Isaac Howell of Ben Howell Construction guides one of Southern Oregon Brewery's new tanks off a flatbed truck. The new tanks will allow the Medford brewery to triple its output. - Bob Pennell

Medford's Southern Oregon Brewing Co. expands

The arrival of three additional 100-barrel tanks has tripled Southern Oregon Brewing Co.'s capacity and opened the door to more flavors in 2013.

The tanks, acquired from Ninkasi Brewing Co. in Eugene, will boost the 5-year-old Medford brewery's annual capacity to between 7,000 and 9,000 barrels, brewer Scott Saulsbury said.

"This allows us to lager our pilsner for a longer period of time and gives us the ability to maintain more flavors without having them simply be seasonals, while keeping up our main porter, IPA and pilsner brews," he said.

Southern Oregon Brewery has been limited to seven varieties per year, Saulsbury said, while making the most of its flagship Pin-Up Porter and Na Zdraví pilsner brews.

Tom Hammond, SOB's president and founder, said the tanks also will allow the company to enter the 16-ounce can market early next year.

"We haven't had a product for the hunter, fisher, rafter, golfer and backpacker to take with them," Hammond said. "Craft can beer is one of the fastest growing sectors nationwide."

India pale ales overtook seasonal microbrews as the best-selling style craft beer nationally this year, Hammond said. While serving up an IPA, SOB has found a profitable niche with one-off and seasonal brews aimed for the Portland market.

"There are bars in Portland that run their whole business serving speciality beer no one else can get," Hammond said. "If we make something special then send it up to our distributor, we can sell eight to 16 kegs and nobody thinks twice, because its pre-sold."

SOB's India pale ale is tame in its "hoppiness," compared to some, he said.

"We have never tried to play our cards in the IPA arena," Hammond said. "We have a more balanced approachable IPA than most Pacific Northwest IPA's, which lends itself to more than one pint and pairing well with foods. We have to have an IPA to be part of the market, but we're not hanging our hat on that as our flagship brew."

Hammond said buying the tanks new would have cost $105,000. His cost was $60,000 and the total project was done for $75,000. Without pegging his revenue, Hammond said gross revenue has climbed 30 percent the past year.

"We're growing in order to make this jump and obviously be profitable as well," he said.

Competition is greater than ever, not just in the micro-brew crazy Northwest, but nationally.

Portland and Bend markets are continually seeing new operations as is the Rogue Valley.

"Our national trade journal asked if there was too much beer out there," Hammond said. "There is only so much shelf space and beer taps; are there too many products?"

Some 1,000 new breweries are planned for the next year. Just as the wine-making boom has produced an explosion of vineyards and wineries, breweries are turning up by the bushel.

"I have friends in the wine business scratching their heads and wondering where all those grapes are going to go," Hammond said. "And I think there will be some weeding out in our industry. Most of us are relatively young — we've been here five years — and scratching our head, wondering where all the beer is going to go."

The critical element, he said is avoiding too much debt.

"If your debt ratio is low enough, you don't have to make a lot of beer to pay the bills and you have time to turn a profit," he said. "Obviously, we have a lot more flexibility."

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