City Club of Central Oregon takes in-depth look at local craft beer biz
Whether Central Oregon’s booming beer business could reach a saturation point was one of the questions posed in a wide-ranging discussion of the local craft brewing industry held in Bend recently.
With the burgeoning sector garnering national and international attention – latterly via a New York Times travel piece and a ten-minute South Korean TV segment touting Bend as a “Beer City USA” – the City Club of Central Oregon chose the hot topic for its latest forum, with views aired by prominent local exponents including Deschutes Brewery founder Gary Fish and 10 Barrel Brewing partner Garrett Wales.
Additional contributing panelists included newly-appointed Bend Business Advocate Carolyn Eagan and Assistant City Manager Jon Skidmore, who also touched on the thorny issue of infrastructure capacity.
In addressing why Central Oregon – which currently boasts some 16 craft breweries, with more in the works – should have become such an ale hotbed, Fish traced a line from the earlier history of beer in North America.
He commented that in the late 1800s there were over 4,000 breweries in the U.S., partly due to lack of connectivity between individual cities and states, but that number had dropped by over 25 per cent by the time Prohibition was enacted in 1920. The law was repealed in 1933, and by the following year 756 breweries were in operation.
But the number of breweries began once again to decline partly due to consolidation, as larger breweries pushed smaller breweries out of business in an effort to produce a beer that would sell nationally, and by 1983 the U.S. was down to just 80 breweries, represented by only 51 companies.
But just when it appeared as if the country was destined for a handful of national beers, a series of events paved the way for microbrewery development, including President Carter’s signing of a federal law legalizing homebrewing, and the granting of rights to individual states to regulate alcohol.
Oregon took the lead in allowing the use of non-pasteurized beer, with Portland spearheading the nascent brewpub concept – allowing manufacture and retail on the same premises and boosting margins in a low material/high capitalization cost ratio business.
Pioneers like the brothers McMenamin, Bridgeport and Cartwright Brewing put the tavern at the central point of the community, and the city grew to boast the world’s highest number of breweries and brewpubs per capita. Today there are over 150 breweries in Oregon, using fresh, quality ingredients and bringing ever higher levels of innovation to the process.
Responding to the question of how many breweries the state, or Central Oregon could handle, Fish responded: “Oregon has around 400 wineries, and California 4,000 – but no-one is asking how many wineries those states can handle.
“The Portland metro area ranks number one for craft brew consumption, with 40 per cent of every beer dollar spent going to craft beer. I think Oregonians have always had an independent streak, and we are fortunate to have receptive and thoughtful consumers matched with rebellious entrepreneurs.
“We still don’t get a lot of media attention on the East Coast, but there’s still no place I’d rather be than Central Oregon.”
Fish added that today there are now over 2,100 breweries in the U.S. – a 125-year high – and a staggering 1,200-plus in planning stages, as the craft brew revolution has gathered significant steam in the last two decades. There are now more styles of beer produced in the U.S. than in any other country in the world.
Eagan told the forum: “As someone who started out as a regional economist with the State of Oregon Employment Department and often had to publish disappointing numbers, I am thrilled about an industry that increased its jobs total by 25 per cent last year, with our area outpacing the state in the growth of brewery employment.”
Eagan said the state’s brewery payrolls increased 8 percent, while in Central Oregon the growth came in at 14 percent, going from 450 to 513 jobs. The region also had the most brewing jobs per capita of any in the state, with one job in the brewing industry for every 390 people, and wages often coming in higher than the state average.
She also saw significant promise in the development of spin-off businesses as part of the craft brewing explosion. Locally, businesses like Gopher Kegs and custom growler and glassware producer Bottless are springing up to help service the sector.
Eagan added: “We have to consider the impact craft brewing has had and how it can act as a catalyst to spur further employment growth.”
Skidmore said: “It is great to see the level of collaboration between exponents in the industry locally, and I hope we continue to see those collegiate-type relationships flourish and foster further growth.
“One of our challenges is that we do have potential capacity issues with the sewer system regarding treatment and collection.
“We are in the process of expanding treatment facilities, but the bigger challenge is in collection capacity, particularly as Bend’s exponential growth earlier this decade made it tough to keep pace with corresponding infrastructure needs.
“We are making progress through the sewer collection master plan advisory committee to help consider the best options moving forward, with infrastructure improvements helping us with residential and employment growth.”
Skidmore added that the City had employed “soft programming” efforts to assist the brewing industry in recent history, including the suspension last year of a higher strength effluent charge while efforts continue to come up with a revised, more equitable solution for commercial users.
He added: “We continue to see what we can do with bricks and mortar infrastructure and other efforts to help propel compatible future growth.”
Wales, who is involved in 10 Barrels’ production activities, Galveston Avenue brewpub and recent entry into the Boise area while also heading the recently formed Central Oregon Brewers Guild, said: “In the industry, Central Oregon craft brewing is what’s ‘hot’ right now.
“We are also seeing the neighborhood brewpub being popular again as a centerpiece of communication, which is one of the great things about craft beer, though we always want to be sensitive to the surrounding community. I think part of what has separated Central Oregon is it is the epitome of supporting local, and has set a pioneering high standard which needs to be sustained.
“Obviously, Gary and the Deschutes Brewery have had a huge impact, with a lot of resonance throughout the contemporary craft brew business that came after, and also in terms of giving back and the philanthropic relationship with the local community which is an example for us all to follow.
“One of our bigger current challenges continues to be dealing with legislative issues, not least because we are often tackling rules that date back to the 30’s and 40’s which are just now being retrofitted to the modern era, but we are lucky in Central Oregon to have advocates on the local and regional level to help us try to keep ahead of the curve in that direction.”
In response to an additional question on water usage, Fish, whose brewery now distributes in 19 states, said his company employs sustainable practices wherever possible, including minimizing water intake versus volume of beer shipped out. It uses around two and three quarter gallons of water for every gallon of beer shipped, whereas the ratio use to be ten to one, and the company is recognized as one of the most efficient in this respect.
Deschutes Brewery has also recently partnered with the Deschutes River Conservancy (DRC) to annually restore one billion gallons of water to the Deschutes River.
Yearly contributions to the DRC’s water leasing program will allow the Brewery to offset more than 14 times their total water requirements in support of the DRC and its mission and Fish said they were “proud to give back to our namesake river in a significant way”.
The Deschutes Brewery’s contribution is now the largest private local donation for the Deschutes River leasing program, making up nearly seven per cent of the restored flows to the Middle Deschutes.
On a national level, Brewers Association President Paul Gatza said in an email that craft brewing continued to experience strong sales growth in the first half of 2012, outpacing overall U.S. beer sales, with data showing a 14 per cent increase in dollar sales and 12 per cent jump in volume in the first half of 2012 for small and independent U.S. brewers.
By contrast, overall U.S. beer sales are believed to be up about one percent this year, with most of that growth due to the extra day on the calendar because due to it being a leap year.
Gatza commented: “Generally, most craft brewers are continuing to see strong growth in production, sales, brewing capacity and employment, which is to be celebrated during challenged times for many of today’s small businesses.
“Plus it’s a fact that beer drinkers are responding to the quality and diversity created by small American brewing companies. India Pale Ales, seasonal beers, Belgian-inspired ales and a range of specialty beers are just a few of the beer styles that are growing rapidly.”
