Less than three years after Stone Brewing, one of the largest craft breweries in the U.S., opened a brewery in Germany’s capital Berlin, the California brewer admitted its failure and announced to sell the site to Scottish craft brewer BrewDog.
“We invested a significant portion of a decade and significant millions building Stone Berlin. And it didn’t work out,” confessed Greg Koch, Co-Founder and Executive Chairman at Stone Brewing in a blog. Reportedly, Stone invested about USD30 million in its German (ad)venture.
Koch explained the reasons why it did not work out: “To feed a beast like Stone Berlin, we needed volume. The sheer cost of building and maintaining Stone Berlin to our standards didn’t let us grow it slowly,” Koch went on saying. “Ultimately the project turned out to be too big, too bold and too early in our growth curve in Europe.” According to people involved in the matter, the brewery has a capacity of up to 200,000 hl.
When Stone Brewing announced in 2014 to open the first American-owned craft brewery in Europe, Greg Koch saw a great potential for American style craft beer in Europe. “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,” Koch said. “As it stands now, German beer prices are the cheapest in Western Europe. As most of us know from life, the best things are rarely the cheapest.” But in the end, he failed to convince enough consumers to pay considerably higher prices for his beers.
It’s not the first time that foreign brewers got a bloody nose in Germany. The history shows dozens of unsuccessful attempts to conquer Bierland Germany. Latest example is AB InBev, which was even unsuccessful to sell part of their German operations (inside.beer, 20.03.2019).
The reasons of failure are manifold.
Firstly, foreign brewers like Stone, misinterpret cheap German beer with bad German beer. In fact, even the cheapest German beers are considerably better than many expensive foreign brews.
Secondly, Germany has already one of the widest range of beer styles in the world. Consumers have a great selection of beers to choose from and don’t wait for new alternatives as it was the case in the U.S. in the 1990s.
Thirdly, German beer business was and is still dominated by families who run the business already for generations. Most German brewers don’t look for the quick return like financial investors or startups, which need to recover their money within a decade or two. The aim of most of those family run businesses is to preserve the business for the next generation of their family, which does not necessarily mean to earn money in the short term.
And last but not least: The structure of the German brewing industry is still very much fragmented. Even most of the biggest players still count as a craft brewer according to the standards of the U.S. Brewers Association (BA).
In addition, Greg Koch made a couple of more mistakes in Germany.
As he later admitted, it was not one of his brightest ideas, to drop a huge boulder (apparently a “stone” meant as a symbol for Stone Brewing) on top a pyramid of European pilsners and lagers. As one of the authors of beerandwhiskybros.com put it at that time: “While on the surface it seemed like a fairly harmless way to celebrate American craft beer’s first beachhead on European soil, the act of destruction may have said more than Stone intended.”
TheBeer Jesus from America, as Koch is featured in a documentary film on the project, also started selling his beer in Germany in cans, a very successful way of packaging in the U.S. Germany, however, introduced in 2003 a special levy on non-returnable packaging, often referred to as can deposit, which made products in cans very costly and which helped banning beverages in cans in the country.
People familiar to the Berlin beer scene also wondered about the location of the brewery. At the first sight, the historic old gasworks in Berlin-Mariendorf looked like the perfect location. However, it is outside the city center and not easily accessible by public transport. While this might not be an issue for most U.S. citizens, public transport is essential for a location in European cities like Berlin.
BrewDog, the new owner of the premise, is also originated in Europe and will hopefully have a better understanding of the peculiarities of the German beer market, when it takes over on May 1. The Scottish craft brewer will temporarily close the facility to “turn the building into a BrewDog space, similar to the vibe we have created at our Columbus brewery,” BrewDog said in a statement. “Once we reopen, we are looking forward to holding a huge opening party, as well as hosting an epic European AGM for our Equity Punks there later in 2019 and also making Berlin the next destination for BrewDog Airlines.”
The brewery itself is a 100hl state of the art system with both a canning line and bottling line and also a 10 HL pilot system too. The main building of the brewery campus features an amazing 2,500 square meter tap room with a 13m high glass wall to the brewery and there are also 5,000 square meters of outdoor gardens for enjoying a beer outside.
After BrewDog takes stewardship of the brewery BrewDog will continue to brew and distribute Stone beers in Europe. “The history and camaraderie of Stone and BrewDog goes all the way back to 2007,” explained BrewDog. “Since our first collaboration brew in our original brewery in Fraserburgh, we have collaborated many times: from brewing ground breaking beers, to Stone being the only brewery featured twice in BrewDog’s TV show. Furthermore, part of the reason BrewDog ended up building a brewery in Columbus was because Greg [Koch] generously shared details of locations that Stone had considered in the city with James [Watt, cofounder of BrewDog].”
“We wish our friends at Brewdog every success with the Mariendorf gasworks property,” Koch concludes. “We loved it and brought it to life, and we know they’ll do the same in their own way. They will do great things.”