The Audacity of Hops: The History of America's Craft Beer Revolution (44 page)

San Francisco's famous Liberty Ale was first brewed on the 18th of April, 1975, to celebrate the 200th anniversary of Paul Revere's historic ride. It is virtually handmade by the brewers of Anchor Steam Beer in one of the smallest and most traditional breweries in the world. Liberty Ale is made with the finest barley malt; fresh, whole hops; top-fermenting yeast; pure water; and the natural methods that reflect our exceptional respect for the ancient art of brewing. It is “dry hopped,” a classic ale tradition, and slowly completes its fermentation in sealed vats in our cellars. This unique process creates Liberty Ale's distinctive bouquet and uncommonly delicate, entirely natural carbonation.

Here was Magee's label for the Oktoberfest, Lagunitas's first seasonal:

The original derivation of the word “Oktoberfest” was actually the phrase, “Ach! Tuber Fest!” This antiquious expression refers back to the Dark Age reign of Sir Loin of Boef, during which there existed a brisk European trade in captured Irish slaves. The prevailing Germanic Lords imported Irishmen to work in their central European potato plantations. These Irish slaves were notorious for their endurance in drinking festivals under the new moon and during the potato harvest. They would brew up huge batches of a unique fermented alcoholic Potato Beer. The Irishmen eventually introduced their German masters to this unusual beer-like beverage. The harvest parties centered around this brew, hence the term “Tuber-fest.” The slaves were finally freed during the European potato blights of 1252 and 1257. Years later malted barley was substituted for the spuds of old and, well, the rest is history. Honest….

Literally every phrase and sentence on Magee's label was factually incorrect (and “antiquious” wasn't even a word); nevertheless the brewery got calls from credulous consumers asking if this was the true story of Oktoberfest. Magee couldn't help himself. He liked the idea of a backstory. He was familiar with the J. Peterman clothing catalogues (before they were immortalized on the television show
Seinfeld),
and he liked the idea of standing athwart the movement toward talking about beer as if one were discussing wine. He did more creative writing for other Lagunitas brands, and soon the brewery was pioneering not only an IPA as its flagship but also some of the zanier names in the already rapidly expanding craft beer lexicon: Dogtown, Bug Town, Hairy Eyeball Ale, Equinox Ale, the Lagunator. The last, released over the holidays, spoofed the recently released Arnold Schwarzenegger vehicle
The Terminator,
complete with a dog in sunglasses and the tag, “I'll Be Bock.” It didn't matter to the brewery that the beer was a brown ale and a bock is a type of lager—it worked. It helped the seasonal sell well in an ever-more-crowded marketplace.
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These beers were rolling out of a new brewery; a moody septic tank at the original location had forced Magee's hand. “In putrid tones,” he remembered, “it told me we had to leave, and quickly. The septic tank also called the neighbors. It called the busy street in front of the brewery, the playground behind
us, and then it called the county.” So he rented space in an old industrial garage about twenty-five miles north in Petaluma, a stone's throw from Highway 101. The move represented an expansion and a step up. He was able to replace the increasingly rickety seven-barrel electric brewhouse once meant for Russia with a newer one fabricated by the same John Cross who had imported Grundy tanks from the United Kingdom, though the fight against the tyranny of fast growth remained.

The label for Lagunitas Sucks Holiday Ale Brown Shugga' Substitute, what might loosely be called an American strong ale.
COURTESY OF LAGUNITAS BREWING COMPANY

Here was how it was working financially for Magee and other start-up craft breweries in this age of multimillion-dollar IPOs and Big Beer takeovers. Lagunitas was still self-distributing all-draft when it moved to Petaluma. Such a brewery might sell a keg to a distributor for sixty-five dollars. Because there were two kegs to one barrel, a fourteen-barrel system, probably the bare minimum to seriously compete and grow, could generate around $1,820 in sales
wholesale. The same fourteen-barrel system, however, might generate around $2,960 wholesale via bottles. But bottling beer introduced an entire new set of costs, including the glassware, the caps, and especially the bottling line, which, as we've seen, could run into thousands of dollars even secondhand. Plus, this was the era of price wars between craft brewers, in particular Boston Beer and Pete's Brewing, as they amped up for and went through their IPOs. So it was not a given that a six-pack of freshly minted bottles would sell at, say, $5.99 when a competitor's in the same display was selling for $4.99. For his part, Magee decided Lagunitas had to price itself at the higher end to send a message that it intended to play with the bigger brands.

Add to this worry over pricing and expansion the actual start-up costs, which never seemed to go away, even after years of growth. Debts had to be paid down, and investors had to be paid up. Even a new location, a new approach to labeling, a new set of styles that might revolutionize the industry, a hospitable local environment like San Francisco or New York that seemed to manufacture new consumers by the day—none of it was enough for a financial respite. Meanwhile, every time a start-up turned around, it was liable to find a fresh competitor, often one with more capital. The only saving grace for startup craft brewers at this point seemed the promise of the industrywide double-digit growth continuing into the late 1990s. Thank God for that.

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The marketing material for the Lagunator, a dark brown ale, included the explanation, “We brewed this Special Ale to celebrate the darkness and depression that mar the holiday landscape” That was not included on the packaging.

T
he crowd of craft brewers
and brewpub owners booed David Geary. He didn't care—he felt what he had to say needed saying. It was that Association of Brewers's conference in May 1996 in Boston, a three-hour drive from his craft brewery in Portland, Maine, the oldest in New England; there were at least three thousand attendees, many of whom had already been fretting openly about the impacts of the wave of IPOs on the industry and the incursion of Anheuser-Busch into Redhook, including the plans for the one-hundred-thousand-square-foot brewery in Portsmouth, New Hampshire, halfway between Boston and Portland. Nerves were frayed, minds were troubled; the industrywide growth was all well and good, but there was a feeling that something
had to give. How much craft beer could the American consumer stomach? No one really wanted to hear what Geary ended up saying.

First, he praised Goliath. Budweiser isn't bad beer, he told the crowd; it's great beer.

Boos.

“Listen to me,” Geary went on, “you would kill to have the consistent quality that they have. You may not like the style, but it's not bad beer.”

More boos.

Then Geary grabbed some salt. He dumped it on a wound that had been festering for ten years.

We have to stop saying that Jim Koch was an importer, Geary said, an interloper. He's not.

The dig had followed Koch since the launch of Boston Beer in 1985, when it was brewed by the Pittsburgh Brewing Company. After more than a decade of explosive growth, steady revenues, and an epic IPO, more than 99 percent of Boston Beer's Samuel Adams line was still brewed outside of Boston, the brewery in the city's Jamaica Plain neighborhood little more than window dressing for tours and tastings and further branding (though it was also used for small batches as well as research and development). Boston Beer now contracted not only with Pittsburgh Brewing but with Stroh's in Lehigh Valley, Pennsylvania; Blitz-Weinhard in Portland, Oregon; and a Gambrinus-owned brewery in Germany for the European marketplace; and the bocks brewed in Jamaica Plain might age in vats at a winery in Northern California. The company traded 961,000 barrels in 1995, including in Europe, for net sales of $151.3 million, many times its nearest competitors.

All the while, there was Koch in the papers, on the radio, and sometimes even on the TV, talking in folksy tones about history's Samuel Adams and his roots in Boston, and the city's own roots in brewing. (The stuff about Samuel Adams grated on some nerves, too, as Adams was not himself a brewer but the son of the owner of a malting house, a business he quickly ran into the ground after his father's death.) Koch, by ceaselessly recounting these details, as well as his own family background in brewing, crafted what Geary called, not without admiration, “a mythology.” It worked. The media repeated it; consumers took to it; it ballasted a brand that went in a few years from experimental bottles on ice in Koch's briefcase and Rhonda Kallman's oversized Lancôme bag to the biggest small-time beer ever. How could you argue with so much Americana, from the patriot on the label to the imagined brewers in their overalls boiling amber waves of grain and one man's devotion to honoring his familial calling at the expense of a cushy job in a big skyscraper?

“So Jim Koch,” Geary asked the Boston conference rhetorically, “is not a craft brewer? The man who taught us all how to sell beer? Ridiculous!”

More boos—in Koch's backyard, no less.

The contract brewing particularly annoyed those brewers who had sunk thousands, maybe even millions, into the start-up costs of a physical brewery: the rent on space, the kettles and tuns, the bottling line, the cooling systems, the labs, the insurance for it all. These were costs that contract brewers like Koch largely escaped, freeing them to pour any revenues into more marketing to spur more sales to spur the need for more lower-cost contract brewing … and on and on, capacity unencumbered by physical limits. It bred resentment. “Contract brewing is the cocaine of the beer business,” Paul Shipman, a cofounder of Redhook, which Koch mocked in the media after the Anheuser-Busch deal, said around the time of the Boston conference. “People who do it deny that they do it; then, when confronted with it, they say they've got it under control.” Other brewers lobbed a simpler insult. “He's just an extremely aggressive salesman,” sniffed Bert Grant, the founder of the nation's first brewpub. It was meant as a particularly stinging rebuke in an industry that traditionally prided itself on not advertising.

But it wasn't just those who had risked a physical brewery. Pete Slosberg and Mark Bronder, cofounders of the other big-time contract brewery, Pete's Brewing, did not get on with Koch personally or his company professionally. And Koch did not help himself with some of his early tactics. Not only did he understandably target Big Beer and imports in his bid to popularize Samuel Adams, but he also went after the little guys, too. Boston Beer backed the late 1994 launch of the Oregon Ale and Beer Company, ostensibly a start-up contract brewer in the Northwest but in actuality a wholly controlled subsidiary of Boston Beer (Koch had, for one, helped devise the new company's recipes). Some saw it as a direct challenge to Pete's Brewing on the West Coast and as another inroad against the smaller physical breweries—and these smaller breweries said so. “Local Microbrewers Incensed at Imposter,” read one ad taken out by the Oregon Brewers Guild and the Washington Small Brewers Association. Explained Michael Sherwood, then the guild's director: “An out-of-state brewer came into Oregon, didn't build a brewery here, appropriated the name, and marketed it around the country to trade on the name that instate brewers worked hard to make, and then put on the label ‘Microbrewed in Oregon'—but it was made at one of the large industrial breweries in the state.”

A similar complaint dogged Samuel Adams Cranberry Lambic, which Boston Beer introduced in 1990. Lambics are generally sour beers developed in an area of Belgium southwest of Brussels; to connoisseurs, including brewers,
a beer should call itself a “lambic” on the label only if it originated from that area, much like real Champagne must come from a particular region of France. Koch did it anyway, calling it an “interpretation” of the Belgian style.