Master a balanced, clean pale ale.”
There are numerous avenues to getting a job as a brewer, including formal brewing education, education in science or engineering, internships, volunteering (which he finds is all too common today) and moving up from assistant to brewmaster at a new pub. “Breweries are opening too fast for startups to find trained and educated brewers,” he said.
He recommended several ways to learn about brewing. Visit breweries to stay apprised of the latest developments and network, join the Master Brewers Association of Americas and state guild, read books and judge tasting contests.
Two of the biggest challenges when transitioning from homebrewing to professional brewing are ingredients and scale. “Going from a 5-gallon homebrew to 30,000 gallons is a 100-fold increase,” he said. “Current recipes use ingredients that may not be available in large quantities or economically.”
For example, the barley and malt market is global and a drought in Russia or a storm in Germany can affect a brewery in Wisconsin. The increased demand for aroma hops due to craft beer’s rise in popularity has created a tight market for some varieties, such as Cascade, Centennial and Simcoe.
Parkes hit on the importance of quality and mastery repeatedly, especially noting clarification and carbonation issues. Consistency and quality go hand in hand and are facilitated by record keeping, possessing the proper tools and instruments, accessing a working laboratory and acquiring education and training.
Once an experienced and dedicated homebrewer does go pro and has spent a solid amount of time in the beer trenches, perfecting and mastering his or her beer, it might be time to branch out and sell to retailers and wholesalers.
Anda Lincoln and Melinda Sellers said that any relationship with a distributor begins with “The Agreement.” They advised developing a complete, detailed and specific written agreement. “Build reports, delivery and payment into the agreement as well as quality standards in shipping, storage and delivery.”
The brewery needs to emphasize how the product is to be handled, Lincoln said. This is where it’s important to be very specific and detailed. List which product cannot be sold past a certain date. Put the rotation schedule in the agreement. Wholesalers don’t want to receive product that will be out of date within two weeks.
A question was asked about wholesalers not following the rotation schedule, even if the wholesalers claim they are trying to fix the problem by implementing a new system. The answer, said Sellers, is not black and white. “It’s a relationship, an ongoing relationship, like a marriage,” she said. Her advice was to check out state law and get a good lawyer. “Go to them early on and have them help you save the relationship.”
Instead of relying on email or even certified mail, she suggested the ideal route to communication was to get your brewery people into the warehouse and walk through it together. Another strategy she suggested was visiting accounts in tandem and detailing what you want to happen at events and tastings -- spell out all expectations to the distributor. For example, one of Sellers’s clients was starting business in a new area of the country. The brewery was afraid that the distributor might place them in an event they wouldn’t want to take part in, so they asked for prior approval.
In dealing with retailers and self-distributing, Lincoln asked, “What can you incentivize them with? What is legal and what isn’t?” Draft beer sales can involve equipment, tap handles, glassware, kegs and line cleaning. Check and see what is legal to provide, she said. Be aware of what your state allows and any other state you may be going into.
“Wholesalers, how many of you have been involved in contests by manufacturers where top sales won a trip?” she asked the crowd. It turns out, that’s usually illegal. Some states allow you to give T-shirts and caps and others say you have to charge for them. There are also rules on signage. Certain point-of-sale merchandise and materials are not allowed, such as coupons.
The best defense, to steal a sports analogy, is to have a good offense. Know the legal restrictions in your state and/or region and record keeping requirements.
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