Deschutes Cuts 7 Percent of Workforce

Oregon’s Deschutes Brewery laid off dozens of employees last week, citing missed growth projections.

Speaking to Brewbound, Deschutes Brewery president and CEO Michael LaLonde said the company cut about seven percent of its workforce on Thursday. Affected positions came from sales, marketing and operations.

Bend’s local newspaper, The Bulletin, first reported the story.

LaLonde told Brewbound that Deschutes had “staffed up to grow over the past two years” but had to slash its workforce when that growth never materialized.

According to LaLonde, Deschutes has now eliminated 54 positions over the last two years, with many of the jobs lost to attrition. The company now employs 520 workers.

Deschutes, which was ranked as the tenth largest craft brewery last year by trade group the Brewers Association, is on pace to finish 2018 with sales of about 315,000 barrels of beer, LaLonde told Brewbound. The 30-year-old beer company’s volume trends are down from a peak in 2016, when it sold 374,313 barrels. Last year, the company’s sales declined 9 percent, to 339,155 barrels.

“Recent trends are looking much better [nationwide],” said LaLonde, who cites the addition of New England-style IPA Fresh Haze and flagship Fresh Squeezed IPA as well as improving sales of the company’s heritage brands. “We’re very optimistic about our performance in the future.”

Deschutes is the latest craft brewery to downsize its workforce in 2018. Lagunitas, New Belgium, Green Flash, Ninkasi, and Avery Brewing, among others, also laid off workers this year. Large brewers, including Anheuser-Busch, MillerCoors, Constellation Brands and Pabst have also reduced their head counts.

The layoffs at Deschutes come about a week after the company said it would not break ground on a planned $95 million manufacturing facility in Roanoke, Virginia in 2019.

Under the project’s original timeline, Deschutes was slated to start construction next June, with the first shipments of beer leaving the new facility in 2021. Now, the company must present a revised proposal to the city of Roanoke by March 31, 2019.

“We need to report in the first quarter what our plans are and then we have to submit plans by the end of summer,” LaLonde said.

The project delay also follows Deschutes renegotiating an incentive package tied to the project in order to maintain “flexibility” on the timeline, size and scale of the project. As part of the altered arrangement, Deschutes agreed to buy the plot of land for $3.2 million to free itself from a string of performance-based incentives that the original deal would have triggered.

Lalonde told Brewbound that the goal remains to “break ground and build in Roanoke.” However, the size and scale of that project are now in question.

“We like the community, they’re a big part of who we are as a company,” he said. “But right now, business results don’t provide us enough financial capability to do that project right now.”

According to LaLonde, Deschutes’ focus in 2019 will be on its home market in the Pacific Northwest, as well as California and Arizona. He added the company will be “reinvesting in those areas” by hiring sales reps to work in those markets as well as chain accounts.

LaLonde added that innovation will also be a core piece of the company’s strategy next year, with the launch of Da Shootz! American lager, a sour series launching in the summer and another new IPA in the fall.

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