Deschutes Brewery will not break ground on its Roanoke plant in 2019 as originally planned, its president said this week.
The Oregon-based craft beer brewer had planned a June 2019 start on construction since its 2016 announcement it would expand to the East Coast on a site in the Roanoke Centre for Industry and Technology.
But earlier this year President Michael Lalonde said a slowing of growth in the craft beer market had caused the company to re-evaluate the scale and timing of its expansion.
This week, in response to an inquiry from The Roanoke Times, Lalonde said work will not begin next year.
“We continue to watch trends in the craft beer market for the right time to build a facility that is high quality and economically sustainable,” he said in a written statement. “We don’t foresee breaking ground in 2019 as originally planned, but we will meet a commitment next spring to let the city of Roanoke know our updated plans.”
Earlier this year, Deschutes and the city rescinded an agreement that would have given the privately held brewer land for its expansion for free and provided $4.7 million in other state and local incentives.
Deschutes opted to forego the incentives tied to a performance agreement that included starting construction and production on a certain timeline.
Instead, Deschutes bought the 49-acre parcel outright in June for $3.2 million as a sign of the company’s investment in Roanoke and intent to build here. Deschutes initially had planned a $95 million facility that would employ 108 people in its first phase.
They can reapply for incentives.
Under that June deal, however, they’re under a new timeline.
They must submit a revised proposal to the city by March 31, submit proposed design plans and drawings for the brewery by Aug. 31, 2020, and commence construction by June 30, 2021, or the city can buy the land back for the full price Deschutes paid for it.
Neither Mayor Sherman Lea nor City Manager Bob Cowell had heard that Deschutes would not break ground in 2019, but Lea said he’s not surprised at the delay given economic trends in the craft beer market.
“I still believe they’re going to do what they say they’re going to do,” he said.
“Hopefully it’s not a sign that they’re not coming, just more due diligence,” said Councilman John Garland.
Deschutes chose Roanoke for its East Coast expansion after a long and public courtship, and their decision to come here was hailed as an economic development win greater than the sum of Deschute’s planned investment.
But word that construction wouldn’t begin until 2019 and beer wouldn’t flow until 2021 raised eyebrows among skeptics.
Since then, Deschutes and its executives have made themselves a regular presence in Roanoke, doing volunteer work, hosting what have become annual “Street Pub” festivals, and opening a taproom at 315 Market St. S.E.
“For now, our downtown tasting room is doing extremely well, and we continue to be very involved with this great community,” Lalonde said in his statement. “We’re proud to see our long-held values of community giving coming to life here.”
He noted Deschutes and its local distributor, Blue Ridge Beverage, have given $98,183 to Roanoke area organizations, including direct donations, Street Pub proceeds and money from the Community Pints program in which each Tuesday the tasting room donates a dollar to a local nonprofit for every pint sold.
In April, word first came that some weakening in the craft beer market had caused Deschutes to re-evaluate the size and possibly the timing of when it would build in Roanoke.
Deschutes, the nation’s 10th largest craft brewer in 2017, saw a single-digit dip in its overall sales for the first time ever in 2017. Other West Coast brewers who had expanded in the east were either cutting back their workforce or, in the case of Green Flash, closing its plant in Virginia Beach.
The craft beer industry was still growing, but at 5 percent in 2017 after years of double-digit growth, according to analysis by the nonprofit Brewers Association, a trade group.
The same group recently found that business is stable so far in 2018, with the trend continuing that most of the growth is among small, local breweries. Regional operations, such as Deschutes, are more likely to be experiencing “headwinds,” the group concluded.
But the group was optimistic about the long-term prospects for the industry. Among other reasons, millennials, major consumers of craft beer, are proving likely to spend even more on it as they age.