8/21/2012 6:29 PM ET|
How Portland attracts craft breweries
It's no accident that this Northwest city has more craft breweries than anywhere else in the world. But some worry that politics and budget cuts could change that.
Van Havig, a former Ph.D. student in economics, clearly possesses the chops to assemble a sophisticated investor pitch for a business startup.
But what Havig, 42, and his business partner, Ben Love, 34, were starting last year was a brew pub in Portland, Ore., the River (of beer) City, the city with more craft breweries than any other place in the world.
All the pair needed, it turns out, was experience, friends and a reputation for knowing beer. Don't tell these guys there's a sluggish small-business climate in the U.S.; less than two months after they announced their plan, they'd raised $400,000.
What was their you-didn't-learn-this-in-business-school pitch?
"Basically, people would ask us what we're up to and we'd say, 'Eh, I'm trying to start a brewery." Havig said.
"The nice thing about Portland, about the brew industry, is people knew Ben, they knew me. People knew that if we were going to get together and do something, we were going to do it well."
Apparently those people were right. Three months after opening the doors to their southeast-side facility, Gigantic Brewing exceeded their projected taproom sales eightfold, all without paid advertising.
Meanwhile, direct sales to grocers and liquor distributors, which constitute the bulk of their business, were sealed before the first batches of beer had even finished fermenting, thanks in part to Portland's reputation for seeding quality craft breweries.
"When we finally hit the market, people were snapping things off the shelf," Havig said.
But if any of this seemingly casual approach to business comes off as an endorsement of a laissez-faire business environment, think again. Havig is quick to credit state regulations for giving small breweries like his a fighting chance against corporate beer giants such as Anheuser-Busch and MillerCoors.
For example, state law prohibits Havig, or any producer, from selling his beer to anyone at a discounted rate. Nor is he permitted to offer a bar or restaurant other financial incentives -- say a television or a jukebox -- in exchange for stocking his beer.
"It means that quality beer, and specifically beer that regular people want to drink, is the driving force for why bars buy any type of specific beer," he said. "It's not what's cheapest. It's not who bought them a TV. It's not who gave them a deal. It's what beers are selling. And that's a huge difference."
In fact, he said, the state's craft-brew movement would not be the thriving $2.4-billion industry it is today without these very specific regulations. Today, 151 breweries pump out craft beer in Oregon, according to the Oregon Brewers Guild, and nearly half the draft beer consumed in the state is locally produced, a far higher percentage than in most states.
"That regulatory framework has been a huge boon to my industry. I cannot possibly overstate how important that is," Havig said. "It's fostered and allowed our industry to thrive in our state. . . . Without it, we'd have Budweiser and that's it."
(Oregon also legalized brew pubs in 1985, which allowed producers to sell their beer on site, helping brewers to remain profitable. And the state has comparatively low excise taxes on beer production.)
Havig, a Democrat, worries when politicians talk about cutting regulatory agencies. The one thing President Barack Obama said that made Havig really nervous? That maybe the federal government should eliminate the Alcohol and Tobacco Tax and Trade Bureau (TTB).
If that happens, regulatory duties might shift to the Food and Drug Administration, which isn't cut out to decide best practices for breweries.
"I don't think there's a brewer in the United States, or a winery, that wants to get rid of the TTB," he said.
"My concern is that in everyone's zeal to become more right wing and reduce the size of government, we might get hurt," Havig said. "When you try to write blanket regulations that cover everything, then you don't regulate anything well."
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