Deschutes Brewery won’t be building its second production facility in Roanoke, Virginia, by 2021, as previously agreed.

In a letter dated March 28, the brewery told Roanoke officials that it is not on track to complete design plans and drawings before the Aug. 31, 2020, deadline, nor be able to begin construction on the facility by June 30, 2021. The first time the brewery pulled back its plans was in April 2018. Then the brewery told city officials that it couldn’t move forward and would waive tax incentives.

“We’re considering the alternatives based on our growth rate and the craft beer market,” said Michael LaLonde, Deschutes Brewery CEO, in an interview. “We’re not going to do anything right now. If we do build something, it will be in Roanoke.”

Roanoke officials would not comment on the latest communication.

Deschutes had a Sunday performance deadline in which to notify the city of its plans. In 2016, Deschutes said it would build a $95 million facility employing 100 people on a 49-acre site. Deschutes planned to break ground by June, start brewing test batches in 2020 and begin shipping from the facility by 2021. But in April 2018, Deschutes waived about $4.2 million in government incentives in exchange for flexibility.

The brewery also went ahead with the $3.2 million purchase of a parcel in Roanoke. LaLonde said there are no financial consequences to pulling back on the expansion since the brewery waived its tax incentives.

In recent years competition has heated among craft brewers. Last year there were 7,450 breweries across the country, a 12.9 percent increase over the year before, according to the Brewers Association, a Colorado-based trade association.

“It’s a competitive market, and the further from your home base you are, the greater the challenge in staying relevant,” said Bart Watson, Brewers Association chief economist. “We are seeing many regional craft brewers focus more on their core markets and less on distribution further from home.”

LaLonde said Deschutes has an East Coast following. The beer is distributed in 30 states and Washington, D.C.

“Like every business in the world, it ebbs and flows,” LaLonde said. “You have to adapt a strategy to what’s going on in the marketplace. We’re optimistic about the future.”

Deschutes is the 10th-largest craft brewer in terms of sales volume, according to the Brewers Association. The company has about 500 employees among the Bend brewery, pubs in Bend, Portland and Roanoke.

The 4,700 square-foot pub in downtown Roanoke opened in August of 2017. The new pub includes more than 15 taps of Deschutes beer, along with pints, growlers and brewery merchandise.

“The craft beer market continues to be challenging,” said LaLonde in a letter to Roanoke City Manager Robert Cowell. “We hope the market stabilizes in the near future and allows us to continue work on our national expansion.”

— Reporter: 541-633-2117, sroig@bendbulletin.com

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