Coronavirus Diaries at Five: Zoiglhaus
Five years ago, during the acute phase of the Covid-19 pandemic, I collected reports from several Oregon breweries as they struggled to navigate the crisis. This week I will have some follow-ups from the same breweries on what has happened since. Today’s installment is the final dispatch, and comes from Zoiglhaus’ Alan Taylor.
Zoiglhaus Brewing was founded a decade ago in the Lents neighborhood, far further south and east than most of Portland’s breweries. The pub serves a diverse working-class neighborhood, and its German-inspired beer is in wide distribution across the state. As Alan explains below, its circumstances are different than most breweries, and helped it weather the pandemic with somewhat less damage than other breweries. The concept for Zoiglhaus flows from Alan’s years living in Germany. He partnered with a Portland developer, who added two breweries Taylor also oversaw (one, Ascendant, closed during Covid). Zoiglhaus remains the flagship brewery and has grown to become a key business in Lents.
At the start of 2020, Zoiglhaus was definitely on an upwards trajectory. Our year-to-year sales had increased 57%, 71% and 20% the previous three years. We were excited about expanding deeper into Washington as well as other neighboring states. Our building, including all of the connected ones, had just been purchased by my business partner, Chad. He also received the rights to purchase and develop the expansive green space next to our parking lot. Things were looking good for a year of growth and opportunities.
What were the effects of Covid closures?
Positives
We were able to purchase our building right before Covid hit. That sounds like a potential nightmare scenario, but it did have some upsides.
The biggest positive is that we were able to reconceive how we utilize the dining area/restaurant space at Zoiglhaus for when we would come out of the lockdowns. Luckily, we had numerous avenues for inspiration. A number of important ideas came from one of the taprooms that we have in Albuquerque (which serves our Ponderosa Brewing products). The El Vado Motel is on Route 66 and was completely renovated before Covid hit. My business partner Chad looked at the food truck culture in Portland and Albuquerque and reimagined the customer’s experience by converting several of the motel rooms into food pods.
Based on the success of that concept, we built out several spaces inside Zoiglhaus to expand our food offerings, realign our focus on brewing operations, and transition the restaurant into more of a beer hall/food hall concept. After the adjoining space next to us opened up, we were able to expand the food hall concept into that area as well as expand our brewery operations (going from 5,000 bbl/year to a capacity of around 30,000 bbls/year). The upstairs floor was reworked to create an attractive space for weddings/receptions including a very nice conference room. Even during the worst part of Covid, when I was the only full-time brewer working every day for seven weeks straight (talk about Groundhog Day!), I was never alone in the building. Someone was always around working on one of the larger projects.
The overall changes to the space led to a rechristening of the building to The Zed. Zoiglhaus Brewing is still its heart and soul, but the restaurants providing nine distinct food options, the Zephyr Lounge (selling some of our Ponderosa Spirits from Albuquerque), and events in the Zenith Room (upstairs) have created a wonderful community.
Another positive was the fact that we had ordered a canning line before everything went sideways. That helped us remain flexible for both ourselves as well as our contract brewing partners. Transitioning draft-only brewers into canning brewers saved their businesses. Even with the nightmare of can supply disruptions, we were able to rely on our network of friends and colleagues to limp through the worst days and find long-term solutions to our can supply needs. Looking back at our sales mix, we were around 55% draft through 2019. It took us until the 2ndquarter of 2024 to sell more draft than cans. Q2 of 2020 was 99% can sales!
Negatives
I still recall the darkest days of fear, uncertainty, and confusion. It might not have been as bad as the generation that survived the Great Depression, but it will continue to have impacts on us socially for many years.
The stresses of trying to raise two school-age children, keep multiple businesses afloat, support family, friends and a marriage were pretty rough. My physical absence while being in the brewery juxtaposed with my wife working from home and trying to deal with remote learning. We felt lucky that we could both still work, but it was definitely challenging.
My dad passed away during Covid (pancreatic cancer) and I was sometimes kept from being able to visit him when someone on staff would either get a Covid scare or come down with it.
On another front, only one of the former brewers is still with us five years later. Some left town in 2020; some changed professions; and some came back for a bit before life plans changed for them and they moved on.
The Ascendant Taproom didn’t survive the chaotic back and forth of lockdowns—the mass exodus of businesses and government offices from Old Town and the dearth of tourism in the city. We tried many, many times to reopen, but there was simply no point anymore. We will probably move the equipment to another future brewery in a different city. We are able to continue the brand out of the Zoiglhaus facility, but I miss Ascendant having a home base.
Now and the Future
The big picture of how craft beer is doing is a bit of a mess. Looking at aggressive expansion into new markets is more difficult. It requires more energy, effort and expense to grow. That said, opportunities are still out there, but the heyday of people coming in just because you are a brewery are behind us.
Inflation has slowed down enough to date that things seem more stable. The ongoing self-inflicted trade wars haven’t manifested into price hikes yet, but the uncertainty is hard on everyone and is definitely driving sales downwards. Trends towards less alcohol consumption, whether driven by generational factors, the proliferation of cannabis, or lifestyle changes, are headwinds for the industry.
For those who are still beer lovers, the squishiness of what craft beer means to the consumer at times dilutes the “cool” factor for a small brewery. The hyper-local focus where folks support their local brewery is a wonderful thing for the pub/taproom model, but harder for a distribution brewery.
Our ethos of being the communal brewery (the basis of what Zoigl means) and truly being flexible and adaptable in working with other brewers (both start-ups and established brewers) has kept us busy as we work to fill the capacity that we have been bringing online. So overall I like to think the three-legged stool (onsite, distribution, and contract brewing), which is ultimately what saved us when Covid hit, should keep us resilient going forwards.
Alan concluded with some positive takeaways about the future of brewing and his business as he peers into the future.
My sunshine on the horizon is based around a few things:
Draft is still growing slowly. The socioeconomic reality of having bars, pubs, restaurants and events venues open and thriving again will help many of us in multiple industries financially. The sense of fear and isolation should abate when we are all meeting with friends and family in open, public settings.
Our brewing/cellaring staff is stocked with seasoned professionals. Between just three of us on the brew staff, we have over 75 years of professional brewing experience. That stability is super grounding. We have now seen three major boom/bust cycles for craft beer, in addition to a pandemic, and have better ideas as to how to adapt to them.
Beyond our current Portland sales team, we are investing in sales staff for the Seattle market. We can support and supply that market well with our existing infrastructure.
We have a new brand/brewery on the horizon in the original Laurelwood space off Sandy. That will be an interesting project that will stay focused on the Hollywood connection.