Tuesday, August 26, 2008

A 'convenient' truth: Dominion's pub closed

Coastal Brewing was formed last year, when Fordham Brewing of Annapolis, Md. partnered with Anheuser-Busch to purchase the Old Dominion Brewing Company of Ashburn, Va. Now, as reported at Musings Over A Pint, Coastal's devolution of Dominion continues apace.


And here's Coastal comment about the shuttering of the pub (not the brewery) posted on Dominion's website:
This decision will have no impact on other operations of Coastal Brewing Company. Brands under both the Old Dominion and Fordham names will continue to be distributed and marketed along the east coast of the U.S.

We apologize for any convenience [sic] this may cause.
That unintentional gaffe (since corrected) seemed to emphasize that, after all, it's just about business. The brewery has canceled temporarily suspended tours. [An update on their resumption here.]

But as to whether or not this "will have no impact on other operations" of Coastal Brewing, blogger and beer writer Andy Scribe Crouch offers this analysis at his blog, Beer Scribe.

The departure in July of Scott Zetterstrom, Coastal’s vice-president of Brewing Operations who had a long history with Old Dominion, was a sign portending recent events that many of us missed.
Very few brewers from Dominion's pre-Coastal days remain at the brewery. Institutional memory is a critical part of any business, let alone brewery.

I think at this point the real question for Old Dominion fans is what will become of the brands and the brewery in the future.
While many younger good beer drinkers today don't remember the bad old days of good beer scarcity, Dominion was indeed begun with great promise in the early 1990s. Its sale and now the closure of its pub are somatic pangs for me and other 'beery' northern Virginia-ers.

As Coastal runs another facility in Annapolis, Maryland–one that is large enough with expansion to cover all the company’s brands–the inefficiencies of running two small facilities will inevitably lead to a consolidation of production.
Coastal's offices and original Fordham Brewery pub (aka Ram's Head, no longer brewing) are indeed located in Annapolis, Maryland. But Coastal's other production facility is actually located in Dover, Delaware. [Since corrected at Andy's blog.]

The combination of expensive rent at the Ashburn, Va. facility with no revenue stream from a pub makes the elimination of redundant facilities a certainty. A move of all operations to corporate tax-friendly Delaware has indeed seemed likely since the Fordham/Anheuser-Busch purchase.

And then Andy gets to the meat of the matter:
Craft beer partners of Anheuser-Busch have to be concerned about the effect the merger with InBev will have on their operations and place in the corporate pecking order. In a business sphere where the corporate parent is producing several hundred million barrels of beer per year, how much interest do you think the company, especially one with InBev’s track record towards small breweries, will have for a measly 19,000 barrels [Dominion, last year, down from a high of 28,000]? Or even for one with 88,000 barrels (Goose Island), 253,000 barrels (Widmer), or 206,000 barrels (Redhook)?
Coastal is owned 51% by Fordham Brewing and 49% by Anheuser-Busch, which is itself about to be purchased by conglomerate InBev of Belgium/Brazil.

I don't believe that that merger will have much effect on Coastal. A sale or dissolution of Coastal Brewing would count little toward retiring ABIB's (Anheuser-Busch InBev) massive $52 billion dollars of merger debt. Indeed, an observer of the local beer scene mused this:
InBev is not going to concern itself with its craft holdings, at least at first. The capital invested in them is so small compared to the $52 billion dollars of debt accrued by the purchase that a sell-off would do very little to help.

4 comments:

  1. Andy Crouch8/26/08, 9:46 AM

    Andy Scribe?

    ReplyDelete
  2. I used to love Old Dominion, but after the last couple years I see it as a sick dog that needs to be taken out back and put down. The current Old Dominion is just a shell of its former self, and possesses no charm for those who enjoyed it in days long gone. I only hope that Judas Bailey is resting well with his thirty pieces of silver.

    ReplyDelete
  3. Strike "Scribe", replace with "Crouch"! Proofreaders on strike for more beer.

    ReplyDelete
  4. First I want to comment that I disagree with the negative comments about Jerry Bailey. He's always been a great person and I wish him well in retirement.

    Regarding Coastal, I wish we knew how they treated their restaurant employees when they closed. They stiffed the ODBC people that were let go when they took over and if they did it again it would be enough to keep me away from their beers.

    ReplyDelete

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