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.