USA: Six months after acquiring Portland Brewing Co., Seattle's Pyramid Breweries Inc. said on January 27 that it is moving a majority of its beer and soft drink production south to Portland Brewing beginning February 1. The move will save Pyramid more than US$1 million a year and will give the Seattle brewery more space to make Hefeweizen, its best seller. The shift starts next month and will be completed early in the second quarter, according to The Seattle Times.

The shift, which the company says will save money because Portland has modern bottling equipment, will enable Pyramid to increase production there by 80,000 barrels of beer per year. In Seattle, the company expects to produce up to 30,000 barrels per year to meet demand from the area market and a new, unnamed international partner.

The shift to Portland will lay off eight to 11 employees of its 200 Seattle employees, including brewers, managers and packaging and loading dock staff, to lose jobs after Tuesday, said John Lennon, chief executive and president. Those people could be offered positions at the company's facilities in Portland and Berkeley, Calif.

The shift and layoffs are part of a larger effort, which started in December, to save US$1 million per year, said Lennon. He declined to give cost-saving specifics. The company's Seattle alehouse will not be affected.

Pyramid, which employs 450 to 550 people companywide depending on the season, expects annual sales of about US$46 million. While Portland will become Pyramid's lead production facility, Lennon said, the company is committed to staying in Seattle.

The Seattle brewery will still make beer for its Seattle alehouse and local customers and will produce 24,000 to 30,000 barrels of malt beverages for a company Pyramid wouldn't name.

Pyramid bought Portland Brewing for US$4.2 million last year in cash and stock to pump up its brand portfolio, give it a toehold in Oregon, and a brewery-restaurant in Portland. The Portland and Seattle breweries can make up to 170,000 barrels of beer. The production shift will allow the company to make 80,000 more a year. "At some point we knew we wouldn't be able to grow Pyramid's Hefeweizen and that we had to move," said John Lennon, Pyramid's chief executive officer and president. Hefeweizen production grew 12% over the past three quarters and Lennon expects future increases.

The shift comes as Lennon, who became CEO in August, is trying to make the company profitable again. Pyramid lost US$1.2 million on sales of US$34.6 million in 2003 and probably will post a loss for 2004.

The brewery, which reports annual numbers next week, lost US$1.3 million out of US$19.5 million in the first nine months of 2004. "It seems like a shrewd move," said Tom Dalldorf, editor and publisher of Celebrator Beer News in Hayward, Calif. "[Malt beverage] doesn't fit with their portfolio, and they won't brag about it, but if it's positive cash flow, why not?"

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