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Navigating the World of Brewery Location, Location, Location

Misc Musings

In the craft beer universe, brewery location matters. But if you move into a space formally occupied by another brewery, will you be plagued by a "hangover" from the brewers that came before you?

In the blisteringly hot real estate market of Portland, Oregon, it can be hard to stay in the same location for long.

Even in this beer-crazy city, breweries are not immune from the impact of increasing rents, changing tastes and unpredictable cash flows. Even well-received breweries can fold if the right combination of factors aren't in play. In 2017, while 997 breweries opened in the United States, 165 shut down around the country -- including several in the Rose City.

Portland is home to more than 60 breweries, and with booming residential and commercial construction (and interestingly, stabilizing rents), there are more and more locations for breweries to set up shop.

Why then, do so many new breweries take over the locations where other breweries previously existed? Aren’t breweries worried about a stigma or a “hangover” from a previously shuttered business selling similar product?

Multiple brewery owners said that opening where a previous brewery once was is a way to ease into the business with a built-in customer base.

In northern Portland, West Coast darling Great Notion Brewing moved into the same space as the former Mash Tun Brewing. Paul Reiter, the co-founder of Great Notion, said it was a fruitful decision to purchase an existing brewpub. Even so, the brewery had to make changes.

“I'd say you need to stay relevant, and that buying an existing brewpub or starting one from scratch, either way you need to stay ahead of the curve and heavily differentiate. If you were to open a new brewpub or buy existing - you need to set yourself apart from the crowd,” Reiter said. “You can't buy an existing brewpub that is struggling and come out with the same beers they were serving. If people weren't buying a kolsch from the former owner, why would they buy your kolsch, for example? Our biggest takeaway is that by opening our location with exciting, new styles of beers, that beer drinkers flocked to drink them.”

Fathead’s Brewing, a miniature chain brewpub based out of Ohio with an outpost in Portland’s Pearl District, produced the two best IPAs in the city according to Willamette Week in 2016. It served an expansive menu and was a major tourist stop in one of Portland’s most pedestrian-friendly neighborhoods.

Then the brewery manager, Tom Cook, couldn’t come to an agreement on licensing renewal and so started Von Ebert Brewing in the same location. He isn’t intimidated by the reputation his previous brewery left behind. Instead, Cook wants to focus on a more refined product.

“I think you can have incredible real estate and a mediocre product and do OK,” he said. “But you can have absolutely terrible real estate and an incredible product and just kill it.”

The Pearl District is a former light-industrial and warehouse neighborhood which has become the symbol (for better or worse) of a changing, gentrifying Portland. Along with Fatheads/Von Ebert, there are Deschutes and 10 Barrel Brewing locations just blocks away.

Cook believes these breweries are not competition, rather, the high density of breweries close to a pedestrian downtown core makes it more appealing for more beer tourists.

“I’d actually be a little hesitant to open a location where there are no breweries,” he said. “People want to try different beers, and this is a case where a rising tide lifts all boats. Our number one seller is our sampler paddle, and our busiest weekend at Fatheads was 1.) When we opened, and 2.) When 10 Barrel opened down the street.”

Some Portland brewers are dealing with a slightly different scenario. Charles Porter of Little Beast Brewing recently expanded from his Beaverton location to Southeast Portland, along the hip Division Street. He took over that location from long-time Portland brewers Lompoc, who decided to leave the homey “Hedge House” beer garden location. Little Beast has become lauded in its own right for its Farmhouse Ales, but until the move to Division, had been brewing and selling their beer out of a bourbon bar in the Portland suburb of Beaverton.

By taking over that location, Porter said he has had to make some changes.

“Division is becoming a block of blingy, shiny things, and I’m not that,” he said. “But I will be making an in-house IPA and a Kellerbier. People came to expect certain things from Lompoc there, but this was an opportunity to bring my own beers to a comfortable Northwest-inspired location.”

The Hedge House had become a bit of a neighborhood institution, but making the “old-school” beers Lompoc is known for. Porter is hoping some Farmhouse Ales, Table Beers and Brett-funky fresh brews won’t be out of line in the neighborhood.

But when it comes to totally changing a location’s atmosphere, look no further than two of Portland’s most popular brewing locations.

The Commons was a critically-beloved brewery specializing in Flanders Reds, Saisons and Farmhouse Ales. The owner, Mike Wright, closed down the location but held onto the property. He rented it out to San Diego favorites Modern Times, and that location, dubbed the Fermentorium, packs the industrial space with a whole new kind of energy, including a massive Randy “Macho Man” Savage papier-mâché hanging over patrons.

Both Reiter and Cook said it’s a huge uphill battle for a brewery to open in a neighborhood with no other breweries or little foot traffic.

“However, I would be concerned about this if the location was a little worrisome or if the new owners don't plan on changing much,” Reiter said. “I would recommend either focusing on an already heavily-foot-trafficked street, or an up-and-coming neighborhood about to pop off.”

Tavour partner Stormbreaker has seen the brewery real estate issue from two aspects. When it opened along Mississippi Avenue in 2014, it was taking over for now-defunct Amnesia Brewing.

Dan Malech, co-owner of Stormbreaker, said that as previous patrons of Amnesia, he and co-owner Rob Lutz wanted to be delicate with the change.

“We wanted to do the space proud and make the changes that we wanted to make as seamlessly as possible,” Malech said.

Even with some early doubters and negativity, Stormbreaker got signs things were OK.

“We were looking to get into the business one way or another and we always believed that our products would speak for themselves. We were fortunate to be able to take over this fantastic location that serves locals and tourists alike,” Malech said. “When we were doing our buildout in January of 2014, people would constantly pop in and ask if we were open, despite the thick layer of sawdust, ladders everywhere, and dozens of signs stating we were closed for renovations. That certainly gave us the confidence that we were in a great location.”

Stormbreaker opened a second location in the St. John’s neighborhood of Portland this year, a self-contained outpost in North Portland. While there are breweries up there (it’s Portland, breweries are everywhere!), Malech felt that taking over a new space presented its own set of challenges and rewards.

“We spent a lot of time in that part of town and after we felt like we would have the support of the neighborhood, we just needed to find the right building,” he said. “Our new spot allows us to expand brewing capacity in the future, while maintaining our core mission of being a neighborhood friendly brewpub meeting the community one pint at a time.”

Whether it be a change in branding, a new expansion, a taproom takeover or a combination of all of these factors, the message from brewers is clear. Location is important, but the beer is vital.

“For the amount of change you see in Portland, this is a very mature real estate market, a very mature brewery market,” Cook said. “Real estate plays a major factor, but if the product isn’t there, nothing’s there.”

Written by Ryan Murray

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