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Seattle’s pioneering Redhook beer will soon be all brewed in Oregon

By Rami Grunbaum, The Seattle Times
Published: August 12, 2016, 9:56am

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 Brewers Alliance has yet another, more radical plan: Import Redhook from Oregon instead of making it here.

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.

But in a recent conference call with analysts, Craft Brewers Chief Operating Officer Scott Mennen spelled out the logical next step: “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.”

A company spokeswoman did not respond to several requests for comment on the timing of the shift to brewing Redhook in Oregon.

It’s just the latest indignity 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 Brewers is not considered a craft brewer.)

The industry context is that “it’s not getting any easier out there,” Craft Brewers CEO Andrew Thomas told the analysts. “The pace of new brewery entrance continues at a blistering rate.”

Craft Brewers 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 Brewers is pouring millions into expanding its Portland brewery. Retrenching and concentrating its Pacific Northwest beer production in Portland makes business sense – particularly when Pabst has an option to buy the Woodinville brewery and pub by December 2018 for $25 million or more.

Despite Craft Brewers’ 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 Brewers 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 exporting Redhook from Oregon and shrinking the reach of its Pacific Northwest brands – but not dialing down how 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.”

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