The loudest statement that founders Jeremy Cox, Chris Cox and Garrett Wales could muster about the deal, shy of an A-B press release, was this video that took multiple beers and takes to complete :
It was an awkward moment for a brewery and crew that typically let its brewers and beers speak for themselves. After being founded as Wildfire Brewing in 2006, the brewery switched names in 2009 to reflect its original 10-barrel brewing system and made waves in 2011 by hiring away brewmaster Jimmy Seifrit from Bend neighbor Deschutes Brewing.
10 Barrel followed that up by hiring brewer Tonya Cornett away from Bend Brewing that same year to serve as the head of research and development, and absconding with hop-centric brewer Shawn Kelso from Baker City, Ore.-based Barley Brown’s in 2012 to lead the brewing team in the Boise, Idaho, brewpub that just opened last year. Earlier this month, it hired a fourth award-winning brewer — Whitney Burnside of Pacific City, Ore.-based Pelican Brewing — to run its third brewpub when it opens in Portland next year.
10 Barrel just won three medals at the Great American Beer Festival in Denver in October — including a gold for Cornett’s Cucumber Crush Berliner Weisse — and fell firmly on the “craft” side of the “craft vs. crafty” debate pitting small, independent brewers against their similarly sized counterparts funded by large beer companies. This past week alone, however, 10 Barrel has been accused of ushering in “the end of real craft brewing” and opening a spigot of high-minded beer hyperbole that hasn’t flowed this freely since Anheuser-Busch bought Chicago’s Goose Island Brewing for $40 million in 2011, or when it acquired Patchogue, N.Y.-based Blue Point earlier this year.
The beer hasn’t changed, the staff hasn’t changed and the address in Bend hasn’t changed, but the reaction to 10 Barrel’s buyout and the ensuing rage from fans is simply the result of a series of changes that brought us to this point. Kurt and Rob Widmer, a sibling duo who opened up their beer operation in Portland 30 years ago, were booted out of the Brewers Association craft beer industry group for selling a 32.2% stake in their Craft Brew Alliance (which also owns the Redhook and Kona breweries) to Anheuser-Busch in 2007. That same year, A-B took a 49% stake in Delaware-based Old Dominion and Fordham. Terrapin Brewery in Athens, Ga., sold a less-than 25% stake to MillerCoors in 2011.
Even the craft breweries that do remain independent aren’t doing so in any small fashion. Boston Beer Co. got its start with Samuel Adams beers 30 years ago, but now produces Twisted Tea, Angry Orchard cider and Traveler shandy, and has bought up breweries including Los Angeles-based Angel City and New York-based Coney Island Craft Lagers. Chico, Calif.-based Sierra Nevada and Fort Collins, Colo.-based New Belgium have both constructed breweries near Asheville, N.C., that have the potential to double their output and expand their availability on the East Coast. Petaluma, Calif.-based Lagunitas has opened a brewpub in Chicago, San Diego-based Green Flash is opening a second brewery in Virginia, and its San Diego neighbor Stone is following suit after opening a second brewery in Berlin.
There are more than 3,000 breweries in the U.S., according to the Brewers Association, and those looking for an edge are either growing rapidly to expand production and distribution or finding partners who will help them do so. 10 Barrel and its newfound partnership with A-B, finalized for an undisclosed sum, are neither sicknesses nor symptoms. They’re just a reminder that craft beer as a whole is changing, and that even its strongest adherents aren’t playing nice anymore.
For their part, the partners at 10 Barrel sincerely don’t seem to view their deal with A-B as any great transgression. It’s helping them retain the talent pool that made their brewery a success in the first place. It’s giving them access to hops, malts, equipment, labs and other resources that previously weren’t at their brewers’ disposal. As the owners reminded their employees during multiple trips to their Boise and Bend facilities after the sale, it also gives 10 Barrel workers job security and better benefits than anything 10 Barrel could have offered previously.
Finally, as light lager sales continue to plummet and craft continues its climb, it makes a huge multinational brewer like A-B InBev realize the value of a wide array of beer styles made well and produced locally. While A-B moved production of Goose Island beers like 312 Urban Wheat and Honkers Ale out of Chicago (or Craft Brew Alliance facilities in New Hampshire) and into A-B breweries in New York and Colorado, both 10 Barrel and A-B see the value in sticking around the Pacific Northwest and learning from prior big-brewer craft ventures.
During a sit-down at Belmont Station, a craft taproom and bottle shop in Portland, we spoke with the 10 Barrel partners and Anheuser-Busch’s craft CEO, Andy Goeler, about the sale, the reaction to it and the brewers’ plans. While 10 Barrel’s initial reaction on social media hedged against changes to the company, the partners and their A-B counterparts acknowledged that change is inevitable, though likely not what the most forlorn fans fear :
Last year, 10 Barrel lost a batch of nitrogenated beer to a bottling issue and lost batches of its Swill radler and Beer No. 1 brown sour ale to secondary fermentation and overcarbonation that made bottles explode. The brewery also announced plans for a new brewpub in Portland. How much did any of that have to do with the decision to sell to A-B ?
Garrett Wales : None. Zero, I and I can say that with 100% confidence and truth.
We push the envelope, and that’s something we’ve taken pride in doing for a long time. There were some issues, obviously, with Swill, but the Portland pub is something we’ve been working on for a while. With those things, you take a risk and sometime it bites you a little bit, but those things had absolutely nothing to do with this conversation. It was all about the partnership and the growth moving forward and the opportunities that present themselves to us, for sure.
One of the points Dick Leinenkugel mentioned when we interviewed him last week was that his brewery’s buyout by Miller gave him access to all sorts of “back room” perks like used equipment, labs and the like. What does 10 Barrel get out of this deal with A-B ?
Chris Cox : Our brew team is really excited about having the strategic partnership with Anheuser-Busch. We’re going to have the resources to back us, and by that I mean we’re going to have access to more barrels for our sour program and to increase our barrel-aging program, to introduce technologies to our brewery, to push the limits of brewing.
Our brewers are really excited to have some technical help and new resources.
Just out of curiosity, does your brewery now get access to the nearly 1,700-acre Elk Mountain Hop farm that A-B just gave Goose Island access to this year ?
Garrett Wales : Absolutely.
Jeremy Cox : The brewers are probably most excited about that.
Chris Cox : ... and the malting plants. So we’re going to have access to grow our own hops and when you look at [former Deschutes Brewery and current 10 Barrel brewmaster] Jimmy [Seifrit] across the room and say, “Hey, Jimmy, you’re going to be able to grow your own hops” or [former Barley Browns brewer and 10 Barrel’s Boise brewmaster] Shawn Kelso, “You can grow as many hops as you want of any variety,” these guys get excited.
We’ve been limited in some of our brewing in the last few years based upon the types of hops we can contract for it, just like every other brewery in the Northwest. So we have the ability to, now, grow hops and use them strategically in our beers, and it’s wonderful.
Garrett Wales : I was with Shawn this morning and it’s been a few days, he’s had some time to think and I just reached out and said, “How are you doing with this ?” He just said, “I’m so excited. I get more excited every day. Being able to create recipes based on what I want and what I dream of instead of what I have available is just the best opportunity I could ever imagine.”
With him, that’s especially on the hops side. We talked about that for 20 minutes.
Chris Cox : We know Shawn, right ? He loves hops. He sleeps with hops.
What is this going to mean for 10 Barrel distribution and how do you envision it affecting 10 Barrel overall ?
Jeremy Cox : Right now we are with A-B and we’ve been with A-B wholesalers since Day 1 ... they have built our brand, so we already knew they were going to be a great partner.
That was one of the reasons why we started talking about the partnership, because they’d already done such a great job of delivering our brand. We believe in their sales structure and, obviously, if we ever want to grow out, they have the resources to grow us out of our area, so we’re really excited about that.
Have you given any thought as to where you’d want 10 Barrel to go next or where you’d consider expanding ?
Chris Cox : We’re Northwest guys. We love the Northwest. We live in Bend, and we want to sell beer in the Northwest, in all honesty.
That’s our plan right now. We’re going to brew here in Bend and Portland and Boise and ship it around the Northwest. At some point we might look into shipping to other areas, but right now we’re going to focus on doing what we do and having fun. Maybe Hawaii ...
Garrett Wales : Maui, specifically.
Chris Cox : That would be awesome.
Some of the loudest responses to this deal came from fans in your backyard, but they seem to have a case of selective amnesia when it comes to deals like this. BridgePort Brewing Company in Portland was purchased by Gambrinus in 1995, just 11 years after it opened. Portland Brewing Company was sold to Seattle-based Pyramid Breweries back in 2004 — a full 18 years into its run — and is now part of the North American Breweries parent company that also produces Magic Hat and Genesee while importing A-B InBev’s Labatt’s products from Canada. Did you look at their examples and results when you were considering life after the deal with A-B ?
Chris Cox : I think, for us, we just focused on ourselves. This was a situation where we felt it was the right partnership for us, and it was more specifically about who we were, what our brand is about and what we need to get back to and what we like to do.
We like to brew beer, drink beer and have fun doing it. If we keep that philosophy going, this was the right strategic partnership for us and this is going to allow us to keep on doing what we love to do.
What do you see as your biggest contribution to the A-B portfolio ? What do you feel 10 Barrel brings to the table ?
Chris Cox : I think it’s our entire portfolio, but [nods to A-B’s Andy Goeler] I think you might be able to speak to that better.
Andy Goeler : That’s just it : a great portfolio of beers up in this amazing craft market in the Pacific Northwest. It’s a nice complement to Blue Point, which plays nicely on the East Coast, and Goose Island, which plays phenomenally in the Midwest. It’s a great brand for this part of the country and a great fit for us as well.
So let’s ask you, A-B : Is A-B implementing a regional strategy in terms of craft ? Is there a glance at the map to see what works in certain places and to see which breweries or styles of beer work better than others in various regions ?
Andy Goeler : There is no regional or master scheme or strategy that we’re in the process of implementing.
It’s really looking for opportunities that make sense for us. Right now, we have our hands pretty full with Blue Point, with Goose and helping integrate these guys into the A-B system. We’re always looking for opportunities, but we don’t have, like, maps with circles drawn around them where we try to go in ... it’s based on opportunities that arise and if they make sense.
The No. 1 thing for us before we even talk to a brewery is : “Let’s taste the beers.” If they’re great beers, then we’re wide open to talking. It’s all about the beer, and once we get to know the makeup of the company, that’s the second thing. It was just a great match. These guys, their love for beer, their passion for beer and the team they built was really very exciting and made it an easy decision for us.
With A-B’s craft portfolio filling up, has there been any thought of spinning off the craft division much as MillerCoors has with its Tenth & Blake beers such as Leinenkugel’s and Blue Moon ?
Andy Goeler : We do have a separate group now that’s more focused on these brands, and it gives us more time to focus attention on these brands and break them away from the system.
I wouldn’t say it’s like Tenth & Blake : It’s just a separate group where I’m overseeing the craft piece of it and there are other people on the street to sell the beers into the right accounts.
When Goose Island sold to A-B, founder John Hall left and was replaced as chief executive by Andy Goeler. His brother, Greg, also stepped down as Goose Island’s brewmaster to start Virtue Cider in Michigan. What made the three 10 Barrel partners decide to stay ?
Chris Cox : This is what we do. This is what we’ve always done. For all of us, this is where our passion is and this is truly the next chapter. This isn’t the end of a story, by any means. It’s kind of turning a page, taking another run at things and going forward.
That was critical : I think the first discussion about this that we ever had with Anheuser-Busch, the priority was : “Look, we don’t want to go anywhere. We don’t want to leave the business. The blood, sweat and tears, the passion of it, the team, us — we’re all in this together.” The response we got was : “We’re not interested if you’re not here.” The idea of keeping the team together and keeping us on board was very mutual. We feel we have so much left to accomplish and we’re set up with a partner that can help us get there.
Jeremy Cox : We love 10 Barrel. It’s our company. This is something that we want to grow, and we want to lead our team, and we love our people. They’re like our family.
At least some measure of the craft beer movement has involved making more styles of beer more readily available to the public. To that extent, as craft brewers, does having Anheuser-Busch take an active interest in your company and make an investment in your company feel like a win ?
Garrett Wales : I don’t know if “winning” is the right word, but definitely you feel proud that your team gets recognized by someone like Anheuser-Busch, and that they want to be involved in something you as a team created. It’s flattering, for sure, and it allows us to get back to when we started things and why we started things.
Is there any formal transition that needs to take place before the deal with A-B goes final ? Is there anything to wrap up in St. Louis or do you just flip the switch and say “we’re with A-B now” and it’s just business as usual ?
Andy Goeler : It’s just business as usual.
We’ll start to see as we move into the future again, but there are no immediate plans to start pushing buttons and having things integrate. But we do want to help these guys integrate into the A-B system, so we’ll do it slowly over time, but you won’t see any major changes at all.
Last-call notes : The only thing we’re going to say about Anheuser-Busch’s tequila-flavored malt beverage Oculto, announced this week, is this : Why doesn’t anyone remember Tequiza ? A-B just killed that “beer” in 2009, and now we’re seeing it come back around again in new packaging ? The sad part is that A-B knows this isn’t the way to stop the light lager sales it’s losing to Corona, Modelo, Pacifico and other Mexican brands. Yes, it’s aware that Modelo Especial sales were up 18% in the U.S. last year while Bud sales dropped nearly 4%. That’s why A-B dropped $20 billion on Grupo Modelo last year. If it wasn’t for the pesky feds and their fear of a monopoly, A-B would be pouring Modelo and Corona throughout the U.S. instead of ceding that territory to Constellation Brands and making do with the rest of the world’s beer drinkers.
With all due respect to the KOMO 4 “Problem Solvers” team in Seattle, the reaction to their story about alcohol content in beer sold at CenturyLink Field during Seattle Sounders and Seahawks games brings out just about the worst elements of the beer-drinking community. The team found that the alcohol by volume of beer served at the stadium was 0.2 to 0.6 percentage point below what was advertised. That’s a 5% ABV Stella Artois selling at 4.8% to a 5% Bud selling at 4.4%. There’s a strong argument to be made for consistency and truth in advertising, especially with the smallest beer in the joint fetching $8, but drinkers who prize alcohol content above all else when pricing alcohol would be better served buying 40-ounce bottles of Hurricane or flasks of Mad Dog 20/20 instead. That’s the game you play when ABV trumps all else and the quality of your beer comes a distant second to how quickly it can turn you into the worst fan on earth.
When Oskar Blues first started canning its beers in Lyons, Colo., back in 2002, it was to market its small-town beer in the cheapest way possible. Or at least that’s the story founder Dale Katechis told us about five years ago. We’re guessing that decision comes in far handier today, when Katechis doesn’t have to worry about embedding glass shards into his forehead by instinctively slapping it while reading canned-beer think pieces like the one Quartz coughed up this week. When scooping pictures off CraftCans.com, maybe it’s worth noting that there are now more than 1,500 canned craft beers from the nation’s 3,000 breweries. That’s not a trend, that’s damned near default.
With just about every band that aging Gen Xers ever loved in the middle of a reunion tour, who would have guessed that one that’s been kicking around for 30 years would break up at this point. Certainly not Dogfish Head, which just released its imperial lager BEER Thousand as a tribute to Guided by Voices, who repaid the favor by breaking up and forcing scores of graying, black-shirted brunch denizens to grow up a bit more quickly than they’d anticipated. It doesn’t seem to be affecting plans to sell boxed sets of the beer packaged with a 10-inch vinyl album of a 20-year-old GBV live set for $50, but let’s hope Dogfish founder Sam Calagione keeps a close eye on Neutral Milk Hotel, The Replacements or Frank Black’s latest incarnation of The Pixies a line before brewing any of them a batch.