Stone Brewing Sells its German Brewery

I am writing a long beer article, fully referenced in the scholarly way, and anyone who has done the full Monty knows the incredible amount of time and patience it takes. So my blogging has slowed considerably until I finish it. But I’ll still blog here and there, mostly on topical issues or for beer reviews.

Stone Brewery, the craft beer icon of Southern California famous for its sassy advertising and gargoyle logo, started in 1996. Former CEO Greg Koch, now Executive Chairman, remains the public face of the company. He retains his youthful rock and roll look – indeed he was in that business before turning to brewing – but he’s a middle-aged man helping to guide a complex business.

In 2016 Stone, which has multiple facilities in southern California and a brewery in Virginia, set up a brewery and restaurant complex outside Berlin, in Mariendorff, Stone Berlin. A large ambitious facility, it can seat almost 1000 people taking in the indoors, private rooms, and large garden space.

The opening was accompanied by a splashy party where a big rock is said to have been dropped on cases of both standard German and other European beers. The idea was to show that Stone’s legendary IPA, the equally famous (here) Arrogant Bastard, and other highly flavoured or off-beat craft beers would liven up the German beer scene. In an interview around the same time Koch made statements about German beer that seemed to put it down although read carefully I don’t think he meant that.

But there’s no question he has a brash style and therefore, when it was announced last week that Stone was selling the Mariendorff facility to the fast-expanding U.K.-based craft brewer, Brewdog, there was the inevitable commotion in social media.

Many feel Koch got his comeuppance and when you are as brash as he is, in a sense he had it coming. He’d probably be the first to admit it though. I doubt it will set him back, it’s not his personality or the company’s image.

Koch is an outsize figure in brewing, he recalls the 19th century titans of brewing and other businesses who were partly showmen, who were selling the greatest show on earth. Exaggeration and super-confidence were hallmarks of American business then and Koch in my view reprises that tradition. He goes against the grain of modesty and humility expected in business today.

The fact is, there are many ways to skin the cat. Being low-key and serious of mien never hurt Ken Grossman who heads the even more successful and certainly older in chronology Sierra Nevada Brewing. Some CEOs manage to blend both traits, I think Jim Koch did in the past at any rate, of Sam Adams Brewery (no relation to Greg).

But I ask myself: How many customers or potential customers of Stone Berlin knew what Greg Koch thought about German beer? How many even knew who he was? I doubt his remarks and famous “attitude” had anything to do with the poor performance of Stone Berlin and resultant decision to sell the facility.

I think it had to do mainly with location. The place is far from the Berlin centre, a 40-minute tram ride and longer by bus, and at least a 10-minute walk from the stations in Mariendorff. In Germany, people don’t typically drive to reach a place for a beer session. And the capacity was very large.

There is an old adage in the real estate business. The three most important things about a property are location, location, and location. Some warned when the investment was first announced that the brewery’s distance from Berlin might be a problem. See this excellent article in 2015 by San Diego journalist Peter Rowe on the plan. Its sub-title was prescient: “This is a gamble”. The story mentions the potential access issue for Stone’s World Bistro and Gardens (as the German locale was ultimately termed) numerous times, in fact.

Stone simply overreached. Had it built a place half the size much closer to Berlin, it might be in clover today. While the bulk of Berliners by all reports still enjoys traditional German pilsener, craft beer is increasingly popular. Stone itself finally set up a tap in the Prenzlauer district of south Berlin, selling its own and other craft beers. The bar does well by all accounts and was not included in the sale to Brewdog.

German tastes are slowly attuning to trends elsewhere. Stone could have capitalized on this, as Brewdog hopes to and a handful of local craft breweries already have. Understanding this has nothing to do with dissing German beer. Few have greater respect for it than I, and for straight-off pilsener at that.*

Or, had Stone gone to the U.K. instead of a country with a language and culture quite different to Britain and America, it might have done much better there.

No one succeeds for decades without making a slip or two. Craft beer has such an emotional resonance among its fans that sometimes any set-back seems a major event or one requiring a special explanation. It’s just business, and things don’t always go to plan, even for well-established players.

I think Stone will recover from it, but even if the sale heralds some deeper issue (is cash tight in the crowded craft environment of 2019?), Stone has been with us for almost 25 years. That’s a long time in business. For any business to last that long at that level, in the Top Ten of craft brewers and making c.400,000 bbl a year, is a major accomplishment.

Whatever the future holds for Stone, whatever exaggerated claims Stone Brewing has made for the importance of Stone IPA and changing the taste of beer drinkers, etc., it has achieved a great deal. Stone forms a permanent part of American beer history. And for the most part, it makes great beers. That’s where it really ends and starts, for us.

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* In fact, there is nothing bland or anodyne about German blonde lager – it has plenty of taste. Try even the large-selling Warsteiner, say, or Spaten – but the flavours differ from the typical craft palate, and are more narrow in range.

 

 

 

 

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