Boneyard Beer and Deschutes Brewery founders discuss acquisition, brand and innovation
First things first, let’s clear some things up: “Deschutes brewery has purchased the assets of Boneyard Beer Company, now those assets don’t include the pub on Division Street or the Elixir CBD non-alcoholic beverage. But it does include the original brewery, all the brands, everything else” - says Deschutes Brewery owner/founder Gary Fish.
Yesterday it was announced that Deschutes Brewery had formed a partnership with Bend, Oregon brewery Boneyard Beer Company to ramp up canning and distribution of their world famous beers. Nowhere in the announcement did it say acquisition, which is where the confusion began in open forums and social media. What this partnership means for both companies, other than more Boneyard Beer for the world which clearly adores their West Coast IPA centric offerings and punk rock gearhead culture was still foggy. For context, Deschutes Brewery produced about 275,000 barrels of beer in 2019 and is now the largest independent brewery in Oregon. Boneyard Beer produced nearly 30K barrels in 2019 to make them the 10th largest brewery in Oregon (including macro big beer brands) and that was all beer from the tap which likely makes them the biggest seller of draft beer in the state.
“Our plan at this point is for that to continue to operate independently utilizing whatever assets Deschutes Brewery may have in terms of capacity, skill sets, administrative responsibilities, and on and on, to help Boneyard realize it’s potential and get it to the people that want it,” says Fish.
“We were really happy with our 30,000 barrels draft-only presence here in the northwest. This was a little outside of my imagination, but here we are, COVID came and we went to cans…and wow!” says Boneyard co-founder Tony Lawrence.
Of course it is all much more complicated than that, and as it turns out many of the questions that the industry has on how the two disparate brands will converge or cross-over is still somewhat of an unknown even to their founders. On Wednesday afternoon both Deschutes owner Gary Fish and Boneyard Beer Co. co-founder Tony Lawrence sat down with the New School for a frank discussion on the past, present and future of the brand.
Pandemic, partnership and legacy:
Tony Lawrence: Boneyard just turned 10 years old and I have been doing a lot of reflecting and just thinking about everything that’s happening in my life right now with myself and with Boneyard. In 2019 some of us were sitting around the board room knowing we were about to turn 10 years old and we were noodling on what the next 60 or 120 months might look like for Boneyard, all the while understanding that we weren’t ready to borrow millions of dollars and dive deep into some capital to invest in packaging or growth by volume to support Boneyard brands. But, we were looking for something to keep us relevant, or for people to talk about and our customers to be happy about…We didn’t know what it was, but we were looking at these topics.
Then the pandemic hit and Boneyard struggled as most have, losing their draft business they started co-packing and using craft canning, then assembling their own canning line and using that dreaded word “pivot.” For a success story like Boneyard which was built on a thriving draft beer business, the pandemic was devastating not only for the short term but potentially the long term.
Lawrence: Somehow through this year it was sort of shaped for us what we were trying to identify for our second decade. Now clearly the world understands what we are gonna do, so it was the opportunity that we are speaking about here today was a byproduct of this last year. We opened pandora’s box. I guess we have identified what our next decade is going to be, we are going to see what this Boneyard brand can really do!
Fish: Yeah there is an upside and a downside to being really good at what you do.
While Lawrence and company had kicked around the idea of partnering with another company to increase production and distribution in the past, it was all just talk and never seriously considered until their team took a tour of Deschutes last April. The Deschutes + Boneyard deal began to take shape in 2020 but had to be kept secret even from most of the companies staff and partners.
Lawrence: Its been very challenging trying to live a double life trying to navigate how this structure might look and not really communicating very well with my co-workers.
Fish: The nature of these kinds of deals…any kind of leak as you can imagine…It’s necessary, these things can go sideways in a hurry. It can kill a very good deal.
Tony Lawrence at Boneyard Beer Co. in 2015
History:
The relationship between Lawrence and Fish is deeper then just sharing the same hometown of Bend, Oregon. In many ways Lawrence owes his career to Deschutes Brewery where he first stepped foot into the industry as a pub dishwasher with not a lick of brewery experience.
Lawrence: I started as a dish dog, a hydro technician at the original Bond St. location!
Fish: I remember meeting a tall skinny, snowboarder-skateboarder dude from California. Tony always struck me as one of those guys who didn’t want to be as smart or as good as he was, he kind of expected to be a screw up, he was always way too capable for that. When John recruited him into the brewhouse it made perfect sense.
Lawrence made friends with Deschutes young brewmaster John Harris (founder of Ecliptic Brewing), they shared pints after work and chatted about snowboarding and beer. At the time Lawrence and his buddies were really into imported beer and Sierra Nevada Pale Ale, at some point John Harris tapped him on the shoulder and asked him if he wanted to step out of the dish pit and into the brewhouse.
Fish: He had all sorts of high level positions like keg washing and shoveling the mash tun, that’s how all brewers get their start right?!
Lawrence spent 12 years at Deschutes, from 1989 to 2001 going from the original pub brewhouse to the building of the production facility. He spent over a decade in the 90’s brewing on Deschutes 50bbl brewhouse on Simpson street as production jumped from about 1,000 barrels of beer a year to 100,000. He later went to work for Tim Gossack at Rio Salado Brewing in Phoenix, AZ making all German-style lagers, a type of beer he still has a lot of passion for despite his notoriety for big West Coast IPA’s. He returned to Bend to found Boneyard Beer in 2010.
Growth and expansion:
As the new partnership begins the focus will be on reproducing the Boneyard Beer’s on the Deschutes production facility so that they may ramp up distribution. Right now Boneyard is primarily available from San Francisco to Seattle with occasional small drops in Bellingham, WA and Denver, CO. The question at some point has to become how far can the Boneyard brand go and how big do they want to get?
Lawrence: I have always been curious about what Boneyard might look like full blown across the west coast. Its all a little new to me because I had never really envisioned us being off-premise or chain store opportunities, so it’s a whole new language for me. I’d like to think if the liquids are as good as I believe they are and if we have the capacity to put them in cute little 12oz containers up and down the west coast that’s a good place to start. I’d like to think maybe we can do more damage than that and move out into Colorado or something. But one foot in front of the other.
Fish: I think that’s whats really important, to try to be methodical and not get too far out over our skis. To really take this one step at a time, certainly the west coast you can envision. Since 10 o’clock this morning since we made the announcement to our teams we have fielded inquiries from across the country for the Boneyard brand. So apparently it’s reputation and it’s brand extends far beyond it’s northwest footprint right now. But for what that means and what the overall potential is, what we’ve learned in 33 years is you just gotta put one foot in front of the other and not try to go too far and too fast.
Lawrence: I think priority is getting some scale on RPM and discuss what other SKU’s might run alongside RPM, I have heard some talk of Incredible Pulp or maybe Hop-a-wheelie, I don’t know, we will decide that as a team. I am really excited to be more of a brewer than I have been in the last 5 years. I am diving back into different hop formats, different utilization of those formats, or concepts, or anything like that. So for me we are going to try to get really creative with the liquids that we produce, that’s where my head is at.
Deschutes Brewery founder Gary Fish
Growing to scale:
Scaling up the Boneyard Beer recipes is it’s own challenge, one that Deschutes is more than capable of doing but it will take time. For the time being there will be no change in where and how the beers are being brewed but in all likelihood the Boneyard production facility in north Bend on Plateau Drive will eventually become unnecessary.
Fish: We don’t have a timeline for ramping down Plateau Dr or ramping up Deschutes Brewery, we could be operating at both breweries for a long time. Right now the focus is on making the beer exactly what it is. It took us 4 years to match Black Butte Porter between the JV system and our Huppmann system and they are 100’ ft apart. We learned a lot through that process about how to flavor match and what are the contributors to certain flavor components. But the Boneyard team knows a great deal about what makes their beer taste the way it does, so we are starting to dig into that only know, to figure out how to make Boneyard beer exactly what it is. That will happen when it happens.
Lawrence: We are still brewing at Plateau Dr with a focus on getting the RPM flavor matching completed and get it into packages as soon as possible. We will continue to brew draft at the Plateau brewery. I’d guess at some point we will be able to be able to bring all the brands across, the different wort streams, and get them all scaled up at the Deschutes plant.
The breweries are near each other and on the same water system, use similar ingredients and suppliers, even some staff that has worked for both companies, but figuring out different yeast strains, vessel sizes, procedures, techniques etc. will be a process.
Wholesale and Distribution:
So much of the discussions leading up to this point were just on getting the deal done and both companies were unable to inform their teams on what was happening until Wednesday morning ahead of the public announcement. That secrecy even extended to Boneyard’s main wholesale partner, Portland based Point Blank Distributing. It’s unclear if Boneyard will change wholesale partners as Deschutes has a long-term relationship with one of the largest distributors in the United States with Columbia Distributing.
Fish: I think out of respect for everyone we don’t want to presuppose anything. We both sit here appreciating and admiring our distributors and the work they do. I am sure there will be more to come in the weeks, months and years ahead of us. We haven’t planned for any of that, getting to this week was where the planning was. We will do what makes the most sense for everyone going forward.
There is a possible future that sees Boneyard’s output in cans being distributed through Deschutes distribution network while Point Blank retains the usually extremely robust draft beer business that will hopefully return to normal once COVID-19 subsides. According to both Fish and Lawrence, there are still no plans on how and where the two brands will converge if at all in sales and distribution.
Fish: We are still finding that out, there are still a lot of questions, particularly among our sales team. They still have the Deschutes portfolio to promote, but there is clearly a lot of white space for Boneyard brands. We think this will be a nice fit in a lot of markets, but we are just taking this one step at a time to make sure we execute correctly.
Lawrence: Boneyard only got its first sales person ever less than 24 months ago, so we are speaking in a language that I don’t have very much experience with. My strength is really in the manufacturing side of things, we’ve never even been in the chain stores and the off-premise space before so I got a lot to learn and a lot to catch up to here but I certainly couldn’t be more excited for the opportunity to have those discussions.
On Brand:
One of those major questions that is yet to be answered is what Lawrence’s title and position will be with the company going forward, but he is not planning on going anywhere. Over the past decade of massive growth, Lawrence has found himself more on the administrative and business side of the company and less time in the brewhouse, that is something he is looking forward to changing. While the title is TBD, Lawrence could end up being more of an ambassador and creative force in the brewhouse while leaving some of the administrative duties that he freely admits are not his strong suit up to Deschutes.
Lawrence: That will free up a little more time for some of the more fun things I hope to focus on to help the brand or the liquids.
Fish: I don’t think we will have any problem keeping him busy!
Lawrence: Who we are and how we are and how we operate needs to be maintained, to start to dilute that too much or do different things that could impact how we operate…we are going to stay very far away from that….We are going to sit across the board room and really have some fun coming up with concepts.
Creativity, Boneyard Pub and CBD Elixir Independence:
Not part of the Deschutes acquisition is the 3-year-old Boneyard Pub in Bend and the separate but connected entity Boneyard Elixir which makes CBD sodas. Lawrence and his partners and team will continue to run both businesses entirely independent of the brewing operations and strive to make them the best ambassadors of the brand.
Lawrence: We are just going to put more motorcycles and more beer in there and turn up the music a little bit.
The original Boneyard Beer location at 37 NW Lake Pl and it’s 20bbl brewhouse will become Lawrence’s new playground for getting back into brewing. He’s excited to catch up with younger brewers and get more into the latest hop innovations and brewing techniques, the acquisition allows him to return to his roots as a brewer both at Boneyard and his original stint with Deschutes where he started.
Lawrence: After a 19 year absence I’m going home
Boneyard Beer co-founder Tony Lawrence