Summer, Baseball and 3-Way IPA

A sample pack of this year's 3-Way IPA arrived on my doorstep the other day. The FedEx dude didn't even bother to collect my signature. No matter. I quickly schlepped the contents of the package to my beer fridge for chilling.

As many who stop by here know, 3-Way IPA is an annual collaboration between Fort George Brewing and two rotating breweries. This year's rotating team consists of Portland's Great Notion Brewing and Seattle's Reuben's Brews, both well-known for their mastery of IPA.

There's a lot of gibberish in the press materials regarding the forging of long-lasting friendships, exchange of knowledge and so forth. Please. These brewers get together to produce a great IPA while drinking a lot of the same. Let's not make this too complicated.

I don't intend to take a deep dive into how this year's recipe was formulated. Suffice it to say that the team wanted to brew a juicy, hazy IPA. It's just another sign of the haze craze times in which we live. No one knows how long it'll last. And it doesn't matter since these beers are best enjoyed fresh.

After some discussion and, you suspect, a fair amount of drinking, the brewers decided the hops additions would include Azacca, X331 (now Strata), Mosaic and Citra. If you travel the beer bar circuit, you may have tasted one or more of the multiple Beta test batches. The ones I tasted were pretty good. Collaborators tasted, took notes, made refinements.

This beer is nothing like what it's been in past years. I'm still partial to the 2014 3-Way, a mildly hazy hop bomb produced with Boneyard and Block 15. That, of course, was before beer fans went bonkers for hazy, fruity beers. The new 3-Way chases that theme bigly with opaque golden color and bursting juicy flavor. I'm not a huge fan of the haze, but I like this beer a lot.

As has been the case for the past few years, the release of 3-Way IPA serves as a signal that summer is here...or almost here since you never know the timing of summer's arrival in the Northwest. It will be available in cans and on draft throughout most of the Northwest as of June 1st. How long it lasts will depend on demand. It is a limited seasonal, after all.

There was a release party in Astoria last week. Forget about that. Below are dates for official Seattle and Portland release parties, but I think there will be additional opportunities to hang with these folks. Check social media boards for info.

Portland 3-Way IPA Release Party
When: Friday, June 9, 6:00-9:00 p.m.
Where: Alberta Street Pub, 1036 NE Alberta St.
What: Join Fort George, Reuben’s, and Great Notion as they kick-start Portland Beer Week. Live music from Boys II Gentlemen, plus plenty of taps from the collaborators including 3-Way IPA.
How: No cover. Robot costumes are optional, but highly recommended.

Seattle 3-Way IPA Release Party
When: Saturday, June 10, 5:00-9:00 p.m.
Where: Reuben’s Brews, 5010 14th Ave. NW
What: Reuben’s hosts the 3-Way IPA festivities. They’ll have plenty of Great Notion and Fort George on tap along with 3-Way IPA. Live music mix from DJ Draft Punk.
How: No cover with a chance of a laser light show.
🍻

The Art of Subtle Subjugation

Anheuser-Busch's recent acquisition of Wicked Weed Brewing led to a deluge of blog posts and articles on the dangers of craft brewery buyouts. What started out as a slow stream of acquisitions some years ago has now accelerated. The subtle subjugation of craft is underway.

The big fellas only grudgingly decided to start buying up craft breweries. Why? For years, they assumed craft was a fad that would go away. They figured it would never put much of a dent in their market share and they assumed that dent would be temporary.

They changed their tune only when forced to. Craft brewers put them in a bind. The suits at AB watched their sales volumes take a beating at the hands of independent brewers who had the audacity to make beer with flavor and character. Imagine the nerve of these people.

As the numbers started to skew against them, the big guys developed a strategy to save their own skins. It was a multi-level plan and included the creation of the fake craft brand Shock Top, as well as what has been a carefully imagined acquisition strategy.

Shock Top flopped with serious craft fans. It's had some success as a gateway craft brand with uneducated drinkers, though MillerCoors' fake craft brand, Blue Moon, has been far more successful in creating an actual niche between premium macro and authentic craft.

The acquisition strategy was slow to materialize. You can see the vision by looking at the acquisition map. The geographic symmetry is obvious. They have breweries in Oregon, Washington, California, North Carolina, Virginia, Illinois, New York, Colorado, Arizona and Texas. That's no accident.

There's still plenty of dirt where they don't yet have craft ownership. They'll likely address that slowly going forward. For now, they own craft breweries in some of the most high profile craft beer states. The geography positions those breweries to compete with independent craft on a local, regional and, yes, national basis.

Of course, we've been concerned about AB's acquisitions for years. The Wicked Week deal may have broken the proverbial camel's back with industry observers. A lot of the chatter involves speculation about how AB will behave in the marketplace in the days ahead.

It's almost comical. Many wonder if AB is serious about squashing independent brewers. Will they use their massive distribution network to cut shelf access? Will they flood the market with High End product and start a price war? Will they limit access to affordable raw materials? Will they use brewpubs to build local brand identities and confuse what craft is and isn't?

Please. This is a giant corporation that has no scruples whatsoever. They're constantly in court over some bullying tactic. The big boys have not enjoyed watching their numbers dive as craft thrives. They will use any tool at their disposal to protect and improve their position in the industry and put craft brewers in their place

That "place" is on the fringe of the industry, removed from the most lucrative profit channels. The effort to squeeze retail distribution and undercut craft on price is already well-underway. That's just the start. They have other anti-competitive measures in the hopper or on the drawing board.

AB isn't necessarily in a big hurry. With craft breweries in their pocket, they're content to ride the wave for now, assuring industry watchers and gullible beer fans that all is well and nothing will change. It's a brilliant sleight of hand, part of the art of subtle subjugation.🍻

Portland Beer Week Features Events Blitzkrieg

Portland Beer Week returns for 2017, its seventh year, with a veritable blitzkrieg of events, as well as some new twists. The 11-day fest runs June 8-18. It's coming up faster than you think.

This year’s official beer is Hop Berry IPA, brewed with marionberries by Culmination Brewing. It will be available on draft and in limited edition bottles at Whole Foods Markets and other beer-centric retailers in the Portland area.

Although beer is its main focus, Portland Beer Week extends that theme. It features numerous activities that happen alongside opportunities to enjoy great beer. The event is effectively a celebration of Portland’s beer, food and arts culture rolled into one.

“Our goal is to showcase the world of beer in the greatest beer city on earth,” event founder and czar, Ezra Johnson-Greenough, told me. “We do that through brewer’s dinners, tastings, educational seminars, festivals, games and more.”

One of the big additions (actually an expansion, since there was a kickoff event last year) this year is the Kickoff Party on June 8th. There will be breweries, along with food and merchandise vendors. The party is being held in the Exchange Ballroom and on the Cascade Rooftop (top of the Exchange Building), which features spectacular views of the city.

“I’m really excited that folks like the Oregon Cheese Guild are joining us and our collaborative beer and food project vendors like Salt & Straw Ice Cream and Blue Star Donuts,” Johnson-Greenough said. “Kickoff attendees can sample spirits, chocolate, jerky, hop candy we’ll have beer schwag, too.”

 

Another addition this year is the Dinner Series, which features a handful of collaborations between top local breweries and chefs. Organizers have built the schedule so they don’t have dinners piling up on the same date.

“I’m looking forward to Firestone Walker at Hair of the Dog, Culmination Brewing at The Woodsman, Block 15 & Ruse at an Imperial Session pop-up dinner and Modern Times at Pizza Jerk,” Johnson-Greenough said.

Returning this year is the Seminar Series, presented by Oregon State University and the HR Group. Several seminars will explore subjects like beer industry branding, starting and building a brewery from Nano to production, sustainability in brewing, barrel-aging beers and sour and wild ales.

The beer event schedule jumps into action shortly after the Kickoff Party with the Fruit Beer Festival at Burnside Brewing, June 9-11. Billed as a premiere showcase for fruit beers, the event also features local vendors, food, DJ's and non-alcoholic drinks. It's the marquee event of Portland Beer Week.

“We’re back to Burnside after last year’s experiment in the Park Blocks,” Johnson-Greenough said. “We’re spreading the beer stations out and the venue will have more shade and seating than in previous years at Burnside. We’ll also have more help at check-in to speed entry.”

The Fruit Beer Fest and fruit beers, generally, have gained favor in recent times. It's a little perplexing because  fruit beers run counter to tradition in this country, tradition being infested mainly with light beers made with malted grains. 

Local writer/blogger/author Jeff Alworth (Beervana, The Beer Bible) gave me this quote regarding the historical relationship between fruit and beer:

Fruit has been used since the Sumerians and Egyptians. As far as I know, every culture on earth has used fruit. Beer was, until fairly recently, a product of the farm, and farmers dumped whatever they had in it, including fruit. Medieval accounts list things like tree bark, hen bane, eggs, beans, honey, chimney soot and ashes as ingredients. Except for lager-brewers in Bavaria, basically no one in the history of civilization ever thought using just grain was somehow "proper."

So what's happening in American craft beer is that we are expanding our tastes to include ingredients that have been used for centuries. The Fruit Beer Festival has helped with that. And, of course, the official Portland Beer Week beer, mentioned earlier, is made with fruit. Symmetry.

The next big event of Portland Beer Week is Masters of IPA, an invitational showcasing America's best brewers of IPA's and hoppy beers. It moves to a larger venue with a curated selection, glassware and meet the brewers’ sessions on Friday, June 16th at Ecliptic Brewing.

The annual Rye Beer Fest, in its sixth year, returns with a new date and venue, moving to the Happy Valley Station indoor/outdoor food cart pod and taproom on Saturday June 17th. The all-age fest will pour more than 20 rye beers and have 18 food carts.

Portland Beer Week’s official finale, Snackdown, returns for a second year on Sunday, June 18^th, noon to 4 p.m. Presented by Gigantic Brewing and taking place in The Evergreen ballroom above Loyal Legion, it features more brewer and chef pairings.

“I expect another great year,” Johnson-Greenough said. “We’re reaching out to tourists and casual beer fans in our marketing efforts and it seems like we’re getting more of those folks. Attendance has been increasing every year and I’m confident it will again.”

Stalk Portland Beer Week’s social media channels on Twitter, Facebook and Instagram for updated news and information. Advance tickets for most events are available online.

Shock and Awe in Craft Beer

Last week was not a great one for craft beer industry news. Despite all the good stuff going on, it does occasionally seem like the industry is under siege. Things figure to get more complicated and convoluted as we move forward. We aren't in Kansas anymore, Toto.

Wicked Weed
The first bad news was the sale of North Carolina-based Wicked Weed to Anheuser-Busch. Some, (I include myself), assumed the big boys would stay fairly quiet on the acquisition front after MegaBrew was finalized and given apparent volatility in the industry. Not so.

Wicked Weed is evidently a bit of an odd duck. They've grown fast since opening in 2012 and expect to produce 40,000 barrels this year. They package 85 or so beers annually and their flagship is an IPA (Pernicious), But sours make up 40 percent of their dollar sales. Yup.

Wicked does something like 35 percent of its sales in North Carolina, and also distributes to a handful of other states, including Georgia, Massachusetts, Colorado and parts of Texas. They will certainly expand that footprint as they extend capacity and gradually get immersed in the AB network.

There's a bit of an alignment smash-up coming, say industry sources. It turns out most of Wicked Weed's distribution network, including in North Carolina, is non-AB. That has the makings of a nice little disaster as AB works to align Wicked with its network. Good stuff.

Heineken and Lagunitas
The announcement that Heineken has fully acquired Lagunitas wasn't a huge surprise. Things have evidently gone pretty well since Heineken became 50 percent owner in the company back in 2015. This is the consummation of that momentum.

When considering the deal, it pays to ignore anything Lagunitas founder Tony Magee says or has said. When the original deal was announced two years ago, Magee said he would never sell the whole company to Heineken. So much for that. And Magee's credibility.

The new arrangement is mainly an international play. According to industry sources, Lagunitas will continue to operate as a separate business entity in the US. Magee will stay on as head of the company and will serve in an advisory role on Heineken's global team.

What's going to happen is Heineken will ramp up the expansion of Lagunitas into new markets around the world. That business has grown dramatically during the past year and has huge untapped potential. That's what motivated Heineken to pull the trigger on full acquisition.

Some craft beer geeks won't look at Lagunitas quite the same going forward. But the reality is, Heineken isn't in the same league as Anheuser-Busch, particularly in the US. It doesn't operate a vast distribution network here or have a collection of craft breweries. No comparison, really.

Craft Brew Alliance
Our friends at the Portland-based Craft Brew Alliance announced their Q1 results late last week. There was good and bad news.

The good news is that Kona was up 14 percent for the quarter, and continues to drag the company forward. CEO Andy Thomas also said Widmer is growing again in its home market, though overall shipments of both Widmer and Redhook were down.

The biggest bombshell was news that the agreement with Pabst to contract brew and eventually purchase the Woodinville brewery has been terminated. That means the brewery will close and be put up for sale within a couple of months.

Realistically, there wasn't much of a chance the purchase was ever going to happen. It's an antiquated brewery and was/is overvalued on the CBA balance sheet. Selling it will be a chore because the buyer, assuming one steps up, will also have to invest in making the place usable.

Of course, Pabst's position has become tenuous. It brewed mostly Rainier Mountain Ale in Woodinville. But the launch of that brand was botched out of the gate and expected volumes never materialized. Brewing capacity wasn't being used. Then Pabst got itself ensnared in lawsuits over distributor terminations (covered here last week) in Washington. A nice little mess.

The Woodinville closure means more CBA employees will be laid off or re-purposed within the company. Reports put the number at about a dozen. That's on top of the 15-20 who were laid off last year due to lower than expected Pabst volumes and declining production of CBA brands there.

In fact, most of the CBA's Woodinville production moved to the more efficient brewery in Portland. That rush to efficiency and greater profits is a slipper slope. The CBA will soon move some production to AB's Fort Collins plant to improve efficiency. That will mainly affect City Brewing in Memphis, but a reliable source tells me layoffs in Portland are imminent. We shall see.

On the heels of the CBA's Q1 report and the sale of Wicked Weed, there was renewed speculation on the possibility of AB completing a full purchase of the CBA. As noted above, the Wicked Weed sale has some people thinking more deals are in the wind. And maybe they are. Or not.

As discussed here numerous times, Anheuser-Busch covets Kona, but has no interest in Widmer or Redhook. It's hard to imagine a scenario in which the CBA strips Kona from its portfolio and sells it to AB separately. So it looks to me like the CBA will at some point be purchased and become a subsidiary of Anheuser-Busch, with Kona as the crown jewel.

Motivating Factors
For those who want a better understanding of craft brewery acquisitions, there was a fine article exploring that topic last week. Author Chris Herron suggests the primary motivation has more to do with preserving macro brand equity than with wanting to be in craft beer. That's vaguely at odds with what most of us have generally assumed.

Herron's article is terrific stuff and required reading. Trust me.

Turnover and Turmoil at Pabst

There's a whole lot of crazy in the beer industry. Then you look at Pabst, which is setting new standards for crazy in the Eugene Kaspher era. Someone ought to throw together a script and turn this wacky story into a reality TV hit.

Last week, we learned that nine top level folks were shown the door. They included chief growth officer, Rich Pascucci, with the company since 2011, and chief sales officer, Bruce Muenter, there since 2010. These moves come on the heels of significant restructuring last September.

The thing is, the pattern of turnover and turmoil at Pabst is legendary, established even before Kaspher took over in 2014. Between 2009 and 2014, there was a virtual revolving door of CEOs coming and going. Great way to build confidence in your brands.

Some of the more recent moves are the result of ups and downs in the business. Since taking over, Kaspher has rolled with the punches, adding people during the rapid rise of Not Your Father's Root Beer, laying them off when the brand tanked. Shit happens.

The moves they made last week are evidently part of an effort to streamline and build the organization according to the visions of Kaspher and new CEO, Simon Thorpe. They want to eliminate redundant management responsibilities and make themselves agile.

In fact, Pabst's fortunes aren't looking so bad. After some lousy years, trends for 2017 are moving in the right direction. Overall sales are up 1.7 percent. PBR shipments were up nearly 6 percent in Q1 and regional brands Lone Star, Old Style, Stroh and Olympia all showed growth.

The Pabst portfolio, in case you're wondering, includes a boatload of legacy brands. Besides those listed above, Pabst owns Colt 45, Old Milwaukee, Old Tankard Ale, Rainier, Schlitz, Blatz, Schmidt's, St Ides and others. Fine stuff, ya know.

Anyway, things were evidently looking so good for Pabst that leaders decided to incite more turmoil. They did so by abruptly terminating three Washington wholesalers in February and transferring their brands to Columbia Distributing statewide.

The terminated distributors are Odom Corporation, Stein Distributing and Marine View Beverage. They were each sent letters terminating distribution rights without cause and directing them to transfer existing inventory to Columbia. You can't make this stuff up.

It's an unusual situation. Suppliers rarely terminate distributors without cause. Why? Because that kind of move tends to lead to lawsuits that cause messy, expensive court battles and massive payouts. You're generally wise to avoid such scenarios.

But not Pabst. The terminations are apparently part of its realignment strategy. They want to have their beer distributed exclusively by Columbia in the state. It makes sense, right? Working with a single wholesaler fits with their agenda of simplification and efficiency. Terrific.

The problem is, they're now entangled in lawsuits. The terminated distributors quickly sued Pabst in federal court seeking damages. They, the distributors, fully believe the law favors them and that they are entitled to significant financial damages.

Soon thereafter, Pabst filed a motion to dismiss. It claims Washington law allows termination without cause and, in such cases, that terminated distributors' sole financial remedy is from the successor distributor, in this case Columbia.

For its part, Columbia is playing along. It has connected with and made financial offers to the terminated distributors. It says it is willing to arbitrate with the individual distributors if acceptable terms can't be reached via negotiation.

But no settlements are imminent. Not until the court makes a ruling on the law. Is Pabst right? Are the terminated distributors right? For now, the parties are immersed in a rolling dispute over the law, with motions filed and words flying.

My guess is Pabst has stepped into a quagmire. Its pattern of impulsive behavior is simply being acted out on another stage. The legal argument Pabst is making is a supple one. Chances are, they aren't going to win, which means they'll be forced pay the terminated distributors.

Lawyers and judges will figure this out. However things turn out, the saga makes for entertaining theater. Thanks a lot, Pabst.