The landscape in the Pacific Northwest has changed considerably since Josh Pfriem, Ken Whiteman and Rudy Kellner opened pFriem Family Brewers in Hood River, Oregon, in 2012. Now on the verge of its seventh anniversary, pFriem is in the midst of a pair of expansion projects that will double its capacity in 2020.
Since pFriem started, more than 140 other beer companies have opened in the state. Time hasn’t been kind to some aging Oregon breweries, though — from the closures of Bridgeport Brewing and Burnside Brewing to the shuttering of taprooms and pubs run by legacy breweries such as Craft Brew Alliance’s Widmer Brothers, FIFCO USA’s Portland Brewing, Alameda Brewing and Lompoc Brewing.
But pFriem has bucked those trends as it continuously evolves.
Speaking to Brewbound, co-founder and brewmaster Josh Pfriem said his company’s goal is to stay relevant and “not become a legacy brand” by staying at the forefront of innovation, while also treating its offerings, including core beers, as “living beers that are progressing on a weekly basis.” He pointed to companies such as Allagash and Firestone Walker that have avoided such labels.
“I don’t ever hear people refer to them as legacy brands because they’re very innovative and very on top of it,” he said. “The breweries that choose to stay on top of it have a very bright future and have a lot of advantages of having time and solid business under them.”
Despite increased competition from more than 280 Oregon craft breweries, pFriem continues to grow and expand with a focus on two flagship offerings — Pilsner and IPA — while also releasing more than 100 different offerings annually.
“We have this really unique mix of having true flagship beers but also being able to play to rotation nation and keep ourselves fresh,” Pfriem said.
The strategy is working. In 2018, pFriem increased production 23 percent, to 18,833 barrels, according to industry trade group the Brewers Association. This year, Pfriem estimated, the company is on pace to sell as much as 28,000 barrels of beer.
“We’ve been very organic, very pull-driven brewery rather than push,” he said. “It’s been pretty fun to see how much natural demand there has been.”
The majority of pFriem’s volume comes from its two flagship brands: Pilsner, which accounts for 36 percent of its volume, and IPA, which makes up 31 percent, Pfriem said.
“It [Pilsner] drives the whole brewery,” he added. “It’s the heart of the brewery. It’s our most awarded beer and our largest volume and fastest growing [beer].”
According to Pfriem, 99 percent of the company’s volume is sold in two states: Oregon and Washington. He added that 70 percent of the company’s sales are made in its home state of Oregon. The other 1 percent comes via spot sales in San Diego, Las Vegas and Vancouver, British Columbia.
Driving growth this year is the addition of can packages for Pilsner and IPA. Pfriem said the company dedicated 10,000 barrels of capacity to can packages when the format launched in March.
In the 90 days ending June 15, pFriem has sold 31,330 cases of canned beer to 1,640 unique accounts, Pfriem told Brewbound.
In that same 90-day period, the company has sold a total 93,000 case equivalents, and its overall volume is up 73 percent.
In an effort to maintain its draft and single-serve bottle businesses, Pfriem said the company placed a higher suggested retail price on its canned offerings, with 6-packs of Pilsner selling for $10.99 and IPA fetching $11.99. Those brands will be the only pFriem beers sold in cans in 2019, but the company plans to re-evaluate for 2020 as additional capacity comes online.
“Once we have more capacity in the brewery, it will allow us to do more offerings,” Pfriem said.
Although cans have proven popular, Pfriem said the brewery’s draft and single-serve bottle businesses continue to grow. Through mid-June, pFriem’s draft volumes are are up 21 percent. The company’s on-premise and off-premise volumes are up 26 percent and 240 percent, respectively.
In an effort to offset any potential cannibalization of Pilsner and IPA single-serve bottles, pFriem launched Hazy IPA as a year-round single-serve bottle at the start of the year, Pfriem said the new offering is “growing a ton and backfilling any placements that are getting pulled.”
Pfriem said the company’s goal is for “methodical, sustainable” and “incremental” growth. In an effort to facilitate that growth, pFriem is in the midst of a pair of multi-million dollar expansion projects that will allow the company to double its capacity to around 60,000 barrels early next year.
At its main production facility in Hood River, pFriem will add a new five-vessel, fully automated brewhouse, as well as a new canning and packaging line.
The company also plans to break ground this month on a 22,000 sq. ft. secondary facility in Cascade Locks, where it will transfer its barrel-aged and sour beer programs. The facility, which will also serve as a logistics hub and storage facility for its raw materials and finished beer, is expected to be completed in about seven months.
Combined, the two projects are expected to cost around $9 million, which the company is financing through cash flow and traditional bank loans, Pfriem said.
Moving pFriem’s barrel-aging program and storage to Cascade Locks will free up thousands of square footage at its Hood River facility, and allow the company to add fermentation tanks and a dedicated canning line, Pfriem said.
“This will immediately allow us to turn on another 30,000 [barrels], which we desperately need,” he said. “The last couple of months, we’ve been rolling at 100 percent capacity, and we’re currently having to allocate the accounts for canned beers and just overall. We have more growth opportunity than we’re able to fulfill at the moment, which is a good problem to have.”