It’s already been two years since Oregon-based Deschutes Brewery announced plans to build an east-coast production in Roanoke, Virginia, at a cost of $95 million. But according to Brewbound, the brewery is now renegotiating an incentive package with the state and city.
Their plans were to purchase 49 acres of land by May 1st, by reworking the original deal, the company will maintain flexibility on project’s timing, size, and scope.
Deschutes fully intends to go ahead with the project and has agreed to buy the land at a cost of $3.2 million at the end of May. But by giving up some incentives, the company can move ahead at its own pace.
Had the project proceeded as originally planned, the city of Roanoke would have reimbursed the cost of the land over a five year period. Additionally, the company could receive incentives from the Virginia Commonwealth Opportunity Fund in the amount of $3 million along with $1.5 million in rebates for equipment. They could also receive a $225,000 job creation grant from the Roanoke Economic Development Authority.
Deschutes CEO Michael LaLonde will be traveling to Roanoke in May to meet with city’s Mayor and Council and continue work on the new deal.
The brewery, which made its plans known in March 2016, is one of several craft breweries from the west coast adding east coast production facilities. Sierra Nevada, Ballast Point, and Stone Brewing already have locations. Green Flash also built a facility but having overextended its operation, recently abandoned its Roanoke brewery.
In spite of Green Flash’s collapse, Deschutes is still planning on sticking with its original timeline, beginning with the land purchase this month. The brewery expects to break ground in June 2019, begin flavor matching in 2020, and shipping beer by 2021.
The brewery predicts that they will sell nearly 200,000 barrels the first year and the facility will be built for growth as demand increases. The company projects the facility will cost $55 million and they will hire 70 full-time employees.
Deschutes is being conservative with their plans but wants to see this project through to its completion. LaLonde said that there’s been a tremendous demand for the Deschutes beer on the east coast and shipping that beer cross country is neither cheap or environmentally friendly.
Deschutes already has a presence in Roanoke as the brewery works towards building a connection with local consumers. The company opened a taproom in downtown Roanoke last year.
Deschutes has been successful for a long time but as the overall beer market has contracted, so has the brewery’s sales. In fact, the Brewers Association ranked the company as the tenth largest craft brewery in the United States. But that’s down two spots from the previous year. According to the market research firm, IRI Worldwide, the brewery’s sales were down 5.6% last year, and 15% through the first three months of this year. This comes on the heels of spotting double-digit growth for six straight years.
LaLonde said the company made some mistakes and missed some opportunities but that they’re working towards getting back on track. The brewery hadn’t been canning their beers even as their sales have increased by 40 percent. But the brewery is now offering three of their core offerings in 12 oz. cans: Mirror Pond Pale, Fresh Squeezed IPA, and Pacific Wonderland Lager. Additionally, they’re hoping two new IPAs will stimulate growth: Hop Henge Imperial IPA and an unnamed New England style IPA will be released in 19.2 oz. cans sometime in the near future.