[Spotlight_EN] Written in STONE – the takeover of Stone Brewing by Sapporo as a manifestation of a wider transition

A German Point of View

Japanese brewing company Sapporo announced on Friday, June 24, 2022, that it will acquire Southern California craft beer icon Stone Brewing of Escondido in San Diego County for $165 million[1]. This marks Sapporo’s second major craft beer acquisition, following the $85 million purchase of pioneer Anchor Brewing in 2017. And even if the omens were already legible for insiders beforehand, this also marks the end of a drama of classic American character that is large in beer dimensions. Time for a bird’s eye view.

Indeed, there are apt parallels in postwar American literature, which often centers on failing men, now advanced in years, who have become frustrated by outmoded notions and changing social conditions.

The drama describes a salesman who is successful in his younger years and unsuccessful in his old age, who tries to conceal his lack of success, including the loss of his job by the new owner, with a single life lie according to the motto „more appearance than reality“. Criticism of the American Dream is also a central point of the drama. The protagonist is too attached to the belief in the universalism of the dreams of the first settlers, and cannot understand that they are no longer realizable in his time. This problem manifests itself in a perpetual progression for him throughout the drama in that he ultimately has no livelihood and thus no identity. 

That is an only slightly modified description of the plot of Arthur Miller’s Death of a Salesman from 1949 on Wikipedia. And indeed, from today’s perspective, Stone seems significantly out of step with the times in one respect if nothing else: the loud, bold, and extremely stereotypically masculine image that – despite some recent attempts that have been limited in success – is inextricably built into the corporate DNA. Grim gargoyles, rock ’n‘ roll, and rampy posing as a constant dance on the tightrope of the just tolerable have accompanied Stone since its founding in 1996. Sub-brands such as Arrogant Bastard and an eternal Ductus of „if it’s too strong/bitter/crass, you’re too soft/weak/uninteresting,“ which the company even printed prominently on the cans in various variations, left no doubt about Stone’s self-image and their projected target group.

And success proved them right: Stone blossomed into an industry giant. With over half a million hectoliters of output and 921 employees in 2021[2], Stone is the largest craft brewery in Southern California (in California, only Sierra Nevada and Firestone Walker are larger), the ninth largest craft brewery US-wide, and the 18th largest brewery in the US. And that’s after several years marked by setbacks and negative growth.

The first twenty years read like a single Cinderellaesque success story (but with chest hair and fangs): founded in 1996 as a hobby to counter the „fizzy yellow beer“, as Koch never gets tired of discrediting so-called mass market lagers, with an alternative that should be the exact opposite in every aspect, in every pore of its being: loud, overwhelming and parting spirits instead of subtle, barely perceptible, just always there and never knocking anyone over the head.

„A dream: we stop calling fizzy yellow beer “beer” & real actual beer “craft beer” & begin calling them “fake beer” & “beer”, respectively.”

Greg Koch, 29.12.2013 auf Twitter

Several brewery locations and gigantic gastronomies with the modest name Stone Brewing World Bistro & Gardens followed – first two in California and then in 2014 also as an East Coast expansion in Richmond, Virginia. Not the only big deal in 2014: as early as 2009, rumors of an imminent expansion into the European market had been deliberately spread.[3] On July 19, 2014, the time had come: Greg Koch invited a number of European scene celebrities and the interested press to the old gas plant in Berlin-Mariendorf. They are to gather around him while he announces the opening of their new mega-project there with much fanfare: Brewery, „World Bistro & Garden“ with 50 taps and huge outdoor area; and last but not least: the European headquarters from which the European continent and more will be explored.
And the Berlin brewers and out-of-town guests are coming: the pictures of the event on Stone Europe’s sparsely populated blog feature all sorts of familiar faces from the Berlin, German and European scene of the time: Theo Musso from Birra Baladin (Italy), Alex Himburg, Thorsten Schoppe, Tom Crozier and Matt Walthall from Vagabund (all Berlin) – and besides Sebastian Sauer from Freigeist Bierkultur also Brewdog’s James Watt (irony of fate: today co-owner of the building and in the spotlight because of massive accusations of a „culture“ of toxic masculinity, as this BBC documentary points out)…

At the time, beer aficionados were amazed at the attitude and confidence with which the U.S. star appeared in Germany; after all, the German scene of alternative brewers, although with some wind of change around the nose, but unlike in some neighboring countries, still bobbed along on the edge of insignificance. So it was no surprise that at this point many expected, or at least hoped for, something messianic to the point of igniting a German beer revolution. Even the tabloids were suddenly on the scene. The Berliner Kurier ran the headline: „The Beer Jesus from America,“ later the title of a documentary educational piece about entrepreneurial hubris that is well worth seeing.[4]

Ohne Worte…

And co-founder and CEO Koch does not hide his expectations and promises the Berliners and Europeans great things. As a meaningful symbol of his uninhibited intentions, he finally drives a huge rock out of the future production hall with a forklift and lets it crash from man height onto a pallet of conventional European macro beer (exactly: „fizzy yellow water“). Unknowingly or deliberately, it can hardly be reconstructed – but ironically, this is the first moment of alienation between the rugged Messiah and his willing disciples, because the pallet contains not only industrial giants, but also some family businesses.

So it is not least the aforementioned hubris that caused Koch, who was committed to the vision of international expansion, to fall into a number of traps resulting from his bizarrely extrapolated misconceptions. Germany in 2014 was not like the U.S. market at the time of Stone’s founding in 1996, as he had assumed:

  • Far out (or jwd – „janz weit draußen“, as they say in Berlin to places like Mariendorf that are just barely accepted as parts of the city) attractions don’t work by themselves in the same way that they do in the US;
  • Here, it wasn’t a given that people would roll up in carpools in front of the Taproom – the nearest suburban train station was a quarter-hour walk away.
  • Bigger, louder, bolder is not a universal formula for success that hooks up equally anywhere and (many other things…)

No matter when you enter the then after some quarrels in September 2016 completed complex of buildings, you always have the feeling to actually sit almost alone on 2400 square meters (indoors…!) in front of the 50 taps . And even if of course the sheer size swallows the other guests a little: Stone also sees that you have to be closer to the city, and builds a taproom in the centrally located Prenzlauer Berg in 2018.

Greg Koch always sought to stage himself as the good spirit of Stone, and he liked to reach deep into the chest of pathos. After a wave of takeovers of American craft breweries by „Big Beer,“ it was he who felt it was extremely important to distinguish himself from the possibility of a Stones takeover, and he staged this with corresponding publicity impact on YouTube.

„Being consistent to my personal values and the values that we built as a company and the people that work here is my ideal. And that ideal is more important than any cheque. Period.”

Greg Koch

On April 5, 2019, the last big news on Stone’s European blog so far: Greg Koch announces the discontinuation of the Berlin location and the handover to Brewdog, with whom Wagner and Koch had already brewed a first collab brew in 2007, and who had thus found a suitable new hub for continental Europe shortly before the Brexit. His heart was broken, he said, but they were simply „too big, too bold, too soon“ on the way for the German market, and the Germans weren’t ready. One looks in vain for reflections on whether Koch’s world view actually corresponded to the realities on the ground. But at least there is the insight that perhaps they should have started smaller and grown consistently.

“I know you’d like to think your shit don’t stank, but
Lean a little bit closer, see
Roses really smell like poo-poo-ooh
Yeah, roses really smell like poo-poo-ooh”

Outkast – Roses

However, the unsuccessful escapades in Berlin and a taproom opened shortly afterwards in Shanghai had not only caused bad vibes and publicity; they had also cost a lot of money. The sum Stone owed his creditors is estimated at around 460 million dollars. Not a pocketful. In view of such sums, it may seem cheap to rub a lurching Koch’s nose in age-old quotes. However, anyone who plays the marketing drum like a Kalashnikov like Beer Jesus should not be surprised if this is later paid back in the same coin. Especially someone who trumpeted so loudly against big beer, fizzy yellow water and mass market or macro lagers should perhaps have taken Slow Food in their own taverns as a model and strived for a somewhat more organic growth instead of running to the fair with a sledgehammer to release Jack from the box. A the beer in the hand is better than the capitalists in the bush. Well, but: action speaks louder than words… Simply taking the hat and leaving was simply no longer an option at this point in time, as shown.

So let’s not look back in anger, but let’s finally sort out what can be learned from the „Stone case“. For on the one hand, Stone can be used to trace the transformation of the one iconic and at the same time iconographic beer style of the craft beer movement in general: the IPA. It started the boom that made Stone surf so proudly as a second-wave brewery for so long. The period around its founding in 1996 was the age of IBU competition. Who made the most bitter yet drinkable IPA?! It was the era of West Coast IPAs, whose resinous, hoppy opulence was only topped by Double IPAs back then. These then arrived in Germany richly aged due to poor transport conditions, so that German brewers initially targeted the characteristics thus created in their attempts at re-brewing, and rather sweet representatives formed the first wave of German IPAs. Stone’s market entry was then also an eye-opener for many in terms of the freshness of the hop aromas. In 2016, the first cans left the factory. And for the first time, Germans felt perceived as a relevant venue for the hot new trend in the beer world.

At that time, however, the focus in the U.S. itself was already slowly beginning to shift: away from the bitter, citrusy, resinous flavors; toward more tropical flavors and, finally, toward the Hazy IPAs, as they are today as New England IPAs also indicating that the focus was shifting not only on the flavor map. While California, as the home turf of the movement’s great pioneers such as Sierra Nevada, Firestone Walker, Russian River and yet Stone, was still one of the states with the highest ratio of breweries per capita in 2014, by 2021 it was already somewhat trailing behind in the midfield. Of course, this trend reached Germany with a due delay, but in the end it definitely made a full impact, and so perhaps also contributed to Greg Koch handing over the keys to the former gas plant in Berlin to Brewdog in 2019.

So if today the IPA still rules the record (17 of the 20 highest-rated beers in Germany on untappd are IPAs), after many metamorphoses we’re actually talking about a very different beverage.

But also the scene is no longer the same. Craft beer is no longer just the new cool kid in town, but also claims a fair piece of the U.S. beer pie, with about 25%. At the same time, all sorts of social dynamics have spilled over into the former nerd domain: the large number of smaller breweries are more collaborative, more diversity-sensitive, and generally more anticipatory of the precariousness of the scene. The recently initiated fellowships for black brewers from the Michael James Jackson Foundation for Brewing & Distilling with Brooklyn Brewery’s Garrett Oliver as patron, the Pink Boots Society, or global-collaborative solidarity brews like Black is Beautiful are just a few examples.

At the same time, first and second wave breweries are showing a greater willingness to break away from former commitments and subordinate themselves to market mechanisms. In recent years, takeovers and market concentrations of former flagships such as Anchor, Ballast Point, Victory, Lagunitas, New Belgium, Bell’s and others have repeatedly made headlines. Many more sold shares to industry giants such as AB InBev, Heineken and Miller Coors. Not all of them had their backs against the wall as Stone did recently.

And even the smaller ones are not completely unsullied. For those German micro-brewers who, just a few years ago, went around the country with missionary zeal, preaching the (stylewise) blameworthily disregarded diversity of the beer world, are today, with few exceptions, primarily brewing NEIPAs in various strengths, because the demand for them here (and especially on the more potent European market) seems almost insatiable – in relative numbers, of course, because the initial euphoria, or rather the hype conjured up by some, has already faded away with the front shelves htat suddenly blossomed in many supermarkets and once were orphaned again. But this topic cannot be rolled out exhaustively even as a separate blog post.

To turn to Miller’s Death of a Salesman, one could say that an unfavorable interaction of internal and external reasons for the downward spiral now finds its dramaturgical climax in the sale of Stone Brewing – of all companies, which had always stylized itself as the rock in the surf of the raging sea of market orientation and concentration – to a major company. At the end of the development, Stone Brewing, like Willy Loman, is left without an identity and without a livelihood, because its internal constitution was created in such a way that it could no longer meet the demands of the times, or at least not quickly and consistently enough. The withdrawal of the founders Koch & Wagner, mocked by some in the relevant forums, is only consistent in this light.

I, for one, have fond memories of my first visit to Stone Brewing Bistro & World Garden in Mariendorf, despite my early alienation at the flamboyant gesture of all their doings. We hadn’t yet taken off our jackets when what turned out to be an overeager new service employee immediately placed two large, fresh IPAs on our table and disappeared again. He had mistaken me for Koch, apparently. Never again did I feel so close to Jesus.

[1] https://sapporobeer.com/press/ [06-25-2022]

[2] https://www.stonebrewing.com/about/history [06-25-2022]

[3] https://www.stonebrewing.eu/blog/miscellany/2009/stone-open-brewery-europe [06-25-2022]

[5] https://www.beerjesusfilm.com/

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