They’re the brands this beer town was built on: Portland Brewing, BridgePort, Widmer Brothers.

For decades, they ruled craft beer not only in Portland but in Oregon and beyond, with wide distribution and venerable names like MacTarnahan’s, BridgePort IPA and Hefe. Craft beer drinkers had their favorite and supported their brewery.

Then something changed. The number of breweries across the nation took a massive leap, going from 1,500 a decade ago to about 7,500 now. With more options, habits shifted, and a fickle, younger generation of craft enthusiasts grew up with little brand loyalty. Instead of grabbing the same old favorites, the craft consumer now is likely to cruise the beer aisle looking for a new release or belly up to the nearby taproom for something fresh they’ve never tried – then take a crowler to go.

Add in external factors analysts say could be cutting into beer consumption -- like legal marijuana and reports of Millennials and Gen Z drinking less and preferring wine and liquor to beer -- and the craft-beer industry has a problem, observers say.

The increased competition is roiling a once-steady landscape and claiming victims. In the past year, Portland’s once-beloved BridgePort Brewing, gone. Portland Brewing’s and Widmer’s once-packed restaurants, closed. Alameda Brewhouse and Burnside Brewing, history.

The breweries most in jeopardy tend to be older, larger and with wide wholesale distribution. In contrast, the model for success -- though in more modest terms -- are smaller operations that self-distribute or have moderate distribution with multiple avenues to sell their beer.

“We live in an age of promiscuity,” says Sam Holloway, a brewery consultant and University of Portland entrepreneurship professor. “For consumers, there’s never been a better time to be a beer drinker. But for a brewer, the old model of best practices doesn’t apply anymore.

“You look at the top 50 (in the U.S.), they’re struggling. These are really good entrepreneurs, really smart people doing everything right, and the industry changed.”

‘IT’S JUST GAME ON’

U.S. beer sales overall were down 1% in 2018, according to statistics released by the national Brewers Association, which tracks the beer industry. But craft beer continued to grow, with barrel output up 4% from 2017. Add in the craft breweries bought by Anheuser-Busch In-Bev and other big beer corporations – a segment not counted statistically as “craft” anymore – and craft consumption is even higher, by 9 million barrels.

While that’s not craft’s heady double-digit growth of a few years ago, it still accounted for about a quarter of the $114 billion in U.S. beer market revenue last year.

Much of that growth can be tied to this: Last year in the U.S., 1,049 breweries opened and 219 closed. In Oregon alone, nearly 300 breweries are now operating, with about 120 of them in the Portland area.

“There’s just too much beer out there,” says Jason Mcadam, the former owner of Burnside Brewing, which shut down in February. “Out-of-state breweries, small breweries, it’s just game on.”

Gary Fish, founder of Deschutes Brewery, said he has seen ups and downs in the market since the brewery, now Oregon’s largest, opened three decades ago in Bend. But this downturn feels different.

“With this many breweries, there’s not enough market, enough consumer purchase to sustain them all,” Fish said. “We’ve got 25 breweries in Bend. We used to kind of ‘own the market’ in Bend. That’s no longer true. We’re fighting alongside all these little, tiny breweries.”

Deschutes Brewery operates a brewpub in Portland's Pearl District, at 210 N.W. 11th Ave.LC- The Oregonian

For Mike De Kalb, the co-founder of Northeast Portland’s Laurelwood Brewing, the key is trying to stay fresh and continue to brew world-class beers, but even that doesn’t guarantee success anymore.

“There’s just too many choices, too many brewpubs,” De Kalb said. “But you’ve got to do what you’ve got to do to stand out. You’ve just got to be better than the next guy.”

‘SHINY NEW OBJECT’ OVER LOYALTY

Beyond the sheer number of breweries, another phenomenon is complicating the lives of brewers: fickle customers. They want what’s new and something they’ve never had before. They will stand in line for hours for a new release from a brewery that has all the buzz. And brand loyalty? Nope.

“The consumer is like, what’s new, what’s awesome? I’ve never heard of this beer, I gotta give it a try,” said Mcadam, who said increased competition was among the reasons Burnside closed. “There’s no allegiance to flagship beers or breweries anymore.

“Everything you put out has to be different. It’s flashy and glittery. People aren’t buying the same beer over and over like they used to.”

Matt Schumacher, who opened Northeast Portland’s Alameda Brewhouse in 1996 but closed it in November amid strangling competition and “circumstances” he declined to discuss, said what craft-beer consumers say and what they do are often two different things.

“In beer, the customer feels like there’s an attachment to their brand, but there’s really not,” Schumacher said. “It’s a fake loyalty. If I have a kickass Alameda shirt, you’ll wear it, but it doesn’t mean you’re going to go buy my beer. They’ll wear the Alameda shirt when they buy a 6-pack of 10 Barrel.

“10 Barrel is a perfect example,” he continued. “Remember the frickin’ outrage people had in this town when (Anheuser-Busch InBev) bought them? Where’s everybody hanging out now? On their rooftop.”

And consumers’ desires for something ever-new creates an unintended consequence, says Ben Edmunds, brewmaster at Northeast Portland’s Breakside Brewery: Beer quality suffers.

“Whether you call it customer promiscuity or lack of loyalty, that absolutely impacts how we compete,” Edmunds said. “It means there are less-refined beers on the market. Brewers lament that. Because I’d love the chance to remake a lot of beers, but consumers are interested in getting something different.

“That may be a monster we created ourselves. Breakside started making 100 beers a year 10 years ago and people thought we were crazy. We may be the victims of our own interest at the full market level because now everyone’s doing that.

“It really begs the followup of what do you do when you’re not the shiny new object. Everyone eventually is that.”

ONLY SO MANY TAPS AND GROCERY SHELVES

For decades, the goal for many small breweries was distribution: Start selling in your backyard, capture distributors’ attention, get your beer onto store shelves in your region and maybe elsewhere, then reap the benefits. And if you did it well enough, you might even get the big payday: Selling your brewery to an AB InBev or MillerCoors, either whole or part.

But that seems to be a fading vision.

“There’s a real tide change happening in distribution models,” Edmunds said, “and older models – the regional, midsize breweries – that script is working less and less.”

Holloway, the craft consultant, said the wholesale channel is a tough place to be right now.

“With AB InBev, Heineken, the grocery aisles are becoming increasingly competitive and harder to get your product into market. If you want to follow that model, you’re about 20 years too late.”

So if a brewery is built on big revenue from out-of-state sales, it could be overleveraged and in trouble. Some are looking toward alternatives to their traditional approaches. Widmer, for example, is beginning to brew hard spritzers. Ninkasi Brewing, the 35th largest craft brewer in the nation but who saw declines last year, has launched a seltzer line as well as created “cooperatives partnerships” with other breweries.

Deschutes, which distributes in about 30 states and Canada, in 2016 announced it would build a production brewery in Virginia to better serve the East Coast. But since then, the 10th biggest craft brewery in the nation has seen negative growth and, as a result, put the expansion plans on hold.

“At some point we have to behave like the company we are, not the company we want to be,” Fish said. “There are some tough decisions that go along with that. … We’re waiting for a little more clarity as to what happens, whether or not -- or when -- we build a brewery there. There’s too much uncertainty to justify that risk.”

Co-owners and head brewers Ben Parson (right) and Richard Hall at Baerlic Brewing Company located at 2235 S.E. 11th Ave., Portland, Ore., May 3, 2019. Mark Graves/StaffMark Graves

Distribution is and continues to be the most pressing issue facing the industry, said Ben Parsons, co-founder of Baerlic Brewing and an Oregon Brewers Guild board member. Access to market is becoming more and more difficult, especially for smaller breweries, he said, and laws that make it difficult or impossible for brewers to switch distributors make it even tougher.

“You have an insane increase in the number of breweries having to rely on fewer, larger distributors,” Parsons said. “And if you are continuing to rely on antiquated franchise laws — wherein breweries don’t have the ownership to their own distribution rights — then how can you have a fair and equal access to market?”

Danelle Romain, executive director and lobbyist for the Oregon beer and wine distributors association, said brewers in Oregon are free to self-distribute or use a distributor. She said the law allows the distributor to recover fair market value if a brewery chooses to leave, a set-up that covers the distributor’s investment in developing the brand. And she said fair market value is the price that a willing buyer and a willing seller would pay if they knew all of the facts of the brand.

Parsons, however, says current law allows “little to no room to renegotiate or walk away from (a brewery’s) distributor relationship without taking on an insane and unrealistic financial burden.” That’s why he says self-distribution is often the smartest course for a small brewer.

GROWING SMALLER

One brewery doing that is Montavilla Brew Works in Southeast Portland. Founder and brewer Michael Kora said staying small feels right. Self-distributing is hard work but gives the brewery some freedom.

“Doing it ourselves and being self-distributed is a really nice advantage right now,” Kora said. “We can brew what we want and be experimental and not be so throttled down by having to brew two or three brands at once and put all our eggs in one basket.”

Self-distribution also provides Kora time to give customers the attention they need.

“We’re not trying to get to 100 accounts in a day. People (in distribution) are overtaxed,” Kora said. “They don’t have enough sales force to get out and cover the sales territory.”

That said, Kora is like many other small brewers: The idea of getting his craft into more hands is appealing. He’d like to expand, he just wants to do it wisely.

“Everyone’s looking around with their eyes wide open because it’s kind of scary out there,” Kora said. “We don’t want to grow too fast.”

Michael Kora eyes his creation at Montavilla Brew Works, 7805 S.E. Stark St. Kora has stayed small and is growing cautiously.Mark Graves/Staff

Despite the challenges for all size breweries, many in the industry remain optimistic.

“I think there’s tons of room still,” Edmunds said. “It’s just not as easy to grow, period; and you’re not going to see many breweries grow to the size of Ninkasi.”

Added Holloway: “I always say, strategy is about winning. As the entrepreneur you get to decide what winning is.”

If you want to define winning as paying a living wage, he said, then that’s what your success looks like.

“As long as we stay dispersed, and as long as consumers continue to buy beer from their brewery or bottle shop,” Holloway said, “this craft brewing renaissance can continue to grow and be successful.”

Oregon’s leading breweries

Number of barrels sold in Oregon in 2018

Deschutes Brewery: 66,186 Widmer Brothers Brewing: 58,773 Hop Valley Brewing: 50,392 Ninkasi Brewing: 50,227 10 Barrel Brewing: 48,794 Pelican Brewing: 25,255 Boneyard Beer: 24,928 Full Sail Brewing: 22,505 Portland Brewing: 21,804 Breakside Brewery: 20,348

Portland beer industry closures in past 10 months

Columbia River Brewing, small Northeast Portland brewpub, closed May 2019

BridgePort Brewing, one of Portland’s first breweries, closed February 2019

Burnside Brewing, small brewpub in close-in eastside, closed February 2019

Widmer Brothers Brewing, one of Portland’s first breweries, closed North Portland tasting room January 2019 after closing Gasthaus restaurant in November 2017

Alameda Brewhouse, Northeast Portland brewpub since 1996, closed November 2018

Portland Brewing, another of Portland’s first breweries, closed pub November 2018 but continues brewing for distribution

Lompoc Tavern, a longtime Northwest Portland tavern, closed September 2018, though other Lompoc Brewing locations continue operations in Portland

-- Andre Meunier

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