A lot of questions are swirling around the big brewery on North Russell Street.

Why did Widmer Brothers Brewing close the Gasthaus, its longtime brewpub, then turn it into a taproom?

Why did Widmer then a year later close that taproom, leaving nowhere to pour its own beers?

Will Anheuser-Busch InBev, minority owner of Widmer parent Craft Brew Alliance, exercise its option to buy the CBA outright come August? And if it does, what becomes of Widmer Brothers Brewing Co.?

The past year has been a bumpy ride for one of Oregon’s oldest and most fabled breweries, and the looking glass doesn’t provide much clarity. With questions about ownership lingering, the creators of the legendary Hefeweizen have seen sales and status within the CBA shrink and direct contact with their beer-drinking customers slip away, and other long-beloved Portland breweries have turned out the lights.

That said, Widmer’s flagship Hefe remains the best-selling, most-widely recognizable craft beer in Oregon, leading the way to keep Widmer among the 50 highest-selling breweries in the nation. Its Omission brand of beers is popular among those on a gluten-free diet. And the young Innovation Brewery at Widmer is creating delicious experimental beers and developing new beverage lines -- pushing back against any stodgy perceptions of the brand.

“We recently closed our pub, and that was very difficult,” said Kurt Widmer, who founded the brewery with his brother Rob in 1984. But “the brewery’s doing great, it continues to evolve. We have multiple partners now -- it’s not just Widmer Brothers. That’s been really a lot of fun.”

Widmer and the Craft Brew Alliance

Widmer began in 1984, when the homebrewing brothers quit their jobs and turned passion into career, scrounging together a brewing line from old dairy and junkyard equipment. They opened in an industrial part of Northwest Portland – before expansion forced a move in 1990 to their current address – and in 1986 created Hefe, an American version of the German hefeweizen.

Hefe changed their fortunes and made Widmer a household name synonymous with Portland craft beer. In 2008, Widmer merged with Seattle’s Redhook Brewery and created the Craft Brewers Alliance. In 2013, the CBA, which now also included Kona Brewing of Hawaii, sold a minority stake to Anheuser-Busch InBev.

The growth brought increased investment and distribution, but it also brought criticism among some in the craft-beer community that Widmer had “sold out.”

Sales for the CBA, which now includes eight breweries and cideries, have remained relatively steady over the past decade, but Widmer is no longer the group’s dominant brand, handing that crown over to Kona.

Kona’s Longboard Island Lager has helped drive sales of the Hawaiian brand above 450,000 barrels last year. That success has prompted the CBA to begin construction on a $20 million, 100-barrel brewery on the Big Island of Hawaii.

Meanwhile, Widmer’s sales have seen a steady drop in the past 10 years, going from nearly 300,000 barrels in 2010 to about 100,000 in 2018, a year that saw a 20 percent drop.

Those numbers drove a change in strategy at the CBA, which, according to its 2018 Securities and Exchange Commission filings, has begun promoting Kona as a national and global brand and focusing the other breweries on their own regions. For Widmer and Redhook, that means strengthening their positions within the Northwest.

“At this point, to think of it as the Widmer Brothers is wrong,” says Jeff Alworth, a Portland-based beer author who has a book coming out next week, “The Widmer Way,” chronicling the brewery’s and the CBA’s history. “It’s the Craft Beer Alliance. CBA has this company and they have brands, and they are going to pay attention to brands that are selling and not pay attention to those that aren’t selling. Widmer is declining, so they’re not getting much attention.

“But they’re not going anywhere. It would be crazy for the company to kill that brand.”

New initiatives

The Innovation Brewery at Widmer’s North Portland facility is part of the plan to keep Widmer vibrant. The high-tech, 10-barrel system was installed more than two years ago as part of a $10 million brewery-wide expansion. It’s designed so any recipe the crew in the experimental-focused brewery dreams up can be replicated across the street at the large-scale brewery.

Of course, part of the plan was to get those experimental beers into the hands of customers at the tasting room for immediate feedback. With the tasting room closed, Widmer is left to work with local establishments to get the kegs onto taps and get second-hand reactions.

And that, Alworth says, is a problem.

“They’re not going to get the feedback they need,” he said during a recent interview. “No way they’re going to place that much beer out there. There are 40 taps at (the Widmer taproom). It’s clearly an abandonment of the R&D model. That just sends up all kinds of red flags.”

Widmer closed the tasting room because it couldn’t turn a profit there, said Kevin Bland, Widmer’s local marketing manager. The area gets little foot traffic, and with so many breweries and tap rooms in Portland now, the competition is fierce, he said.

“We see where things are opportunities, and we see when things are a challenge,” Bland said. “Widmer as a brand, we’re doing fine. … But the future of craft is that everybody is adapting.”

Widmer plans to use the space as the terminus for new public tours of its expanded brewery, where the public can taste its innovation beers. It will also be available for charity and community events and to brewery employees.

The pH Experiment

The CBA has begun developing new products at the Widmer Innovation Brewery as well. The pH Experiment, a venture to create new beverages with an eye on emerging tastes, began in March and this spring will put its first product into the market: the Pre Aperitivo Spritz. The 6.6 percent alcohol by volume beverage is described by CBA as a “dry, botanical bubbly with an herbaceous bitterness that stays unapologetically true to a classic Italian aperitivo.”

Six-pack cans or bottles will be available in grocery or liquor stores, said Shannon Riggs, a public relations representative for the CBA. The beverage, promoted as having 1 gram of sugar and being made from gluten-free apple wine, is a slightly less sweet version of a traditional Italian cafe cocktail.

The pH Experiment’s goal is to create $25 million in revenue by 2025 for the CBA, which had net sales in 2018 of $206 million.

“Our goal is to provide long-term, sustainable growth for CBA,” said Karmen Olson, the pH Experiment’s general manager. “We’ll do that by combining the spirit and agility of an innovation startup with the muscle of a large craft brewer, working side by side with drinkers, retailers and wholesalers to quickly get products to market, listen to feedback, iterate, and either expand or fail fast.”

An August date

Throwing uncertainty into the brew is Aug. 23, 2019, the deadline by which AB InBev, which holds a 32 percent stake in CBA, has the option to buy all the remaining shares at an agreed-upon price and own the operation outright. But AB InBev could also pass, leaving the status quo.

What will happen is an open question.

“My guess is that yes they will buy it,” said Alworth, the author. “CBA has made decisions that would make it an attractive acquisition for AB InBev. The focus on Kona, shifting away from Widmer and Redhook, purchasing little regional breweries to give it regional diversity and potential growth down the line, investing in cider and pH, all of those things make it a valuable asset as a company.”

And that could be bad for Widmer.

“If bought outright, for Widmer, you’re not 100,000 barrels out of a 700,000-barrel brewery, you’re 100k out of whatever,” Alworth said, referring to AB InBev’s sales, which were about 600 million barrels in 2017. “At that point you’re not a valuable asset in the company.”

If AB InBev doesn’t exercise the option, Alworth said, that’s a plus for Beervana.

“People tend to focus on that the Widmers had become this big brewery associated with AB,” Alworth said. “The truth was the Widmers were always integral to the Portland beer scene.

“(Portland) started making really good beer really early on and had lower tolerance for the off-flavors that were acceptable in other cities,” Alworth continued. “Widmer was responsible for that. Widmer was doing free (lab testing) for the entire city. … Their idea was we’ll sell more beer in a city that’s more sophisticated.

“If that brewery closes down and the lab goes away and Kurt and Rob are no longer doing the collaborator project and kind of become invisible, you lose all that,” he said. “There’s a lot of stuff the Widmers were doing to support Oregon craft beer that weren’t so visible but will be missed.”

Kurt Widmer is proud of that legacy – of helping Portland become a world-class beer city.

“I hope that people will recognize our commitment to brewing high-quality beer,” he said. “And being perfectly willing to experiment and dump stuff that we’re not proud of. Over time that pays dividends.”

-- Andre Meunier

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