It’s tough to be a craft brewer these days, whether that’s in Oregon or elsewhere in the nation.
Shifting consumer demands, including for non-alcoholic beer, along with rising costs and market saturation, have contributed to declining craft beer sales in recent years.
In Oregon, the abrupt closure of Rogue Ales last November after nearly 40 years was a stark reminder that even iconic brands aren’t immune to the industry’s struggles.
It’s against this backdrop that four Central Oregon breweries and a cidery recently announced the formation of the Oregon Beverage Collective.
The new partnership includes Cascade Lakes Brewing Company, Silver Moon Brewing, Crux Fermentation Project, GoodLife Brewing Company and Tumalo Cider Company.
The OBC aims to share resources and manage rising costs for supplies and ingredients. Crux’s production facility in Bend will now be responsible for brewing most of the OBC’s craft beverages. Crux Fermentation Project has also been acquired by the Rhine family, which owns Cascade Lakes Brewing.
Andy Rhine, co-owner of Cascade Lakes Brewing and President of OBC, says the collective will allow each of the brands to retain its own identity while fostering new collaborations between them.
Rhine joins us, along with Steve Augustyne, CEO of OBC and owner of Silver Moon Brewing, to share what this collective model offers for both brewers and consumers.
Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Dave Miller: From the Gert Boyle studio at OPB, this is Think Out Loud. I’m Dave Miller. It is a tough time to be a craft brewer. Shifting consumer demands, rising costs, and market saturation have all led to drops in craft beer sales in recent years and the closure of many breweries. That’s the background for a recent announcement from four breweries and a cidery in Central Oregon. They announced the formation of the Oregon
Beverage Collective to share production resources and manage costs. The new partnership includes Cascade Lakes Brewing Company, Silver Moon Brewing, Crux Fermentation Project, GoodLife Brewing Company and Tumelo Cider Company.
I’m joined now by two of the folks behind this partnership. Andy Rhine is a co-owner of Cascade Lakes Brewing and president of the collective. His family recently purchased Crux as well. Steve Augustyne is the owner of Silver Moon Brewing and the CEO of the new partnership. It’s great to have both of you on Think Out Loud.
Rhine: Hi, thanks for having us. We’re happy to be here.
Miller: Andy, first, I was struck by a line from Brian Yeager in “The Source,” the alt Weekly, in Bend. He noted the press release announcing your new collective, used the phrases production partnership, strategic partnership, joining forces, newly-formed coalition and community of breweries, but you didn’t use the term merger. So let’s just start with the basics. What does it mean that you’ve all formed this collective?
Rhine: Yeah, so we think of ourselves as a coalition or a family coming together, we all have deep ties and deep relationships with one another. And we do have various ownership structures and partnerships and manufacturing agreements, but we all have a vested interest in each other’s success and we are working together to build each other’s businesses to be stronger.
Miller: Steve, what exactly is going to be different because of the formation of this collective?
Augustyne: The big difference will be all of the production happening in one house.
Miller: And that is the facility at Crux Fermentation.
Augustyne: Correct.
Miller: Why is it helpful for your businesses to bring all production under one house?
Rhine: Really just the consolidated resources to be everybody’s ordering similar ingredients, is working with similar distributors, so distributors gain efficiencies from picking up product all in one house, the buying power associated with having more volume and more brands under one, everything, can materials, draft materials, sales resources, marketing resources. It allows all the brands to have access to more tools to help their business than ever before.
Miller: So for example, even if you’re going to be putting different labels on a can, you might all collectively be buying the same raw cans and would get a discount because you’d be buying bigger amounts at a time?
Rhine: Yeah, especially like a lot of can lids, case trays, you know, there’s a lot of materials that go into what we put out on shelves and at bars. So, yeah, none of the recipes are changing, and none of the ethos of the brands are changing, but it’s better for our partners, better for our vendors, helps with freight and shipping, and sort of repeat order. So it’s kind of a win-win all around.
Miller: Steve, if you have a recipe and you have ingredients, does it matter where a craft beer is made?
Augustyne: I definitely think it matters depending on what capabilities the production facility has. I think that’s why being at the Crux facility has been an awesome change for all brands as they have a lot of capabilities that some of the brands didn’t have previously.
Miller: Hmm. What I just asked is kind of a technical question about brewing, but to me there’s also the marketing side. Do you think that your various customers ‒ people who are fans of these five different brands ‒ do they care that these different brands of beers are now all going to be made in the same facility? A facility that doesn’t say GoodLife on it, doesn’t say Silver Moon? It is originally a Crux Fermentation facility. Do you think consumers care at this point?
Rhine: Yeah, I do think, consumers care, maybe some more than others, but the core of craft beer culture, I think it is something that makes Bend so popular for craft beer. There’s just a lot of elements about the town, the quality of water, sort of the vibe, the culture that we have here that promotes and supports craft beer.
But back to Steve’s point earlier, the founding brewmaster, Larry Sidor, he has a storied background. He’s kind of a legend of the craft beer industry and built what we view as sort of the Taj Mahal of a local, but regionally-sized craft brewery.
And so, yeah, to Steve’s point, Crux has a lot of technology in its production space, a great deal of capability. I think it kind of pioneered a non-alcohol beer space when it first came out with its NØ MØ line. So those are product types and categories that now all brands have access to that they didn’t previously. And furthermore, Crux has always been known for its high quality craft beverages. So we’re really excited to be a part of it and kind of allow other brands to participate in what they do.
Miller: Right, Steve, apropos of what Andy was mentioning about the non-alcoholic line, I’ve read that Crux’’s NØ MØ line is basically its best selling line right now. Will this collaboration give the rest of you a chance to increase your non-alcoholic options if you want to?
Augustyne: Currently, none of the other brands have a non-alcoholic beverage in their portfolios. So I think to Andy’s point, that capability is now available so coming out with new brands in that space is now possible.
Miller: Andy, the announcement came that your family was buying Crux at about the same time as the announcement for this new collaborative. Which came first in terms of, of the backend conversations, conversations about forming this collective or about acquiring Crux?
Rhine: Conversations about the collective. The collective is something that Steve and I and GoodLife and Tumelo Cider have been talking about for a handful of months now and something we’re working towards, and with what we’re building together, we’re all local, the craft beer industry is super friendly. We feel like we pretty much all know each other. And so, word kind of got out to the founders of Crux, Paul Evers and Larry Sidor, and they desired to retire and we’re kind of looking for a group or buyers to pass the torch to. Steve and I have both been local to Bend for a very long time, so we’ve known them for a while, and their facility just set up very well for us to achieve our goals, so that’s kind of how it all came about.
Miller: I’m curious, Steve, who do you see as your competitors right now?
Augustyne: [Laughter] Calling them out.
Miller: No, well because when I’ve asked that in the past, people have said, seltzer or wine or non-alcoholic mixed drinks if we’re not in a non-alcoholic space. Maybe the more pointed way to ask the question, what I really am curious about is to what extent you see the different brands who are now a part of this collective as your competitors?
Augustyne: I think because we’re all in the craft space, we definitely believe that if we can all raise the tides of the boats, we all win in that space. So if there’s a competitor, not really in this group per se, it would be the micros of the world, the Miller, Coors, Anheuser-Busch’s of the world versus local craft beverages.
Miller: Andy, you mentioned distributors before. My understanding is that in the past, the five of these different labels that are still going to be different companies with different brands and labels, that you all haven’t necessarily shared the same distributor. Might that change in the coming years?
Rhine: You know, the three-tier system in beverage, alcohol, and primarily Oregon state regulation does make it very difficult to transition distributors and that’s not something that we’re really exploring at this time. All the brands involved have excellent distributors in the state, which were very lucky to have. This collective opens doors for expansion.
For example, Crux has a great distributor down in Nevada, and none of the other brands in the collective are distributed in Nevada. And, the distributor also, Crux is its only Bend brewery, and they do quite well with Crux because they’re able to tell the story of Bend in Oregon, and so on and so forth. So now they can have even more options to expand their Bend, Oregon, beer portfolio. And there’s other potential relationships like that.
With craft beer being down the last couple of years, the appetite for distributors to add brands and to move brands is a little bit reduced, but we are excited about those aspects. I do think that really helps some of the brands in this group.
Miller: Steve, how will you know in the coming years, say, that this partnership is working.
Augustyne: I think it’s about filling tanks and filling trucks. So if we can maintain volume and even grow in the space right now, that will be a huge success.
Miller: Andy Rhine and Steve Augustyne, thanks very much.
Rhine: Yeah, thank you very much for having us. It was great to chat. We appreciate the opportunity.
Augustyne: Thank you.
Miller: Andy Rhine is the president of the New Oregon Beverage Collective, co-owner of Cascade Lakes Brewing. His family now owns Crux Fermentation as well. Steve Augustyne is the CEO of the Oregon Beverage Collective, owner of Silver Moon Brewing.
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