Devils Backbone: One Year Later

Posted by  Alex Hannagan   in  Breweries     1 year ago     2410 Views     2 Comments  

The news from Devils Backbone on April 12, 2016, that it had accepted an offer from AB-InBev to join their “High End” portfolio of craft beers shocked many of its fans.  Whether you looked at it as a necessary evil or a savvy business move, the event stirred some pretty deep emotions on all sides.  Still, the bottom line back then was that such events were not all that uncommon.  The biggest names in American craft beer are, with few exceptions, increasingly owned in part or majority by one of the big corporations.  Here are a few that go under the radar, and their rank in terms of volume around the time of their deals:

  • Lagunitas (#10, 50% stake to Heineken)
  • Ballast Point (#17, Constellation/Corona)
  • Brooklyn (#18, 24.5% stake to Kirin)
  • Firestone Walker (#19, partnered with Duvel)
  • Founders (#20, 30% stake to Mahou San Miguel)
  • Breckenridge (#47, AB-InBev)
  • Four Peaks (#49, AB-InBev)

Those are not particularly small companies.  But that means that, in terms of volume, unless you’re a Yuengling (#4), Boston Beer/Sam Adams (#5), Sierra Nevada (#7), New Belgium (#8), Bell’s (#12), Deschutes (#13), or Stone (#15), you’re probably feeling a bit squeezed to grow.  That makes such a list as the one above (which is not meant to be fully up to date) a sobering reminder that a fair amount of the biggest craft brewers are part of some larger conglomerate’s portfolio.  And unless you’re firmly ensconced within that Top 15 or so, odds are you’re fielding offers or working to become a conglomerate yourself.  The fact is that the biggest names are also losing out as beer’s share of the alcohol industry declines, particularly relative to wine.

Now imagine you’re Devils Backbone, arguably one of the most successful craft breweries in the country in terms of quality.  After all, when that BA list came out, DB wasn’t even in the top 50.  The Mid-Atlantic region was primed for expansion, however, with names such as Dogfish Head (#23), Flying Dog (#44), and Victory (#33) some of the biggest competition.  When the latter accepted a deal to effectively merge with Southern Tier in March 2016, that served as a reminder that to survive, expanding breweries would have to get creative with their capitalization.

With all that in mind, we sat down with Steve Crandall, the founder for Devils Backbone Brewing Co., to get his perspective on how the evolving beer landscape affected his vision for his company a year ago.  Steve has graciously offered to share his experience both in selling his company and working with AB-InBev.  The following interview is edited for clarity and narrative purposes only.

Steve Crandall (R) at a launch party in Columbus, Ohio

Virginia Brew Review (VBR):  Tell us a little bit about your original vision for DB, and how partnering with AB InBev aligns to that?  Such as, what was your biggest hope for the brand?  The beer?

Steve Crandall (SC):  Our original vision for the brewery probably started forming after, obviously, the brewpub was built.  We didn’t really understand that the brewpub was going to blow up into something much larger.  It was really the anchor business for a commercial and residential development, and 2008 came and that didn’t happen, but oddly enough at the same time the beer took off.  At that point we did realize we needed to expand our capacity and our capability.  My wife and I put up everything that we had ever earned in our lifetimes, at age 54 or 55, to build the Outpost brewery.  That was the start of a wild, wild ride as you know.  The capacity that we had was constrained every year because of our growth.  At one time I think we were the fastest growing craft brewery in the country.  Off of a small base, but that was exciting for us.

We also had a lot of other plans.  We soon realized that our whole Basecamp property in Nelson [County] really should be all about the beer.  We had built our [Outpost] facility in Lexington, which was going to be able to produce up to 30,000 barrels per year, and we figured it would take us 10 years to get there.  That was a little optimistic, and the reality was we actually got to 30,000 barrels at the end of our second year.  We’ve been in a constant crunch for capital and capacity from the very beginning.  We also had a vision of where we wanted to take the brewery.

Devils Backbone Basecamp in Nelson County, Virginia

I visited a place out in Oregon called McMenamins, east of Portland, and they had a large property and multiple restaurants on it, and I thought that was such a neat concept.  That’s where we started pushing.  In 2014, I had an architect design a distillery for us to put alongside our brewpub.  Everything is about experience – you want to bring people in and just have this wonderful experience of being among the mountains, with new impressions and things to think about.  The distillery was planned, but the money kept going into the packaging operation.  We had to build a second building, and buy millions and millions of dollars of tanks.  But Basecamp, the idea was not only the distillery but we wanted to put in permanent camping, cottages, a lodge, but we could never do any of those things.

About January of last year, I started going back to my banks saying I needed a couple million more dollars, and the banks at that point put the brakes on.  I shopped a couple other banks, and in that process AB [Anheuser-Busch] came knocking at the door.

VBR:  When did you know that DB was going to be a big thing in the craft beer world?  (And sorry, the GABF three-peat is too easy a response!)

SC:  You’re not letting me get away with saying the three-peat at the Great American Beer Festival?  One year in particular we got a lot of good PR.  I think it was in 2014, we were at the Craft Brewers’ Conference, and we were in the grand hall with 5-6 thousand people.  People were wondering since we’re winning these awards who we were.  Kim Jordan [co-founder of New Belgium Brewing Company], the opening speaker, was talking about innovation, and she said, “breweries ought to be more innovative, like Devils Backbone Brewing Company.  They just had their brewer go down to Australia to do a collaboration.”  We’re sitting there in the audience and we’re like, “OHMYGOD, she knows who we are!”  We were just floored, and it was very unique that she mentioned a brewery at all in her talk.

Later on, we’re at the British Embassy for DC Beer Week, and David Walker from Firestone Walker came up to me, and he said, “Steve, you guys are doing amazing things.  We started out just like you.”  That was the most amazing thing I’d ever heard.  The year after that, I was at a conference in Florida, and Jim Koch [founder and chairman of Boston Beer Company, which includes Sam Adams] came up to me and asked, “Steve, where’d you get the idea for that Vienna Lager?”  So we were definitely getting noticed, and it was a great honor for me to get elected to the BA Board of Directors.

VBR:  For me when you hit the big time:  I was traveling in England in 2015, and I went to this far out little town on the Thames, called Henley-on-Thames, where I couldn’t believe my eyes when I saw this sign for a Devils Backbone American IPA on tap there!  It was like, “what in the world just happened here?”

SC:  That’s actually still going on!  We’re sort of doing that one on our own.  With the JD Witherspoon’s group we’ve been contract brewing over there, and it’s actually getting into packages and we may actually be expanding and getting into retail over there.  We’re also working on a thing in Australia to be able to ship to there, where there’s actually a winery called Devils Backbone.  We think we can probably send a couple of containers a month there.  That craft market there is up double digits, 20% or maybe even 30%.  Going to Australia would be a hoot.

The sign from Henley-on-Thames, England

We also hosted all the national military wholesalers at Basecamp here back in February, and these are the guys that are buying for all the PXs [Post Exchanges on Army installations] and all the branches around the world.  We’re working with them to get our beer out – I think we’re in Spain, and it’s nice to be in Virginia near Norfolk as it facilitates getting that stuff shipped out.  I think there’s a real commitment from the military for trying to provide that to soldiers overseas – they deserve it and want it.  I hope over this year that will get nailed down.  AB has been very instrumental in helping us get that – they have more contacts than we did.  It’s a good cause.  We’re sending guys away from home, and we can make it a little more comfortable, a little more like home.  I was born in Stuttgart, Germany – my Dad was Army.  I’ve got a little affinity for the Army, being a military brat like I am.

VBR:  Let’s be honest, at some point it’s all about the beer – good beer makes money!  What was it about the DB portfolio that made you so attractive to them?  Similarly, what made them so attractive to you?

SC:  We were attractive to a lot of people.  Some of the biggest names in craft brewing came down to talk to us, and some of the largest international beer companies.  If you looked at our growth, and the quality of our beer, we were (and are I still hope) an innovative, trendy, and exciting company for others to partner with.  A lot of craft guys have a national footprint but they grow very, very slowly.  For them to be able to acquire smaller breweries that don’t have the breadth of distribution yet, there’s a lot of growth potential there.  With some of the great craft breweries, there’s then a lot of DNA transfer, and a lot of knowledge.  It was gratifying to see people I only knew names of before, that came overnight and stayed to talk to us.  AB definitely won that out, obviously.

We had sat down and talked to almost a dozen different companies that were interested in buying us, and actually four of them made offers.  And a couple of them made offers that were higher than what AB offered us.  What AB did do, and the others couldn’t do (or didn’t feel like it was viable for them to do), was they asked, “Steve, what is your dream?  What is it that you want for this brewery?”  I explained it to them, and they said, “well, sit down and tell us what this is going to cost.”  It was tens of millions of dollars, and I went back to them thinking, for sure, there’s no way they’re going to buy into this whole deal, and sure enough they did and signed off on it.  It was a long laundry list of things.

VBR:  What’s been the one thing that’s impressed you most about working with AB-InBev?

SC:  First and foremost has been their people.  There’s been this misconception about who AB is.  I don’t deal with the international guys, just the people here in the US.  I was prepared to come in to their office in New York and see a marble-lined foyer with a waterfall.  It was a foyer under construction with drywall, dust, and some guy sitting on a desk.  I went up in the elevator and it opened on this floor that was just wall to wall kids, 20- and 30-somethings.  They were in there painting on the walls with ideas, and everyone was so engaged.  It was just these young people that were trying to win, and that just impressed me so much.

Devils Backbone recently celebrated its 8th anniversary

My boss, and this is the first time in my life that I’ve had a boss… Felipe [Szpigel] in the High End Division, is also just warm and inviting and that’s been really great.  Even though I have a boss, they’ve been folks of their word.  We’re building out the dream.  The distillery is under way, we have a 50,000 square foot warehouse going in at Lexington, and we’ve got a whole bunch more toys for our brewers to play with.  Partnering with AB has been, I think, a real blessing not only for my employees but our community also.  We feel like we’re going to be on the cusp of innovation and beer as we move forward.

As part of our deal, we set aside hundreds of thousands of dollars to give away to charitable organizations that need support in our communities over the course of the next five years.  As far as our communities, they’re very supportive of what we’ve done and what we’ll do.

VBR:  In as broad of terms as you like, how would you compare the “DB process” now as compared to a year ago?  What has changed, remained the same?  Anything improved?

SC:  Devils Backbone is still an independent LLC, but is majority owned by Anheuser-Busch InBev.  I am still the CEO of the company, I still have all my people in positions from COO on down to sales and marketing.  We have tremendous autonomy in what we do.  We have absolute autonomy on what beer we make and what states we want to enter – how we go forward.

We work against some headwinds, you know.  The BA here at the Craft Brewers Conference [in Washington, DC] has been pounding “independence” as very important, and I appreciate that.  I have many friends at the highest level of BA and other ownership – in fact, I had beers with a bunch of them just last night – but yesterday Bob Pease [Brewers Association CEO] spoke, and he’s the perfect guy to be running that organization.  He said, basically, there were four core values of the BA, and he said this in a way that reflected that maybe guys like us don’t share these core values.  They were independence, authenticity, collaborative spirit, and community mindedness.  Other than the independence one, which believe it or not we still have tremendous autonomy, the others are smack dab in the middle of what we do and will continue to be that way as long as I’m the CEO of the company.  I think it makes no sense for Anheuser-Busch to want to go in any other direction because that is what made us great and that’s why they bought us.

VBR:  You’ve retained a minority stake in DB since the acquisition.  Can you talk a little bit about the role you play, and how that will evolve going into the future?

SC:  They control ownership in the company, and we’re charged with growing the business – it’s what you gotta do in business!  They support by helping us fund ideas, or giving us some ideas on marketing, or even helping us get into new markets by meeting distributors or buyers at retail.  Eventually they’ll own 100% of this company, but we’re in the process now of helping grow this business.

They did this thing as part of the purchase deal – after you pay off all your debts, that money is usually then allocated to all the partners in the business.  We had eight owners,  50% of the income from the sale that they got out of this deal was reinvested in the company.

We’ve been accused of selling out, but we actually bought [back] in.  It’s a completely different concept.  Selling out means you abandon your principles and your scruples for economic gain, but buying in means we have “sweat” equity in where this company goes, and we care about it and nurture where it goes.  I am probably working harder today than I ever have in my entire life.

VBR:  Are there any criticisms of the sale that you think are unfounded?  Any that were well-deserved?

SC:  I’m in this very unique position where I’m friends with a lot of the leadership of the BA, yet I don’t agree with their strategies (and nor do they agree with mine).  This is a business thing.  Beer is a business.  Beer is not a cure for cancer, although it might help, actually.  There’s been some studies…

This is a business, and every person, every one of the 5,400 guys [breweries] out there, if they don’t run it as a business they won’t be viable for very long.  We made a decision to go in a certain direction for a variety of reasons.  One was capital that we could no longer comfortably obtain, and another one was were we saw the world, the market for beer heading.  We were part of one of the greatest renaissances of beer in Virginia – and throughout the country – and we have been very fortunate that we came in at a time when a lot of the pioneers in the craft beer business – the New Belgiums, the Sierra Nevadas, the Deschutes, the Lagunitas – had already fought a lot of the battles, and they’d already laid a lot of the groundwork for other people to come along and have success.  At some point I began to realize:  here in Virginia I was part of a very small group of people that got the law changed, SB 604, to allow taprooms to sell beer; we were the financiers for the Virginia Craft Brewers Festival; and we were one of the original founders of the Virginia Craft Brewers Guild.

Devils Backbone recently launched in Cleveland, Ohio as well

VBR:  Is there any one thing that you regret that could have gone better over the last year?  What would you have done differently?

SC:  The part about resigning from the BA Board didn’t bother me, what bothered me was no longer being able to help support some of the friends I left behind there.  You know, when you’re in this rarified air, you’re sitting with some of the giants in this industry…who were so inspirational to us and helped us grow, so that was sort of hard to leave.

It was a bit unnerving when we announced, but we had every expectation of continuing a very strong relationship with the leadership of the [Virginia] Craft Brewers Guild.  It was very hurtful to us during the six month period after we announced [the sale], when there was no guarantee whatsoever that we would conclude the sale [due to a Department of Justice anti-trust investigation into AB-InBev’s acquisition of SABMiller], but immediately from the time we announced – remember, we were still small and independent – we were barred from attending any more meetings of the Guild.  We had dozens of different breweries in Virginia, people that we had grown up with in the business, who called us with their frustrations or sympathies with what had occurred.

I will have to admit, a certain part of our soul was lost when that happened.  We weren’t going to fight it, and didn’t think that was an appropriate thing to do.  One of our core values is being “beer positive.”  That’s a term that [Head Brewer] Jason Oliver coined, and we felt the best course of action was continuing to put our best foot forward and support craft beer whenever we can.  We love our fellow craft breweries, we visit them, have beers with them, all those things…the fact that we’re not invited to the party anymore is discouraging but it’s reality, and we just keeping doing the things we’ve always done and hope for a day that things can change.

I respect their decisions, and this is business.  It’s competition, and people want to win.  People have livelihoods staked on their success, and that’s understandable.  Something that’s less understandable is a really funny thing where you get all these dichotomies of emotion and realities occurring where the thing on us is we supposedly joined this big conglomeration without a heart, and reality is very different than that.  In a prime example, we live in Nelson County – a beautiful, beautiful county.  About 2-3 years ago we heard that the Atlantic Coast Pipeline would come through the Northern part of the county.  At that time we staked out our position (and I’m a conservative treehugger) that natural gas is good, fracking is good, and natural gas has to be carried by pipelines, but…BUT, the state should not use eminent domain to figure out where the pipeline route’s going to go.  There’s a lot of existing right of ways this pipeline could travel, but we sided with the little guys – we sided with our neighbors.  This, to us, was the right thing to do because this is going to alter those people’s lives if that pipeline crosses their property forever.  Yes, it’s a small segment of the community, yes the pipeline is going to help bring energy independence, yes it’s going to support the state (it’s a $5 billion project) – it’s all of those things, but the person that gets left out of that discussion is the little property owner that has no say in this pipeline coming across their ancestral land in some cases.

Early this year, or maybe late last year, one of the local groups fighting it posted on their website with, “This Bud’s for you.”  It listed 100 companies supporting the Atlantic Coast Pipeline, and one of them was Anheuser-Busch.  I was like, holy crap!  We’ve been fighting this thing for a number of years, and here’s this big international conglomerate without a heart saying they support the pipeline.  I called different people at AB and I said, “guys, this isn’t right.  This has been our position, can you alter your position?”  They went from pro-pipeline to neutral, and got their name off that list.  That is an example of how we are changing them, and we could never have done that otherwise.

What adds even more interest to this, is one of the companies that were listed among those 100 supporting the natural gas pipeline is the Virginia Manufacturer’s Association, which is a parent organization to the Virginia [Craft] Brewer’s Guild!  I know half of the brewers on the guild are totally against the pipeline!  It’s just interesting the dynamics of politics that are involved in this business.  There’s always different layers, and it’s fascinating to see.

What makes it more absurd, I suppose, is over time we’ve gotten several signals from the Governor’s office that he was boycotting us because of this decision.  I get his position – everybody has a right to do what they want to do and figure out things from their perspective – but that’s fascinating that he won’t come visit us because he said he’s going to visit every craft brewery in Virginia.  We’re the largest craft brewery that was organically grown in Virginia, and he won’t come visit us.

The other part that adds a little more salt in the wound:  here we are, we started out this small little independent company, and we didn’t get a dime from the state.  And the state – for all good reasons, you know – is soliciting big outside companies that can come in and build $80 million breweries, and yet we’re chastised for coming up with a business decision on how to grow our business rather than using taxpayer money.  It’s an interesting dichotomy.

VBR:  Did the Brewer’s Guild or anyone give you a reason why the ostracism was occurring even while the sale wasn’t final?

SC:  Not only did they not given us a reason why, they never even contacted us.  After the sale, we had a meeting set up, and we fully expected that these friendships we’d gotten – and maybe we were naive – and the collaborative spirit to continue.  Again, this was the Guild leadership, this wasn’t the regular guys.  We were told after the announcement, there was a meeting and…it was an immediate sever of strings and attachment.  We wanted to come to the meeting and plead our case.  To me, we had earned that.  Just to plead our case, to say, “guys, this doesn’t change who we are.  We’re still gonna be here, we’re still gonna support everything that’s going on in Virginia.”  That was just an unfortunate thing.  Maybe if they had to do it over again, they’d do it a little bit differently.  But, again it does come down to politics, and money, and competition, and people trying to win.  I get it, and we’ve moved on, but I’d be wrong if I didn’t tell you if there wasn’t a little bit of our hearts that died that day when they told us that.  That’s the way life is, and we’re going to continue like I said to do everything in our power to support Virginia craft beer.  We’re going to continue to do it in any way that’s we’re allowed to do that.

Staff from Devils Backbone and Three Notch’d

VBR:  Whatever consternation some craft beer fans may have had, the sale going final a few months back doesn’t appear to have hurt your ability to collaborate with other VA breweries.  Can you talk a bit about what went into the new Adventure Pack?  What has the response been so far?

SC:  We’re collaborating all the time! We’ve got a lot of brewers, in Virginia particularly, that are what I’d call solid, positive friends and we collaborate with these guys not just on beers, but on problems and issues.

We do these collaborations every year, and we’ve done it every year with a couple different brewers from around the country.  We get so much out of that:  brewing techniques, ideas on different materials.  We have a better footprint for doing this than some of the guys in our collaboration packs, as some of them are very small with just taprooms and others are desirous of growing their business into regional brewers.  We [asked ourselves], “how do we tell people that we do support craft [beer] in Virginia?” and this is the idea we came up with.

Some of these guys were ones who were very supportive of us when we were booted [from the Guild], and the interesting thing in beer, and craft beer in particular:  the brewers are all in a different place than owners and management who are thinking in dollars and cents and competitiveness, and “how can I step up?” or “how can I take that guy out?”  You do need some of that, but the brewers are on a completely different level.  They’re incredibly collaborative, incredibly supportive of each other, because they know what it takes to brew good beer.  They have respect for one another.  It’s really a neat thing to see.

Jason Oliver, the day we opened our brewpub eight years ago, demanded that we have Budweiser, Miller, and Bud Light in our cooler.  I was the guy who was the owner/manager who was like, “are you kidding me?  Why would we do that?”  He goes, “I know those brewers and they make good beer.  What they do is really hard to do.  You don’t tell people what to drink:  90% of the country is drinking that beer!”  Now, it hasn’t been a big mover for us, but it is a statement that we believe that all beer is good.

Ocelot also partnered with Devils Backbone on the Adventure Pack

We still have collaborations that we’re going to be doing.  We’re doing an exciting collaboration here in the third quarter with the High End guys, and it’s the first time some of them will be in the state.  Some amazing craft breweries from around the country, but that was our idea and nobody else told us to do it.

In the fourth quarter we have the return of our Family Pack.  That is one of the coolest things we do.  We have our company meeting twice a year, and we form into teams with brewers – everybody from the guys flipping burgers in the kitchen – and everybody gets in this team and they come up with an idea for a beer.  Then they gotta present it in front of the entire company, and those presentations are hilarious, amazing, and just cool to watch.

You’re always going to see a variety pack from us, four of those a year.  We’ll do some more collaborative stuff for next year in that regard.  We think our fans really enjoy that, they’re excited about it, and it just makes sense to do it.

VBR:  As you top 100k barrels per year, what does your strategy look like as you get into new markets – are you targeting certain beers for new states/regions?  Certain styles?

SC:  You know, the beer landscape is rapidly evolving and changing.  It’s really ironic, you have amazing companies like Sam Adams and Sierra Nevada that are seeing significant declines in sales.  These are the guys that really created the foundation for the rest of us to follow.  What they’re getting taken out on is there’s so many local, amazing craft breweries across the country, and people want local.  They generally want local beer if it’s available, and it’s really hurt the sales of these big national brands that have been there a long time.

Our strategy is to cement a regional presence.  We expanded all the way down to Georgia, and up to Ohio, and we’re going into Manhattan in another couple weeks.  We’re going to sort of sit on that a little while.  We may go into Florida in the fall or late summer.  But all those markets are ones which I’d classify as our “backyard markets.”  We already have a lot of fans in these markets, we’re relevant, we have very good friends in the beer business, longstanding friendships, and they’ve welcomed us with open arms.  We’re not going to have a monster presence in any of those markets.

Devils Backbone’s regional expansion began with Pennsylvania, Delaware, and New Jersey

Part of the deal with AB (and this is the first time they’ve done this) was we wanted our own people’s feet on the streets.  We’ve hired 30 salespeople to hit those eight or nine states that we just went into.

We go in draught only, initially, for 30 days and then we go in with package.  We’ve had pretty good success, from the early days, of getting chain store authorization which is really an important aspect of our business but also trying to win some tap handles, too.  We have beer that travels really well:  the Vienna Lager, our flagship obviously and an amazing beer, not crazy, very sessionable; our IPA does very, very well, and has for a long time.   Those are the top two craft beers sold in the state of Virginia, which is pretty cool.

We have some other arrows in our quiver, and the problem is we have so many beers that have won awards that it’s hard to choose which beer you’re going to go with.  We have a beer called Gold Leaf, it’s a light lager, and that beer has probably won more awards than almost any of our beers other than Vienna Lager.  We had it in a can format and it didn’t get a lot of traction that way, so we’re changing it over to a bottle format.  We think that beer has ability to really grow well, and we’re going to put some effort behind that.  Our Schwartzbier, which we now call Black Lager, we had a name change because we thought it was more understandable for a lot of people, but that is still a very challenging beer to put out and market because most people don’t like black beers until they taste it.  That’s one of our favorites for our brewers – it’s very sessionable, just full of coffee notes – a wonderful, wonderful beer.

VBR:  A few months ago you mentioned something big would be occurring around the one-year mark from the announcement of the partnership.  That’s this week!  So, any hints?  Following that, what are you most excited about over the next year?

SC:  The distillery was a really well-kept secret internally, and we wanted to make a big splash with that sort of stuff.  But it won’t make a huge splash because we’ve sort of let it leak out as it went through.

One of the more exciting things is what I call the Jason Oliver Project – JOP – sort of like the Alan Parsons Project.  We’ve expanded a number of times on Jason’s pub, which is our pilot brewery in Basecamp.  We’re doing an expansion where we’re going to have wood fermentors, fooders, coolships, open fermentors, horizontal fermentors, things that will allow us to stretch our capabilities in the brewing art and experimentation in different ways that we haven’t done in the past.

There’s a lot of collaboration back and forth on that and the distillery.  It’s the first one in AB’s world, which was challenging for some of them to see – it’s all about the “beer biz.”  We think that there’s a lot of interesting elements that can be married up with beer and distilling.

Campers at Devils Backbone in Nelson County, Virginia

In addition, I just got approved from the county for the balance of the [Basecamp] property.  It’s 25 primitive camp sites, 50 RV slips (25 full service), 10 cottages, a 25-row lodge, and a 250-person event space.  It wasn’t all part of my original ask [to AB] so I have to make my case for the viability and value for some of the rest of that stuff.

At the Outpost, we’re going to start a very serious barrel aging program.  That’s something that’s been on the drawing board for us for years, but we’ve never had the room or the space to pull that off.  That will allow us to do a major expansion on the existing taproom, and more than likely we’re going to add some food component to that.  We’ve got some big neighbors right down the road from us – it’s a competitive business with Deschutes coming in, and Ballast Point.  You just have to up your game constantly, and make it more enjoyable for your fans to come.

Tanks outside the Devils Backbone Outpost facility near Lexington, Virginia

VBR:  When you’re looking at expanding, a lot of us fans love more than just your beer.  The Outpost has been hugely popular even as you’ve made it your “Brew HQ.”  Do you have any plans to open other brewpubs in the Commonwealth or other states?

SC: We want to.  We don’t know quite where we want to go, but we’re a little hesitant to put in another remote taproom.  We really value our on-premise retail guys, and they’re not real super happy about the proliferation of remote taprooms.  It’s hard enough for the retail accounts to make it.  They don’t have the benefit of making beer in the back, and if I’m going to go down the street from them and compete directly against them through the use of interbrewery transfers…  The guild leadership was initially against remote tap rooms for this very reason and it was not the intent of SB604 when we got that approval.  We’re not so sure that’s the right way to go to the market, so if we do something it’ll probably be a regular pub with a restaurant in it and beer-making capacity.

Where would I do it?  I’d love to do it in Northern Virginia, but that has not been determined yet.

VBR:  For all the brew-ha-ha (sorry) over your sale, people still love other breweries like 10 Barrel, Goose Island, Lagunitas, and the list goes on…  Do you see these kinds of acquisitions as the future of craft brewing in America? 

SC:  My personal belief is we shouldn’t be drawing lines around beer.  Virginia is really fortunate that we’ve got an Anheuser-Busch plant and a Coors plant – those guys should have a seat at the table, too!  It would only support the industry in Virginia.  I think those kinds of things will eventually happen.  And I think that’s a good thing, even though there is that competitive spirit that sort of initially doesn’t allow you to get together.

No doubt we will see more acquisitions  and some form of capital infusions into craft.  Of course the 6 million dollar question is how does that affect the authenticity, collaborative spirit and community mindedness of these breweries going forward.  I think it is clear in many cases it is a win for craft moving forward.  The big question that is not getting much attention is how does beer grow volume in the market?  Wine and spirits are growing at a faster rate and that will diminish craft sales and viability of some craft breweries.

Construction outside Devils Backbone Basecamp

We all should be talking about how to grow beer, not fighting each other inside the beer segment that is losing sales every single year.  The wine and spirit guys love seeing our turf battles and the lack of alignment.  That’s not the way, I think, to move it forward.  I think you move it forward when you find ways to have people understand how wonderful beer is, which goes beyond finding more occasions to quaff and sip fine craft beer.

VBR:  What does life look like for you after DB?

SC:  Who the heck knows!  I’m 60 years old right now, with three children – two married and one of them expecting this fall with twins…  I don’t know.  Am I going to walk away in five years?  I can’t say that’s anything that’s ever been in any of my calculus…  I honestly don’t know.  I just have to wait ’til I get there.  I don’t ever plan on leaving Virginia.

VBR:  Finally, for anyone who still has doubts that DB beer will still be DB beer a few years from now, what would you say to them?

SC:  The interesting thing:  because of our alignment with AB, we are limited now in how many beers we can enter [into GABF].  Before AB, I would’ve been able to enter 10 beers – five from each of my breweries.  We only entered four beers [in 2016], and we won two Gold Medals.  Good beer is good beer, right?  You can have your opinion, and that’s fine, and choose to malign or be negative.  That’s fine.  You’ve gotta do what makes sense to you, but like I said, we’re looking forward and we’re doing the best we can do by our employees and our families and in our communities.  We’re going to continue making award-winning beers and hope that people see that we’re the same ‘ole guys we’ve been, we just have a different bank who happens to be a partner who has been around brewing beer for over 100 years.

Devils Backbone Head Brewer Jason Oliver has continued his Fireside Chats series

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