USA, OR: Deschutes Brewery acquires Bend’s Boneyard Beer

Boneyard Beer, one of Bend’s scrappy upstart beer makers, has been acquired by crosstown rival Deschutes Brewery. The deal is expected to help Boneyard expand its capacity to can beer, a process that proved challenging during the pandemic, Oregonlive.com reported on March 4.

Financial details of the acquisition were not disclosed because both companies are privately held, said Gary Fish, founder of Deschutes Brewery Inc. Boneyard Brewery owner Tony Lawrence will retain ownership of the Boneyard pub on Division Street in Bend.

While both companies compete in the craft beer market and both are based in Bend, the similarities end there. Deschutes Brewery is considered an old hand in the craft brew market, established in 1988. It remains among the 10 largest craft brewers in the country by sales volume. Its label and image conjures up bucolic scenes of pure mountains and rivers. Boneyard Beer, founded in 2010, is more skull and crossbones, a brash upstart perhaps best known for its RPM IPA with a lineup that also includes Skunkape, Hop a Wheelie and Notorious IPA.

“It’s an exciting deal. In our 33 years of being in business, this is the first time we have been involved in a deal like this,” said Fish. “The opportunities are great, and we look forward to digging in and realizing those.”

The deal allows Boneyard to move its production and canning operations to the Deschutes Brewery production facility near the Old Mill District. The deal will make Lawrence a shareholder of Deschutes Brewery and an employee. He will continue to be responsible for the direction and production of Boneyard’s beer, said Fish.

Bart Watson, the Brewers Association chief economist, said there have been a number of similar deals in recent years. Trend shows that buyers are looking for brands with either strong growth potential or that help to diversify their existing portfolios. Sellers, he said, are generally looking for access to capital, scale and distribution.

“Brewing is very competitive, and that competitiveness has increased in recent years,” said Watson. “The pandemic has exacerbated the pressure on breweries as craft brewer sales have dropped due to the higher percentage of draught beer that craft brewers tend to sell.”

The agreement takes effect in 30 days. Fish said he is not anticipating any job losses from the deal and from the consumer’s perspective, nothing will change.

“They shouldn’t notice anything at all,” said Fish. “The branding will be same, the same artwork, the same attitude, still brewed in Bend, Oregon. Any brewing of Boneyard at Deschutes will be under the strict supervision of Tony himself. He will supervise the flavor match. We look forward to that process.”

Lawrence, who grew up in Bend and has previously worked for Deschutes Brewery, agrees that the end product won’t look any different but will simply become more widely available.

“For our customers that will be a great thing,” said Lawrence. “The liquids we produce will be as quality and interesting as they ever have been.”

Boneyard is expected to benefit from Deschutes Brewery’s network of distribution, which goes out to 35 states and some international locations. Fish said they will first target markets along the West Coast.

“We think there is terrific demand out there,” he said.

Boneyard, which produced 30,000 barrels of beer in 2019, is a recent entrant to canned beer. For 12 years the company relied on its draft-sales, but that became challenging when COVID-19 hit and pubs and bars were forced to close their doors.

In April last year, Boneyard announced it would start selling canned beer and take advantage of surging sales of beer at grocery stores as consumers focused on drinking at home and at virtual parties.

But the journey into mass canning proved challenging and “created enormous logistical issues,” said Lawrence. The agreement with Deschutes allows Boneyard to produce more canned beer.

“I have always been curious what would happen if Boneyard was in all the chain stores up and down the West Coast. This partnership will be the catalyst to do so,” said Lawrence.

The acquisition is not the first big brewery deal in Bend. In 2014, Anheuser-Busch bought Bend craft brewer 10 Barrel Brewing Co.

For Deschutes Brewery, the acquisition is welcome news after a challenging year. In May, the company announced it was laying off 60% of its workforce amid the COVID lockdowns. That came on the heels of a 10% workforce reduction in 2018 when the business streamlined its operations.

Deschutes Brewery has pubs and tasting rooms in Portland, the Portland International Airport, Bend, and Roanoke, Virginia. Roanoke had been tapped for a second brewery, but those plans were shelved when the craft beer market softened from oversaturation. The deal with Boneyard could be a fresh restart for the pioneering beer maker.

“It’s made sense to both parties to see if we can create something that the sum is greater than the parts,” said Fish. “We’re very excited to get Boneyard beers to people who want it.”

04 March, 2021