The Hubris of Stone Brewing
It was a sunshiny day in Berlin. A few scattered members of the media had gathered outside a 113-year-old picturesque brick building, in front of which stood a pyramid of German beer bottles. [Correction: Greg Koch emailed to point out that the pile were a blend of international mass market lagers, including Olde English 800.] After a few minutes, Stone Brewing co-founder Greg Koch maneuvered a forklift out the doors; balanced between the machine’s two steel beams, a boulder—or giant stone. Koch dropped the boulder on the pile, as Stone metaphorically smashed a millennia and a half of brewing tradition. This preceded an announcement: Stone Brewing, that iconoclast of the San Diego scene, was opening a brewery in Berlin.
Koch was going to teach Germans about beer.
“Maybe Germans would take exception to this comment, but Berlin is not really a beer city yet. There are very few beer cities in Germany,” Koch said at the time. American craft beer had been growing like crazy for a decade, and Koch gave a number of interviews offering lessons from San Diego. Germany was an old and tired beer country in need of revitalization. Reinheitsgebot was a con. Germans, exposed to American craft beer, would quickly dump their Reissdorfs and Bitburgers. Koch knew how to smash industrial American beer, and he was going to do it in Germany, too.
How did that work out?
The news was announced by Koch himself in a blog post. It is a remarkable document that underscores why this act of enormous hubris failed, failed so quickly, and how Koch seems to have learned very little from the experience. The title alone is a masterpiece of denial: “Farewell Stone Brewing Berlin: too big, too bold, too soon.”
In Koch’s telling, Germany 2014 was identical to America 1996, dominated by big breweries making cheap beer. “We started Stone in 1996 because we weren’t OK with the status quo of beer in the U.S. We felt Americans deserved better, so we brewed it for them. When we saw much of Germany stuck in a similar status quo of cheap beer, we were convinced we could help.” This is a misdiagnosis of the German market, and consequently a misdiagnosis of the cure. (US breweries founded a decade and a half before Stone might also wonder about this historical recap.) German beer has indeed been in a slump, and one that has lasted quite a while. But were Germans hungering for American IPAs? Was the problem with the Germanness of the beer, or something else? Had Stone looked more closely, they may have been more cautious. Undoing centuries of beer culture is a lot different than building a successful brewery in a country with little beer culture.
It’s no surprise that the project failed given the contempt in which Stone held its new country. The oppositional approach that worked so well in California didn’t sell in Berlin. But instead of asking hard questions about why the brewery didn’t achieve the volume it needed, Koch blames the Germans. “The sheer cost of building and maintaining Stone Berlin to our standards didn’t let us grow it slowly…. The real challenge was the tendency of our contractors to stop everything when a problem arose.” Nowhere in Koch’s post is there any soul-searching about how Stone might have appealed to Germans or what they could have done differently. Blaming the contractors? Come on.
Worse than blaming others for Stone’s failures to understand the country in which they’d be doing business, Koch then does some special pleading. In this failure, he suggests, one can see the ultimate triumph of the Stone way:
He goes on to take credit for transforming Berlin into something like San Diego. He appears to take credit for the resurgence of Berliner weisse in its home town. He believes the failure of Stone’s business came at the expense of its success in transforming Berlin’s culture. “It is from this culture of beer selection, range, and quality that we saw our vision,” he wrote. “This helped drive us to create a destination with the largest selection of draft beer in German history. We’re incredibly proud of that big number because it means big diversity and, almost always, bigger quality.” The post even concludes with a video taking a victory lap.
There’s certainly nothing wrong with thanking your team and supporters and accentuating the positive in failed but bold and risky adventure. But Koch isn’t doing that. He’s avoiding the reckoning that might have been much easier to see if he had been less focused on the Stone way than the German way. Back when Stone Berlin was launching, Koch said: “People ask me all the time whether or not I’m afraid if people in Berlin or Europe won’t like my kind of beer. And my answer is no.“ Despite all the evidence, he still seems to believe that.
Who knows if Stone might have made the Berlin project a success by building a bridge between two cultures. But the failure to even try is surely the centerpiece of this story. BrewDog, which has modeled their business strategy on Stone, will take over the keys to the building. It will be fascinating to see what changes they make and whether they learn from Stone’s actual mistakes, or double down on the narrative of cocky disruption.