The Audacity of Hops: The History of America's Craft Beer Revolution (29 page)

It was the multimillion-dollar bids that kept him awake. A goal had been from the company's founding to build a physical brewery and to stop relying on contract brewing through the Pittsburgh Brewing Company. Koch, who by now was running all the business operations except sales, had raised $3 million from industrial bonds and venture capital to purchase and to begin renovating the old Haffenreffer site in the inner-city Boston neighborhood of Jamaica Plain. He ordered $2.7 million in equipment, including thirty tanks, and began telling people he planned to open a 225,000-barrel operation in the first half of 1988—the largest craft brewery in America. Then the renovation bids started coming in. They were millions over what he had funding for—costs to get the brewery up and running could run to as much as $14 million. It was enough to sink the whole company if things didn't work out. Koch, ever the consultant, stepped back. Jeez, he thought, I'm almost forty, and I just wrote off more than I've made in my whole life. Riskier yet, the new brewery would not necessarily have made his beers any better. He opted to continue contract brewing, with the Jamaica Plain site used for storage, a small test brewery, and tours. Koch would continue to focus his considerable energies on marketing the beers.

Armed with a Harvard Law-trained mind and a masterful publicist in Sally Jackson of Boston, Koch was by now one of the more vocal proponents not only of his own brand but also of the little guys, so to speak, on the American brewing scene. He could be relentless when painting this David-versus-Goliath tableau. Take this testy segment on PBS's normally staid
MacNeil/Lehrer Newshour
in August 1986. Reporter Paul Solman in a voiceover introduced a blind taste test that Koch organized at a Boston restaurant. The tasters? Local bartenders. The contestants? Koch's signature lager and major imports like Heineken and Beck's.

Solman [voiceover]:
Koch charged that the imports have been adulterated for the American market with corn, sugar, and preservatives. As a result, he claimed, these beers couldn't meet the standards Germans
apply to their own domestic beers. While his competitors were understandably reluctant to play into his hands, they simply couldn't let Koch's charges go unchallenged. Philip Van Munching, importer of Heineken:

Van Munching:
His contention in his ads that Heineken is outlawed in Germany for using illegal adjuncts certainly sounds dramatic. Well, the truth is rather boring…. [T]he German law that Jim Koch cites is a trade restriction. They want … to protect their smaller breweries. Well, that's fine. But to call it a purity law and state somehow that our beer is impure, other beers are impure, is ludicrous.
*

Koch:
What I'm doing is obviously very risky. I'm directly attacking very powerful, entrenched interests—imported beers and imported brewers, beers that sell hundreds of millions of dollars worth of beer here. And I'm pointing the finger directly at them and saying they're a fraud.

Boston Lager won that day's taste test; Heineken placed fourth.

*
Philip Van Munching never really got over confronting Jim Koch. After he left the beer business when his family firm was bought out, Van Munching wrote a book about his experiences, with a chapter called, “Sam Adams: Brewer, Patriot, Pain in the Ass.”

P
ete Slosberg and Mark Bronder
and other early investors met often at the Jew and Gentile Deli in Mountain View in those six months after the Palo Alto Brewing Company went so eventfully bankrupt. They had bottled and shipped hundreds of cases of Pete's Wicked Ale—and, as with the last batch in late 1986, the cases had moved briskly off area retailers' shelves. The brown ale Slosberg had stumbled onto trying to mimic Samuel Smith's Nut Brown Ale was popular with consumers and respected by critics (it would take the silver in the ales category at the 1987 Great American Beer Festival). But it was a scarce commodity growing scarcer. They needed another place to brew it.

And it would not be their own. Like Jim Koch and Rhonda Kallman with the Boston Beer Company, Slosberg and Bronder had started out planning to eventually open a brewery, though that was never the main goal. The main goal was liquidity—making a handsome profit. Contract brewing saved them time spent locating a site and the subsequent construction costs, which could have run into the hundreds of thousands in the Bay Area. The realization comforted Slosberg as a homebrewer who wanted to go to the next level. “You don't have to own your own brewery to make great beer,” he thought. “I guess some people have to hug their very own vessels and pipes every day in order to feel good, but that wasn't a requirement for us.” It also afforded them the flexibility to keep their day jobs and run Pete's Brewing in their spare time.

In those six months after the Palo Alto rescue mission, Slosberg and Bronder sought out older regional breweries with excess capacity. They wanted to avoid what had happened with the start-up craft brewery and figured a more established name would give them less of a chance of a sudden emergency phone call. They returned to Bronder's roots to search, flying to Minneapolis and staying the night at his mom's. The next day, they drove five hundred miles in a rented Honda to visit different breweries, aware that a decision had to be made soon enough to keep the brand going two thousand miles away in the Bay Area. They were resolute about finding a brewer who took their product seriously and not simply as another brand. One candidate had a big office and a new brewery he named after his Irish heritage. Bronder and Slosberg didn't like that—too much about the brewer, not enough about the beer. They settled on the August Schell Brewing Company, a family-run concern in New Ulm, southwest of Minneapolis, dating from just before the Civil War. Pete's Brewing was back on.

“D
o you know who Milton is?”
the snooty voice on the other end of the line asked Steve Hindy.

He did know who Milton Glaser was. He was one of the best graphic designers alive, the hands behind the “I Love NY” logo and innumerable magazine covers. That was why Hindy wanted to talk to him. Could he?

“Absolutely not,” Glaser's receptionist said. “He doesn't talk to anyone who just walks in the door.”

It was that kind of year for Hindy and his partner, Tom Potter. They had been trying to start the Brooklyn Brewery since late 1986 and were running into obstacles at nearly every turn. Their plight was a common-enough thing in the craft beer movement but ironic given their locale: the global capital of capitalism. Instead, Gotham threw up problems, not least the real estate costs for the physical brewery itself. The pair decided to start out contract brewing, and, as fellow New Yorker Matthew Reich had done a few years before, they sought out F. X. Matt Brewing in Utica, which meant seeking out F. X. Matt II. Hindy cold-called him one day.

“What makes you think you can sell beer just because you make five gallons on your kitchen stove?” Matt asked him. “My family has been doing this for one hundred years and we are having a very hard time.”

Hindy asked Potter to try. His call was greeted with the same forceful no. Hindy gave it one more try. Matt started into another harangue about the difficulties that even established brands faced. His company was itself at a crossroads as one of the last regional breweries in the nation. It would lose more than $1 million in 1988 and was operating at less than half its potential capacity (which explained the room for contract brewing). Contrast that with the Miller plant eighty miles to the west in Fulton, New York: the Philip Morris division was spending $23 million to rejigger the plant so it could produce 1.5 million barrels annually of Miller's new hit, Genuine Draft. Big Beer's marketing budgets had convinced many consumers that brands like Genuine Draft were superior to Matt brands like Matt's Premium and Utica Club. Moreover, Matt could not compete with lower-priced brands like Old Milwaukee and Milwaukee's Best for one reason that was very simple (and, to newer brewers like Hindy and Potter, endearing): Matt couldn't and wouldn't make beer that cheaply.

It was an ominous situation. The regionals' market share was shrinking. You could see how this was supposed to end, so why would you jump in now? Hindy pressed on in the phone call. Matt asked him what he did for a living. Hindy explained his time as a foreign correspondent. There was a pause.

“Really?” Matt said. “I always wanted to be a journalist.”

They talked for the next fifteen minutes about the news business and literature—Matt had studied it at Princeton and wrote poetry as a hobby. He was even known to write apologetic verse to consumers in response to those rare complaints about his beer and to carry a copy of Henry James's novella
Daisy Miller,
about a romance in Europe, in his breast pocket during walks around the brewery. He invited Hindy and Potter to Utica to discuss contract brewing.

Hindy and Potter devised the recipe with a brewing consultant named William Moeller, who had recently taken early retirement from Christian Schmidt and Sons, the last brewery to close in Philadelphia. Moeller, whose grandfather had been a brewer in Brooklyn at the turn of the century, saw the venture as a refreshing change. “For thirty-five years,” he told Hindy and Potter, “I have listened to brewery owners tell me to make a beer cheaper and faster. This is the first time in my career that an owner has ever asked me to make the best damn beer I can make.” They leafed through Moeller's grandfather's notebooks, fiddling with different combinations over a two-month period in Moeller's Boyertown, Pennsylvania, basement, before settling on a recipe. Moeller would take it to Utica and, in a departure for Matt, would be on hand when the initial batches were made.

Hindy and Potter raised $300,000 from a variety of sources in 1986 and 1987: lawyers, bankers, friends, relatives, even low-paid journalists that Hindy had known in his soon-to-be former life (the two would both turn full-time by the end of the year, though Hindy returned briefly to
Newsday
during the first Gulf War in 1991). They hit their goal at an unimaginably lucky moment: right before the stock market crash on October 19, 1987. The market lost more than 20 percent of its value in that single day, taking investor confidence down with it.

Hindy and Potter also paid for services through stakes in the company—Bill Moeller got one, for instance. So did Milton Glaser. Hindy finally got through to the graphic-design legend, approaching the end run around the receptionist as a dogged reporter chasing a scoop. Glaser got the concept immediately, more than Hindy or Potter, really. Beer in Brooklyn. Brooklyn beer. Brooklyn. Brooklyn, New York. America's fourth-largest city. The Borough of Kings. Known worldwide. A brand in itself. Hindy and Potter had pitched the iconic imagery of the borough, including the Brooklyn Bridge and even the
Brooklyn Eagle,
a newspaper once edited by Walt Whitman. Instead, Glaser went with a simple yet elegant
B
—no cheesy graphic, just the perception of Brooklyn, what it meant to people. His clients were underwhelmed when he unveiled it. “Don't say a word,” Glaser said. “Take this home and show it to your wives. Put it on the counter in your kitchen and live with it for a while.”

The first cases of Brooklyn Lager, with Glaser's design, were delivered to the company's first five accounts on March 30, 1988. By June there were 150 accounts, and a fanfare-filled delivery of the first bottles to Manhattan via water taxi was planned for August. Hindy and Potter had rented space in an old warehouse formerly used by the Hittleman Brewery, one of the dozens of breweries that had once dotted Brooklyn. It was on Meserole Street, which used to be known as Brooklyn's Brewers Row—and would be again.

The Brooklyn Brewery debuted just as the brewery portion of Matthew Reich's beautiful New Amsterdam brewpub on Manhattan's West Side closed. Reich, not yet forty, was the acknowledged pioneer of contract brewing— Hindy and Potter sang his praises, along with Jim Koch (even F. X. Matt, a hard man to impress, would tip his hat to the newcomer). The expense of a physical brewery in a large metropolitan area, however, proved too high. Construction costs ran hundreds of thousands of dollars over budget; and then operating a restaurant alongside the 110-barrel brewery took a toll, even as New Amsterdam reached fifteen thousand barrels in annual sales and distribution in twenty-two states (far better than what Reich reached for in his original business plan). It was a New York minute rendered ironic. “How long do you think it takes to unload a truckload of malted barley in New York City?” Reich asked Hindy after the two had become friends. “It takes a lot longer than it does anywhere else.” Plus, the venture-capital firm backing him scored big on another investment (a railroad) and had no desire to extend more credit for his concern. Reich sold the restaurant portion of the old brewpub in 1989, and though New Amsterdam continued as a brand contract brewed once again out of F. X. Matt, its outer-borough rival would soon eclipse it as New York City's most famous beer.
*
That rival's ascension was not only notable for its location, although plunking a craft beer flag atop the summit of American media and finance didn't hurt the movement. More important, the Brooklyn Brewery would place itself at the vanguard of the wider public's understanding of craft beer. And not a moment too soon, it would turn out. The number of craft breweries and brewpubs was about to balloon, upending the entire industry in the process. Things were about to get very interesting and very messy.