Deschutes to Open Downtown Roanoke Tasting Room Ahead of 2nd Brewery Buildout

Deschutes Brewery is beginning to build its presence Roanoke, Virginia, where the company is still two years away from breaking ground on a $90 million production brewery. The Bend, Oregon-headquartered brewery yesterday announced plans to open a tasting room in downtown Roanoke in late August.

“Roanoke is home to us now and we wanted to put down some roots while we plan for breaking ground on our new brewery east of town,” Nate Brocious, Deschutes’ tours and tasting room manager, said via a press release. “Since we will not be breaking ground on our new brewing facility until 2019, we’re excited to take one of our first steps in becoming part of this awesome community by opening the new tasting room.”

The tasting room — slated to open at 315 Market Street Southeast — will feature more than 15 taps pouring Deschutes beers, indoor and outdoor seating and ready-made food from local restaurants.

Just over a year ago, following an extensive site-selection process, Deschutes announced plans to build a second production brewery, dubbed “Brew 4,” in Roanoke. The company is slated to break ground on the 55-acre site in 2019, start commissioning and flavor matching in 2020 and begin shipping beer brewed at the new facility by 2021.

In a conversation with Brewbound in March at the company’s Bend headquarters, Deschutes CFO Peter Skrbek discussed the importance of building an early presence in the Roanoke community prior to beginning construction on the new brewery.

“We’re going to be hiring a lot of folks, and it would be good if we had some representation there,” he said. “It’s a place to bring people and introduce them to who we are as a company.”

Despite the craft beer industry showing signs of a slowdown, Skrbek said the company hasn’t pivoted on its plans for the second facility or adjusted the timeline for buildout.

“It really hasn’t affected us because our growth plans were so conservative to begin with that even with things in the external environment slowing a bit, we’re hitting our targets, and we have been consistently for the last several years,” Skrbek said. “And I think the key was building it up so that we really would run out of capacity here [in Bend] before opening Roanoke, and we’re pretty much on path to do that.

“All of the financial goals that we have, we’re hitting,” he added. “And I think an important thing here is that we have an excellent partner in Wells Fargo, who is our senior lender, and the way that we’ve structured our credit is very flexible.”

Work has already begun to ensure that the beers made in Roanoke — starting with Mirror Pond Pale Ale, Black Butte Porter and Fresh Squeezed IPA — taste the same as those made in Bend, Skrbek said. The company has been working with Virginia Tech’s fermentation sciences program as well as running test brews with Roanoke sourced water in preparation for brewing in Virginia, Skrbek said.

“That is ultimately the biggest challenge: ensuring that we have the quality that we want,” he said.

Greenlighting the new brewery changed Deschutes’ long term vision of brewing one million barrels out of its Bend facility by 2020. In pursuit of that ambitious production target, the company was investing more than $10 million annually to expand capacity.The Roanoke project was born out of Deschutes’ strategic planning committee, which recognized the need to fulfill demand east of Kansas as well as save on freight costs and reduce the company’s carbon footprint.

“We went from what was a double-digit growth target to instead trying to hit between 7 and 9 percent growth, which we’ve done consistently, which is really important because I think you see in the industry a lot of folks harnessed their investment strategy on this huge growth, which may or may not be occurring,” Skrbek said. “Early on we took a more conservative approach, and that’s what we’ve been doing. So we’re kind of ticking along up until Roanoke.”

But continued expansion in Bend wasn’t sustainable, Skrbek said, and a more disciplined growth strategy focused on fewer new market expansions was eventually adopted as the company worked to build stronger relationships with wholesalers and retailers in its existing territories.

The Roanoke brewery buildout will be in phases with capacity of up to 350,000 barrels.

“It’s a really big initial investment, but it is phased so that we can seek how the business is performing and adjust the buildout in accordance to what’s happening in the market, what’s happening with the rest of the business,” Skrbek said.

To further build the community bond, Deschutes recently hired Caroline Macdonell to serve as a field marketing manager and act as a boots-on-the-ground liaison in Roanoke.

The company also plans to use the Roanoke tasting room as a way to gauge consumer acceptance for a Deschutes-branded taproom outside of Oregon, Skrbek said.

“We’re trying a bunch of new models,” he said. “I think this initial tasting room idea that is being explored for Roanoke is something that might be a lot more scalable. It’s a nice test of a different business model.”

In recent years, Deschutes has embarked on significant capital expenditure projects at its Bend brewery. Most recently, the company installed a $1.8 million, two kettle pilot brewing system to increase its research and development output from 20 beers a year to potentially 20 a week, Skrbek said.

“Look for the pace of R&D to accelerate pretty markedly,” he said. “There’s a lot of pent-up creative energy within our team. There are ideas that have been sitting around for months or years that haven’t had the opportunity to become real. Now they will very much have an opportunity to be real.”

Skrbek also hinted at future expansion on the Bend campus, but he declined to discuss details.

“So we have this four acres of dirt here down the hill, which is a really cool location,” he said. “We want to do something cool with it. Something that’s pushing us out of our normal comfort zone a little bit, so we’re working on something.”

That “something” would still be “in the beer space,” he admitted.

Come 2021, when Deschutes begins shipping beer from Roanoke, the company will join San Diego’s Stone Brewing, Ballast Point and Green Flash as regional breweries construct second breweries in Virginia. In recent years, companies such as Sierra Nevada, New Belgium, Lagunitas and Oskar Blues have traveled west to build satellite brewing locations along the East Coast as well as in Chicago.

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