N.W. Beer GuideComment

Oregon: Bend: After the sale to Budweiser: A 10 Barrel Brewing Company postmortem.

N.W. Beer GuideComment
10 Barrel Brewing Company's production facility
To paraphrase Otto Von Bismarck's famous quote - beer is like a sausage, it's better not to know how it's made.

This sentiment has been shared by a majority of those who enjoy beer. But for the curious, one needs only to visit a nearby brewery to find the answer.

The same approach can be said of a brewery's investors - most people don't concern themselves with who is signing the brewer's paycheck, only that the pint produced is memorable.

Yet there are some who do concern themselves with who is paying for the grains and hops. This is what it means to be a craft beer philosopher/supporter versus a general beer drinker. It requires adherence to a philosophical dogma of only supporting privately-owned, craft breweries. Often this leads to a perception of snobbery by those who are content to enjoy a Bud Light or Blue Moon.

Craft beer supporters are a select breed of people. All told they make up around 2211% of the total consumption in the United States. That means for every 7889 Budweiser, Miller, Coors, Rainier, or Olympia drinkers, there are 22 approximately 11 other people sipping on a pint of Holy Mountain, Breakside, or Payette IPA. (source, IB Times)

In the Pacific Northwest a false sense of security was enjoyed by those who live in cities like Portland or Seattle. But a few decades after the birth of craft beer, Anheuser-Busch's Budweiser felt the need to enter that market, and announced the purchase of Illinois' Goose Island in March, 2011. New York's Blue Point Brewing was attained in January, 2014, swiftly followed by Bend's 10 Barrel Brewing Co. later that year (December 2014). Seattle's Elysian Brewing Company was next on the list (January 2015), and their latest acquisition, announced September 2015, was Los Angeles' Golden Road Brewing.

From the majority of America, these purchases have generated a collective shrug, while an adamant minority vowed to never set foot in any local brewery owned by A-B. Some even went as far as driving past places like 10 Barrel to offer them a single-fingered gesture. Others walked into a brewery's public house, purchased a 22oz bottle of beer, and proceeded to empty the contents on the floor as they exited the building.

These types of reactions are still classified as fringe examples, associated with craft beer supporters' feelings about these breweries being 'lost' to 'mass-market' breweries. But what many people have failed to grasp is that businesses are purchased all the time, in many cases as a direct result of the loyal customer's support.

With each craft beer acquisition announcement by Budweiser, freelance writers and reporters alike would weigh-in on the impact of such a purchase.

And then something happened a few months after 10 Barrel and Elysian Brewing broke the news to its customers - no one updated the story. Much like ol' Otto's saying, no one wanted to learn who or how the beer was being made - because no one wanted to support the brewery anymore.

Realizing a glaring postscript was missing from the story of 10 Barrel's 3 owners and 4 brewers, I took a trip to Bend, Oregon to learn about the changes since their acquisition. In other words, I wanted to learn how the beer was being made.


a featured pint at 10 Barrel Brewing Company's Bend Pub

Quick Oregon Facts about 10 Barrel

  • Originally opened as "Wildfire Brewing Company" before a legal dispute forced the name change
  • Founded by Garrett Wales and twin brothers Jeremy and Chris Cox in 2006
  • Original brewer was Paul Cook (now at Ninkasi Brewing)
  • Brewers James "Jimmy" Selfert (formerly of Deschutes Brewery and hired in 2011), Tonya Cornett (formerly of Bend Brewing and hired in 2011), Shawn Kelso (formerly of Barley Browns and hired in 2012), Whitney Burnside (formerly of Pelican Brewing and hired in 2014), all worked for award-winning breweries. 
  • Inaugurated as a 10 barrel production brewery in 2006
  • Expanded brewery operations to 50 barrels in 2011
  • Currently produces around 70,000 barrels of beer per year.
  • Announced expansion in 2015 to increase barrel production to 125,000 by June 2016. 
  • Operates 3 pubs: Bend (OR), Portland (OR), & Boise (ID)
  • Total Oregon sales in 2014 (prior to sale to Anheuser-Busch): 23,060 barrels (source, OLCC 2014)
  • Total Oregon sales through August 2015 (after sale to Anheuser-Busch): 22,846 barrels (source, OLCC 2015)
From the beginning the brewers and owners were given assurances that almost nothing would change at their three breweries. If any changes were made it would be to the current way the business was executed. This included access to greater quantities of hops, barley, and assistance with research and development of new recipes.

Unfortunately there has been some modifications, mostly in the areas associated with conduct and individual contribution. As is the case in any corporate-owned environment, modifications are made to improve overall profitability.

Breaking it down here's what 10 Barrel Brewing gained and lost after the acquisition by Budweiser.

Pros
Cooperation - Ingredients
  • Like all small-production breweries, 10 Barrel often had to bid against larger craft breweries (e.g. New Belgium, Sierra Nevada, Boston Beer, etc). This often resulted in smaller purchases of key hops, or in some cases required substituting hops (e.g. Summit in place of Amarillo). This didn't lead to a 100% reformulation of recipes, but it does lead to ingredient substitution. As a consequence beers produced with alternate hops were sometimes received with mixed reviews.

    Since the acquisition, the brewers at 10 Barrel have enlisted the supply network that Anheuser-Busch has developed over the decades. This has led to greater access to hard-to-acquire hops like Simcoe, Amarillo, or Mosaic. This has also allowed brewers like Tonya Cornett (head of 10 Barrel's R&D) to purchase wine, bourbon, and rum barrels for experimentation.

    Recalling a conversation in early 2015, Shawn Kelso (head brewer of 10 Barrel's Boise brewery) remembers a conversation he had with Andy Goeler (head of Budweiser's craft beer division) and the inability to acquire Amarillo hops to produce a hop-focused beer. Soon after mentioning this, Goeler was on the phone with their suppliers to acquire approximately 40,000 pounds of Amarillo hops. You only have to enjoy a Joe IPA, made with 'tons' of Simcoe, Mosaic, and Amarillo hops, a beer that is currently rates around 87 (with less than 20 reviews) on Beeradvocate and 90 (with around 35 ratings) on Ratebeer.com, to see how serious A-B is about their craft beer division. And It continues with pub-only beers like Pearl IPA (brewed in Portland by Whitney Burnside), rated 92 on Ratebeer.com.

    Alternately, Goeler has recognized something special in 10 Barrel's Tonya Cornett, who has been developing wild ales and even cider. Chances are you've tried her No. 1 Cherry Ale, Swill, Cucumber Crush Berlinerweiss, or Pine Box's 2nd Nail Berlinerweiss blended with apple cider. But those beers only represent a small portion of what Cornett is developing. From barrel-aged beers matured in sherry, rum, bourbon, port, and pinot barrels, to the use of fresh fruits and vegetables, Tonya continues to experiment with the boundaries of Budweiser's knowledge.

    Starting next year, with the re-release of Crush in 11oz 'stubbies', Cornett's legacy will continue with the bottled release of Cucumber Crush, subsequently followed by the release of Apricot, with Lemon and Strawberry varieties to follow.
Cooperation - Quality Control
  • Like many small production breweries, 10 Barrel lacked a dedicated laboratory to analyze their beers for quality. Without a lab, a brewery cannot analyze the various characteristics associated with beer - including color, aroma, flavor, carbonation, or mouth-feel. The lack of a lab also fails to precisely report on a beer's alcohol by volume, which is reflected on the brewery's beer labels.

    Prior to 2015, 10 Barrel's brewers often would visit nearby Deschutes Brewery's laboratory. Today, through conversations with Budweiser, the brewery has installed an in-house laboratory. This has lead to an improvement in their brewing accuracy as well as avoiding delays in getting beer authorized for sale in the United States.
Cooperation - Research and Development
  • It's been said that Budweiser has a problem stereotyping craft brewers, some going as far as equating craft brewers as a 'home brewers'. This is obviously furthest from the truth as many breweries employ some of the same techniques breweries like Budweiser enjoy. From quality control, to experimentation with wild yeast strains, craft brewers are more than simple home brewers.

    Tonya has introduced many questions that even scientists at Budweiser cannot answer. This has led to more research into the development of lambic-inspired beers, among others, on a larger scale than produced at 10 Barrel. In exchange, Tonya and the other brewers at 10 Barrel are educated on laboratory analysis and better utilization of ingredients.

    This has also led Tonya to expand 10 Barrel's current business model to include cider in the near future. Two years in development, this is a first for not only 10 Barrel but also Budweiser's craft beer division.
Brewery Distribution
  • Starting with Colorado, Budweiser and 10 Barrel continue their expansion into markets beyond the Pacific Northwest. After Colorado the brewery anticipates distribution in Northern California, before moving onto new markets.
Brewery Expansion.
  • Since the purchase by Budweiser, 10 Barrel stands to triple their current property's 25,000 square feet to 75,000 square feet by June 2016, with the acquisition property adjacent to the brewery. With the expansion the brewery anticipates an upgraded refrigerated warehouse, upgraded canning/bottling line, dedicated laboratory, as well as administrative space for 10 Barrel's management.

    Through this expansion the brewery anticipates a maximum production of 120,000 barrels of beer by end of 2016 (current production is approximately 70,000 barrels).

    More plans include the reproduction of 10 Barrel's beers by Budweiser, once their breweries in California are redeveloped to produce ales. Currently Budweiser uses lager tanks to produce their line-up of beers, but shares in the production of 10 Barrel's Pray for Snow winter ale in Fort Collins (Colorado).
Employee Benefits
  • Through this acquisition, many employees will now receive health insurance as part of their continued employment.

Cons

brothers Chris & Jeremy Cox - founders of 10 Barrel Brewing Co.
Employee Conduct
  • With the acquisition by Anheuser-Busch, 10 Barrel employees are now required to adhere to strict anti-drug policies. Despite Oregon's recent legalization of marijuana, all employees are subject to drug testing. This is the same policy enacted at Chicago's Goose Island Brewing, Elysian Brewing Company, Blue Point, and Golden Road.
Customer Perception
  • The Brand: Despite the improvements in production, limited edition beers, and greater access to 10 Barrel's beer, the brewery will more than likely be avoided by those who value locally-owned, craft breweries. One independent writer went as far as presuming "... Anheuser Busch will not care about 10 Barrel Brewing. Anheuser Busch does not care about taking chances, using local ingredients or sourcing regional hops. Anheuser Busch will not care about what regulars like to drink at 10 Barrel brewpubs."(source, Magic Valley's OnTap )

    However, as witnessed during our recent visit to 10 Barrel's pub in Bend, there doesn't appear to be a perception issue with many locals.
  • The Employees: After the news of the acquisition was announced, many independent writers took to their digital tomes to opine their thoughts. This led to people accusing brewers like Jimmy Selfert and Tonya Cornett of "selling out", or as one writer put it "I’m not planning to even taste their beers, ever again, even if Tonya and Jimmy keep their jobs." (source, The Pour Fool)

    This drove many employees, including Cornett, to steer clear of websites like Facebook to avoid being depressed on a daily basis. Today many have resumed their lives online while continuing to brew the same beers they made prior to 2015.
Unresolved Pros/Cons

Creative Control
  • Using another beverage company as an example, Starbucks, we currently don't know what Budweiser's long-term goals are with their investment in craft beer. Because of this we cannot determine if recipe development, packaging, and promotion will remain with 10 Barrel's management or if this will eventually rest in the hands of people like Andy Goeler.

    By comparison, Starbucks Coffee Company purchased La Boulange cafe's, before shuttering most of the stores in favor of featuring the brand's signature baked dishes in Starbucks stores. This resulted in unemployment or reassignment (within Starbucks) La Boulange employees.

    Unfortunately a corporation owns the intellectual property and offers no guarantees how they exercise that I.P.
Management
  • As of October 2015, the three prior owners of 10 Barrel currently report directly to Andy Goeler. As part of their reporting, Jeremy, Chris, and Garrett have to report on operations in the brewery and the pubs. Current discussions center around expansion of Crush as a brand series and expanding 10 Barrel's brewpub operations into other markets.

    It's unclear, beyond Crush's proposed lineup (see above, Cooperation - Ingredients) or current number of brewpubs, the seriousness of Budweiser's investment in 10 Barrel. 
Final Analysis
  • No matter how you feel about the sale by Chris Cox, Jeremy Cox, & Garrett Wales, you have to concede the brewers will gain much in experience. This will lead to not only more consistent beers from 10 Barrel but also some potentially exciting beers as well. One only has to look to beers like Joe IPA or Pearl IPA to see the brewers are already testing the limits of Budweiser's investment.
As with all things, further time and analysis is needed.

Now that you've gotten to the source of the 'sausage', do you still want to swallow?

In the interest of full-disclosure - 10 Barrel Brewing Co. provided us with transportation, lodging, and sponsored meals - during our stay in Bend. We wish to thank them for their time and their hospitality.

Please visit our sponsors
Zeek's Pizza. With over 10 locations. Open daily till from 11AM - 10PM