by Tom Acitelli
LUCKY BASTARDS
Los Angeles; San Marcos, CA | 1996-1998
Greg Koch certainly remembered the Dateline segment as a tipping point—and he didn’t even see it. He was too busy at the time.
Koch, no relation to the segment’s main target, Jim Koch, was born in Southern California, and his family moved to Ohio when he was four. He moved back west in 1984 to attend the Guitar Institute of Technology above the Hollywood Wax Museum on Hollywood Boulevard in Los Angeles. Koch wanted to be in rock and roll, and he was, for a long while: he worked at one point as a tour photographer for the guitarist Steve Vai and later, after earning a business degree at the University of Southern California, managed bands and owned rehearsal studios in downtown Los Angeles, which musicians could rent by the month.
During his time at USC, Koch frequented a downtown bar at the base of the American Hotel called Al’s. It was loud and cramped and still defiantly punk in a new wave world, the sort of place that reveled in being a dive; Thursdays were “No Talent Night,” Koch’s favorite time to go. Al’s had up to four beers on tap at any one time, serving them in the sorts of waxy paper cups you might get from a fast-food joint. One Thursday night, there was only Lowenbrau Dark and Anchor Steam on tap—and Koch chose Anchor Steam. A light-bulb went off in his young mind, a total epiphany; it was the first craft beer he had ever tried, and from then on that’s all he drank, becoming a self-described “beer geek” increasingly familiar with a movement that was about to grow by leaps and bounds, particularly in California.
Though not necessarily in Southern California. While Northern California was undeniably the movement’s Eden, beginning with Fritz Maytag’s 1965 acquisition of Anchor in San Francisco and growing from there into dozens of breweries and brewpubs by the mid-1980s, craft beer in the Golden State’s bottom half had developed only in fits and starts. The region might have been, by the time the lightbulb went off in Koch’s mind, only really notable in the movement as the birthplace of both the nation’s first homebrew club, the Maltose Falcons in Los Angeles, and, in the same city, Ken Grossman, cofounder of Sierra Nevada—which he and Paul Camusi chose to open in Chico, way northward near the Oregon border.
San Diego was an illustrative case. Its history with beer ran just about the entire gamut of the nation at large. Before Prohibition, the city had one brewery for every sixteen thousand residents, and a far narrower pub-to-resident ratio. After Repeal in 1933, three breweries were able to reopen: the Aztec Brewing Company on Main Street, the San Diego Brewing Company at Thirty-Second Street and Bay Front Street, and the Balboa Brewing Company on Imperial Avenue—about one brewery per ninety-seven thousand residents. All would close by 1953. It would be pretty much Big Beer only for about twenty years after that, and then came the imports in a big way, particularly from just due south. Mexican brands like Corona, Dos Equis, and Tecate dominated the shelves and menus of San Diego by the 1980s because those were the cheapest imports for distributors to carry. By 1985, with more European brands making the transcontinental trek, 10 percent of the beer sold in San Diego was imported, more than twice the national average.
This would turn out to be the peak of a trajectory that started in the early 1970s as some imports started clocking in at an unacceptable six dollars a bottle. Big Beer reasserted itself; the craft beer movement germinating in Northern California seemed a world away, the odd Anchor tap or six-pack just about the only glimpse a San Diegan might catch of it. Then, in the mid-1980s, two friends, Chris Cramer and Matt Rattner, began toying with the idea of opening a craft brewery after moving to the Mission Beach neighborhood after college. Cramer, who had grown up in San Diego, had an older cousin named Karl Strauss, a German immigrant who had worked his way up over forty-four years at Pabst to head its national brewing operations and later became a noted brewing consultant. Intrigued by his cousin’s idea and old enough to remember a pre-Prohibition America, Strauss helped the pair of twenty-somethings design the brewery and recipes as well as train the brewers (he also lent his name to the brewpub).
On February 1, 1989, the Karl Strauss Brewing Company opened with a Vienna lager, a pilsner, and a brown ale on tap and to lines around the block on Columbia Street in downtown San Diego—the city’s first brewery since Prohibition. Paul Holborn, a homebrewer who studied under Michael Lewis at UC-Davis, had opened the first brewpub in the wider San Diego County more than a year before, the short-lived Bolt Brewery in Fallbrook, which named its beers after those three San Diego breweries that staggered out of Prohibition. (Holborn would go on to be a brewing consultant at the respected Pizza Port brewpub chain in San Diego in the early 1990s.) Within a year of Cramer and Rattner opening the Karl Strauss brewery, several more entrepreneurs let it be known they were planning their own in the city and surrounding county. San Diego was late to the game, but it had arrived.
So had the rest of Southern California by the start of the 1990s. Its quality and scope still could not hold a candle to Northern California—few regions nationwide could—but Greg Koch, the newly minted beer geek, did have regional options. Most were brewpubs or connected to a brewpub, including the largest craft brewery in Southern California at the time, the Alpine Village Hofbrau in Torrance, which opened in 1988; it specialized in German lagers with its ten-thousand-barrel brewhouse, which sold much of its beer at the adjoining restaurant. Several operations, typical of the time, were firsts for the region since Prohibition: the first brewpub on a beach (Belmont Brewing in Long Beach, summer 1989); the first brewpub in Santa Barbara (the Brewhouse Grill and State Street Brewing, summer 1990); the first craft brewery in Orange County (Heritage Brewing in Dana Point, December 1989); the first in Ventura County (Shields Brewing in Ventura, winter 1990). Southern California’s oldest craft brewery was the Angeles Brewing Company in L.A.’s Chatsworth neighborhood. Richard Belliveau, a mechanical engineer who relocated from Maine to Los Angeles in the late 1950s and later opened his own machine shop, filed papers with the state in July 1985 after assessing the sorry state of the area’s beer. “Nobody’s doing it here,” he thought, “I’m going to get rich.” It, of course, did not quite work out that way; it would take Belliveau nearly two years to start brewing commercially in early 1987 in an old industrial park, held up by a zoning variance; and then it would not be until the early 1990s that he broke even, when annual sales tipped into the six figures.
Also in Los Angeles, there was Gorky’s on Eighth Street downtown, a funky, twenty-four-hour bistro noted for its in-house Russian imperial stout. Steps from the Manhattan Beach Pier was the Manhattan Beach Brewery, which two brothers, Michael and David Zislis, and a friend, John Waters, opened in the summer of 1991 with an eight-barrel system.
These last three operations were largely it for the nation’s second-largest city beer-wise in the early 1990s. Luckily for Koch, who then was living in an artist’s loft in downtown Los Angeles, he spent a lot of time in the San Francisco Bay Area. It was there that he learned about a Saturday class being offered through UC-Davis’s extension program and taught by Michael Lewis, “A Sensory Evaluation of Beer.” Lewis, who in 1970 was the nation’s sole full professor of brewing science, now had academic company, as did the UC-Davis program he helped build. Oregon State University in Corvallis, home of the USDA’s hop-breeding farm and birthplace of the Cascade hop, had started a fermentation-science degree program in 1996.
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 o
n 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.
A TALE OF TWO BREWERIES
White River Junction, VT; Philadelphia | 1996-2000
The 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 see
med 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.