- Associated Press - Saturday, February 6, 2016

BEND, Ore. (AP) - From the outside, the two-story building behind the Anderson home on NW Third Street resembles any other detached garage on a residential street in Bend.

The illusion fades quickly with one step inside. The epoxy-coated floor; gleaming, stainless-steel brewing tanks; and a tidy workspace with three sinks suggest the attention to detail one expects from an air traffic controller, which Steve Anderson once was. This is the home of Kobold Brewing LLC, the most recent brewery to join a growing number of them, large and small, in Bend. Anderson chose the name from German folklore.

“In Germany, kobolds are house sprites that brewed in the cellar at night,” he said recently. “They were productive creatures that did positive things for their owner and family. But if you wrong them, they do dirty little tricks to you.”

Dirty tricks or not, the lure of becoming a commercially successful brewer beckons many in Bend. In January 2006, the Oregon Liquor Control Commission counted 11 brewery-public house licenses, the type Anderson holds, in Deschutes County. The OLCC counted 14 of those licenses in January 2011.

Five years later, that number has more than doubled. The commission counted 36 brewery-public house license holders in Deschutes County as of Jan. 1. Of those, 22 are held by brewers in or close to Bend.

At the top of that list is Deschutes Brewery, the largest brewery in Oregon by the number of taxable barrels sold in the first 11 months of 2015, 78,019, according to the latest OLCC beer report. Monkless Belgian Ales, the smallest brewery in Bend at the time, sold 8.5 barrels in the same period, making it 194th in size out of 204 in Oregon.

“They have a great product, a big dream and a tight budget,” said Michelle Mitchell, co-founder of Humm Kombucha, in Bend, and a friend of the Monkless co-founders, Todd Clement and Kirk Meckem. “They’re smart; they’re motivated. They care deeply about quality, and, simply put, I believe in them.”

The path from avid homebrewer to successful commercial brewer presents obstacles enough to quench the most ardent desire: financing, marketing, regulatory requirements at every level of government and turning out consistently good beer in large quantities time and time again. No wonder few make it to the big time.

“You have to have the ability to brew, obviously; you have to have a good palate,” said Tom Brohamer, president of the Central Oregon Homebrewers Organization. “But it also takes that entrepreneurship that anybody has to have to start their own business.”

Anderson credits the homebrewers organization and other professional brewers such as Bridge 99 Brewery founder Trever Hawman with helping him launch Kobold Brewery. Hawman also started as a homebrewer with a 1.5-barrel brewing system. He moved the operation a year ago to an Empire Avenue warehouse he fitted out as a commercial brewery and tasting room.

“I tried to let him know about problems I had and things to watch out for, things that will bite you in the butt,” Hawman said. “It’s definitely different than homebrewing. In homebrewing, you get to play with a beer and then do another beer. When you go into production, you need to focus on specific beers, at least for a while. You’ve got to get it down to where you’re doing it consistently, and get your process down, getting things as efficient as possible.”

The cost to set up a small, backyard brewery that meets licensing requirements starts at around $100,000, based on information supplied by brewers like Anderson and Larry Johnson, who started Shade Tree Brewing last year on his property in Deschutes River Woods.

Anderson installed a new, two-barrel system manufactured by Stout Tanks and Kettles LLC, of Portland, in one room of the 600-square-foot brewery. He declined comment on the cost of his operation, but John Watt, a former Bend resident and owner of Stout Tanks and Kettles, said a two-barrel setup like Anderson’s can run anywhere from $20,000 to $45,000, depending on its complexity.

Anderson started brewing commercially, with help from neighbor Jerry Moore, in November and delivered his first batches in quarter-barrels in late December. Glen Samuel, co-owner of Platypus Pub on NE Third Street in Bend, said Kobold Brewing’s Lawful Evil, an imperial stout aged in bourbon barrels, sold out in four days.

“That’s about right,” Samuel said. “I thought it was very good, even though that’s not my particular style. The customers really liked it.”

Kobold is also available at White Water Taphouse and soon at The Lot, both in Bend.

Johnson started up Shade Tree Brewing in 812 square feet inside a larger building with a five-barrel system he purchased from Boneyard Beer in Bend. The brewery took its name from Johnson’s affinity for fast cars - after which he names his beers - and the fact he was an independent, or “shade tree,” auto mechanic for 20 years, nearly as long as he’s been brewing at home.

Like Anderson, Meckem and Clement, Johnson financed and built the business himself. While he got off to a slow start, he now delivers his beer in half-barrels in his biodiesel-powered Volkswagen Jetta to White Water Taphouse, C.E. Lovejoy’s Brookswood Market and other outlets in Bend. Johnson, who once owned The Brew Shop, a homebrewers supply store on NE Third Street in Bend, is full of practical advice for would-be startup brewers. He could fill a book with what not to do, he said.

“If you want to be a brewer and you don’t like washing dishes,” Johnson said, “don’t bother.”

Or: “My experience is it will take twice as long and twice as much to set up a brewery as you think.”

Part of that time and expense will be devoted to meeting government regulations. City zoning codes allow small businesses like nanobreweries to operate in residential areas under certain restrictions on employees, deliveries and signage, for example.

The state of Oregon regulates the brewing industry through the OLCC, which issues licenses to make and sell alcoholic beverages and polices their sale, and through the state Department of Agriculture, which licenses and regulates food processors. Satisfying the Agriculture Department can be time-consuming, although brewers said it dealt fairly with them.

“It’s actually a lengthy process,” Meckem said.

Before issuing a license, the department rigorously inspects breweries for cleanliness; correct installation of equipment like sinks, hoses and light fixtures; and pest control. Adam Miller, a department inspector who works in Bend, said he prefers to establish a relationship with small craft brewers, some of whom grow into large craft brewers.

“The title is inspector, but if we had to divide it up, teaching, I think, takes 80-85 percent of my time,” Miller said. “When there is a violation, we do cite them, but equally important is getting a commitment by them to correct a problem.”

The co-founders of Monkless Belgian Ales applied for the required federal beer permit from the Alcohol and Tobacco Tax and Trade Bureau, a division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, at about the same time the federal government shut down in October 2013. The Tax and Trade Bureau, among other things, regulates production standards and labeling for brewers.

“That put us on a really big delay with the TTB,” Meckem said. “I had to call them every single week, and even then you’d leave message after message. That was brutal.”

Johnson said the Tax and Trade Bureau changed its mail delivery system when he applied, which caused him about three weeks’ delay. “You have to be patient,” he said, “and have a sense of humor.”

Not every small brewer aspires to grow, but Meckem and Clement do. They’re looking for a commercial property in which to scale up their one-barrel system to a 10-barrel system. Their operation, so far, has been a proof of concept.

“We literally have four clients right now that buy our beer; they buy everything we make,” Meckem said. “I have to go buy my beer from somebody else.”

Whatever they’re called - nanobrewers, small-batch brewers, microbrewers - startup brewers in Bend said encouragement from friends, neighbors and retailers kept them moving forward. It helps to win an award or two along the way. In the end, the beer itself has to sell.

“What does it take? Belief that it can happen, surrounding yourself with smart people, never compromising on quality and, most importantly, never compromising on being who you are (as a brand),” wrote Mitchell, of Humm Kombucha, in an email. Mitchell, Clement’s neighbor on Awbrey Butte, consumed homebrewed Belgian ales in his garage and encouraged the two to make a business of their hobby. Today, Humm Kombucha sells Monkless ales at its NE Second Street taproom. It’s also available at White Water Taphouse on NW Wall Street and, most recently, at Zydeco Kitchen & Cocktails, on NW Bond Street.

Paul Arney, formerly a brewer at Deschutes Brewery, left there in 2011 to found his own craft brewery, The Ale Apothecary on the outskirts of Bend. Like other startup brewers, he said doing your own thing creates its own rewards, like more business opportunity, happy customers and the occasional day off to ski. But building a brewery in a town with nearly two dozen already can be a tough proposition.

“The brewery needs a story,” Arney said. “The beers need to be interesting. The business needs to exist for more than creating cash for the owner. People are talking about the brewery bubble, and with more beer than ever, the brewer needs to find a need and fill the niche.”

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Information from: The Bulletin, https://www.bendbulletin.com

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