The Audacity of Hops: The History of America's Craft Beer Revolution (48 page)

In Lewis's class, Koch ran into a guy who played keyboards and bass in a band that used to rent rehearsal space from Koch. Steve Wagner was born in Chicago, and his family decamped to Los Angeles when he was ten. He drank a lot of bad beer in college at UC-Santa Cruz and turned his English literature degree into fifteen years on the road as a professional musician. Like Koch, his beer epiphany came through an Anchor Steam, although he was also able to sample different craft beers on tour throughout the 1980s and early 1990s. One of his bandmates got him into homebrewing, and he gradually became obsessed with it, not only as a hobby but also as a possible avenue out of life on the road and toward more stability. The pair—who hardly knew each other through the rehearsal space because Wagner's band always paid the rent on
time—became better acquainted in Lewis's class; eventually, their talk of beer inched toward the commercial edge. After Wagner worked a stint as a brewer at a Pyramid operation near Portland, Oregon, the two decided to partner on a new venture.

But where? Wagner didn't want to move back to Los Angeles from his current home in Portland; Koch was not averse to leaving the megalopolis. Still, Southern California had not been that hospitable to craft beer. Even Wolfgang Puck, a pioneer in casual fine dining with local hotspots like Spago and Chinois, had seen his own toe-tip into the movement falter. Largely owing to Puck's imprimatur, Eureka, the 214-seat West Los Angeles brewpub the chef and his partners launched in the spring of 1990, had been one of the loudest salvos so far in elevating the role of craft beer in dining. Dishes like tubular ravioli stuffed with tangy cheese and potato puree and topped with a toasted hazelnut butter, as well as the meats of a skilled sausage-maker Puck lured from Munich to oversee Eureka's charcuterie kitchen, were paired with the fruits of a $6 million brewhouse imported from West Germany, including the brewpub's signature Eureka California Lager. It was all so hip and bold. “Most brewery restaurants have been created for beer drinkers,” Puck declared, not entirely inaccurately, “and very little attention is paid to the food.”

By May 1992, it was all gone; the brewpub shuttered under approximately one million dollars in debt. The restaurant portion, according to the partners, had done well, but the brewery part had never really caught on, weighing down the entire operation. A plan to reopen with Boston Beer running the brewery portion never quite took, and, by May 1993, Eureka's former manager, an old Puck friend named Mickey Kanolzer, who was now running the chef's pizza company, could tell the
Los Angeles Times,
“It just hurts so bad, but it was one of those things beyond my control. I've been going downhill ever since: I was making beer, now I'm making pizzas. Next thing will be hamburgers and hot dogs, and then what?” We could glean from this lament, then, that craft beer was at least in the middle tiers of fine dining, no matter the risks it might still entail.

Against this inhospitable Southern California backdrop, Koch and Wagner continued to talk about where they might one day put a brewery of their own. Then one idyllic weekend in March 1995, Koch went to Solana Beach in northern San Diego County with some old college buddies. He called Wagner. “Hey, how about the north part of San Diego County?” Wagner was OK with that; his brothers had gone to college in the area. Five weeks later, Koch drove his Mitsubishi Diamante the two hours from Los Angeles to Solana Beach to move in with a friend in a condo, where he began brewing test batches of what
became Arrogant Bastard Ale (a name, Koch claimed, that was always in the cosmos' ether, awaiting humanity's incantation) for his and Wagner's Stone Brewing Company. Wagner moved from Portland, Oregon, in October, and the pair rented a warehouse in San Marcos, about fifteen miles inland and about thirty-five miles north of San Diego. They set up shop on February 2, 1996, with Koch, by now sporting a goatee and hair falling over his forehead, focusing on the sales side and the cleaner-cut Wagner on the brewing end via a thirty-barrel system. They sold their first keg, a pale ale, to Pizza Port on July 26. Vince Marsaglia, who owned the chain with his sister Gina and who had introduced in-house brewing in 1992, dropped by personally to pick it up.

Steve Wagner, left, and Greg Koch, cofounders of Stone Brewing Co.
COURTESY OF STONE BREWING
co.

It was the frothiest time in the larger movement. The industry was growing annually by double-digit percentages, and the number of new entrants like Stone was swelling by the month. Koch and Wagner found themselves in the midst of fourteen- to sixteen-hour days, fighting the good entrepreneurial fight against what Tony Magee, several hundred miles up the California coast at Lagunitas in Petaluma, called “the tyranny of fast growth.” After ten months, Stone started bottling their beers in twenty-two-ounce bombers—Stone Pale Ale in June 1997, Stone IPA later that summer, and, finally, Arrogant Bastard Ale in November. That last one, a strong ale we might place among the earliest extreme beers, displayed the new brewery's swagger right on its logo: a
muscular gargoyle which appeared to brook no nonsense. As if to dispel any confusion that might be left by the name and the logo, the brewers put the story, written by Koch, on the label. It was rather smug:

This is an aggressive ale. You probably won't like it. It is quite doubtful that you have the taste or sophistication to be able to appreciate an ale of this quality and depth. We would suggest that you stick to safer and more familiar territory—maybe something with a multi-million dollar ad campaign aimed at convincing you it's made in a little brewery, or one that implies their tasteless fizzy yellow beverage will give you more sex appeal. Perhaps you think multi-million dollar ad campaigns make things taste better. Perhaps you're mouthing your words as you read this.

Not exactly the sort of pitch meant to draw consumers. Still, Arrogant Bastard Ale was a hit; it would prove one of the bestselling craft beers out of Southern California. But it wasn't enough—the company was losing money, around $30,000 a month. It was a precarious time in the industry, but, more prosaically, Stone faced the same challenge that had daunted start-up craft breweries going back to Jack McAuliffe's New Albion: distribution. Stone was losing five dollars a case or thereabouts doing distribution itself (driver, truck, and so forth). Koch started talking to big distributors in the area, most of them tied to one Big Beer operation or another. It was no and no from the Anheuser-Busch and Coors affiliates; the Miller affiliate, to Koch's surprise, said yes. “Maybe our company won't die!” he thought. Then the distributor called in November and said it did not want to start carrying Stone around the holidays—how about January 1998? Agreed. The distributor called back in December and noted that the Super Bowl was in San Diego that coming January; how about February instead? Agreed. Then in January, after the Denver Broncos had dispatched the Green Bay Packers in Super Bowl XXXII, the distributor called to say its employees would need a break; how about March? Fine. Then the distributor called Koch again: On second thought, it was too busy, period, and would not be able to carry any Stone beers. At least that's what the Miller distributor said. What Koch heard was, “You know what, we're going to let your company die.” He hung up, walked the fifteen feet to Wagner's office, and recounted the news. What now? Every other distributor had said no, and they had been losing money the whole time.

Then March came and with it spring. The clouds parted, sales picked up, the decision to start bottling the year before paid off, and Stone made its first
profit. Koch and Wagner, and their company of around a dozen people, had held on just long enough—and had not had to compromise to do so. Stone was one of the lucky ones.

T
he old railroad crossroads,
White River Junction, rests bucolically right on the Vermont-New Hampshire border. It was there, as we've seen, in January 1987, that Stephen Mason, Alan Davis, and Stephen Israel, with $750,000 from thirty-two investors and a Small Business Administration loan, rolled out the inaugural kegs from the Catamount Brewing Company, the first brewery in Vermont since Prohibition. It had been a long slog to opening day—the state incorporated the brewery on Halloween 1984—but the brewery was quickly both a critical and commercial success. Working out of an old meat warehouse on land that Catamount leased from the Central Vermont Railway, it produced thirty-five hundred barrels that first year with Mason, a former homebrewer and PE teacher, as brewmaster. Its Catamount Amber, a mild English-style pale ale, and Catamount Gold, a hoppier golden ale, inspired fellow New Englanders hip to the craft beer movement. So did Mason's dedication to the craftsmanship side; his willingness to have put in the years of training, including at a brewery in Hertfordshire, England, before the idea even got off the ground; and the hours he logged at the brewhouse that seemed to be in the middle of nowhere. Catamount Gold took a gold medal at the 1989 Great American Beer Festival. Catamount's line of beers grew to include a pale ale, an oatmeal stout, and seasonals; production climbed to twelve thousand barrels by 1993, and annual revenues tickled $3 million.

All the while, as the production increased and its quality impressed, Catamount's sales-and-marketing operation remained basically a one-man show. Davis would drive around to accounts to negotiate orders and payments in person, as distribution had never really grown beyond central New England. After a few years, he started to notice something: the retail shelves once populated only by Big Beer brands and a handful of stale imports were now peppered with other craft brands like Catamount. The marketplace was getting
crowded. Davis went to Mason and the brewery's board of directors, which included original investors, to persuade them to hire more salespeople and develop a better marketing strategy, like point-of-sale materials for these stores with more craft brands than ever before. The board said no. The brewery would, instead, focus on production of its award-winning beer.

Davis left the brewery in frustration, and Mason went looking for a way to expand Catamount's capacity. He found it fifteen miles down Interstate 91 in twenty-six thousand square feet on several acres of an industrial park, which also housed a glass-blowing factory that served as a major tourist attraction for Windsor, Vermont. Catamount's second brewery would be about eleven thousand square feet bigger than the original and would serve as the production point for the company's bottled beers, the White River Junction location moving to kegs only. Mason, who had already been buying top-notch equipment from JV Northwest throughout the early 1990s, decided to spend between $3 and $5 million acquiring and outfitting the Windsor brewery. It would be, in the words of a consultant Catamount hired, “a real Cadillac,” completely state-of-the-art. Mason announced the Windsor location in the summer of 1996, and started brewing there in 1997. Production jumped to nearly twenty-two thousand barrels the following year.

Within twenty-four months it was all over. Catamount closed its doors in April 2000, undone by debt it couldn't get out from underneath. There had not been a concomitant sales-and-marketing pitch to move all the new beer being brewed in both White River Junction and Windsor. Creditors closed in on both locations as the brewery fell tens of thousands of dollars behind on taxes and hundreds of thousands—perhaps millions—behind on loans, especially loans tied to the Windsor expansion. The Mass. Bay Brewing Company, the maker of Harpoon, which had recently reached its capacity limit at its South Boston brewery, bought Catamount's Windsor brewery from a creditor for $1 million in the summer of 2000. The original site in White River Junction was also auctioned; it was by then, as one observer noted, “in a state of minor disrepair.”

During the same years, 350 miles away, in the nation's fifth-largest city, a similar story of decline was writing itself, although the ending would be even grimmer. It had all started promisingly enough for the Red Bell Brewing Company in the fall of 1993. It looked then like James Bell, the ex-college football player and securities broker, and his partner, Jim Cancro, a civil engineer turned
brewer, had a smash hit on their young hands with Philadelphia's newest craft beer company.

Bell had amassed more than $200,000 from investors, including local television personalities and pro athletes, and used about $60,000 of that to start a cheeky marketing blanket of the city that included, as we've seen, the billboards that read,
PHILADELPHIA
is
PUTTING BLONDES BEHIND BARS,
and the slogan, “Put a blonde at your table.” Although the company started by brewing the approximately seven thousand barrels annually of Red Bell Blonde, a light-bodied golden ale modeled after the German beer Kölsch, and Red Bell Amber, a lager, under contract at the Lion Brewery in Wilkes-Barre 115 miles to the northwest, Philly locals embraced it. Mayor Ed Rendell and other big shots turned out for the company's official launch in January 1995 at the Egypt Nightclub on Delaware Avenue. Consumers snatched bottles from the shelves—happily so, oftentimes paying less for the hometown beer than what they would've had to pay for an import or another craft brand; the same went for bars, where pints of Red Bell retailed for three dollars or less. They were willing to pay a premium at Veterans Stadium, raucous home of the NFL's Eagles and baseball's Phillies, where a cup of Red Bell might go for $5.25. More than eighty thousand people turned out for a month-long Oktoberfest sponsored by the company. Sales grew by double-digit percentages in 1995 and 1996; the company sold about forty-six hundred barrels in 1995, and Bell estimated that for every twelve hundred barrels sold, his concern made $1 million.