Oregon Craft Beer Continues to Grow Rapidly -- and What it All Means

Hipster Sweet Spot: Bikes, Gritty Industrialism, Ironic Humor and Good Beer - GIGANTIC 

Craft Beer in Oregon (or locally produced non-macro lager if you prefer) is still going gangbusters according to the Oregon Brewers Guild:

PORTLAND, Ore. (June 26, 2013) – The Oregon Brewers Guild announced today that Oregon’s breweries crafted 1,296,000 barrels of beer (or roughly 321 million pints) during 2012, an 11 percent increase from the previous year. 

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Oregon currently has 137 brewing companies operating 174 brewing facilities in 59 cities across the state. There are currently 51 breweries in Portland, 15 in Bend and 10 in Eugene.  

More than 17 percent of the 2.79 million barrels of all beer — both bottled and draft — consumed in the state were made in Oregon. For draft beer, that percentage is even higher, with Oregon breweries producing an estimated 47 percent of all draft beer consumed in the state. Oregonians consumed 12.8 percent more Oregon craft beer over last year, equaling 483,400 barrels. Craft beer production in the U.S. grew 15 percent in 2012 and now represents 6.5 percent of the total volume of beer brewed in the United States.

This last bit is what really strikes me: consumption in Oregon grew 12.8% and 47% of all draft beer consumed is Oregon craft beer (add in the out-of-state craft beer and you are certainly talking about more than half of all draft beer consumed in the state being craft beer of some sort).

To the extent that Oregon represents the most mature craft beer market in the US and perhaps the world, this shows that there is still a lot of room to grow.  My favorite personal index is the college student consumption that I see in my day job as an OSU professor - watching college-types buy beer at the market, drink beer in the bars and talk about their likes and dislikes among a myriad of styles suggests to me that the sea change has come: beer has been redefined.  Beer is now defined by having a plethora of styles, brands and tastes.  Beer is now connected to place, time and personality.  Beer from Bend or Eugene or Hood River is considered different stylistically and provenancially (I may have just made that word up).  Seasonal and special one-offs give beer a time dimension it did not have in the macro days.  And brewers are becoming figure-heads, spokespeople for their beer and their brewing philosophy. 

All of this to me suggests that we are defining a new market not re-defining an old one.  I am not so sure how much it makes sense to talk about taking market share from the macros any more as it really is about shifting a different demand curve.  What these Oregon data suggest to me is that there is still a lot of shifting of the curve that can be done.  For example I suspect that part of the dominance in draft beer is that craft is really growing the pub trade again.  Take the 'tap room.' Almost all craft breweries have them and they are extremely popular --- why?  They are typically underwhelming spaces with limited ambiance and food, often out of the way in industrial enclaves and have limited hours.  But they are extremely popular and I think it has to do with the way people want to relate to their beer: they want to connect to the source.  [There is, of course, the element of ironic hipster-ism: let the suburban affluents roll up to the bucolic Yamhill wineries in their Volvo SUVs and sip wine, we are biking on out fixies to the grungy industrial district to chug beer in a corrugated iron warehouse!]  This is a 180 degree turnabout from the macro days and suggests again that we are talking about a different product all together. 

So with each release of these annual statistics there is the inevitable talk about saturation, future growth and so on.  Though there will inevitably be failures and shake-outs I suspect that the overall growth in craft beer, even in Oregon, will continue unabated for quite some time.  The market might be less forgiving to breweries like Migration that took quite some time to find their footing and the inevitable grow-or-die calculus that is the inexorable result of the inherent economies of scale in beer will claim victims, I would still back most new breweries to survive and even thrive. 

Gambrinus, Sellwood and Portland Breweries of Yore

No, not that one, this one:

HT: Vintage Portland

Bill Night has made a map to historic breweries in Portland (of which I was reminded by his comment to VP's post).

Bill, however, did not Bill's map includes the Sellwood Brewery:

Though it is not clear where exactly this was.  What I love about it is the clear notion that Sellwood is another city down the river - so remote in fact that Mr. Wilhelm's Half-and-Half has reached Portland and is so popular that he has opened a Portland Depot.  I can only assume that this is the same Wilhelm family that ran the funeral home.

[Corrections added - see comments]

Will Work in Beer: Rogue is Hiring

Rogue is hiring and holding a job fair THIS WEEKEND and they asked me to let you know.  So, now you know:

Beer in Glass or Plastic

This little tidbit came my way via The Telegraph.  Apparently in nightclubs in the Highlands of Scotland after 9pm due to 'fears of injury.' Which I suppose is a euphemism for 'a great big bloke smashing it over your head.'

Okay, fair enough, but now the government is being accused of overreaching: extending the plan to ban the pint glass in Highland pubs:

Mr Lawson, who owns Johnny Foxes and The Den, added: "The biggest complaint I get from customers is about having to drink from plastic containers. "You have to serve bottles of wine or champagne in a plastic glass. It's not good for the image of the Highlands." 

One drinker added: "The Highlands have seen an incredible revival in microbreweries producing some truly distinctive and wonderful beers, and it goes without saying that Scotland's whiskies are world-renowned. It's insulting to suggest they could be enjoyed out of plastic." 

Which brings me to another discussion of glass and plastic.  Finally, after 25 years of plastic tasting mugs, the Oregon Brewers Festival is switching to glass:

The last several years, the quality of the plastic tasting mug at the OBF has not been as acceptable as in the past. Consumers have noticed an unpleasant plastic smell that didn't dissipate rapidly, and it became evident that it was time to make a change. At the same time, the festival has been seriously looking at its carbon footprint; we've increased our recycling efforts, both on the back end with food vendors, and on-site with consumers. Switching to glass is one more piece of the puzzle. 

We've had concerns expressed about glass breakage, and have looked to other festivals as an example. Locally, the Spring Beer & Wine Fest has always served its beers in glass, as has the Portland International Beerfest. Neither event has had serious issues with broken glass. 

The OBF tasting glasses will have the current year's artwork printed on them with the date, and will be considered a souvenir item. For those who don't wish to take their glass home, we will have recycling stations set up at every exit. 

Ultimately, the Oregon Brewers Festival believes most beer drinkers would prefer to see, smell and taste a beer in a glass over a plastic mug. A glass offers the consumer the ultimate beer tasting experience, and in the end, that's the goal of any festival. Cheers!

Hooray for that.  They, of course, failed to mention the absolute travesty of the color changing plastic glassware that they used for a year or two which turned a color when it got cold and made the beer appear blue.  Ugh!  So good on the Highlanders of Scotland and the OBF.  (Full disclosure: I am a member or Clan Munro but I have never smashed a glass on top of any one's head)

Map of Beer Taxes in all 50 States

From the Tax Foundation:

Could Legalization of Marijuana Spell Trouble for Craft Beer?

Not really, I suspect, but there is strong evidence that medical marijuana laws had a considerable and negative effect on beer sales in the states in which they were enacted.  Total per-capita sales decreased by 5% as a result of the law which suggests that beer and marijuana are strong subsitiutes. This is overall sales and so we don't know the differential impact on sales of macro versus craft beer, but I suspect that to the extent these substances are subsitiutes, they are so due to their intoxicating properties and not the refinement of the beer itself.  Thus I suspect that this drop in beer sales is mostly macro beer.  But who knows - maybe my impression of the refined craft beer drinker is all wrong?

It would be interesting, perhaps, to test the effect on craft beer sales in Washington and Oregon after the legalization of marijuana in the former. 

JV Southern Hemisphere

I spent an extended weekend in Buenos Aires last weekend. I had a lovely time, perfect weather and a city that I found pretty, pleasant and recovering (at least in spirit) from the crisis.  I was happy because my last visit in 2009 left a lasting impression of a decaying city with a grim population.  It is a lovely city and one hopes for a return to better times economically will allow it to flourish once again. 

But all this is by way of introduction.  The real reason I found my visit blog-worthy was my discovery, whilst strolling in lovely Recoleta, of an American-style brewpub: Buller Brewing Company.  Sadly I had just eaten and we were on our way to Palermo so no time to stop and sample the beer but I did have enough time to take these two pictures and I was delighted to find, as far south as Argentina, a JV Northwest brewhouse.

Buller Brewing Co, Buenos Aires, Argentina

Bueller's brew house, manufactured in Canby, Oregon

 What is especially interesting is that, like most of South America, the beer culture in BA and the beer at the pub is mostly German and Czech influenced so you might expect a brewhouse from those parts. Well, I suppose it makes no difference, except for the shape of the fermentation vessels.  Anyway, it was fun to see.

I did try the Quilmes local macro brew and while it is a notch above Brasilian beers, it is fairly character-less.  Other than that the local Malbec wine was too inviting (and too good - wow) and so I never sampled any other beer.