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Stone’s Indiegogo Campaign is Cynical and Exploitative

One of the things that I find frustrating in writing about beer is the insistence by people that brewing is not first and foremost a business. I have written two histories now and I can claim to understand from its outset the development of brewing in North America. At no point before 2008 was anyone under the misapprehension that brewing was not a business to be embarked on as a money making venture.

I suspect that the reason for this is that craft brewing in North America is a rebellion against globalization. We don’t have a whole lot of production capacity on this continent anymore for manufacture and it has become a service economy. People like brewing because it provides the ability to create something special and unique. Each brewer has a different fist and while there is a certain amount of sameness between products and always will be, you can make the case that compared to something like Budweiser or Heineken, craft beer is art. It’s small batch analog production.

But, and this is really really important, it is and has always been and will always be a business first.

The modern development of craft beer mirrors almost exactly the development of brewing in the 19th century in North America. Small companies starting up to service local areas. Craft beer has filled in the vacuum left behind by mergers and acquisitions. It has taken advantage of market opportunities presented by Global brands that are too large to care about the vacuum they created. The thought process for the global brands is not “we could open a brewery in Brooklyn.” The thought process is “let’s take over the entire Peruvian beer market.”

The problem is that the concept of craft beer as art comes with baggage because of the way art is perceived in North America; that the important thing about craft beer is that it is a community or that it is a culture or that it should be supported by viewers like you in the manner of a PBS pledge drive. The difficulty is that it is already supported by you. The business model is as follows: You like the beer, you buy more of that beer.

There is no additional business model. That has been the business model since Alewives put out boards and since bread was soaked in pots in Egypt. If the product is good, the product sells. If the brewery sells enough beer, the brewery expands. (There is a corollary here that suggests that upon sufficient expansion the brewery will become beholden to its shareholders and start cutting corners to increase profit. Happens damned near every time. You see it in action in the current market daily.)

To switch gears for a moment, let me tell you how much I hate Kickstarter and Indiegogo.

Kickstarter and Indiegogo exist for the purpose of crowdsourcing funds to start a project. Famously, one wag has recently used it to acquire funds to make some potato salad. Some aspiring brewers have been attempting to make use of the site to fund their start-up projects.

Let’s say that you’ve got a hankering to open a brewery and you don’t have enough money to do it on your own. You don’t have your own capital and you can’t get a loan from the bank. You have decided that you must start your brewery now and that the best way to do that is micro-donations. Personally, I feel that the decision to do that marks you as impatient, narcissistic and entitled. I will judge you negatively for doing it. It is not a business plan, by the way. If you don’t get to the goal, you don’t get the money and your alternative is what, “oh, I didn’t want to do it anyway?”

The thing about brewing is that it if you enter into it on a whim, you’re more or less screwed before you start. If you want to own your own brewery and be successful, you’re doing it for life. You want to make enough to retire. Kickstarter and Indiegogo reek like hell of the trend bandwagon to me. Having said that, there are cases where it might be the only way forward and if you truly believe you want to brew as a career and it’s the only path to that, it’s probably excusable. You will almost certainly deal with not being taken seriously for a lengthy period of time, but you can overcome that.

When a really large brewery creates a Kickstarter it’s absolutely inexcusable. Stone’s current Indiegogo campaign is shockingly exploitative and cynical. Worse than that, it is actively evil.

Let me explain: Stone Brewing is, according to their website, one of the 5000 fastest growing private companies for the last seven years in a row. They are averaging 43% year to year growth over the last 15 years. They are the tenth largest brewery in the United States with a 2013 production of 213, 277 barrels. Greg Koch was named Ernst & Young’s Entrepreneur of the Year in 2011. He is a millionaire many times over. Stone’s annual revenue in 2012 was just over a hundred million dollars. The figure that I have seen for last year is $137 million although I cannot substantiate that number.

Stone has been rumoured for years to start up a brewery in Berlin. I first heard the rumour about three years ago. It is not a new plan. They have been thinking about it for quite some time. They have had years to acquire the funding for this project through traditional sources. It is my belief that they have the money on hand or that they could easily acquire it. Their Indiegogo is asking for you to help pay for their facility in Berlin because it’s “a fun way to do it.”

This is a project that will make Stone a brewing multinational. It will be a Global business. I cannot tell you how advantageous from a production standpoint having an established craft brewery located in the heart of Europe would be to Stone, but I can state with some degree of confidence that it is a license to print money. It might eventually double their production globally. I should imagine that properly managed the Stone Berlin plant will recoup investment in fairly short order. It is slated to cost something like $25 million dollars. The Indiegogo campaign is asking for a paltry million dollars.

Stone does not need to crowd source a million dollars. They have already funded the Berlin plant and one in the Eastern United States. They just want your money so they can do it faster. In order to get your money they are saying “Stone Brewing Co. was founded with the mission of joining the fight to return the art of brewing to the noble stature it enjoyed before industrialization and subsequent commoditization diminished its luster.”

Firstly, Stone is attempting to become a global industrial company and secondly beer has always been a commodity. If you don’t think it is a commodity, why is it that you think we pay for it? They are fundamentally misrepresenting themselves and I begin to wonder whether they even see the hypocrisy in their position. The Indiegogo campaign is a perversion in this case of the basic business model which I mentioned earlier. They want you to pay money now so that you can have beer later so that they can build a plant that will make them tens of millions of dollars over the next decade. They are essentially panhandling as part of their marketing strategy. Say what you will about MolsonCoors or Anheuser-Busch or SAB Miller, but they don’t expect you to pay them to advertise to you.

Stone’s Indiegogo campaign is actively evil because they are exploiting secondary ideas around the brewery business model like art and community in order to get you to pay them money to do something they are going to do anyway. My suggestion to you is that there are 3000 other breweries in the United States and maybe 400 in Canada and many of them will gladly accept your money without exploiting your sense of belonging to a culture.

25 Thoughts on “Stone’s Indiegogo Campaign is Cynical and Exploitative

  1. This is marketing. He’s generating buzz, creating interest and reducing his financial risk along the way. It might be shady, but it’s still effective.

    • admin on July 24, 2014 at 12:59 pm said:

      Correct! And in asking you to pay him money in the marketing he is actively worse than the global multinational companies he claims to despise.

  2. Greg on July 24, 2014 at 1:03 pm said:

    Interesting article. You are totally right, it seems like basically panhandling by a company that doesn’t need it.

    That said I am curious if you feel the same way about things like the Beau’s greener futures project or the Kensington Community Supported Beer Project. They are basically the same thing as a kickstarter campaign, just run in house.

    • admin on July 24, 2014 at 1:18 pm said:

      It’s an interesting question because I do not pretend to know exactly where the line is. I think Beau’s would have made the ecological changes greener futures provided for anyway, but having less environmental impact sooner is probably better. The rewards weren’t really scalable, either, so I’m sort of fine with that or at least I was at the time. KBC, I feel like they are a contract brew start-up trying to not be a contract brewer and I can really respect that ethos. The difference is, I think, that neither of those campaigns were on Indiegogo, that neither of them supported the basic premise of trying to make more money faster. Stone is hiding behind a posture that they have outgrown in order to expand and make more money. It’s sickening. They’re awful.

  3. Greg on July 24, 2014 at 1:22 pm said:

    I think the not doing it to make more money faster thing is a very valid point. That said I find it interesting that Beaus launched Greener Futures 3 years ago, and as far as I know they still haven’t installed any solar panels.

  4. The beer’s fucking tasty though.

  5. I’m not entirely sure I agree here.Criticism of crowdfunding always comes down to critic’s views on the platform, and for me personally, I think (with the recent adjustments) there’s nothing particularly evil about this.

    To me, crowd funding it at its purest when its a pre-sale or a direct transaction. Recently Zach Braff raised a lot of criticism for a campaign where he fundraised a movie, but didn’t make a copy of that movie one of the perks. To me, an investor in that film has every right to a copy of that film, as long as their investment covers the cost of the physical media. Braff did this so that investors still had to PAY to see the film, meaning he profits off of them TWICE.

    Stone (again, with yesterday’s revisions) are just offering up limited edition beers to fans that would be buying them anyways. They are using the profits from those beers (that they otherwise would just be making at a later date) to create liquid capital to help them build something quicker. This isn’t insidious. Most of the people supporting the campaign would be buying these beers anyways, and with the additional perks of getting 50% off at Stone stores on the day you pick up your perk, they are giving people much more than most crowd funding campaigns.

    As to the point of them becoming a multi-national corporation, I will not speak to that, as again, thats going to come down to each person’s views on what constitutes ‘craft.’ Personally, I have seen the good that Stone has and continuously does for the Southern California beer scene and for that I will happily pre-buy a 1.5L bottle of a one of a kind collab that I would want anyways.

    • admin on July 24, 2014 at 1:56 pm said:

      Dissent is, naturally, welcome.

      I think the galling part is how completely unnecessary it is. Koch could throw a million at it himself without any difficulty. Which means it’s marketing that they’re asking people to buy. It’s terrible. People are paying to be marketed to. That’s an exploitation of the culture they claim to love and it’s actively evil.

      Additionally, “the good that they do for the southern california beer scene” is predominantly for their own benefit. It is a business first. They are not giving away the beer. Let’s not credit them with being selfless giants of Randian industry.

      • I think our disagreement is on how its being framed – to you its buying marketing. To me its buying a magnum of a beer that I would likely buy anyways. And if it helps the brewery get some attention, thats great.

        And I never said that Stone doesn’t have a stake in what they do for the beer community down here. Of course they benefit from it, but they are raising up smaller breweries along with them, and I support that.

        You bring up the fact that Stone is a business first and foremost a number of times here, and I would argue (as someone currently working in business affairs for a film/tv co) that its a better idea to use a million dollars from actual sales revenue (the sale of vouchers for beer via indiegogo) rather than invest your own personal capital.

        I think the irony of all of this is that, much like Zach Braff’s kickstarter, the criticism of this campaign just feeds the marketing machine even more, meaning that it will get even more attention and further reach.

        • admin on July 24, 2014 at 2:25 pm said:

          I’m sure they’re laughing all the way to the bank regardless of what I or anyone else thinks. This is what happens when a millionaire convinces you to give him 50 dollars for 6 dollars worth of beer and 44 dollars worth of feelgoodery.

          • Its $30 (the reduced costs yesterday). And I’m not really sure making an argument based on beer mark-up is really in line with the issue here. I regularly pay 25-30 bucks for special Bruery releases. Its a business.

  6. Greg on July 24, 2014 at 1:57 pm said:

    The thing about people not treating beer like a business frustrates me to no end. I don’t know how many times I have seen a post on facebook or the beer advocate forums where some brewer will get a cease and desist order from some other brewer because they are using a name of a beer that is trademarked. Just about every single time it seems that the brewer that receives the letter tries to spin it about that the other brewer is not being cool, or how there should be some kind of camaraderie and they shouldn’t do this kind of thing to each other. When really you should just realize it is a business not high school, and put on your big boy/girl brewer pants, shut up and move on.

  7. Pingback: The Craft Beer "Revolution" Will Be Crowdfunded? | Craft Beer and Brewing Magazine

  8. It’s worse than every PBS pledge break I ever suffered through in the ’80s while I was waiting for the next episode of Doctor Who to come on.

    Only they needed the money.

    Seriously with a straight, bearded face he’s really asking people to give money to a rich dude so he can make more beer and sell it to them?

    Talk about delusions of grandeur.

    What’s in it for me?

    Oh! My contribution will allow him to go into the stratosphere stylistically? Which means what? They’ll brew their 900th variation of an IPA or DIPA? Their 600th take on a porter/strong ale/imperial stout/etc.

    Yeah no. I’ll drink the Stone beer before I’ll drink the Stone Kool-Aid.

  9. I’ve already written on this matter, and the more I think about it, the more I see the use of crowdfunding to finance business projects (and not only Stone’s) as something exploitative and, to some extent, immoral. It’s nothing but asking for charity for a private enterprise whose only purpose is to benefit its owners.

    There are other, fairer, ways Stone could have done this, an “Equity for Punks”-like scheme comes to mind. Instead, they chose to pass the hat around before even playing the first cord. Fortunately for them, however, fools with money aren’t exactly in short supply.

  10. I think crowdsourcing as a means of financing is an excellent way to change the current inequity in the world of finance…good ideas get financing instead of connected people. It brings a tremendous amount of power out of the hands of the few (banks and venture capitalists) and into the hands of the many (anybody with $50 and an interest in the project). It typically is done by smaller companies, but I don’t see this method of financing any more ‘evil’ (or good, for that matter) than other options like issuing shares, taking on loans, etc. It just makes the financing more accessible to people who aren’t lucky enough to be born rich.

    As I read the piece I get the sense that the general principle here is: Stone shouldn’t get to do this because they are successful. I don’t understand that train of logic, and it reminds me a lot of calling a band a sellout because they got popular. But there is a legitimate side issue here…at what size does a craft brewer stop being small enough to be considered ‘craft’? In the US I believe they are now stating that max as 7 million barrels of beer, which to me doesn’t pass the sniff test. Is 200,000 barrels too big to be considered craft? I don’t know…

    There are two valid arguments that could be made against Stone, that didn’t really seem to come through the article

    1) The value offered does not match the contribution requested – I think this is very valid
    2) If larger companies like Stone crowdsource, they will dry up the well for smaller breweries more in need of funding – this is possible, but it could also turn on a lot of would be brewery investors to the market

    Lastly, as an update for the Greener Futures Project, the first round is now almost fully funded, our application for panels looks like it has been finally approved and we hope to start work on this shortly…I’m also a bit amazed at how long all this has taken, but happy that progress is being made slowly.

    Cheers,

    Steve Beauchesne

    • admin on July 28, 2014 at 9:34 am said:

      I never accused Stone of being sellouts. They didn’t sell out. They’re so much worse than sellouts.

      Stone had a revenue of $137 million last year. To put that in perspective for calling a band a sellout, which I understand is your approach because your background is musical, Madonna made $34.3 million dollars last year. What would you think of Madonna if she said to her fans next year, “The European leg of the Tour is already funded, and we know that people are going to buy tickets to it, but we’d like you to kick in some money to our Indiegogo so that we can have X on the tour. Kick in the money now.” Now if, Madonna believed in having X, which in this case is a troop of scantily clad male dancers or a bubble rave or whatever it is that madge is into now, she could obviously easily pay for it. She has $34.3 million dollars just from 2013. She just doesn’t want to pay for it and it drums up publicity to ask. I mean, sure she’s one of the top ten touring acts in the world and she can achieve the goal independently, but she’s exploiting fans she’s won over a long career and whose lives she’s influenced with her music. No big whoop, right? It’s not like she did an ad for Coke.

      Doing an ad for Coke is “selling out.” Exploiting your fans to your own benefit is the behaviour of a con man, especially when you’ve spent two decades attempting to convince people that what you’re doing is less business than cultural revolution or great leap forward. The difficulty is that the German newspapers are calling Greg Koch “Beer Jesus.” The craft beer evangelism is hitting the fan and this was the first attempt to pass the plate. It is symptomatic of the much larger problem of religious thought applied to an addictive substance.

      So, we’re going to disagree on this issue. It was good to have an update on greener futures though. That was a worthy goal and a reasonable investment scheme.

      • I want to facepalm every time I see the expression “sell out” applied to a brewery.

        This is like saying that a shoe store, a supermarket or a cocktail bar have “sold out”. It’s a business for ef’s sakes! It is, and has always been, about making money first and foremost!

        Koch and co. “sold out” the moment they decided they’d make a living out of selling beer. That should be clear to anyone with a modicum of critical thinking, and yet there are still many otherwise smart people who believe they do it to make the world a better place.

        • admin on July 28, 2014 at 10:22 am said:

          Exactly. It is an exchange of goods for money. \How you produce those goods might be ecologically sound and community friendly and the labels might win awards and the beer might be organic, but it’s still a product that you are exchanging for money. Being organic is good, being ecologically sound is good and benefiting the local community through your presence is good, but you wouldn’t be doing any of those things if it weren’t a business. There is no shame in casting off the pseudo-religiousity and just being a business with excellent practices. You can do both. You should do both. But it is, first and foremost, once and always, a profit seeking endeavour.

  11. We’ll done Jordan. Nice to have a writer friend who has the guts and language to verbalise and expose some of the hypocracy in an industry which I have described before as becoming a “fashion statement.” I wonder if the “suckers” that Stones are exploiting are the same people who spend ten minutes discussing the pros and cons of their next beer selection whilst I’m waiting to order my next pint?

  12. Jason on July 28, 2014 at 9:20 pm said:

    Here’s how I see it:

    I donate money to the Anti-Cruelty Society because it’s where I adopted my dog, and he’s a pretty sweet dog. I donate money to diabetes research because my father passed away due to complications with the disease. I pay the suggested donation to go to an Art Museum because I appreciate Art and am happy that it exists. If a friend is in a bind, I loan him $50 without thinking about it, and tell him to pay me back whenever he can.

    If someone is starting or expanding a business and wants me to invest my money, I want a piece of that business, or interest on the loan. I will not, sir, gladly pay you today for a hamburger tomorrow.

    If you have a really great idea, or a really great product that will bring tons of profit your way, you shouldn’t have to shake an empty McDonalds cup on the street to get it off the ground.

    Also, as someone who works in the beer industry, I’m very over the concept and obsession with “rare” beer, so not even that will get me to pull out my wallet. That’s a whole other topic of discussion though.

    • admin on July 28, 2014 at 9:22 pm said:

      Rare beer is another quandary indeed. I’m unconvinced that Heady Topper is a better beer than Sierra Nevada Torpedo. If it is, it’s a squeaker. When you consider the extra effort needed to get it, it loses. Rare beer is more or less bunk.

      • Jason on July 28, 2014 at 9:34 pm said:

        I couldn’t agree more. I’m a big fan of the thought process that the best beer is the one in front of me, and my favorite beer is the one I can have whenever I want it. One-off brews are essentially test batches that you pay a premium for, and honestly, I’d rather drink a well-made pilsner at this point anyways.

  13. Tapsucker on August 19, 2014 at 10:26 pm said:

    To paraphrase the Simpson’s episode when all the corporate mascots go on a rampage: “Just don’t look”.

    You’re article is a good discussion point and well framed, but it neglects to reaffirm the simple point that no one is forcing you to invest or even buy their beer.

    I agree many of these marketing stunts are cynical, but so is the pro sports entertainment industry, and so many other exploiters of those without self esteem, yet the sheep take to the pasture. Should we interfere with those who are rudderless and need a shepherd? Maybe, maybe not. Whatever we feel does not mean we are obliged to join them.

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