Instead of striking a deal with the City of Roanoke to get its land for free, the Bend-based company is going to buy the land outright.
In 2016, the craft brewer announced that it would build an east coast facility in Roanoke—a project that, at that time, included a contract with the City of Roanoke in which Deschutes would invest $55 million and employ at least 70 full-time workers, in exchange for 49 acres of land. The cost of would have been forgiven over five years, according to a report in The Roanoke Times. That deal, however, came with a required timeline to be selling beer by June 1, 2021, according to the Times.
"Our goals in Roanoke have always been to help build a burgeoning craft beer industry in the southeast and to contribute to the community through non-profit support and job creation," wrote Deschutes CEO Michael LaLonde in a statement issued Monday. "For these goals to be achieved and for us to remain a strong leader in the craft beer industry for many decades to come, the markets dictate that we monitor and analyze consumer activities closely over the next year and adjust our plan of approach to the launch of our new facility accordingly."
Lalonde told the Source that the company will buy the land outright for $3.2 million instead of maintaining that deal with the city.
"We thought the incentives were important, but of course they’re not the most important thing," Lalonde said Tuesday. "They didn’t even rank the highest on a list of what was important for Roanoke, so making the decision not to get those so that we could control the timeline just made a lot of sense."
The Times also reported that Deschutes was also slated to receive several other incentives in the local area, including $3 million in incentives from the Virginia Commonwealth Opportunity Fund, a $225,000 grant from the Roanoke Economic Development Authority and $1.5 million in rebates for machines and tools from the city.
- Deschutes Brewery
"Those are still on the table," Lalonde said Tuesday. "We are in the process of negotiating those—it was basically the land that was the issue."
In addition, Lalonde said, "We’re still operating under the same timeline that was in the incentive agreement — so break ground in 2019 and ship beer in 2021, but it does give us the flexibility to modify that if we think that’s the right business decision."
"It’s no secret that the craft brewing industry is going through a period of market adjustment. In carefully and thoughtfully considering these market conditions, Deschutes must act with adjustments of our own with regard to the scale and timing of our investments," LaLonde wrote.
To help weather the changes in the market, Deschutes recently started a line of canned beers—a sector which Lalonde said grew by 40 percent last year, as well as installing a pilot brewery to release more experimental brews, and shifting its field marketing positions to key cities in the Pacific Northwest.