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Tuesday, April 07, 2009

Recession Blues: Widmer Down, Others Up

Via the Oregon Econ blog, we have some mixed news about craft breweries and the recession. For Widmer, a dark cloud hovers over the bouyant anniversary celebration:
Less than six months after Woodinville, Wash.-based Redhook Ale Brewery Inc.’s merger with Portland’s Widmer Brothers Brewing Co., the new company has written down the value of the Widmer brand by more than a third.

Last week, the company that resulted from the merger, Portland-based Craft Brewers Alliance, released its 2008 annual report. For the year, the company lost $33.3 million on $86 million in revenue.

The loss included a $30.6 million impairment for Widmer assets acquired in the merger. Of the $30.6 million, $6.5 million is a write-down of the value of the Widmer brand, which the company valued at $16.3 million when the merger closed July 1.

The swiftness with which Craft Brewers restated the value of Widmer surprised analysts.

The whole article isn't available to non-subscribers, but Patrick posts this paragraph--hopeful signs for other breweries trying to weather the economic storm:
December and January shipments for all Oregon craft brewers fell by 5 percent and 7 percent, respectively. But in January and February, shipments for all beer in Oregon actually rose by 10 and 20 percent, respectively. “It would appear trading down from higher-priced, locally-made beer has already begun in earnest,” said Brian Butenschoen, executive director of the Oregon Brewers Guild.
I guess it's not surprising that a recession would produce winners and losers. Let's just hope there are no real "losers" and that everyone makes it through in the end.

6 comments:

joe said...

I'm pretty sure impairment is a non cash charge, which basically means Redhook couldn't get now what it paid for Widmer before given the current environment. As such they have to write down the value of those assets, which is a charge against earnings. Losing 3 mil is nothing to sneaze at, but certainly not as bad as the release makes it seem.

Anonymous said...

You said "hopeful signs for other breweries" followed by this:

“It would appear trading down from higher-priced, locally-made beer has already begun in earnest,” said Brian Butenschoen, executive director of the Oregon Brewers Guild.

Were you being sarcastic? I'm easily confused.

Mark said...

I'm trying to understand “It would appear trading down from higher-priced, locally-made beer has already begun in earnest,” said Brian Butenschoen, executive director of the Oregon Brewers Guild." That sounds like more folks are buying more large brewery beer, i.e. national brands. Those typically cost less than our local craft beer. That is not good news because it is an economic driver that will hurt all craft beer. As far as I know, there are no real "bargain" craft beers out there. Good flavor and quality have a direct relationship to cost, in my experience.
By the way, for those who really love to read financial statements, the entire Widmer/Craft Brands financial statements are available online. The salient, and unfortunate, essence is reported here. It goes with the territory that with a bigger organization goes bigger risks. It would make an interesting story to hear how other craft breweries are working to weather the economic storm.

Jeff Alworth said...

Anon, I can't speak for Brian, but a rise of 10 and 20% for craft brewers looks like good news to me.

Jared said...

I think it's more then a recession. Local breweries don't get much brand loyalty outside their own pubs it seems. I wrote a bunch on it, but can't be bothered to cover it all. heres the link http://www.theweeklybrew.com/2009/04/future-of-beer/

Like you said in your post about Widmer, many Oregonians made up their minds about their corporate ties. Nevermind that they make good beer. What seems to make a good brewery in Oregon is if it fits this magic combination of unrelated things, it doesn't necesarily have to do with their beer.

Patrick Emerson said...

I understood the paragraph to say that all beer being sold in Oregon is up, but craft brewers down, thus the implication being that people are going macro. However, the phrase "shipments for all beer in Oregon" is confusing. Is this shipments by Oregon brewers or shipments of beer by anyone in Oregon?

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