Monday, March 20, 2017

Update on Speakeasy: Back up and running but on life support

March 10th, Speakeasy Brewing stunned the Bay Area brewing world by abruptly announcing they were ceasing operations due insolvency. A week later, Speakeasy announced some good news for those rooting for brewery's rebirth when the brewery declared they were resuming operations under receivership. Earlier today, Speakeasy proudly tweeted out they were brewing up a batch of Big Daddy IPA.

I'm not a bankruptcy lawyer, but what I understand receivership to mean is that Speakeasy is allowed to continue to operate under the ownership of their creditor. That most likely is Union Bank, which funded an ambitious and apparently failed expansion to the tune of 7.5 million dollars in 2015. So while Speakeasy is back to brewing beer, their future is no longer in the hands of CEO and co-founder Forest Gray. Instead, it's largely up to whatever Union Bank thinks is the best way to recover due to them for their unpaid loan. So for the near term, Speakeasy will be running again as Union Bank allows the company to continue to brew again to help pay off their debts. 

But in the long term, I envision three likely scenarios, and two of them aren't going to make most Speakeasy fans happy.

1) Union Bank decides to shut down Speakeasy, and sells off all assets of Speakeasy (the brewing equipment, the tap room) to recover what they're owed on the loan. Speakeasy dies.

2) Union Bank decides to sell Speakeasy to a private investment group, mostly likely one that invests in breweries, wineries, and/or distilleries. This investment group takes over the brewery and gets it up and running again to get the best return on their investment.  Yay! Speakeasy lives!

3) Union Bank decides to sell Speakeasy to a large industrial brewery like Anheuser-Busch, MillerCoors, and some other large brewing concern eager to to pick up a strong Bay Area brand at a fire sale price. Speakeasy lives, but it becomes part of big, corporate industrial beer. I suspect for a lot of Speakeasy fans, becoming part of big beer is a decidedly unappealing outcome.

For those of you thinking "No way would Speakeasy ever sell out to Anheuser-Busch!", I'm afraid it's highly unlikely that Speakeasy has much say in the matter. Notice I started each possible scenario above with "Union Bank decides...". Assuming they are the major creditor, they effectively operate Speakeasy now and their priority is finding the best way to get the money Speakeasy owes them.

Whether someone like Anheuser-Busch would want to buy Speakeasy at this point is rather interesting to consider for brewing industry wonks like myself.  For what it's worth, Anheuser-Busch seems to have the West Coast covered pretty well with their acquisitions of Oregon's 10 Barrel, Seattle's Elysian, and Los Angeles's Golden Road. Do they think a Bay Area brewery will significantly improve their West Coast market share? In addition, Anheuser-Busch's parent company, ABInBev's recent acquisition attention seems to be overseas with recent brewery acquisitions in Europe. My guess is that Anheuser-Busch takes a pass on Speakeasy, a strong brand in Northern California, but comparatively unknown elsewhere. 

At any rate, I hope Speakeasy finds a way to survive and I continue to root for them.

Monday, March 13, 2017

Thoughts on the closure of Speakeasy Ales & Lagers

In a time when hundreds of new breweries open each year, long-time San Francisco brewery Speakeasy Ales and Lagers has abruptly announced its closure.

On their website and in social media, Speakeasy declared they were ceasing operations due to insolvency, stating "Difficulty securing capital investment and outstanding debt obligations led to this difficult and painful decision."  Speakeasy founder and CEO, Forest Gray, further elaborated, explaining "The brewery has worked with multiple investment banking groups and have had numerous meetings. One fact has become central to the process, and that is the company is financially insolvent and requires new capital to move forward. Whether that will happen is unclear, but I do hope the brewery and brand will persist."

Now back what seems eons ago, circa 2008, Speakeasy was one of about six breweries in San Francisco, and one of the most prominent members of the San Francisco Brewers Guild. Founded in 1997, six-packs and tap handles featuring Speakeasy's Roaring 20's Mafia-themed branding with its piercing eyes was pretty ubiquitous wherever beer was sold in the Bay Area.  Their beer, while not always excellent, was pretty solid, and Bay Area beer geeks have plenty of fond memories surrounding Speakeasy. I was a fan of their Prohibition Ale (a 2013 GABF medal winner) and their Payback Porter ranked as one of all time best porters I've ever had. Given all the changes in beer over the last decade, Speakeasy was a rock of a brewery in Northern California and its apparent passing is a real death in the Bay Area beer family.

It's unlikely Speakeasy's downfall was about the beer. As Jeff Alworth noted on his Beervana blog, Speakeasy embarked on an ambitious expansion in 2015, to increase their capacity five fold from 15,000 to 95,000 barrels a year, at an estimated cost of 7.5 million dollars. It's a pretty safe bet those plans didn't go well. And looking back, given such an increasingly crowded and competitive beer market, it's a little hard to figure out why Speakeasy thought they could simply march into new territories and unload tens of thousands of barrels of beer in already saturated craft beer markets full of strong breweries. More than one brewery has told me finding new markets is getting to be a real challenge.

Now virtually every brewery I've been in contact with in one form or another is investing in some level of expansion. Usually it's something like a new 7 or 10 barrel system, expansion plans into an adjoining county, or embarking on a modest packaging operation to expand their distribution footprint.  Whatever their plans entail, they might result in doubling annual beer sales in a year or two if successful. Speakeasy comparatively went "all in" on their expansion and appears to have paid the price.

Does the closure of Speakeasy signal an ominous trend in the industry? It's a bad idea to predict a trend on a single data point, so I won't do that. What I will say is this is what a market correction looks like. Multiple firms in the same industry all expand at the same time to capture a growing market which cannot grow fast enough to absorb all the excess inventory. Weaker or poorly positioned firms are unable to sell enough to pay off their loans, and go out of business. Only time will tell if Speakeasy is an outlier that just poorly executed their expansion or is the proverbial canary in the coal mine.

Could an investor or another brewery come to Speakeasy's rescue?  Hard to tell, since we don't know what the problems actually are. Given that craft beer enjoys a pretty hot investment climate and they still couldn't do a deal behind closed doors, it's not looking good that Speakeasy is going to find a good suitor.  Especially now after they've told the world how desperate they are.

But enough about the beer industry crystal ball gazing. Speakeasy looks to be leaving us and I'm sad to see them go.

This may have been my last taste of
Speakeasy Big Daddy IPA

Wednesday, March 8, 2017

Small victory at the San Jose 408k

The year 2016 was memorable for so many reasons. Running-wise, it was a year I hit some running highs, but plenty of running lows in the form of injuries. As soon as my injured left hip recovered, my right hip would start hurting. For 2017, I've battled the flu a couple times, but simply running around relatively pain free has been a victory in itself.  The San Jose 408k, held last Sunday, was a chance to start the year to see just where I was at.

Named for San Jose's area code and 8 kilometers long, the point to point course starts at the SAP Center just west of downtown San Jose and finishes at the upscale Santana Row mall. A heavy overnight rain threatened to last into the morning and drench the race, but it died down once the sun came out, leaving the course under undercast skies and ideal running conditions. My modest goal entering the race was to hit 7:00 per mile pace, or 35:00 for the 4.97 mile course.

This goal was complicated by the fact that my GPS watch had some problem, or wasn't charged right, or something. It had trouble reaching the satellites and started flashing all sorts of warning lights and messages which I could read with my feeble eyes as I desperately stared down at it standing at the starting line. Whatever problems my watch was having, never worked them out by the time the race started and so I race the whole race having no idea of my time until the finish.

It was one of those run where I fought pretty hard to keep pace, but could never find a higher gear.  I just kept working over the course, until I turned down to down the Santana Row mall way, looked up and saw the clock ticking away at 33 minutes and something. Finishing with whatever sprint I could muster, I crossed the finish line at 34:13, way under my goal, or so I thought. Runners finishing next to me remarked their GPS watches had the race distance at 4.9 miles. Uh-oh. GPS watches typically overestimate distance by about 2% meaning the course was short. I'll just say I met my goal of 35:00 for just under 5 miles, and leave it there.

Next race is The Great Race in Los Gatos April 30th.

Tuesday, March 7, 2017

Rambling Reviews 3.7.2017 : Brews from Santa Clara Valley, Left Coast, and Karl Stauss

Saratoga Gap Scotch Ale at Taplands
It's been awhile since I last rambled on beers. A bunch of busy work weeks will do that. Still, I've been able to squeeze in a few beers along the way, so let's ramble about three of them.

I was able drop by Santa Clara's Taplands hosting a Santa Clara Valley Brewing (SCVB) tap take-over as part of SF Beer Week. There I enjoyed SCVB's Saratoga Gap Scotch Ale, full of toffee, some smokiness, and a little sweetness. There's also some noticeable fruit character to the brew, and SCVB Brand Manager Peter Estaniel was on hand for the evening and as we chatted about the beer, he pointed out some of it's similarities to SCVB's fine New Almaden Imperial Red Ale. All the flavors come together rather nicely and at 9.6% abv, you'll want to sip it slowly.
Left Coast's Voodoo Stout on the floor
of an LED Lighting trade show

After that evening at Taplands, work started getting pretty intense and blogging came to pretty much a complete stand still. At an LED Lighting Trade Show at the Anaheim Convention Center, I enjoyed a Voodoo Stout from San Clemente's Left Coast Brewing, albeit in a plastic cup, poured at the late hour of the trade show. It's a rather full bodied stout with a creamy consistency with some sweetness and lots of milk chocolate character. Nice way to end a
trade show and I can only imagine how much better it would taste with a proper glass.

Trudging back to the hotel after a long day at the trade show, I made my way to the empty hotel bar. For a cheap hotel mostly catering to tourists going to Disneyland, they actually had a pretty decent selection for the eight taps they had set up. I went with Queen of Tarts from Karl Strauss and what a great choice that turned out to be. Aged in wood with Michigan tart cherries, the cherries and light sourness played well off the underlying brown ale. A pretty amazing beer to find in an dingy, empty hotel bar. Further proof that you can find great beer anywhere.
Karl Strauss Queen of Tarts, all alone in
quiet hotel bar in Anaheim

Friday, March 3, 2017

The Session #121: A Brief Ode to Bocks, Past and Present

This month's Session, host by John Abernathy over at The Brew Site is on Bock styles, which seems appropriate for March when Bock beers had traditionally rolled out.

In fact, Bock is the very first beer style I became aware of back when I grew up in the small Ohio town of Bowling Green in the 70's. When March rolled around, my dad would eagerly bring home a six-pack of Rolling Rock Bock, a departure his usual Rolling Rock's flagship Lager. Except back then, it wasn't called a Lager, it was just "beer". One time I asked him "What's Bock beer?" Dad went into this explanation about breweries traditionally cleaning their tanks in the spring and brewing Bock beer to celebrate the occasion. I suspect Rolling Rock Bock was basically the flagship Lager with the grain bill tweaked a bit and some caramel coloring added. That was Bock beer in America just before the brewing revolution started taking off in the 80's.

A Vintage Rolling Rock Bock Neon Sign

Thirty years later, I discovered craft beer. One of my favorite spring seasonals was Anchor Brewing's Bock.  Maybe I liked the deep roasted chocolate and caramel flavors, or maybe it reminded me of those simpler times in the 70's, learning about the mysterious Rolling Rock Bock. Then, in 2014, Anchor decided it would no longer release their Bock each spring, instead focusing on the more popular IPA's and Saisson styles. A year later after that announcement, I caught up with long-time Anchor Brewmaster Mark Carpenter at a brewery event and we reminisced about Anchor Bock. I jokingly tried to talk him into bringing back the Bock. I got the distinct feeling Carpenter didn't miss it all that much. At any rate, it was clear I shouldn't get my hopes up that Anchor Bock was coming back.  And it hasn't.

Anchor Brewmaster Mark Carpenter
I guess Bock beers are pretty old school these days. In an era where "craft beer" and "IPA's" are becoming synonymous the way "beer" and "light Lager" once was, there just doesn't seem to be a lot of enthusiasm from most breweries to brew Bocks. Maybe that's why one of my favorite go-to beers is Blonde Bock from Gordon-Biersch, a brewery that's been a long time rock in an ever changing beer landscape. Brewmaster Dan Gordon learned to brew at the Technical University in Munich in the 80's and the brewery focuses solely on Germanic styles. Their Blonde Bock is one of those highly underrated beers, a light thirst-quenching brew with some character to it, with it's bready, yeasty character with very faint citrus notes and a good dose of sweetness. No, this isn't my father's Bock Beer. But thankfully, it should be around for a good long time.

Stacks and stacks of Gordon-Biersch Blonde Bock, ready to ship

Tuesday, February 21, 2017

Daniel Del Grande of Bison Brewing builds supply and demand for in Edible East Bay

Bison Brewing's Dan Del Grande
(photo from Edible East Bay)
If you ask me, Bison Brewing's Daniel Del Grande is one of the sharpest environment activists in the brewing business, with a keen sense on how to use capitalism to further a pro-environmental agenda. Which made for a good article in the latest issue of Edible East Bay, which you can read at the link below.

Brewer with a Cause: Bison Brewing's Daniel Del Grande builds supply and demand for organics

Monday, February 20, 2017

Scenes for the 8th Annual Meet the Brewers Festival

The 8th Annual Meet the Brewers Festival last Saturday was the usual of mostly South San Francisco Bay breweries.  Held on the grounds of San Jose's Hermitage Brewing, the usual suspects like Strike Brewing, Santa Clara Valley BrewingAlmanac Beer, Hermitage Brewing, Freewheel Brewing, Discretion Brewing, Red Branch Cidery and New Bohemia  were all pouring some fine brews.  Notable newcomers showcasing their latest concoctions include Steel Bonnet, Geartooth Alewerks,  Brewery Twenty Five, and Golden State Brewery. If I didn't give a brewery a mention, it was because I just didn't get around to their stand. Breweries typically bring their A-game to any beer festival, but usually there's always a misfire or two.  Not Saturday.  Everything my wife and I sampled was solid to excellent.  Biggest surprise?  Strike Brewing, long known for straightforward Session Ales was pouring "Stand Up Triple IPA", a dynamite Triple IPA. Sorry, no fancy tasting notes, I was just enjoying the brews and community.  I'll leave you with a few snapshots from the afternoon.