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The loss of the Commons was, as the saying goes, a shock but not a surprise.
The Commons Brewery was once one of the city's most romantic success stories. The operation started as a nano in the Southeast Portland garage of owner Mike Wright, who sold his beer door-to-door to bars on Division Street. When his farmhouse beers got a warm reception, Wright quit his day job as an IT manager for Multnomah County and opened a 7-barrel brewhouse in an intimate nook of industrial Southeast. In 2015, they moved up to a massive 15-barrel showhouse at the eastern edge of the Belmont Street bridge.
In retrospect, the move was a mistake.
In July, WW reported that the Commons head brewer Sean Burke had departed. Rumors swirled around the move, and scuttlebutt suggested the brewery was being sold—rumors brand manager Josh Grgas was quick to deny when WW asked.
Turns out, the Commons is not being sold. Rather, it's vacating its space at the end of this year to make room for California's Modern Times, which plans to lease the space to open a "Fermentorium" complete with a coffee roaster and a full food menu.
We were among the Commons' earliest and loudest supporters, naming its Urban Farmhouse as Beer of the Year in the first edition of our best-selling beer guide magazine. But we were also among the first to flag problems with the vast, "hollow" new Belmont Street space, especially the fact that they opened without any chairs because their custom-built ones hadn't arrived.
Related: Get Your Grisette On at The Commons
What went wrong?
Beer bloggers had plenty of theories. Jeff Alworth, the nationally renowned Portland beer writer, described the Commons as "the Velvet Underground of breweries," which made "exceptional beer most people didn't understand." Alworth wrote that a lot of the problem was the Commons' humility.
"I've traveled all over the U.S. and Western Europe, and I'm here to tell you they make world-class beer," he wrote. "But they internalized the sense of the non-braggy Everyman—perhaps inevitable for a brewery named the Commons. Their bottled beer sent clues that it was a luxe product, but just clues… A lot of the recent wave of breweries swan onto the stage with a regal sense of self regard and charge a mint for their beer, which they serve with a heap of attitude."
Conspicuously absent in this conversation were successful brewery owners and the pub owners who sold the Commons' beer.
So we reached out to them, along with other beer-industry observers with a good grasp of the numbers. Because Portland is a small town and this is a very sensitive subject, we granted them anonymity in exchange for their honest appraisal of the situation. The purpose in this isn't to heap trouble on the Commons, but to move the conversation forward with an unsparing assessment of what went wrong, so that hopefully others can avoid this fate.
The Commons wasn't selling enough beer..
Seems obvious, right? But, it's worth looking at the specifics.
It appeared when news broke, most gadflies confronted the fact for the first time that the Commons was not selling enough beer. Brian Yaeger, the longtime Portland Mercury beer writer who recently returned to his native California, bemoaned "disloyal" drinkers.
"It speaks volumes, and poorly, of us as beer patrons that we didn't spend enough money on their beer," he wrote on Facebook. "There's 'too much' awesome beer being made in PDX, and every other brewery owner is now more nervous than even when Bud bought 10 Barrel, because if the Commons can't move enough product locally, perhaps no one outside of Breakside can."
This is not what the brewers we talked to said. In Oregon, brewers have a pretty good idea how their peers are doing based on public reports from the data kept by the Oregon Liquor Control Commission. Other brewers had been watching the Commons trend line pointing in the wrong direction for years.
"The publicly available numbers in the OLCC beer reports made it clear that things were not going as great even by the end of 2015," said brewer No. 1. "Between the end of 2014 and 2015, The Commons only grew in-state sales by about 100 barrels or 8 percent. That was better than the overall market at the time, but it was also in a year that they undertook a big expansion and build-out. How can you pay the debt from that off if you're selling hardly anymore beer than you were beforehand?"
In 2016, the Commons signed a wholesale agreement with a distributor. Sales did not jump. By the midpoint of 2016, they were on track to do about 2,000 barrels—the same as much-less prominent breweries like Golden Valley and Klamath Basin. They were selling about a third as much beer as neighboring Base Camp Brewing. Distribution cut into their profit margin, but they were not selling significantly more beer.
Another successful brewer says any brewery that wants to make its bones off a flagship farmhouse has to work hard to build that brand.
"[Wine-sized bottles] of well-balanced farmhouse-type beers have a limited audience, no matter how popular you think the style is right now," said brewer No. 2. "Doesn't help that so many breweries have opened since they did, and are continuing to open, often focusing on the same or similar styles. It's simply a way more competitive market than only a few years ago, and even though Urban Farmhouse is a wonderful, well-priced, multiple-award-winning beer… we're in an age of consumers wanting new, new, new all the time, so maintaining a core brand that's relevant and popular requires tons of effort from the producer. Breweries that aren't focused on that end of the business are going to have a difficult time."
The Commons was unlikely to sell more beer because their flagship product was, as a knowledgeable industry insider put it, "a niche style in an unpopular format."
The first problem was the bottles. The Commons' wine-style 750 milliliter bottles were on-trend when they started, and their branding is iconic in the city. The bottles have been especially popular with local fine-dining restaurants because they're cheap, do well in storage and pair well with food. But those shareable bottles were also a turnoff to more casual craft drinkers.
"As more and more styles and brands are offered in single-serving options, customers have been shying away from larger formats," said the industry insider.
"Consumption of saison is down—it peaked a few years ago and has been trending strongly downward," wrote brewer No. 1. "[Brewers Association] economist Bart Watson pointed that out in his Craft Brewers Conference presentation this year. 750 milliliter bottles at $8-plus for a beer under 5 percent ABV are just not going to move in today's marketplace, no matter how good the beer is. They were trying to push an increasingly unpopular style in an increasingly unpopular format, and they had expanded in a way that put them on a path where they had to move a decent quantity of beer to stay afloat."
That path involved their large new brewery and taproom on the exploding Belmont corridor. But it's a mistake to blame that taproom, said a third successful brewer.
"They aren't closing because their pub didn't do well. They are closing because sales through distributors didn't work well. Sales of their 750s are extremely slow and draft sales are lagging, too," said beermaker No. 3.
We shared these opinions and the others here with Wright, who questioned whether exterior perspectives can be of any help, writing that "if there is a sincere desire within the beer community to learn from the Commons experience, then I am happy to speak with my colleagues one-on-one, and would be willing to conduct some sort of Oregon Brewers Guild forum."
Their tasting room didn't work.
In April 2015, the Commons opened a large new brewhouse and taproom in the middle of a beer-dense neighborhood that's home to Cascade, Green Dragon, Hair of the Dog and Base Camp.
The ways in which that taproom failed was the most divisive topic amongst the people we talked to. Everyone agreed what the Commons was doing wasn't working, but there was no consensus on a better a direction, with some suggesting turning the space into a full-service restaurant while others thought they should simply better the taproom. Some thought there was no way the space could've worked, and that the Commons was better off in a smaller and less prominent location.
"Some craft operations can cover a huge chunk of their expenses simply from the high margins gained by selling their own beer in volume onsite," said a second industry insider. "Lacking air conditioning and outdoor seating is a big limiter to traffic in their tasting room."
Brewer No. 2 pointed out that selling beer out of the tasting room offers the best profit margins, and would have considered installing a full kitchen.
"People love to eat out in this town, and their beers are so well suited to pairing with a proper meal," that brewer added. "Opening a full kitchen is expensive, of course, but you have to figure they were already in deep with everything else, so securing some more financing to do a kitchen was probably an option. Seems like a great location as well for not just dinner but lunch, too, especially looking forward with the growth of the surrounding blocks."
Industry insider No. 1 agreed there was potential, but doesn't think anyone should run a kitchen unless they're fully committed.
"A full kitchen does make a world of a difference when you're hoping people will stay for one or two more beers," they said. "The beers the Commons make are wonderful food beers, so I do believe a full kitchen would have helped. But running a kitchen is a lot of work and requires a lot of diligence. I don't know about the Commons business practices, but if the heart wasn't there to run a full kitchen, having a kitchen could have been just as harmful as helpful."
A fourth successful brewer agreed with them.
"Full food service can get you into as many troubles as it solves if you are not fully committed to it," they said. "I came from a mostly full-service brewpub background and was comfortable running the completely different business that a restaurant is, in addition to a brewery. It is pretty obvious when I go into a place that is only running the pub part because they feel they have to."
Three others didn't see any hope once the Commons moved into their new space.
"I don't think that alone would have overcome the underlying issues of sluggish sales, though, it's hard to say definitively," said brewer No. 1. "Sure, more seating, a patio, a real kitchen—any of those would have helped. But even some of the busiest brewpubs in the city barely move more than 2,000 barrels onsite. Realistically, given the space, I don't think they were ever going to move more than 600-800 barrels onsite in a year, so even in an ideal situation, I'd argue that they needed to sell about 2,500 barrels [outside their brewery] in order to [break even]."
The third industry insider we talked to said the math was wrong.
"There isn't enough seating to turn over enough plates at an, 'affordable' price point with their fixed costs," they said.
One respected local beer writer was more unsparing.
"Classic overreach, driven by ego and a poor business plan," they said. "Their success in the little space on Stephens lulled them into thinking they needed more space and production capacity. It was a mirage."
Almost to the end, they didn't make IPAs.
The Commons was famously resistant to making IPAs. It won them plaudits from hop haters like Portland Mercury food critic Andrea Damewood, who wrote a laudatory profile of the five breweries in the state with the "cojones" not to make the industry's best-selling style.
That worked well when they were in a small, out-of-the-way space. But once they were in an area frequented by bar crawlers and tourists, it seemed odd. Brewer No. 1 had little patience for brewers who don't want to make what customers want.
"Some brewers view making an IPA as pandering," they said. "To me, that's crazy for two reasons: one, because I love IPAs and hoppy beers. Two, because selling IPA is what can allow a brewer to subsidize and support all their other projects. Would a brewery making lots of IPAs on the same equipment in the same space with the same food options have had a higher likelihood of staying in business? I think so. Would that brewery have sold more beer over the counter at that same location? Yes."
Brewer No. 4 says they aren't always excited about making IPAs, but doesn't see much of a choice.
"I often find myself yawning when marketing says we need a new IPA," they said. "The brewers would love to make something more interesting than another IPA. Then again, we all like being able to cash our paychecks, and the numbers irrefutably demonstrate that the majority of my mortgage is paid for in very hoppy beer sales. My advice to people getting ready to start their own place is: 'Whatever you make, call it an IPA.'"
Brewer No. 2 called making an IPA a "no-brainer" and suggested making a taproom-exclusive—which is, in fact, what the Commons finally did, though perhaps a little too late.
We asked beermakers whether making lots of IPAs could have succeeded in the same space, with the same brewing system and the same food options. One brewer simply replied, "Yes."
The third industry insider thought the low-hop strategy could work if they'd put more effort into marketing it; for example, by throwing more release parties and educating the public about farmhouse styles.
"Hop-heavy brewpubs tend to get more people in the door. Then serve a few less hoppy beers and wine, and most people in groups are happy," they said. "Regardless of our personal opinions on [release parties], they matter long-term. Those don't make a business, but slowly get people out of their comfort zone."
Brewer No. 1 points out that brewers don't necessarily have to make it their main mission to educate consumers or push unpopular styles.
"Can you imagine a chef saying that they won't put a chicken dish on their bistro menu because there is an overabundance of coq au vin in Parisian bistros?" brewer No. 1 asked. "You're at a French bistro, you serve coq au vin. You're a brewery in Portland: Make and serve the IPA."