The Rosenstadt Experiment: Launching Bottles During a Pandemic

What happens when you’re an all-draft brewery and the coronavirus strikes? Many American companies were in this boat when all the pubs and restaurants closed down last month. One of them was Portland’s Rosenstadt (German for “Rose City”), which offers classic German beers brewed at Laurelwood and Portland Brewing.

The backstory is a great one. The two guys behind Rosenstadt are either German (Tobias Hahn) or married to a German (Nick Greiner), and they have a serious, romantic love for both the beers of Germany, but also the culture of drinking together, cheek-to-cheek, in gartens and gasthauses. They decided to start with a contract-brewery model while they saved money for their brewery while fomenting the communal Gemütlichkeit they loved from home.

Everything was working out beautifully. They were developing a fan base (including me) for their classic beers, including harder-to-find beers like helles and dunkel. They’re really well-made beers with subtlety. All great until the bottom falls out of your business plan.

When they announced they were planning to release beer in bottles, I reached out to Tobias Hahn for an account of how all this played out and what their future looks like. Hahn trained as a scientist, earning a doctorate in Microbiology and Immunology, with a focus on virology and the vertical transmission of HIV. (His report included some observations about the coronavirus I’ve cut, but suffice it to say he was alert to the dangers before most people.) His love of beer caused this mid-career shift to beer, and he and Nick have been immersed in Rosenstadt ever since. I’ll turn over the mic to Tobias now.

January was a pretty good month for us and February was even better—the best February yet, with strong demand. We felt hopeful that with the warmer weather, more help on the sales side, draft demand would increase sharply, enabling us to finance the (vehicle) expansion mostly out of cash flow and the reserves we had been diligently building up during the previous year thus avoiding taking on too much debt.

Spring and summer were coming and we had to think about making enough Helles Lager, enough Kolsch and all our other beers like the Schwarzbier, Vienna Lager and the seasonal Maibock. For production planning as a brewery, we always have to think at least eight weeks or more ahead, meaning we were already ramping up production for the seasonal increase in demand with warmer weather approaching. As brewers, and more so as a lager brewer, by the time you have a hunch you might be running out of beer, it’s already too late. Production forecast does involve some element of crystal-ball gazing.

With sunshine outside, the Weißbier, our Bavarian Hefeweizen and one of my favorite summer drinks, was on the docket to be brewed in early March. Demand in the first March week was a bit slow but most of our accounts had stocked up the previous week, so it looked like a normal cycle. Next week would be better. Then came the closure of large events like basketball games, large gatherings were discouraged (I think it was more no more than 100 or 50 people at first; how quaint looking back just a few weeks). And then rumors went around that schools might close (Seattle had already closed theirs, I believe). School closures always pose a logistical challenge for us as both Nick and I have school age children.

And then of course the world stopped: schools closed, all bars, pubs, restaurants were ordered shut. And here we were a draft only brewery (100% of our revenue came from draft) and all our customers vanished from one day to the next. I likened it to enacting prohibition overnight without warning anyone. Our sales went from best February ever to exactly zero.

Our first reaction was shock and disbelief and, to make things worse, there was little we could do. As I mentioned, production and spending decisions had to be made weeks or months earlier before it was clear what was happening around us. We felt like sitting ducks, dead in the water, as we had no packaged inventory nor an established pipeline of selling packaged beer. On the plus side was that we are a lean company with a small team, there is only Nick, myself and Aaron Shepherd, our sole employee. Our general overhead, although not insignificant, is relatively low, we have little debt and, most importantly we have the reserves that we had saved up to reinvest in the company.

First thing of course was to curtail spending as much as possible. We cancelled an order for new keg shells and stopped paying ourselves as owners. A quick back-of-the-envelope calculation showed that we’d be OK in the immediate short term but would, no surprise, run out of money swiftly if this dragged on.

Packaging the Helles had been in the works for quite some time. We spent time last year on package design and sourcing the materials, TTB label approval etc. This took longer than we wanted but we wear so many different hats at Rosenstadt that range from brewer, supply specialist, delivery driver, sales rep, warehouse manager to HR and accountant, that other things slowed us down.

By March all we were really waiting for was the labels to arrive from the printer. Luckily, during the first week of the shutdown we received word that the packaging materials would be in Portland soon. We also had some beer in tank that originally was supposed to go into draft (we already had the empty kegs stacked at the brewery for filling). Now draft was dead, there was no point in kegging the beer and potentially write it off later if this takes a while.

With the packaging material almost in hand, the decision was easy: get that beer into bottles as soon as possible and get it into the hands of our supporters who would hopefully like to enjoy it. If Rosenstadt had any chance of survival, this would have to be it. Unfortunately, we had to bide our time for another two weeks (and bleed money all the while) waiting for the final delivery of the bottle labels and bottle caps. During the waiting period as we and the rest of the world came to terms what was happening, patterns of a “new normal” emerged. Restaurants and bottle shops could stay open for to-go orders, beer pick up, and some of them established delivery services. Obviously, grocery stores were open and it became clear quickly that off-premise sales (packaged beer) were skyrocketing. Some breweries and cideries in Portland started home delivery but that was out of the question for us due to our licensing. We felt there were some channels to sell beer, however, and there was a glimmer of hope for a way forward.

“The decision was easy: get that beer into bottles as soon as possible and get it into the hands of our supporters who would hopefully like to enjoy it. If Rosenstadt had any chance of survival, this would have to be it.”

Then early Monday morning April 6, we fired up the bottling line at Portland Brewing. Portland Brewing is one of our partners where we brew the Helles Lager on a beautiful copper brew house that originally came from Germany (actually the valves and buttons are still labeled in German). The packaging line is a marvel of engineering: filling, capping, labeling and putting bottles into cases at a breakneck speed. What a relief and excitement to see the first filled bottles coming out of the filler and rattling down the conveyor.

However, that is of course only the opening of the battle: now we have to get it delivered and into the hands of thirsty Portlanders. We already had commitments to buy some cases from our friends at Olympia Provisions, The Beermongers, Belmont Station, and a few others.

Soon a few more accounts followed, so after the quiet a storm followed. The last two weeks have been a whirlwind; not only is it hard to remember what day of the week it is to be begin with, but add to that running around like crazy to make this transition happen.

I think it is safe to say that we are not alone in throwing our original business plans out the window. A few weeks ago we were a draft-only brewery that was planning to get into the packaged beer market. Now we are an (almost) exclusively bottled beer company. As it looks at the moment, at least we have some incoming cash flow. Although I had no high hopes to start with, we also applied for some government help in the form of SBA paycheck protection loan. However, after a frustrating application process with ever changing guidelines, the underfunded program ran out of money, so at this point we are on our own.

With the bottles out in the wild, we hope to break even soon, which would give us some breathing room to tread water until draft comes back in some form. It will be a different world for sure and there are so many uncertainties. Obviously, we are not alone in this, we (breweries, distributors, retailers) are all adjusting and trying to make the most of it and working hard so that all of us can get together again over a pint—I mean a half liter—to share stories and laugh.

ALL PHOTOS: ROSENSTADT