The popular brand’s parent is moving to consolidate the brewing of its own beers in Portland while using the Woodinville brewery for contract production of other companies’ beers.
This article has been updated with a response from the company.
Hoping to prop up the sagging sales and profits of pioneering Seattle craft brewer Redhook, its Portland-based owner has tried a lot of things: tie-ins with fast-food fish sandwiches, a “Joint Effort” hemp-infused beer, and, more recently, a plan to open a neighborhood brewpub to underscore the faded brand’s local roots.
“The big message is Redhook is looking to build again where it started,” said a spokeswoman in 2015 about that brewpub, scheduled to open next year on Capitol Hill.
Now Redhook parent company Craft Brew Alliance has yet another, more radical plan: Import Redhook from Oregon instead of making it here.
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The company’s big Woodinville brewery, adjacent to the popular Forecasters Pub, is already being used to bottle beer for Pabst, which is busy adding Rainier to the 30 or so aging brands it has revived.
Craft Brew Chief Operating Officer Scott Mennen spelled out the logical next step In a recent conference call with analysts: “In the second half of the year, Woodinville will become almost exclusively our contract-brewing brewery as we shift CBA’s own beers to Portland.”
In an interview, Mennen said Craft Brew has long produced Redhook beers at four breweries around the country, and labeled them accordingly.
The Woodinville plant is likely to be acquired by Pabst, given the option it has to buy the brewery and pub by December 2018 for $25 million or more.
But even then, said Mennen, Craft Brew’s planned Capitol Hill brewpub will be “doing unique beers year-round … The roots in Seattle will be around that brewpub.”
It’s just the latest transition for Redhook, which was founded in Seattle in 1981 and sold a one-third stake to Anheuser-Busch long before mega-beer/craft-beer deals became popular. (Because of that tie, Craft Brew is not considered a craft brewer.)
The industry context is that “it’s not getting any easier out there,” Craft Brew CEO Andrew Thomas told the analysts. “The pace of new brewery entrance continues at a blistering rate.”
Craft Brew has called Redhook “our least profitable brand family,” and in recent years the corporate strategy has been to focus its regional beers back in their home markets: Redhook in Washington, Widmer Brothers in Oregon.
That hasn’t kept sales from draining away. Redhook’s first-half sales shrank 43 percent from 2014 to 2016, the company reported this past week. Widmer’s sales fell by nearly as much.
Yet Craft Brew is pouring millions into expanding its Portland brewery. Retrenching and concentrating its Pacific Northwest beer production in Portland makes business sense.
Despite Craft Brew’s talk about focusing on home markets, its one big brand that’s doing well is the Kona Brewing line — up 19 percent in first-half sales from 2015, and surpassing Redhook and Widmer combined for the first time.
The company’s chief marketing officer told analysts Craft Brew now has a “Kona Plus strategy … focused on leading with the Kona brand family here in the U.S. as well as globally.”
So far, at least, that strategy includes relocating Redhook brewing from Woodinville, and shrinking the reach of its Pacific Northwest brands — but not dialing down the way it touts the Redhook, Widmer and Kona trio: “These craft-brewing legends have expanded their reach across the U.S. and approximately 30 international markets, while remaining deeply rooted to their local communities.”