How Oregon businesses are planning to respond to tariffs

On March 4, the U.S. imposed 25% tariffs on imported goods from Canada and Mexico, the nation’s largest trading partners. China was also hit with an additional 10% hike on its goods entering the U.S.

OPB will hear from a broad range of business owners and representatives from different industries in Oregon about the impact tariffs may have on them and consumers. Joining us are Tyler Freres, vice president of sales for Freres Lumber Company; Jeff Stone, executive director of Oregon Association of Nurseries; Bob Wymore, president and CEO of Diamond Fruit Growers; Jason Barbee, an owner and brewer at Level Beer; Michele Kenny, co-owner of Goose Hollow Flowers and executive director of Pacific Northwest Florist Association; and Bitty Egan, owner of Bolt Fabric Boutique.

Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.

Dave Miller:  This is Think Out Loud on OPB. I’m Dave Miller. After more than a month of uncertainty, a global guessing game about the future of international trade, President Donald Trump carried through on his tariff threat. Starting just after midnight, the U.S. slapped 25% across the board tariffs on imported goods from Canada and Mexico, our nation’s largest trading partners. Chinese goods face an additional 10% tariff.

We’re going to hear from a broad range of business owners and industries today to get a sense for how these hikes and retaliatory tariffs, in response, will affect Oregonians. We start with Bob Wymore. He is the president and CEO of Diamond Fruit Growers, a pear growers’ cooperative based in Hood River. Bob Wymore, welcome.

Bob Wymore:  Thank you, Dave. I appreciate the opportunity.

Miller:  It’s good to have you on. How significant are Mexican and Canadian markets for the fruit that your cooperative members grow?

Wymore:  Well, it’s actually a really important part of our program. So we develop a very detailed program for marketing at the start of the season, and it entails not only domestic markets but also exports. Canada is a big market for Bartlett pears and bosc. They take about 20% of our product.

But Mexico is a huge market for our anjou pears. And they will take anywhere from 35% to 40% of our pears in a season. So to disrupt that market really throws a wrench in our marketing plan. And it creates a lot of turmoil for us.

Miller:  How much do growers know in advance at the beginning of the season? I imagine there aren’t even yet flowers on trees, right? So there are no pears to speak of yet. But do growers already have a sense for where they plan to sell those pears in the fall?

Wymore:  Certainly, and actually we have pears right now. We store pears until June. So the current situation does affect our current marketing season and will certainly have a major impact on our upcoming season that is, obviously, just getting started. We still have probably 25% of our crop left to move.

So to disrupt it right now causes us a lot of headaches and it just makes it difficult to finish the season. It’s a perishable crop. We have a plan in place. And when you disrupt that, it makes a lot of issues for us quality-wise and it hurts our growers. We’re a cooperative of 60 small family farms, and my job is to try to keep those folks in business. And this just makes it more difficult.

Miller:  What have you heard about retaliatory tariffs on American exports and what specifically they might mean for your pear growers?

Wymore:  So that is the obvious issue that we have. The tariffs that the U.S. has imposed don’t really affect us. It’s the retaliatory ones that are going to affect us. I reviewed the list that Canada put out this morning, and I did not see pears on that list. But I did see cherries on that list.

It sounds like Mexico is going to wait until Sunday to tell us what and if they’re going to impose those retaliatory tariffs. The fear is they put pears on that list. And that would have a definite dampening effect on our marketing season.

Miller:  What would that mean? Let’s say that there is a similar tariff on pears, so 25%. Is it as simple as saying that some significant percentage of Mexican or Canadian buyers would just say, “no, we’re not going to buy those American pears”?

Wymore:  Absolutely. This current season for the pear market here in the Hood River Valley has been a very strong one. Our prices are very good. Unfortunately, the exchange rate right now is not in our best interest. I think the exchange rate this morning for Mexico is about 20.5 pesos per [U.S.] dollar. Normally, it would be about 18.5 [pesos per U.S. dollar]. So it makes our product more expensive in Mexico.

And then if you were to put a 25% tariff, the price that we would be asking them to pay would be higher than what most Mexican consumers could afford to pay on the retail shelf. So my worry is it just shuts that market down.

Miller:  If that did happen, could you just sell more of your pears and cherries in the U.S.? Could you shift to more of the domestic market?

Wymore:  Obviously, we would try that. The issue is so many of these programs are pre-set at the start of the season. So we have ongoing programs with the major retailers in the U.S. And we have volumes and pricing and all these things set up, prior to the season. We have to go back and ask them to increase those numbers, and it disrupts them. They’re big corporations that have all these things in place.

So what ends up happening is you end up going into markets that are probably not the best market for our growers. They’re going to be at a lower price and they’re going to be more volatile. We just hope that this doesn’t happen, that we can get through our marketing season, keep our programs in place, keep our pricing where it needs to be, so that our growers are healthy.

Hopefully, we can settle this thing before the next crop comes up because, if we start out the season with this type of situation, it’s going to disrupt that whole season, which could be really devastating.

Miller:  We’ve been focusing so far on the export market and the possibility of retaliatory tariffs. But what about imports? How much do your producers rely on fuel, fertilizer or fruit crates from other countries, goods that are all about to get more expensive?

Wymore:  I don’t know that our industry particularly relies on that that much. I believe that most of our inputs come from U.S. producers, so I don’t see a huge issue with that one. Mostly on the marketing side of the crops is where it’s easy to hurt us.

Miller:  Bob, thanks very much. Bob Wymore is president and CEO of Diamond Fruit Growers.

Michele Kenny joins us now. She is a co-owner of Goose Hollow Flowers and the Executive Director of the Pacific Northwest Florist Association. It’s good to have you here.

Michele Kenny:  Thank you so much.

Miller:  How much of the flowers and house plants sold in Oregon by you or by other folks come from abroad?

Kenny:  Well, I’d say our community definitely tries to source everything local as much as possible, but [in the] offseason, it’s hard to find fresh flowers.

Miller:  And we’re in the offseason right now, the heart of it.

Kenny:  We’re in the offseason right now. So a lot of it is imported. Some of it can come from California. As a shop owner, in the years past, I tried to just focus on only American grown product. But it’s very difficult. It’s not possible to really source everything because there’s not that infrastructure. So, for example, we have some local growers of certain products, but they don’t have greenhouses that grow year-round anymore. They’ve eliminated a lot of that. So it’s just not available to you, even if you want to try to find it.

A lot of it, I’m not sure of the exact percentage, but we do get a lot of product from Canada. There are big growers up there, a lot of plants and fresh cut flowers. Especially in the Pacific Northwest region – Washington, Idaho, and Oregon – we’ve got relationships with a lot of distributors and growers up there.

Miller:  What about from Mexico?

Kenny:  Mexico, too. I’d say more hard goods would be coming from that direction, recycled glass. And then with the tariffs on China, too … our hard goods issue is another side of it. So there’s two sides.

Miller:  So there’s the flowers, which, a lot of them are in the offseason, as you say …

Kenny:  Right – flowers and plants.

Miller:  … come from Canada. What are the hard goods that you might get from China?

Kenny:  A lot of glass cylinders, vases, a lot of our products. So there’s the whole hard goods side of being a florist. There’s different types of tools that we use that can come from China.

Miller:  Do you have a sense yet for what these tariffs are going to mean for your bottom line?

Kenny:  A little bit. There’s a lot of anxiety obviously for how that’s going to affect what florists have booked out – say, like weddings this summer. The cost of what it costs our local growers to produce what they’re producing has been significantly increasing year over year.

So even though we’ve got this bounty of Oregon where things are wonderful and beautiful, the costs are high for those local flowers. Florists who have booked weddings, they’re considering possibly having to add surcharges or add fees additionally to what they have already booked or what they’re booking in the future, because they have to account for all those costs, across the board, going up.

Some of the wholesalers are working with some of the distributors out of Canada on what they bring in and some of the distributors are trying to absorb half of the tariff. So that way, it’s not as crushing a blow to consumers. Our wholesalers definitely are working very hard to try to keep great relationships with these vendors that they’ve been using for years.

Miller:  If that’s the kind of conversation that’s happening now, that a distributor or importer would say, “we will absorb half of this extra cost” – 12.5% or something – eventually it seems like you would have to then absorb the other half of that. How much can you pass on to your customers?

Kenny:  That’s the thing, and not everybody is doing that. Some companies are taking half, some aren’t. And that’s a huge jump in a market that’s already difficult. Especially in Portland, our region has been slower to come back after COVID and we’re still trying to recover from that. Events are still sort of down. We’re doing our best to try to create more opportunities, but it’s definitely a challenging time.

If you look at what it’s going to do to the consumer … I’m always looking at my prices for my shop and trying to look at what I can do. We’re starting to look at some of the pricing that we [have]. If you have a standing order for something that comes from Canada and the prices are going to go up by 25%, we’ve locked into an agreement to do something on a standing order. So do you have to back out of that now because it doesn’t price out? It’s just a lot of variables.

We don’t know who is going to just put a flat fee on everything. Where we’re purchasing things, are they going to have a flat surcharge on everything now? Or is it only going to be on Mexican product or Canadian product? We don’t know.

Miller:  Might this be a chance for general gouging, as opposed to more surgical, having to pay this much more for this exact thing?

Kenny:  I can’t know for sure, but I have a feeling that’s the direction it’s going to go, because nobody has systems where they’re really defining where every single thing is coming from, by country. Your inventory is sort of mixed up and if you’re getting a flat 25% increase, it’s going to be hard to set that up, even in your system.

So it’s going to be easier to slap that fee, but I don’t know if they’re necessarily gouging per se because they’re also losing so much in purchasing too. People are going to try to find other ways to find less expensive product at the same value.

Miller:  If almost everything that American consumers are paying for is going to cost more soon, are  florists gonna really feel it? I think of flowers in some ways as a luxury, certainly compared to food. We don’t need flowers. We need to eat. Do you suffer first in economic downturns?

Kenny:  Absolutely, absolutely. You know, having my shop, I bought my business in 2007, right before the economy tanked last time. And that’s one of the things that gets cut first for businesses. So if they order weekly flowers to have in their lobby, maybe they’ll move to a plant or maybe they’ll just take it away completely.

Hotels in Portland have had a hard time rebounding. I mean, they’re working really hard. I know Travel Portland’s working really hard in trying to bring business to the city. A lot of organizations are doing that, but they still haven’t quite recovered. So yeah, it is one of those first things that go away. So it’s going to hit our industry hard. But we’re trying to get creative. That’s what the association does, to try to build community and find opportunities to survive this one.

Miller:  Michele, thanks.

Kenny:  Thank you so much.

Miller:  Michele Kenny is a co-owner of Goose Hollow Flowers and the executive director of the Pacific Northwest Florist Association.

Tyler Freres joins us now. He is the vice president of sales for Freres Engineered Wood. Tyler, welcome to the show.

Tyler Freres:  Thank you for the invitation.

Miller:  It’s great to have you on. After so much uncertainty, none of us really knew if the tariffs were gonna happen. How are you feeling right now that they did?

Freres:  I think we’re actually in one of the industries in which the tariffs are actually going to have a significant impact and a beneficial impact on our markets.

Miller:  In what way?

Freres:  As it is right now, we are primarily an engineered wood products producer, panel and veneer. There have been existing tariffs on lumber products coming into the United States, to the tune of about 15%. But so far, there haven’t been any tariffs for engineered wood products like we produce.

The real problem has been, in the last couple of years, the dollar has strengthened significantly against the entire basket of currencies. And then the housing market has declined significantly, from 1.7 million housing starts to 1.3 [million]. Those two confluence factors have essentially led to the shutdown of about 50 mills nationwide and the loss of about 10,000 jobs, due to the fact that the U.S. turns into the dumping ground for wood products from all over the world.

Miller:  For decades, Americans have argued that the Canadian lumber market is subsidized by the state. And as you said, they’re dumping lumber in the U.S. at below market value. What is the current difference, even if you can just ballpark this, in wholesale costs? I’m just wondering if Home Depot were going to buy some 2x4s made in the U.S. versus those made in Canada, how big a difference in cost is there?

Freres:  Well, I think another way to say that would be, what would we anticipate the potential increase in domestic pricing due to the tariffs? Is that kind of what you mean?

Miller:  Well that is, I guess, a follow on question. I’m curious about the status quo. I’m curious how big a difference in the price there is currently. Then we can wonder about what the 25% increase is going to mean, as you said, on top of the existing 15% fee for softwood lumber already. But do you have a sense for the existing price difference?

Freres:  Well, I would track that more based on the currency issues as far as saying the Canadian currency has weakened about 15% compared to the U.S. dollar over the last year-and-a-half. That, of course, makes it easier for them to get their products into the United States at a cheaper cost. So, just from the currency standpoint, I think there’s probably 15% there compared to the historical average for the Canadian dollar.

Miller:  And as you were saying, you’re excited that now, instead of raw lumber, you’re going to be able to have engineered wood products from Canada, also now, face a tariff that they didn’t before?

Freres:  Correct. I mean, the argument for the stumpage rate set by the Canadian government applies to all wood products that cross the border. And to date, the only wood product that has really had any tariffs or countervailing duty has been lumber. So to the extent that maybe the lumber should just be under its current tariff and countervailing duty regime that’s currently established, that’s fine.

But really, all other wood products that come south of the border from Canada, have the same impact as far as the base pricing. So between that and the currency, it’s just led to a very damaging period of time for wood products producers in the United States.

Miller:  As I’m sure you know, the National Association of Home Builders is not thrilled with what’s happening right now. They say that given that more than 70% of the imports of two essential home building materials that home builders rely on – softwood lumber and gypsum for drywall, from Canada and Mexico respectively – that these higher tariffs are going to raise construction costs and harm housing affordability at a time when there’s a bipartisan consensus in Oregon and around the country that housing affordability is an urgent issue. What’s your response?

Freres:  Well, I would say that there’s multiple ways that we could potentially counteract the increase of pricing. Most other countries on the face of the earth consider wood to be a renewable material that regrows and is one of the best building materials out there because it is renewable. In the Pacific Northwest, we have been continually reducing the supply of timber available to lumber companies and engineered wood products companies over the last 30 years, which has made us the most expensive wood basket on the face of the earth.

If the United States, through their federal land ownership – which amounts to about 60% of Oregon – chooses that we should start managing our lands again to reduce forest fires and increase prosperity across our rural communities, that would have a much bigger impact than just a temporary tariff. So yes, I do think that we have policies that we can put in place in order to encourage domestic production.

Miller:  How much do you rely on products or equipment from Canada, Mexico or China that could get a lot more expensive?

Freres:  Very, very little. The only thing I could think of from the top of my head is probably natural gas prices might have an impact, considering a lot of natural gas supplies come from Canada. But other than that, most of our consumables are all domestic.

Miller:  Tyler Freres, thanks very much.

Freres:  Thank you.

Miller:  Tyler Freres is the vice president of sales for Freres Engineered Wood.

Jeff Stone joins us now. He is the executive director of the Oregon Association of Nurseries. It’s good to have you here.

Jeff Stone:  Good afternoon.

Miller:  What have you been hearing from your members over the last five hours?

Stone:  Well, wait another five hours and it could be something completely different. That’s part of the worry that we have. There’s genuine concern about the price of goods. For this tariff, we’ve already seen the retaliatory side from the Canadians, for example. They are our largest trading partner, by the way, for the nursery industry for Oregon.

Aluminum is a big deal. They use that for greenhouse structures. And then of course, if you’re a landscaper, lawnmowers, if you can believe it, is one of those things that has a tariff.

Miller:  When you were talking about the uncertainty, “talk to me in five hours and we’ll see what’s different,” what does that mean broadly for planning? If things can change that quickly and that profoundly, how do you make plans for a business?

Stone:  You’re hitting the nail right on the head. It is extremely difficult if you’re growing live things. So you’re going through the process of producing a plant or a tree. You have a customer that’s in Canada, for example. The uncertainty about what that’s going to look like really hampers the relationship. Because when it comes down to trade, it is all about the relationship.

Miller:  How worried are you? Let’s say that the market responds really unfavorably to these tariffs. That’s already happened, but let’s say it’s an ongoing thing. And a month-and-a-half from now, the Trump administration says, alright, we’ve gotten what we wanted from this. We got these concessions from China, Mexico or Canada. We’re going to back off because they were successful. Maybe a month-and-a-half is too short a time, but I’m wondering how likely it is that there could be longer lasting impacts from these tariffs, even after they are eventually lifted?

Stone:  When you’re producing something, at any point in time, the cost of that good is what it is. So the margins in the nursery and greenhouse industries are very very slim. The thing I’m more worried about, Dave, is in five weeks, additional things will be added to the tariff, which will then have a retaliatory response. The Canadian market with the nursery industry is deeply embedded in our supply chain. So it could be everything from, if you’re in the Northeast, Minnesota, Michigan and New York, they sell electricity to those areas. So you’re going to see the price to the consumer go up in those ways. For a plant, there’s only so much that someone will pay for a tree or a plant at a garden center.

Miller:  One of the ostensible reasons for this is broadly, if there’s a fentanyl issue, which doesn’t make a ton of sense to a lot of experts when you’re looking at Canada in particular. But in general, the broader idea behind tariffs is to boost domestic production in a variety of ways. Could that happen in nurseries? Could these tariffs lead to a beneficial increase in economic activity in the nursery industry?

Stone:  Well, Oregon is the third largest nursery state in the country already. California’s No. 1, Florida’s No. 2. Our market penetration is fairly significant, not only in the United States. So us growing more in order to feed foreign markets, yes. But there are a whole bunch of regulations about how you ship a plant to China, or ship a plant to Mexico or even Canada. There’s a lot of pest and disease pressures that we want to make sure are maintained. So I don’t think that a protectionist measure for the nursery industry would render that type of result.

Miller:  Finally, I understand that you’ve been doing some lobbying with members of Oregon’s congressional delegation. Do you think that lobbying makes any difference with this administration? This is an executive branch world here, in terms of tariffs. There’s no debate about that. Do you think you have any sway?

Stone:  Well, I would love to say yes, my members would love to say yes. But when using real life examples, about an order being canceled in three weeks just because of the uncertainty between the country and the United States, is a real thing.

When Trump won, I was criticizing the administration with the U.S. Department of Agriculture. And then I got a call from the White House like 20 minutes later. Now, that was a little weird, I gotta say. But I think they are sensitive to this. I think that the president has convinced himself that this is going to be good for the American consumer, when I don’t quite see it that way. But we’ll be back there next week, Dave, so I’ll let you know how it goes.

Miller:  Jeff Stone, thanks very much.

Stone:  My pleasure.

Miller:  Jeff Stone is the executive director of the Oregon Association of Nurseries.

Bitty Egan joins us now. She is the owner of Bolt Fabric Boutique, which sells fabric and sewing supplies in Northeast Portland. Bitty, welcome to the show.

Bitty Egan:  Thank you.

Miller:  Where do the products that you sell come from, broadly?

Egan:  They come from all over, but very few are manufactured here in the United States. There are not really apparel fabric mills left in the United States right now.

Miller:  So where do they come from, or if they’re coming from all over the world, where are the distributors that are the last stop before you get them?

Egan:  There are a number of them. There are a lot of them in the U.S. But the fabric itself is manufactured elsewhere. We have Canadian distributors, a lot of European distributors, and we get fabric from India as well.

Miller:  What have you been hearing from those distributors or importers about the impact of these tariffs?

Egan:  Oh, they’re scared. They’re definitely scared. I mean, it’s gonna have a profound impact.

Miller:  How much can you raise your prices?

Egan:  Not very much, honestly. And we don’t have a particularly large margin either. It’s a really labor intensive thing to sell fabric. So, yeah, not much.

Miller:  We were hearing just now from Jeff Stone that he doesn’t think that these tariffs are going to lead to a big increase in the American nursery industry. What’s the chance that these tariffs lead to the resurgence of American fabric manufacturing?

Egan:  I think it could. I think it could and it should, and that would be wonderful. But I think that the bigger issue is that most fabric is sold to individuals in small businesses like mine. And I don’t know how long small businesses can hang on. I mean, we can’t make it until there’s a fabric mill set up again here.

Miller:  What’s it like to conduct business right now amid all this uncertainty?

Egan:  There’s a lot of anxiety about it. We have a lot of customers who are confused and scared. They don’t know what’s going to happen.

Miller:  And neither do you, it seems. Neither do any of us.

Egan:  No, we’re really kind of in a wait and see place.

Miller:  Bitty, thanks very much.

Egan:  Thank you.

Miller:  Bitty Egan is the owner of Bolt Fabric Boutique, which sells fabric and sewing supplies in Northeast Portland.

We’re going to end this series of conversations about the impact of these new tariffs with Jason Barbee. He is one of the co-owners and the brewer at Portland’s Level Beer. It’s good to have you here.

Jason Barbee:  It’s nice to be here.

Miller:  I want to start with cans since that’s an issue that’s gotten a lot of attention when it comes to recent reporting on tariffs. Where do your cans come from?

Barbee:  I guess one of the funny things, talking about cans and hearing about your conversations with other people … I heard Trump yesterday talking about bringing manufacturing back to the U.S. Most of the cans are manufactured in the U.S. Crown and Ball are the two big suppliers. We buy mostly from Ball.

It’s the raw aluminum itself that’s being imported. So, the idea of bringing the manufacturing back … the manufacturing is already here. And I’ve heard that Ball is planning to open a plant in Oregon, so that’s not really a thing that’s being accomplished.

Miller:  So the issue though is the materials that they’re buying. And am I right that there is a separate issue of the 25% across the board tariffs on goods from Mexico and Canada, but separate tariffs or fees on various metals?

Barbee:  I believe that’s true. Yeah.

Miller:  So how big an increase in the cost of cans might you be looking at right now?

Barbee:  I think that echoes what everyone else has been saying, where it’s really more an issue of uncertainty than anything. Talking to our suppliers … the way that the cans work in the brewing industry depends on the quantity and the type of printing that we’re doing. The cans themselves vary or I guess what we pay varies wildly in price, but the can itself tends to be pretty stable.

So for our higher priced beers that we put in cans, that tend to be smaller runs, we’ll see less of an impact on the actual can itself. Where the things that are really the volume movers for us and the big revenue generators but tend to be the lowest margin products that we make, we’ll see the biggest hit on those ones. And they’re already the lowest margin things that we’re making.

Miller:  So if you get a 6-pack of 12 ounce cans, those cans that you may order a ton of, are cheaper per can than the fancy 16 ounce cans?

Barbee:  Yeah, so really the can itself costs the same amount. If we buy [for example] the 12 ounce cans, we’re buying direct from Ball. Really, we’re going through a middleman, but we’re buying from Ball. But the minimum order to do conventional printing on those is an entire semi-truck full. So that could be, depending on the skew, a quarter’s worth, or it could be two years worth of cans. It’s a big upfront cost to us and it’s a lot of cans.

Like I said, the can itself, because of the way that we’re printing it, is less per can, but we would see a much bigger impact of the tariff on that. Whereas, a 16 ounce can, those cost triple the price because of the way the artwork is applied to them. So the tariff would be a smaller percentage of the total price of the can. But, the overall impact would be similar.

Miller:  Is there any urgency right now, as a kind of bet, to just buy a bunch of cans as quickly as you can, and set them aside thinking that they would be more expensive if you bought them six months from now?

Barbee:  Barley is the other thing that we’re dealing with because a lot of the barley comes from Canada. We buy our malted barley from Vancouver, Washington. Again, they’re moving a raw material down here and then processing it here. So the jobs in the processing are all here.

To your question, we just pre-purchased a bunch of cans in anticipation of something like this. Last time the tariffs didn’t actually go into effect, so midnight last night was kind of a “well, I guess we made our bet correctly.”

And then we have our malt price locked in for a year. But we have no idea how long this is gonna go. So, a year may not be enough runway, but we only bought a quarter’s worth of cans. So we may be staring down the barrel of higher prices fairly soon.

Miller:  In terms of the production of beer itself – it seems like you were talking about that a little bit with the malted barley, the main ingredient in beer, one of the raw materials that doesn’t come from the U.S.?

Barbee:  A lot of barley is grown in the U.S. also. Malting is the process. Barley is the grain that we typically use. You can malt other grains, but we use mostly malted barley. It’s grown in a combination of the Northern States and Southern Canada, and we use a combination … I guess it really depends on where our suppliers are getting it from.

But we had a meeting with one of our malt suppliers the other day, and they said that, leading up to this, they were moving a lot of raw barley from their Canadian warehouses into U.S. warehouses preemptively. So they are already trying to move a lot of barley down here so that they can malt it and everything, just as a preemptive move.

Miller:  But that’s the kind of thing that can only last for a couple months, right?

Barbee:  One hundred percent. Yeah, yeah, yeah. That buys everybody a little bit of a negotiating window, assuming that’s actually what they’re trying to do.

Miller:  Maybe this is impossible because one of the themes of all these conversations is uncertainty. But let’s say that a 6-pack of craft beer now costs, I’ll call it, $12. How much more might the consumer price be when you factor all this stuff in?

Barbee:  I guess that’s one of the problems that we have as a craft industry. We’re sold to grocery stores by distributors. If we go up a tiny amount, then it gets magnified by both the distributor and then magnified again by the retailer before it reaches the consumer. So it’s really difficult for us to raise our prices by any sort of meaningful amount on our end without it being really amplified to the consumer.

Then we also face downward pressure from the really big brewing entities in the world. We can’t increase our prices very much with that magnification, without it suddenly being priced out of what’s reasonable for a 6-pack. A small increase on our end, all of a sudden we’re at $16 on the shelf. And you could buy a pseudo craft beer produced by somebody much larger for $12 and now we’re not selling anything. So we wind up having to just eat it a lot.

Miller:  And as we’ve talked about a couple times in the last year or two, you’re already facing really big challenges as a craft brewing industry with NA [non-alcoholic] beers, with seltzer, with just market or taste changes. It seems like a particularly hard time for you to face the big increases in the cost of production?

Barbee:  One hundred percent, yeah. I kind of joke with friends that anytime somebody buys our product, they’re choosing to buy something local and craft. We’re not making a product that Budweiser’s not capable of making. We’re making a product that we care about, and you can walk into the brewery and you can talk to me. You can talk to my brewers. You can see us making it. And I think that’s really the thing that we’re selling. We do make an excellent product. I’m very proud of our product. But I think we’re also selling the craft and we’re selling the locality. Just getting people to come and experience that is important.

The best example I can give right now is with my son’s school auction. Every year, I auction off a brewmaster-for-the-day experience. People get to come and we sit down. We have a couple of beers. We design a recipe together. Then we arrange a day where they can come out to the brewery and brew the beer of their dreams. And the same group of parents bought it this year that bought it last year, because they had such a good time. That’s really where craft differentiates itself.

Miller:  Jason, thanks very much. Jason Barbee is one of the co-owners and the brewer at Level Beer, board member of the Oregon Brewers Guild.

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