E-Malt.com News article: 2115

US beer maker, Pyramid Breweries, agreed to buy Portland Brewing for $4.2 million on January 27, a deal that would make the Seattle-based craft brewery the third-largest on the US West Coast, The Seattle Times reported on January 28. The deal, expected to close in the second quarter, would give Pyramid a foothold in Oregon, a stronger brand portfolio, a 100,000-barrel facility and a brewery-restaurant in Portland. It would produce more beer than all West Coast microbreweries except Sierra Nevada Brewing and Woodinville, WA-based Redhook Ale Brewery.

Pyramid agreed to give Portland Brewing cash and stock and to assume debt. The deal is subject to approval by Pyramid shareholders. "The craft-brewing business is very competitive and changes daily," Pyramid CEO Martin Kelly said. "To stay ahead, breweries must keep moving forward. "Some breweries have chosen to go the route of aligning themselves with large, multinational, industrial brewers. We believe that approach can stifle creativity and lead to less choice for consumers."

Portland Brewing, whose signature product is MacTarnahan's, is a good fit for Pyramid. The Seattle brewery runs four ale houses -- in Seattle and in Walnut Creek, Berkeley and Sacramento, Calif. -- and has been looking for new locations on the West Coast. The ale houses have allowed Pyramid to introduce the brand to consumers. "What's significant is Pyramid is playing to its strengths," said Thomas Dalldorf, editor and publisher of Celebrator Beer News, a newspaper based in San Leandro, Calif. "It saw a good opportunity at a good price, and MacTarnahan's was struggling for a while."

Portland Brewing, founded in 1986, has struggled financially since it opened its new 100,000-barrel facility in 1992, just as the microbrewery craze died down. Majority shareholders Robert MacTarnahan and his son, Scott, rescued the company in 1998 by offering to pay off the brewery's $3.5 million in secured debt for voting control and more stock. It continued to struggle, with operating losses in 2001 and 2002.

In a state where people drink with the motto "Think Oregon, Drink Oregon" in mind, Pyramid is keeping Portland Brewing's brewery to maintain its Oregon ties. Observers said they expect Pyramid to keep making MacTarnahan's and contract-brewed beers in Portland, but it may drop some Portland Brewing labels. Pyramid also might shrink its brewing capacity in Seattle.


30 January, 2004