Business is Hard, and No Brewery Stays Cool Forever
Following my post about Sapporo’s acquisition of Stone a couple weeks ago, people both castigated me for failing to condemn the latter strongly enough (“Jeff … has not only drank the stone beer, he’s also drunk on their koolaid”), and for being too mean to Stone (“Wow....vindictive much? Put down the cudgel and maybe rethink your petty attitude.”) Who says people don’t feel strongly about beer anymore?!
It got me thinking. Stone outlasted most US businesses—by a long shot. A majority of US companies fail in their first decade (51%), and only 12% make it to their 26th year, as Stone did before the sale. I’m sure every industry has its own rhythm, and breweries seem to beat the odds, at least in the earlier years, more often than other companies. But one thing no brewery can do is stay cool for 26 years. That has been the case since the dawn of the craft era, even before the frenzy surrounding novelty. Indeed, it appears to be true of breweries going back centuries. And because of that, I’d consider Stone’s run a good one, and their sale even better.
The Lifecycle of a Brewery
Everyone loves a new brewery. Plop a new one down the street today, and I’m the first in line tomorrow. Back in 2009, then-brewmaster Karl Ockert of then-existing BridgePort Brewery (RIP) introduced me to a phrase I’ve been using religiously ever since that describes this impulse: the novelty curve.
“Every [brewery] that comes along goes through a novelty curve. Ninkasi is the current big one on the streets. They’re going through a novelty phase where people are out there trying and sampling. All breweries go through that. If I left BridgePort now and went out and started a new brewery, I could do the same thing. I could take tap handles right and left and get a lot of sampling. But it’s that “stayability”—being able to develop loyalty. That’s the tough part.”
At the time we were speaking, BridgePort was 25 years old, and Ninkasi was two. BridgePort was struggling to find its identity more than a decade after they’d released an IPA that had once defined the brwewery. Meanwhile, Ninkasi is 15 years old now, and they’re suffering from being on the other side of that whole novelty curve thing. Their IPA, Total Domination, was giving Karl fits back then, and now it’s years past being the IPA people talk about.
Breweries have different business models, and they age at different rates. Roughly speaking, however, successful breweries go through something like this:
Honeymoon period. The period when people come with open minds to see what’s shaking.
Cool phase [a day and many comments later, perhaps “buzz phase” would be a better name here]. It takes some time for a brewery to get buzz, but following that honeymoon phase, successful breweries often enjoy the best periods of their lives. Whether they’re a niche brewery doing open-fermentation lagers, a buzz brewery doing IPAs and pastry stouts, or a slick place with great branding and a cool hang, for a period of time, they seem like shiny new paragons of whatever it is people associate with them.
Established phase. Once a brewery has figured things out, good ones enjoy an established phase where people think of them as being reliably awesome. They maybe don’t have the most buzz anymore, but they have loyalty and respect. Growth seems automatic and effortless.
Awkward phase. I don’t know a single elder brewery that hasn’t gone through an awkward phase, though they can look very different. Some breweries may suffer declining quality or a lack of the kind of invention that marked earlier stages. They may get awkward in the way dads do—using slang (or marketing pushes) that are cringey. Maybe they don’t even shift what they’re doing much, but their relevance slides and they don’t seem to have an answer. (This describes Stone.) It happens to super cool little breweries and big breweries alike. No brewery can age without hitting a wall eventually.
Death, sale, or revival. Breweries can weather the awkward phase, but it’s a dangerous point. Some breweries illustrate how to do this well: Sierra Nevada and New Belgium jump out. Others, like Ommegang and—well, BridgePort is an obvious example—haven’t or didn’t figure it out.
There’s no set timeline for these phases. Slow-burn breweries may not get to the cool phase for a while. Some breweries figure out ways to extend their establishment phase. Twelve years in, Breakside is still a great established brewery that few would say has lost a step. Deschutes had a miraculous run, introducing new products just at the moment it seemed a downturn was coming. They got close to thirty years before that whole parrot thing announced that the awkward had definitely arrived.
It doesn’t stop, either. Old European breweries constantly cycle through different phases. They even may return to the cool phase—Cantillon was barely hanging on when beer nerds discovered them in the mid-aughts and turned them into an international darling, to cite one example. Leadership, quality, trends, and reinvention all play a role.
Considering Stone
Stone had an excellent run. It was one of a handful of second-gen breweries that redefined craft beer, transforming the industry into something brash and American. It debuted in the darkest moment of this era, when the industry had been seduced by big money and had lost the “good beer” plot. Had breweries like Stone not come along, the nascent industry might have run out of gas before it hit critical mass. Except in select pockets, few people drank craft beer or cared about it. Craft beer could easily have gone the way of cider.
Stone also helped convert Americans to hops (though they had a lot more company than they once admitted). It was, ironically, that strong association to hops that ultimately led to the awkward phase—though Stone also had quite a run as an established, successful brewery. When the haze displaced bitterness, Stone had a hard time adapting its brand.
Growth in the period just before the awkward phase hit—and a pandemic in the middle of it—left the brewery almost half a billion in debt. For that reason, from the outside the deal with Sapporo looks like an excellent one. Stone walked away from the debt and took $165 million with them. I don’t know what the ownership structure looks like, but that’s got to be some decent walking-around money.
It was also the right thing to do. Because founder Greg Koch was so outspoken and provocative, he became the focus of a lot of schadenfreude at the end. I saw many people on social media claim he was a liar and hypocrite and always wanted to sell out. That seems preposterous to me. When you own a company, you have a ton of responsibilities, and for sane people, one’s own ego is way down the list. No one was more aware of the times Greg sneered at big beer and sell-outs than Greg, and he had to see the schadenfreude coming months ago. Yet selling the company to Sapporo was the right move for the workers, the brand, and the legacy of the brewery, even if it did mean some carping on social media.
For what it’s worth, Greg is a surprising guy. I’d write about him from time to time, often leveling at least latent (and sometimes overt) criticism his way. He would email and we’d have sometimes long exchanges. That Greg was reflective, measured, and open-minded. Far from the abrasive public figure, he was generous and sincere. I never met Greg in person, but I always figured he was more the person I saw in emails than the one who became, for better and worse, the face of Stone. In the sale to Sapporo I think we see Email Greg, and it’s an important coda to his tenure.
I’ve been writing about beer for 25 years. In that time I’ve seen scores of brewery debuts, scores of breweries enjoy their “cool” phases. Old writers have many blind spots and faults, but they at least have the gift of perspective. No brewery stays cool forever. Business is really hard, and those who manage to survive into their third or fourth decade do so because they’ve managed to make good choices and avoid too many bad ones. Breweries like Stone deserve to be celebrated for thriving as long as they did. And they did more than survive and sell a lot of beer. Stone leaves an important legacy. If merely surviving is rare, that is almost impossible. So kudos, Stone: you had a good run and you made a difference.