By Gail Oberst
Oregon has nearly 140 craft breweries. But Nov. 5, when officials from one of those breweries announced they are selling to international brewing giant Anheuser-Busch/InBev, Bend-based 10 Barrel Brewing Company set social and traditional media on fire. The sale will be final by the end of the year.
The announcement by owners and founders Chris and Jeremy Cox (twin brothers) and Garrett Wales was followed by “expert” opinions locally and nationally. Wall Street experts sought to advise investors on what A-B/InBev was up to. National statistic geeks tried to ferret out trends reflected in the sale. Fellow business owners suggested 10 Barrel’s owners were just being smart. Others felt betrayed.
The owners indicated 10 Barrel’s success since they began in 2006 exceeded their own expectations – and management abilities. In a video announcing the sale of 10 Barrel, Wales and the Cox brothers admit they are good at making and drinking beer. But they said they are not good at a lot of things that a growing brewery needs, some of which includes administrative functions from packaging and distribution to employee benefits and making quality videos.
Despite recent administrative struggles, 10 Barrel’s brewers continued to produce award-winning beers. Most recently, the brewery won three medals at the renowned Great American Beer Festival for its Cucumber Crush (gold) and bronze medals for both Amber Waves and P2P.
A-B/InBev officials have deferred to 10 Barrel’s former owners, who responded to questions about the impact of the purchase on brewery jobs in Oregon, on plans to expand to Portland, and on the quality of 10 Barrel beers that inspires passionate reaction from fans.
10 BARREL’S FUTURE
Portlanders have been anxiously watching construction of 10 Barrel Brewing’s new Portland brewery and pub in the Pearl District, but does the sale of the brewery put this on hold? Absolutely not, said Wales: “We're on track for a mid-winter opening for the Portland pub,” he said. The 6,229-square-foot space at 1411 N.W. Flanders St. will have seating for 150 people and will reportedly employ more than 80 people. Nov. 7, the brewery announced it was hiring Whitney Burnside to be the Portland location’s brewer. Burnside has been Pelican’s specialty brewer.
Jeremy Cox also said that there won’t be any personnel changes at the Bend or Boise facilities in the near future. “The team is staying the same,” he said.
Might there be an increase in production at any of the 10 Barrel facilities in the future? Jeremy Cox said that keeping up with current expansion plans is about all they can handle. "It's business as usual for us right now. We've been growing fast over the last few years and we're staying focused on continuing our growth while keeping our distribution focus here in the Pacific Northwest,” he said.
Meanwhile, the affiliation with the larger company will have its advantages for the brewers. "You tell Jimmy, Shawn and Tonya that they have access to unlimited hops and the best of the best malt and see their faces light up. We're really excited about the opportunities this partnership will provide for all our team,” said Garrett Wales.
Cox had a few words for those who fear that 10 Barrel will lose its Northwest quality and flavor. "We're still brewing our beer here in Bend, our families are here in Bend, our employees all live and work here in the community and we're not going anywhere. We definitely still consider ourselves a local Bend brewery,” he said.
A-B/InBev is a Belgian-Brazilian multinational brewing company headquartered in those two countries. Although it is most often affiliated with Budweiser products in the U.S., A-B/InBev’s international owners claim a brewing history back to 1366 through its Belgian merger with Artois, as in Stella Artois. A series of mergers created InBev, the world’s largest beer company in 2004. In 2008, InBev bought Anheuser-Busch, further expanding its holdings. Today, nearly half of all beer products sold in the U.S. are owned by A-B/InBev. Bud, Corona, Michelob and Beck’s are all part of the A-B/InBev family.
Despite the craft beer craze (which it has apparently joined), the company is doing well. According to New York Stock Exchange reports, as of mid-November, its stock was listed at $87 per share, up from $35 per share four years ago. For the quarter that ended in October this year, the company earned $12.24 billion – times that by four for an approximate annual income, and you’re talking real money.
Even with climbing profits, the company is not selling more beer, according to A-B/InBev’s October report to its shareholders. Volume had dropped last year throughout the company’s holdings by nearly 3 percent, and this quarter, volume sales were nearly flat worldwide. The biggest volume drops among company labels recently were in North America and Europe, where small craft brewery beer sales are climbing. But is a drop in volume a problem for the company that sells nearly a third of the world’s beer? Stock prices in November took a tiny dip, but in the long run, probably not.
Owners are reassuring, but fears abide that small breweries bought up by large corporations often disappear. Macro Trend Investor writer Charles Sizemore, a self-described proponent of these kinds of buyouts, suggested 10 Barrel’s brand could go the way of George Killian’s Irish Red and Shiner Bock, both bought out by large beer companies before they disappeared.
“Could BUD and the rest of Big Beer take a page out of Warren Buffett’s playbook, buy a craft beer brewery outright but leave its management in place and maintain a low profile? Maybe. But it’s hard to see regional microbrews having much of an impact on the bottom lines of companies with tens of billions in annual sales,” said Sizemore.
Paul Gatza, director of the Brewers Association, sees the purchase as a sign of the times. “With middle-of-the-country Goose Island, Long Island’s Blue Point and now Bend and Boise’s 10 Barrel part of the portfolio, it looks like A-B is developing its own version of a regional-brand footprint strategy,” he said in a blog post. “I am thinking about why these deals don’t happen more often,” he said.
OBG Blog Archives
Welcome to our archive pages! Read stories from the print edition of the Oregon Beer Growler from June 2012 to January 2018. For newer stories, please visit our new website at: