 Interview With Stone Brewing's Greg Koch
Jan 15, 2010 | dtrivisonno | Return
Brewery Stone Brewing Escondido, CA.
Years in Business 14 (1996)
Annual Production 100,000+ Bbls.
# of States 34
Favorite brewing book Maureen Ogle’s Ambitious Brew: The Story of American Beer
Favorite non-brewing book Seth Godin’s Purple Cow
Tech gadget can’t live without iPhone
The Art Of Brew recently had the opportunity to meet Greg Koch. For those of you who are not aware of who Greg Koch is, he is half of the creative genius behind Stone Brewing. Stone Brewing is a company that has had major impact in shaping the craft brew industry, and continues to push the boundaries and continually razing the bar. He took a few minutes to sit down and talk to The Art Of Brew while in town for the Cleveland Beer Week, and this is what he had to say…
TAOB Where do you see the craft brew industry going?
GK “Up”… “Great,” one word answers, perfect. Clearly craft beer is on a tear and I think there is this very specific reason for it. I’ve been in the industry now for 13 years. I was an enthusiast since the late ‘80’s, and of course, then all the way through the early ‘90’s. We started in ’96 and I saw the meteoric increase of the category from, especially, 90-95. It was 40-45% a year. As you guys might know there were a lot [of brands] that were jumping in. Anything with a choo-choo train or a dog on the label was selling and of course wholesalers and retailers didn’t completely understand what they were selling, but if it had a dog or a train on the label, the wholesaler was selling it and the retailer was stocking it. The fact of the matter is there were some very, very good beers in there and there were some very poor beers in there. The consumer didn’t exactly know how to know the difference. Of course we didn’t have the advantage of a Beer Advocate or a Rate Beer; we didn’t have the advantage of blogging, so the way that word was spread was the old traditional way of spreading word, just the old school word of mouth. Then it all crashed down in ’96. 20/20 did a show on micro breweries, “Are they really where you think they’re from?” I don’t know if you are aware of that episode of the show, but it’s kind of considered to be the tipping point of the crash. It was a lot of big brewer influence in that show, and it called to question the small brands, where there was a bit of a bubble because there were so many coming in. So now we have started coming out of that, and the brewers are better. The brewers that were good then—let’s pick a couple of obvious examples; Anchor and Sierra Nevada were brewing really great beer in the 80’s and 90’s—continue to be great. If anything they continue to improve. Although sometimes you can’t improve on something that’s wonderful already, and the ones that weren’t great have learned to be great, or they’ve failed. So what we’ve got is this really solid base now. In the early 90’s when somebody would randomly pick up a beer, there was a chance that the beer might be good. Now when somebody randomly picks up a beer the chances are a lot higher. I mean, it’s still not perfect; there are still some beers out there that are, eh, you know? But at least they’re probably not going to have felt like they absolutely wasted their money and got burned. So based upon that, the cultural changes that are happening, along with the Beer Advocate’s and the Rate Beer’s, the whole social networking, and the blogging, communication methods are improving so much for the world of enthusiasts that we have, in my opinion, a real snowball effect that isn’t going to risk a sudden melting. Instead, because it’s on such a solid base, I really believe that we are going to continue to go up. The cautionary tale out of this; we, as wholesalers, retailers, and communicators, have to pass judgment. This one’s good, this one’s not good; versus the “I can sell this one” approach. Being able to sell it today is not an excuse for stocking or wholesaling it. If you sell it and you really believe it’s a fantastic product, great! That’s the way we need to approach our business. Otherwise, if you’re knowingly hocking something that isn’t of a significant quality then you’re damaging the category. Even though I think the category is based on such a great base today, it still could have chinks in its armor. I prefer a road without those speed bumps ideally. We love sharing this industry with all of our craft brewing brethren. Well, not all of them. I love sharing it with ones that are ethical and that make great beer, and if they’re cool people too, that’s awesome!
TAOB You had made reference to pedaling mediocrity. How does it make you feel to know in cases like this (referencing the beer shelves of grocery stores and other retail outlets) that they have fizzy yellow beer right along side your brand?
GK The fizzy yellow beer right along side of our brand doesn’t bother me so much, mostly because they’re simply in a different world. So, they happen to be stocked nearby on grocery store shelves…sure, because we still share that four letter word with them: “beer”. But it’s the mediocrity in the craft brewing realm that is, in my opinion, the threat. Of course, sometimes big brewers intentionally introduce mediocrity into other categories (e.g. the industrial light lager category) with the aim to bring it down, or to give those chinks. It’s a very common established technique from large brewers and, you know, it’s troublesome. I think that they perhaps aren’t seeing a large amount of stock in that kind of activity anymore. But go look up and down the beer aisle you can pick out them. To us in the industry there’s a very obvious example.
TAOB Where do you see distribution for craft brewing going? We know that Stone self-distributes. How do you see that influencing the established distribution channels?
GK It’s huge! Yes, we not only distribute ourselves, but we’re also a wholesaler of an amazing portfolio of specialty beers. And, you know, we probably couldn’t be talking about this in a better place. We’re in Ohio with Cavalier Distributing and you’re talking to a guy from California with Stone Distributing, and I think these are a couple of the wholesalers that are showing that there’s a completely different model out there for wholesaling beer. At Stone Distributing we don’t have any fizzy yellow beers; we don’t have any beers that we feel are mediocre. At Cavalier Distributing they don’t have any major brands; it’s only specialty and smaller brands.
But, the big are getting bigger. Clearly Miller/Coors has combined, and Miller/Coors wholesalers have combined. The major brand wholesaler in one town is combining and merging with the major brand wholesaler in the next town, so portfolios are getting bigger and territories are getting bigger, and big organizations just by their very nature can only handle a certain depth of portfolio before it just doesn’t make sense anymore. So then it opens up this kind of space underneath, if you will, for the specialty operators—the Cavalier’s of the world, the Stone Brewing Company’s of the world, etc. Because these big guys are getting so much bigger, the space underneath them, or to the side, is also getting bigger. However, we’re also doing things that are making that space bigger. In other words, what we’re doing at Stone Distributing is doing our jobs well and creating our own opportunities. It isn’t just the leftovers from big conglomerations that are getting bigger, but it’s also the fact that we’re getting better at our business. The beers that we represent continue to be fantastic and are getting better. So we’re making our own reality, sort of creating our own path. But this is a path that has opened up somewhat. Combine this path that’s opening up with the fact that we’re at a grocery store [Heinen’s of Bainbridge] that has what I would call a significant craft selection for a grocery store, and the way consumers are continuing to open up specialty beer bars, gastro pubs and specialty beer stores…this conversation is huge and it’s going in our direction.
TAOB When Stone Distributing, and Cavalier as well, take on new brands, what are you looking for? What are your standards for a new beer?
GK Well…and I’ll let Rick [of Cavalier Distributing] answer also…at Stone we specifically look for viability. Do we think it would be viable in the marketplace? You could be a great beer, obviously, but if it’s not viable maybe they need to grow their reputation within their home area. Sometimes some of them want to leapfrog too far away from their home territory without being established yet. We’ll of course look for quality, and as brewers we have a pretty high standard for what we think a great beer is all about. It’s got to have some uniqueness in the portfolio. That’s essentially it, however even if it’s very viable, but we’re not impressed by the beer, we don’t carry it. We’ve had beers that have been offered to us that we would sell a lot of, but we don’t think it fits our portfolio, so we say ‘no thanks’.
Rick For us at Cavalier, it’s the viability and a lot of the points that Greg touched base with, but also, does that brewer have a sense of programming and a business structure with the organization? Because some of the guys are so full of passion, and brewers first, sometimes the business side of it causes a lot of frustration. Sometimes communication isn’t there and it winds up being a waste of their time and our time, which costs a lot of money. We also take a look and see how well does that fit into our book. Is it going to be something that’s going to cannibalize something else. It’s gotta work for us. Over the last three years, we have actually been more selective about what we bring in than any time in our history and I think that’s really given us the ability to drive the brands that we’ve had for a long time, and really just keep grinding it out on the street.
TAOB: Future for Stone: What are you guys looking to do next? You’ve been the fastest growing brewery in thirteen years…
GK I believe it’d be the last twelve when you’re looking at an average annual year over year percentage growth. So as of last year I think that, including last year, our annual average growth is 47%, calculated out over twelve years. So in any given year some other brewery has, of course, grown more but we’ve had nice consistency. At Stone, nothing really new. We enjoy producing new beer styles from time to time as we can, and we enjoy the collaborations that we’ve been having a lot of fun with our brethren in the industry, but I wouldn’t expect any left turns from us. We just bought a new 57,000+ square foot warehouse about a mile and a half from our brewery, so we’re moving our storage and distribution operations over to that building to allow us some additional room for production within our existing brewery. We will produce right around 100,000 barrels, might be a couple hundred less or a couple hundred more. Our restaurant has been doing very well. Even in this tough economic time, we’re up 40% so far this year. Despite no advertising, we don’t do much of a happy hour, our prices are expensive, we’re all organic, natural and free range, and people are responding. I give people a lot of credit for that. I think people want better, especially when you can show them examples of better and move them over to the “better side.” Giving them a good reason to come over to better, a lot of people want to. Not everybody, but that’s OK.
TAOB I noticed on your website that you’re looking for assistant brewers and a couple of other positions. When you look at new employees, how do you make sure that they fit in with your corporate environment?
GK We definitely look at things from a cultural perspective, because we know that we’re unique, we know that we’re different and we embrace that. There’s going to be a certain kind of personality that’s going to be extremely comfortable in our environment, and there’s going to be, probably more like a corporate style, that might not be so comfortable in our environment. So they’ve gotta be somebody who can accept some structure, certainly you need structure in brewing consistent beer, and that’s very important to us. But also we have a decided lack of structure in some other ways.
TAOB So a very horizontal structure?
GK Reasonably horizontal structure. We still have some calling the shots and this is how we need to do it.
TAOB When you go about crafting a new beer, do you give freedom? Does your partner take full reign of that…have you worked that out?
GK We approach it like this…and I use the analogy of songwriting, because both my partner and I came from the music industry: songwriting can sometimes start with the lyrics, sometimes with a melody, or a riff, or a rhythm, and sometimes a song is completely written by somebody, sometimes by one person, and sometimes it’s a collaborative effort. Most often these days it tends to be a collaborative effort, but not everybody is involved in writing every song. So that’s how I approach it, it’s really all over the map.
TAOB After brewing, what are your plans? Go back into music?
GK No, I’m definitely not going to go back into the music industry.
TAOB No thoughts of starting a band and opening up for Sam [Calagione]?
GK No thoughts whatsoever. Although what I have thought about from time to time, is that it might fun to put out a rap album to counter Sam. To do one a little bit better, which of course would be very easy… clears throat and says with a wry grin. It’s not so much after brewing; it’s in concert with brewing. Food, I’m very passionate about food, and not… A lot of people interpret passionate about food meaning what spices you use and how you do it in the kitchen. I’m not a cook. I’m passionate about food from the food system, the underlying things. How do we raise our animals? How do we grow our food? Sustainability is definitely a part of it. You know we have all these health problems today and I’m very passionate about how all these things intertwine, and just looking at it and being a part of the solution. If we just ate decent in this country our healthcare crisis would be a fraction of what it is. But this disconnect between what I eat and all these other things, it’s just disconnected. People can’t seem to understand. Yes, I understand that the runoff cause this big dead zone in the Gulf of Mexico, or yes I understand that the plastics might be in the Pacific Gyre collecting and are going to ruin our oceanic food system but you gotta look at the whole thing and it’s not that complicated. Man, we sure make it complicated. It’s like brewing really great beer. Brewing really great beer; yes it’s attention to detail, it’s knowing what your doing, it’s being passionate about the beginning and the end and the result, but it’s not that complicated.
TAOB Any advice to aspiring brewing professionals?
GK Follow your heart. Ignore critics because the bottom line is if you’re good enough to succeed then you should ignore critics. Because critics don’t like things that are good, generally speaking, they just like to criticize, and if you aren’t any good then the critics won’t help you either because you just weren’t any damn good. You’ve got to go your own way. Do approach it with passion, but approach it with skill, and good luck. I have a speech on iamacraftbrewer.com. It’s my keynote speech, so sometimes when people ask me for advice I say “watch the speech”, because I put some of that stuff in there and I said what I mean and I mean what I say. I’m probably going to like your beer better if you’re inclined to go the ways I’m suggesting which is follow you, don’t follow me.
TAOB OK, a couple of quick-fire questions… Favorite Brewing Book?
GK Brewing book is… on the tip of my tongue. I really enjoyed “Ambitious Brew: The Story of American Beer,” by Maureen Ogle. That was fascinating.
TAOB Favorite non-brewing book?
GK Probably still it would be “Purple Cow” by Seth Godin.
TAOB Do You Surf?
GK I don’t surf. I grew up in a small town in Ohio so I don’t have beach culture in my youth.
TAOB You’re in San Diego, you’ve got Lajolla right there, you’ve got…
GK I’ve got it all right there, and the challenge is, man, I always joke with Adam Avery. He surfs way more than I do and he lives in Boulder, but he comes out. But, I’m a bit of a workaholic, so…
TAOB To maintain that kind of growth you kind of have to.
GK And we never pushed for growth, I think what we’ve done instead is created something that naturally wants to grow that’s quality enough to grow naturally.
TAOB Any parting words for our readers?
GK The things in this world that are best, are the things where people are following their heart, their muse, their passion and they’re not pulling back. There’s still a huge tendency to pull back; I like it like this, but somebody else? I think they’re not ready for it, so I’m going to give them a watered down version. You can decide to make beer for people that like watered down versions, but they’re not going to be passionate or loyal. I prefer to make beer for people who are like me; passionate and loyal. So I want to be loyal to them by not pulling back, by giving it my all.
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