How the Roanoke Valley nearly lured Sierra Nevada

The water bottles went from Roanoke to Chico by UPS.

Perhaps the full case of drinking water from Spring Hollow Reservoir in west Roanoke County would remind the rock star-like founder of California’s Sierra Nevada Brewing Co. how good things could be here, thought Roanoke County economic development director Jill Loope.

A development deal this year with Sierra Nevada could be pivotal for this region, one of the county’s biggest business and tourism wins in a long time.

“Please accept this gift with our compliments as a friendly reminder that Roanoke, Va., has the quality and quantity of water desired by Sierra Nevada for your East Coast brewery,” Loope wrote in a Jan. 6 cover letter to Ken Grossman, the brewmaster. “Here, you will play a key leadership role in charting the course for the craft beer industry in Virginia. … Sierra Nevada can lead the way in Roanoke, Virginia!”

But the water alone wasn’t enough to woo the craft beer powerhouse.

Tiny Mills River, N.C., on the outskirts of “Beer City USA” Asheville, was three weeks away from learning it would win the brewery.

While Roanoke County’s industrial park near Glenvar finished as the company’s second choice, the bottles Loope sent to Grossman stood for more than a failed business gesture. They marked a newfound wisdom and pride in how local leaders may sell the Roanoke Valley — and particularly its water supply and culture — to prospective companies.

For almost a full year, the Roanoke Valley’s economic development leaders had quietly focused on landing the first East Coast site of the craft beer giant while media and the public tracked them elsewhere, including Christiansburg, which had been eliminated by late April. Roanoke County and the state dangled almost $13 million in incentives to lure Sierra Nevada. Yet a host of other bait attracted the company’s attention for its expansion, code-named “Project Fishbowl.”

Through the process, the economic development teams in the Roanoke Valley have realized the value of marketing the area’s trails, rivers, bike paths and mountain culture. They grew to understand how the Western Virginia Water Authority — with an ample and high-quality water supply — could be more of a business asset. And Sierra Nevada’s yearlong high profile search pushed the Roanoke Valley to the attention of national development consultants and amplified Virginia’s young craft beer culture.

“Every deal, win or lose, is the birth of the next deal,” said Dennis Gallagher, president of Virginia Beer Wholesalers Association, the lobbying presence for beer distributors and a group that pressed Grossman to choose Roanoke County. The search has spotlighted Virginia’s emerging craft brew enthusiasm, he said. “It’s the old idea a rising tide lifts all boats.”

The search begins

Counties and cities in Southwest Virginia first learned of Sierra Nevada’s interest in late January 2011. The Virginia Economic Development Partnership sent a routine message calling local governments to provide information on their sites to a food manufacturer, according to interviews with Roanoke Valley economic development leaders and emails and planning documents obtained through Virginia Freedom of Information Act requests.

The type of food product wasn’t known; neither was the company’s name. Localities emailed their resumes and waited.

By March, economic development staff knew that the company wanted to visit locations in the Roanoke and New River valleys. A person from Sierra Nevada and a person from a site location consulting firm came that month to rule out most of the region’s sites.

Then a team of nine flew into Roanoke April 19 wearing shirts marked with Sierra Nevada logos. They represented the sixth-largest brewery in the country, one that had gained an avid following for hop-heavy beers. Grossman, the man who had grown his homebrew operation into a nationally known brand and whom Sierra Nevada drinkers now regularly toast, led the team.

They heard pitches from the state and regional government leaders. They toured two properties, Roanoke County’s Center for Research and Technology and Falling Branch Corporate Park in Christiansburg. Grossman’s son, Brian, also on the trip and destined to be an East Coast beer co-manager, asked to visit Floyd because he had “heard it was a cool town,” Ken Grossman said. The group didn’t have time to visit the Mill Mountain Star.

Clusters of the visitors interviewed a Roanoke industrial bakery’s staff about the labor pool, visited Virginia Western Community College and spoke with utilities representatives. They had dinner at Metro restaurant, and before retiring to Hotel Roanoke, sampled the downtown bar scene.

The visit lasted less than 24 hours.

On the same trip, Sierra Nevada’s group traveled to the two other regions that appealed most to the company: central Pennsylvania and eastern Tennessee.

Next-door competitors

Sierra Nevada’s search wasn’t the first time a business had been drawn to Southwest Virginia’s water. Coca-Cola and Pepsi already bottle products at plants in Roanoke and near Hollins, and the bottling company for Nestle’s Deer Park spring water looked closely at sites in Botetourt and Alleghany counties in 2006.

But last year marked a new era in Roanoke’s business promoters’ understanding of the resource.

To make beer, brewers need malted barley, hops, yeast and water — traditionally about four times as much liquid as beer they ship out the door.

When Sierra Nevada came to meet with local leaders, water and sewer systems were an intrinsic part of the business plan.

The Spring Hollow Reservoir, which is near the industrial park where Sierra Nevada would have built, can deliver 18 million gallons of Roanoke River water to the region’s faucets each day. Sierra Nevada’s needs wouldn’t have strained the far-from-capacity source, said Gary Robertson, the Western Virginia Water Authority’s executive director of water operations.

When the water authority sent gallon plastic jugs of water to California at Sierra Nevada’s request, the analysis came back exemplary, Robertson said.

As for wastewater, the authority would have welcomed a brewer’s concentrated beer byproduct at the southeast Roanoke water treatment facility, said Mike McEvoy, the authority’s executive director of wastewater services. The authority doesn’t place a pounds-of-waste surcharge on industrial sewage users — a rarity among most city sewage systems that want to discourage heavy loads of waste.

Generally, Sierra Nevada’s operating costs in the Roanoke Valley would have been lower than most other sites, according to Beth Doughty, executive director of the Roanoke Regional Partnership.

In late May, Doughty and Doug Chittum, Roanoke County’s then-director of economic development, flew to California to visit Sierra Nevada’s operation in Chico, a farm-and-college town in the Central Valley of Northern California.

By this point, Sierra Nevada wanted to build in either Roanoke County or Maryville, Tenn., near Knoxville.

“They were honest about Knoxville. [They said] they drink more of our beer there,” Doughty said.

Tennessee had tweaked a law to help Sierra Nevada’s sales of high-alcohol content craft brews. But the location’s humidity and water consistency weren’t ideal for beer, said Bill Manley, Sierra Nevada spokesman.

Roanoke County was inching toward the win, but Sierra Nevada wasn’t ready to decide.

“Every portion of the deal is dancing on the head of a pin at all times,” Manley said.

A deal in the works

Roanoke County first offered a financial incentive plan to Sierra Nevada in April, for $8.7 million in land, construction and tax reimbursement grants.

By summer 2011, the county had drawn artistic renderings and engineering designs to share with Sierra Nevada. They showed what a brewery, restaurant, visitors center, gift shop and 450-seat amphitheater could look like in the Center for Research and Technology, near the Dixie Caverns exit of Interstate 81. A rail transfer station for delivering malted barley was lined up nearby, next to Blue Ridge Beverage, Doughty and Manley said.

And various Virginia politicians, including state Sen. John Edwards, Del. Greg Habeeb and Gov. Bob McDonnell, had contacted Grossman about the Roanoke Valley. U.S. Sen. Mark Warner had tried but never connected with Grossman, Doughty said.

Roanoke Valley economic development staff and the state rallied for a winning strategy. The county’s financial offers grew to $12.76 million in grants — an amount that Roanoke County economic development staff characterizes as fair because of the project’s potential.

The commonwealth initially offered, among other negotiations, $300,000 through the Governor’s Opportunity Fund and up to $1,000 per full-time job for workforce training, Roanoke County staff said.

The money was competitive and might have clinched the deal. But this company and its looming decision was unusual, say the Roanoke County staff: Ken Grossman’s gut guided the search, not the balance sheets.

Still, something about the Roanoke region jibed with what Grossman likes.

Sierra Nevada dreamed of an East Coast version of Chico — a place bustling with vibrant young drinkers and enthusiastic homebrewers, a place filled with music lovers, musicians, festivals and concerts, and a place that cared about the environment. A place with mountains.

For the CEO who had named his business after the California ridge lines he liked to hike, the Blue Ridge Mountains became one of Roanoke’s most important selling points.

In an interview Thursday, Grossman recalled visiting the Center for Research and Technology. It has a pond, mountains in view and forests that edge the property.

He, his wife and children looked at the land and could imagine the potential: outdoor concerts, a beer garden, hiking trails. The Roanoke Regional Partnership’s effort to sell the outdoor lifestyle in the valley was a different approach than Grossman had seen elsewhere, and one that resonated, he said.

The partnership had launched a marketing plan three years ago to capitalize on Roanoke’s outdoor amenities. This was the first major prospect that confirmed that the branding strategy would work, Doughty said.

County officials tried to appeal to the intangibles. Grossman became aware of a Facebook page with more than a thousand supporters asking his company to choose Southwest Virginia. And the Roanoke County attorney, a beer enthusiast, tried on his own to charm the brewer.

“I would like to invite you to my home: you can sample some homebrew from me and my club (Star City Brewers Guild), and I could grill some steaks for us,” Paul Mahoney, the county attorney, wrote to Grossman in June 2011. Grossman declined.

Roanoke County thought it had lost the deal to Tennessee. In fact, Sierra Nevada was turning its attention from Tennessee to North Carolina.

The state had long been a national leader in nurturing the craft-beer industry, and Asheville is a place that embraces Sierra Nevada’s product.

The community earned the title “Beer City USA” for three consecutive years in an online poll, was dubbed by the Wall Street Journal a hot spot for the beer industry, and offers a brewers’ guild and “Brews Cruise” tourist bus tour. A state law changed during Sierra Nevada’s East Coast search made North Carolina even more welcoming to large breweries like Sierra Nevada, so it may sell solely its own beers on site.

Western North Carolina has more than a dozen breweries. Roanoke has two.

Still, Roanoke County held on as No. 2 on the list.

The family visit

Ken and Brian Grossman made their second trip to Roanoke in June to get a feel for the city.

This time, Ken Grossman’s wife, two daughters and their infant babies came too, Doughty said.

The family flew into Roanoke in the afternoon and went to dinner at 202 Market, according to Doughty. Grossman’s daughter had walked with her baby on the downtown streets and window shopped, noting how much she’d like to go to La De Da, a women’s boutique, Doughty said.

The next morning, Ken and Brian Grossman, Doughty, developer Ed Walker and city and Roanoke County officials met at the pedestrian bridge near Hotel Roanoke.

The group stopped by the under-construction City Market Building and strolled down Market Street to take in farmers setting up their sales. At the end of the street, the group turned to the right.

“They were very interested in the fire station,” said Roanoke City Manager Chris Morrill, referring to the 105-year-old building on Church Avenue. “When they started asking about it, it struck us.”

The city put together its own pitch, which included the possibility of about $1.3 million in rebates and grants to restore and renovate Fire Station No. 1. Sierra Nevada would have built its pub, restaurant and a music venue there.

Morrill noted that the city and county’s joint effort marked a departure from past business deals, a first for a company to seek complementary sites in multiple localities. Previously, companies hadn’t wanted to tap into multiple industries, including tourism and retail, but Sierra Nevada’s search charted a new map for Roanoke development, he said.

Ken and Brian Grossman and Sierra Nevada staff also visited the Roanoke Valley multiple other times without local officials’ hosting. They walked through downtown, drove the city’s neighborhoods and on surrounding mountain back roads, and tried what was on tap at Roanoke bars, Ken Grossman said.

Six months into Sierra Nevada’s search, Roanoke leaders had hoped to hear a decision. But none came.

The decision

By fall 2011, Roanoke Valley staff members bounced links from North Carolina newspapers back and forth, all mentioning the Sierra Nevada East Coast search. A representative from the site location consulting firm visited again and asked to look at a few more Roanoke-area sites.

On Nov. 8, Doughty sent an email to Roanoke County and state development officials: “I have a bad feeling.” An Asheville newspaper had reported spotting Grossman and his family — his third known visit there — at a beer bar called the Thirsty Monk in the city center.

The word came in mid-January. Sierra Nevada would invest about $100 million over five years in western North Carolina. The company plans to fill almost 100 full-time positions and add about 80 more part time, according to a news release from Gov. Beverly Perdue. The brewery has plans to open in 2014.

North Carolina’s local and state grants to Sierra Nevada came in at about 35 percent less than Roanoke County’s, the search consultant told Roanoke Valley economic development staff.

“This one really hurt,” said Loope, who became acting director of Roanoke County economic development after Doug Chittum retired in July. “We were closer on this one than we have been on many. We worked this project more than any other project.”

In the end, Roanoke County just wasn’t perfect enough.

Asheville is already a craft beer cultural center, while Roanoke’s beer scene is budding. A Sierra Nevada pub could have added some excitement to Roanoke, but Sierra Nevada preferred one facility to keep all the beer and tourist offerings together, as at its Chico headquarters. And the Center for Research and Technology fell a little too far outside the city, said Manley, the brewery spokesman.

“Honest to God, [Asheville] was everything we were looking for rolled into one,” he said. “It pretty much skyrocketed to the top of our list, like a bullet.”

A glass half full

But Roanoke County shouldn’t feel left behind, economic development leaders say.

Don Schjeldahl, a vice president at Cleveland-based Austin Consulting, the group that managed Sierra Nevada’s East Coast search, said his firm would remember the region and its assets when it works with future development clients. And the national prominence of Sierra Nevada’s search created buzz about the beer industry in Virginia.

Loope hopes the experience can draw another big-name food and beverage manufacturer to Roanoke County.

“We’re laying the groundwork now for some of those projects in the future,” she said. “You got to take risks. Not everything is going to succeed. You keep pushing. It’s coming.”

Colorado-based New Belgium Brewing Co., the brewer of Fat Tire beer, is looking to expand on the East Coast in either Philadelphia or Asheville. A company spokesman said Friday that the Roanoke region wasn’t on its shortlist.

However, New Belgium’s mid-Atlantic regional director and a salesperson spent Thursday in Roanoke. They discussed distribution with the owners of Roanoke County-based Blue Ridge Beverage Co. over dinner at Blue Five Restaurant.

(Feb. 26, 2012)

Go to the story on Roanoke.com