Heading in Opposite Directions, MacTarnahan's and Breakside
We begin today's post by turning it over to the economist Joseph Schumpeter:
But it was also high risk. Breweries like Pete's Wicked skyrocketed and then collapsed. Others, like Portland Brewing [MacTarnahan's] and Pyramid stumbled badly after the market re-set in the mid-1990s. Redhook and Full Sail are two examples of breweries that nearly went the way of Pete's but finally flourished, but Portland and Pyramid fall into a separate, depressing cateogry, sort of like zombie breweries. I have no idea how much beer the newly re-olded Portland Brewing makes, but if it weren't for that gorgeous facility they have, the brand would have died a long time ago. Brands are fungible; brewing plants retain their value. Two months ago we learned that in yet another buy-out, Portland would be acquired by a Costa Rican company. That's not how Art Larrance and Fred Bowman drew it up when they founded the brewery 27 years ago.
Contrast that with the more modest risk/modest reward ventures of post-shakeout craft breweries. They're among the safest businesses to start (at least in Oregon), and few fail. On the other hand, most don't get huge, either. Ninkasi is the rare example of a quickly-growing new brewery, and I'd put Breakside into that category. Going from three barrels to thirty is a huge jump--rare in the 21st century. Collectively, though, the dozens of small breweries create quite a force. They are "revolutionizing the economic structure from within, incessantly destroying the old one."
Is rebranding enough for a brewery dependent on a generation-old amber ale? PBCo (as the employees used to call it) are reviving the elephant-themed IPA from the old Alan Kornhauser days, but is an IPA enough? It sure doesn't seem like it. What are you more excited about, Ben Edmunds' next concoction or a new "brand" from a tired old brewery? The gale blows...
The opening up of new markets, foreign or domestic, and the organizational development from the craft shop to such concerns as U.S. Steel illustrate the same process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism.The truths of Schumpeter's observation (referred elsewhere, delightfully, as "Schumpeter's gale") are evident in the fortunes of two breweries, both with big news out this week. The first comes from one of the shining new stars of the Oregon brewing scene:
New Breakside brewery/taproom opens Jan 30. From nanobrewery to microbrewery with a 30 barrel system in three years, Breakside Brewery’s new location is proof the craft beer producer has no intention of slowing down. The new 7,000 square foot facility opens Wed., Jan. 30 just behind Bob’s Red Mill in Milwaukie and features a tasting room with 24 taps.The second from one of the aging veterans of the first days of craft brewing (no link):
An exciting change for Portland’s beer scene is quickly taking shape. The company that brews the beloved MacTarnahan’s Amber Ale and other craft beers is going back to its original name and will once again operate as Portland Brewing Company, beginning in February 2013.Schumpeter's thumbnail description nearly perfectly describes what's going on here. American brewing has, in the aggregate, been very good for new breweries in the last 30 years. But despite the overall health of the herd, there have been some pretty spectacular die-offs. Indeed, when you look back at that first decade of microbrewing, you see how the game turned out to be high-risk, high-reward. When you look at the largest American breweries today, among those founded after 1980, most of the largest were founded in the late 70s or 1980s. Early success gave those breweries a huge advantage. You see that in Oregon, too, where the biggest breweries--Widmer, Deschutes, Full Sail, and Rogue--were all founded before 1990.
But it was also high risk. Breweries like Pete's Wicked skyrocketed and then collapsed. Others, like Portland Brewing [MacTarnahan's] and Pyramid stumbled badly after the market re-set in the mid-1990s. Redhook and Full Sail are two examples of breweries that nearly went the way of Pete's but finally flourished, but Portland and Pyramid fall into a separate, depressing cateogry, sort of like zombie breweries. I have no idea how much beer the newly re-olded Portland Brewing makes, but if it weren't for that gorgeous facility they have, the brand would have died a long time ago. Brands are fungible; brewing plants retain their value. Two months ago we learned that in yet another buy-out, Portland would be acquired by a Costa Rican company. That's not how Art Larrance and Fred Bowman drew it up when they founded the brewery 27 years ago.
Is rebranding enough for a brewery dependent on a generation-old amber ale? PBCo (as the employees used to call it) are reviving the elephant-themed IPA from the old Alan Kornhauser days, but is an IPA enough? It sure doesn't seem like it. What are you more excited about, Ben Edmunds' next concoction or a new "brand" from a tired old brewery? The gale blows...