After laying off 10 percent of its workforce earlier this week, Deschutes Brewery is looking ahead to an improved bottom line and launching new beers, a company official said.
Earlier this week, the company laid off 10 percent of its workforce in a cost cutting measure designed to make the iconic Bend brewer leaner to match sales volume. This is the second layoff since 2005 at Deschutes, said Michael LaLonde, Deschutes Brewery CEO and president. There are 520 remaining workers at the brewery and brewpubs.
“It’s hard to make a decision like this,” LaLonde said Friday. “We’re grieving quite a lot. We had staffed to grow with the company, so we had added a number of positions to do that.
“We looked at our core business and looked at those positions that weren’t about the core focus and realized they had to be eliminated. Our volume hasn’t been what we thought it was so our sizing was not in line with that.”
Given the slowing of the craft brewing industry over the past year, it’s not surprising that there were layoffs, said Damon Runberg, Central Oregon regional economist for the Oregon Employment Department. Craft beer sales nationwide grew by 5 percent last year, according to the Brewers Association based in Colorado.
“This is more of an indicator of trends within the brewing industry than the broad economy,” Runberg said. “We have seen this slowdown in brewing for a few years, particularly from these legacy breweries where beer production remained largely flat the past several years. The flat production trend hadn’t matched up with employment, which continued to rise.”
The Brewers Association ranks Deschutes 10th in craft brewing and 20th in overall beer sales volume.
Deschutes is hanging its future on innovation. It is canning about 10 percent of its beers and purchased a pilot brew system that will enable experimentation in small batches, LaLonde said. New beers will launch in fall 2019, he said.
This fall Deschutes launched Fresh Haze in cans. Rolling into stores now is Da Shootz!, an American pilsner lifestyle lager with 4 percent alcohol by volume. Next summer Deschutes will roll out a sour series. Deschutes plans to repackage its beers.
“Innovation is really important now in the craft beer industry,” LaLonde said.
The number of craft breweries in Oregon has more than doubled over the past seven years from 124 in 2011 to 266 in 2017, according to the Colorado-based brewing trade association.
Roger Worthington, owner of Worthy Brewing in Bend, acknowledged the craft brewing marketplace is saturated.
“It’s a highly competitive market but we’re seeing very good sales on several beers,” he said. “We’re very optimistic as we continue to innovate with new hops.”
Earlier this year, Deschutes decided to give up tax incentives on a second brewery in Roanoke, Virginia, to gain freedom in the development timeline. Deschutes purchased the land for $3.2 million.
Deschutes can sell the land, but there are restrictions, said Robert Ledger, Roanoke Economic Development manager.
Deschutes alerted Roanoke officials it wanted to revise the timing of construction of an $85 million facility. Construction was to begin in 2019 and brewing in 2021. Deschutes now will have to submit plans by Aug. 31, 2020.
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