USA: Deschutes to cut workforce by 10%

Deschutes Brewery, one of the ten largest craft breweries in the USA, has announced to lay off 10 percent of its workforce because business hasn’t met expectations over the past two years. The announcement of the Bend, Oregon-based craft brewer follows a series of similar notifications of other larger breweries in the United States and are indications of an increasingly difficult market environment.

Three days ago, AB InBev said it had to lay off nearly 40 people across the United States in order “to better align our operations with our commercial strategy and to further reduce complexity” (inside.beer, 10.12.2018). In October, Lagunitas Brewing Company, since May 2017 fully owned subsidiary of Heineken (inside.beer, 6.5.2017), and also one of the leading craft beer breweries in the United States, said it was laying off 12 percent of its 900 employees (inside.beer, 3.10.2018). Before also Constellation Brands (inside.beer, 16.8.2018), Green Flash Brewing (inside.beer, 20.6.2018), Summit Brewing (inside.beer, 2.1.2018), Redhook Ale Brewery (a member of the Craft Brewing Alliance, which is 32 percent controlled by AB InBevinside.beer, 19.10.2016), and Stone Brewing (inside.beer, 14.10.2016) announced similar measures.

Deschutes Brewery along with most of the before mentioned breweries recorded declining sales in 2017 which amounted to 5.4 percent through Dec. 3, 2017 (inside.beer, 18.12.2017). Deschutes is ranked 10th in craft brewing and 20th in overall beer sales volume in the U.S. and brewed nearly 400,000 barrels in 2017.

Signs of weaker sales by Deschutes were also perceptible in April, when the company further postponed plans to open a second $85 million brewery with an annual capacity of 150,000 barrels at the East coast in Roanoke, Virginia. Deschutes Brewery CEO and president Michael LaLonde said at that time that the brewery wanted “to gain some flexibility,” but still planned to break ground in June 2019. (inside.beer, 16.4.2018)

However, in November LaLonde had to correct his decision. "We are looking at our business growth in the craft beer market ... It is not the time to break ground right now," said Lalonde. "There are 7,000 craft breweries in the U.S. and 1,500 in planning.  The market has become diluted."

LaLonde commented the newest decision to sack 10 percent of the workforce with the words:  “We have made the hard decision to reduce staff across sales, marketing and operations by 10 percent to match our sales volume. This decision was extremely difficult to make, but necessary for the brewery given current market conditions and trends.”

 

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