Few craft breweries in the U.S. have a growth story like Stone Brewing Co.
The San Diego-based brewery has grown at an average rate of 50 percent per year since its founding in 1996, and is credited with having helped start the craft beer revolution. Stone Brewing made the Inc. 5000 list of the fastest-growing private U.S. companies for the tenth time this past year with a ranking of 3015.
One of the ways co-founder Greg Koch has continuously grown the business is by offering more than just beer. In 2006, the company opened the Stone Brewing World Bistro and Gardens, an all-organic restaurant that also grows produce from its local farm and is the third-largest visitor destination in the north half of San Diego County, according to the company. Last year, Stone opened a second World Bistro and Gardens, and today, it's the largest restaurant in San Diego County.
As if managing two restaurants and a brewery weren't enough, Koch recently announced two new ambitious projects for the company: a production brewery and destination restaurant in Berlin, Germany--making Stone the first American craft brewer to own and operate its own brewery in Europe--and a $74 million East Coast brewery and restaurant in Richmond, Virginia.
Inc. caught up with Koch recently to talk about the growth of the U.S. craft-brewing sector and his business tips for brewery startups. What follows is an edited version of our conversation.
What advice would you give young entrepreneurs just starting out in this industry?
I would give the same piece of advice to almost any entrepreneur starting out in almost anything, which is, screw the way that it’s supposed to be done, or the way that you’re told it’s supposed to be done.
Instead, do it the way you want to do it, period. The only way to really create great art--and I’m a full believer that quality entrepreneurial business is a form of art--is by following your own muse.
Can you share some examples of how you’ve done that with Stone Brewing?
When we released Arrogant Bastard Ale in November of 1997 it was so far out of the spectrum of what was available during that time. It was much more bitter, much stronger in flavor and alcohol by volume (ABV) than commonly available beers. Nobody was asking for beer that was over the top like that, and yet we released it and it became very successful.
Additionally, when we opened our restaurant at our brewery in Escondido, the three closest restaurants to us were an Applebee’s, a Chili's and an Olive Garden. Those restaurants are very good at knowing their customer base and doing demographic research.
We did no demographic research. We opened up with no sign on the building, it was out of the way, hard to find, we had a complete ban on high-fructose corn syrup, no major brand sodas, no major brand beers, and no TVs--basically, all the things people typically want and order when they go to a restaurant.
We had no burgers and fries, no chicken sandwiches, and no pub food. It was an all-organic menu, very eclectic, and it made some people quite uncomfortable in fact. Yet, we’ve become one of the highest-volume restaurants in the region. So, we followed our muse.
With more than 3,000 craft breweries in the U.S., do you think we’re approaching the point of saturation?
We must be close, but the point of saturation is a moving target. I’m sure we’re past what would have been the saturation point five years ago, but since the saturation point has moved, it’s been able to sustain more breweries.
Craft beer represents about 10 percent of the U.S. beer market. Do you think that figure will grow?
I’ve predicted a 20 percent market share. I’m very bullish on craft beer.
Why are you so bullish on the space?
There’s a changing tide that we’re in as people are moving away from a life filled with the commoditized, industrialized version of things.
We’re moving into a time where it’s sort of a return to normalcy, a return to the real versions, whether that’s food or beverages.
It’s actually a rediscovery of our own humanity, and it’s kind of refreshing.