This article is worth sharing. Written by Aliza Earnshaw, published in the Business Journal.
Friday, November 7, 2008
A Rogue idea
Brewery celebrates 21st b-day
Making beer entirely from local ingredients
Portland Business Journal – by Aliza Earnshaw Business Journal staff writer
| Cathy Cheney | Portland Business Journal Rogue Brewery co-founder Jack Joyce tours the hops field that the company bought last year in Independence, Ore.View Larger
An Oregon craft brewery has come up with a way to become even more Oregonian – and possibly even more successful.
Rogue Brewery will celebrate its 21st birthday next year by launching beers brewed entirely from Oregon ingredients: water, barley, hops and yeast.
The beermaker can do it because last year the company bought ownership of 20 acres of hops production at a farm in Independence, about 14 miles southwest of Salem.
This year, the brewery paid for another 20 acres of hops. It also paid to plant 200 acres of barley at a farm in the Tygh Valley, 10 miles northwest of Maupin on the Deschutes River.
These agricultural investments – unusual, if not unique, for a brewery – total almost $295,000.
That’s not out of scale for Rogue, which has grown to an estimated $35 million to $36 million in revenue this year, according to Jack Joyce, co-founder and “chief wisdom officer.”
Joyce would not comment on Rogue’s profits, other than to say they’re good.
The company employs 238 and sells its beer in 19 countries.
Rogue’s investments in hops and barley should allow it to brew 15 percent to 20 percent of its beer next year entirely from Oregon ingredients.
Next year also marks both Rogue’s 21st anniversary – breweries often celebrate their 21st rather than their 20th – and Oregon’s 150th year of statehood. That offers even more opportunity for the brewery to market its beers as all-Oregon.
Rogue’s acquisition of its most critical ingredients is “a nifty move, and strategically sound,” said Benj Steinman, editor of Beer Marketers Insights Inc., which publishes beer industry newsletters out of Nanuet, N.Y.
Over the past five years, Rogue’s production has grown 112 percent, to 65,000 barrels. That’s much faster than the craft beer industry as a whole, which had five-year growth of 45 percent through 2007, according to Steinman.
Rogue’s sales have far outstripped its production, at 196 percent over five years, according to Brett Joyce, Jack Joyce’s son and the company’s president.
“I know Rogue prices above the market,” Steinman said. “The very name, Rogue, tells you there’s something a little offbeat about it, and Jack is quite the character.”
The company takes the concept of roguery all the way, as is obvious from its labels; the diverse character of its nine pubs; its amusing product names, such as Dead Guy Ale; its recent addition of distilled drinks such as vodka, gin and rum; and its Web site and newspaper.
The company has had a roguish management style since the very beginning, said Bob Woodell, a co-founder of Rogue who was also Nike Inc.’s first chief operating officer. In fact, the idea of buying a hops farm came out of one of Rogue’s shareholder meetings.
“We have very freewheeling meetings, with all sorts of ideas, some good, some stupid, flying around,” Woodell said. “There was a hops shortage, and we knew there would be tremendous price increases the next year. We started talking, and Jack jumped on it, made a ton of calls, and made some visits. Out of it came this relationship where we are now raising hops down there in Independence.”
Jack Joyce liked the idea of ensuring his company’s hops supply, though it’s unlikely Rogue will ever get its entire supply within Oregon. Nor would the brewery, which prides itself on unusual beers, want to limit itself in that way.
Ultimately, Joyce said, he’d like to have enough production so Rogue can act as an agent and sell special, higher-priced hops to other Oregon breweries. The farmers would share in that premium pricing.
Joyce plans to open a tasting room at the hops farm, which he thinks will attract “agro-tourists.” Rogue may even open a pub in Independence.
Joyce and his co-owners don’t seem too worried about the current economic downturn. The brewery continued to grow after Sept. 11.
Good beer may actually be recession proof, Steinman said.
“At bottom, beer isn’t really that expensive,” he said. “Even for more expensive beers, it’s an affordable luxury. It’s cheaper than filling up your tank.”