BEND, Ore. (AP) - Worst-case scenario, Jeremy and Chris Cox thought they’d get a pretty nice trip to the beach out of the deal. Almost immediately after the brothers and their business partners sold 10 Barrel Brewing Co. to global beer Goliath Anheuser-Busch InBev in November 2014, the Cox brothers booked a 3½-week vacation to the Bahamas for themselves and their entire family. They left Wednesday morning.
“Our acquisition vacation,” Chris Cox said Tuesday from his second-floor office at 10 Barrel’s production facility in northeast Bend. “We booked it out a year in advance, thinking one, we’d be fired.”
“That was the most likely outcome,” Jeremy Cox interjected.
“Or two, we’d quit because (AB InBev) didn’t follow through with what they said,” Chris Cox continued, “and we’d probably be unemployed.”
A year after the craft-brewery sale heard around the world, the Cox brothers are still gainfully employed and 10 Barrel is still producing award-winning beer, albeit in a much different Oregon craft-brew landscape that the two brothers helped create with their decision to merge with what is the largest beer company in the world.
On Wednesday, AB InBev announced plans to get even bigger after finalizing a deal to buy SABMiller for nearly $106 billion.
“Now, 10 Barrel wasn’t AB InBev’s first acquisition,” Bart Watson, an economist for craft-brewing industry trade group the Brewers Association, said Wednesday. Watson pointed out the company’s 2011 purchase of Goose Island Brewery in Chicago and its acquisition of New York’s Blue Point Brewing Co. in February 2014.
“But it did signal a bit of a shift in their strategy,” he continued. “With 10 Barrel, it was the first time AB InBev bought a brewery and brewpubs. That’s become part of their model now. And it marked a move away from lagers. Blue Point is known for its Toasted Lager - it’s a high-end form of what Anheuser-Busch is known for. But 10 Barrel is known for its IPAs. That purchase showed (AB InBev) was interested in buying brands that were in the fast-moving craft-beer segment.”
With an infusion of cash -and with the Cox brothers still running the brewery - 10 Barrel a year after being acquired by AB InBev is making some of its most well-received and innovative beer in the brewery’s eight-year history.
In September, 10 Barrel won a pair of medals at the Great American Beer Festival, and next year the brewery expects to launch a line of sours modeled after its award-winning Cucumber Crush beer. The Coxes said they’re working on releasing a Flanders-style red that has been aging for three years, as well as a barrel-aged Baltic porter and an experimental beer from acclaimed brewmaster Tonya Cornett that checks in with a 17 percent alcohol-by-volume rate.
“The next six months we’re going to release the best high-end stuff we’ve ever released,” Jeremy Cox said.
Additionally, the brewery has added a quality control lab and by next summer hopes to have finished a 45,000-square-foot expansion next to its current production facility, complete with an in-house taproom, bringing its production capacity up to 120,000 barrels. Last year, 10 Barrel produced approximately 40,000 barrels.
Outside of Bend, 10 Barrel’s Portland restaurant is in the works to add a rooftop bar, and the company has eyes on adding another brewpub to its lineup, possibly in Denver.
“We would have expanded and done a lot of those things to keep our business moving forward anyway,” Chris Cox said. “But we wouldn’t have had the capital to do it this fast. The acquisition expedited everything a little bit.”
In Oregon alone, 10 Barrel’s sales are up 33.7 percent year over year, through August - the most current numbers available from the Oregon Liquor Control Commission. It produced 17,090 barrels from January-August 2014, compared to 22,846 barrels for the same period in 2015. The Bend-based brewery also broke into the California and Colorado markets for the first time this year.
“In our business, when you’re our size, cash flow and capital are hard to come buy,” Chris Cox said. “Everything has to pencil out. Now we’re in a position where we can expedite some of that growth because of our strategic partnership.”
The merger hasn’t been without challenges.
When the sale was announced Nov. 5, 2014 - the Coxes and co-owner Garret Wales posted a video on Vimeo - the reaction in craft-beer circles was almost universally negative and the criticism on social media was deafening.
“We anticipated it,” Chris Cox said. “The only thing we didn’t anticipate is some of the backlash locally from some of the brewers who tried to take advantage of the situation.
“It’s too bad because they were our friends - still are our friends,” he continued, “and they went in the papers talking about the acquisition and then come around and ask if they can use our (quality control) lab or borrow our hops. That bothers us still.”
The sale also sent a message that all breweries, large and small, were being looked at by Big Beer, said Brian Yaeger, a Portland-based author who recently wrote “Oregon Breweries,” a guide to 190 of the state’s breweries.
“It was a bit shocking how wide their radar was,” Yaeger said about AB InBev and other beer giants’ interest in craft breweries of all sizes. “Between the smaller 10 Barrel and the larger Elysian Brewing in Seattle, that 1-2 punch was the signal that literally no one is safe; everyone is on their radar.”
Since the 10 Barrel sale, AB InBev has acquired Elysian and its four pubs in Seattle and Golden Road Brewery and its pub in Los Angeles. MillerCoors bought San Diego’s Saint Archer Brewing Co. in September and Heineken invested a 50 percent stake in what had previously been fiercely independent Lagunitas Brewing Co. in Petaluma, California.
“We love bitters,” Yeager joked, referencing a style of beer, “but this is a bitter pill to swallow. We’ve helped create an industry that’s so successful it’s become attractive to those that want to play on a bigger scale than what the smaller craft brewers have been offering.”
Back at 10 Barrel, the Cox brothers offer no apologies for the path they chose for their business. Along with new streams of capital, they now have access to AB InBev’s marketing, sales, distribution and brewing departments.
“There’s guys on their sales team that have worked with wholesalers for 30 years,” Jeremy Cox said. “All that expertise in all different aspects of business have been super, super helpful.”
The brothers admit they’re still getting used to the corporate nature of their parent company - “We’re in a ton of meetings now, which isn’t too much fun,” Chris Cox said - but have no regrets.
“These guys are awesome to work with,” said Chris Cox, referring to the bosses at AB InBev. “Everyone’s having a good time; we couldn’t be happier. At the time, we made a decision for our company and employees. You can’t ever dictate the future, but looking back now, it was one of the best decisions of our lives.”
Information from: The Bulletin, https://www.bendbulletin.com
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