Much like the brewery that produces this event each year, Founders Fest has grown quite a bit since its first iteration. In late June, the eighth edition of the festival welcomed beer lovers— attendance has grown to 7,000 people — and bands from all over the country, filling a couple city blocks with revelers, music, food, and a preposterous amount of All Day IPA.
Speaking of All Day, it’s what Founders’ co-founder, vice president, and director of brand and education, Dave Engbers, drinks when he gives Good Beer Hunting a chatty hour of his time just before the festival kicked off on a Saturday afternoon.
“This is the only beer I’ll be drinking all day,” he says, invoking the beer’s name with good reason. As it turns out, All Day’s satisfyingly hoppy mix of Amarillo and Simcoe at 4.7% ABV is ideal for multiple hours standing on the streets of sunny Grand Rapids, even if you’re the guy who runs the brewery that makes it and can have it anytime you want. But the beer’s something of an industry anomaly, too — a brand that’s rocketed to prominence since its release in 2012, becoming a defacto, if accidental, flagship brand in the process.
All Day’s popularity is quintessentially Founders, too. Like its early forays into so-called “extreme” beers and barrel aging, it’s an accidentally trendy hit that’s paralleled the brewery’s rapid growth in recent years. In 2014 alone, Founders shot up from 26th to 17th largest craft brewery by volume in the United States. The 18-year-old company also sold a 30% minority investor equity stake to Spain’s Mahou San Miguel in December. As its downtown Grand Rapids facility goes through another expansion to keep up with demand, and as 4,700 barrels of beer sit aging in a gypsum mine somewhere underneath the city, it seemed like a good time to take stock of a beer company that’s growing faster than almost any other in the country and is showing no sign of slowing down. So slow down is just what we did.
Events like Founders Fest always strike me as a good time to think back on how far you’ve come, and I wonder what Grand Rapids was like, beer-wise, in 1997.
Well… [laughs] Not just beer-wise. In the mid-90s, Grand Rapids was a completely different town. Very quiet nightlife. Really only a handful of restaurants. Downtown, this is where people worked. No one played. No one came down here to walk. Outside of a smattering events over the weekend, for the most part, Grand Rapids was very business-oriented. But what happened [in 1994] is that they put in a minor league baseball team [in Grand Rapids suburb, Comstock], and immediately started setting national attendance records. That was the catalyst to get a group of investors together to say, “Look, there’s a need here in West Michigan for entertainment. Maybe a sporting venue.” So when they broke ground on [downtown Grand Rapids sporting venue, Van Andel Arena], it was some crazy number, like, 22 bars or restaurants opened up in 12 months. That’s really when we started.
A few years into Founders, you pretty drastically changed course. There were some major monetary issues, of course, but you guys also decided you didn’t like your beer.
Our beer was good, but it wasn’t great. We realized that, when we opened up [in 1997], we were making beers for the masses. It was done by design. At that time, there wasn’t the craft landscape that there is today. If we came out of the gate brewing crazy beers, I don’t know if that would’ve worked. It took us a few years, because, in the state of Michigan there was not only Founders, but New Holland, Arcadia, Dark Horse, Atwater, Local Color—quite a few of us opened up in that ’97-99 era. We were all cookie cutter: pale ale, amber ale, some type of American wheat beer that tasted a whole lot like Oberon. We were all playing the same cards.
I remember talking to Mike [Stevens, Founders co-founder and CEO] and saying, “Look, we need to do something different. We need to find a beer that doesn’t compete with everyone else.” We literally pulled out the BJCP guidelines and started looking at different beer styles. We wanted to find something no one else was doing, but we also wanted something that was more malt-forward. At the time, IPAs still had not been embraced. We’d begun brewing Centennial IPA, and consumers on the other side of the bar were saying, “I can’t drink this beer. It’s way too bitter.”
How weird is that to think about now?
[laughs] I know! That was back in the days when ambers were the highest volume. We were looking for a big malt bomb, and Scotch ale is where we landed. We came up with Dirty Bastard, and it was kind of on the brink—this was during some of our dark times, financially. Literally every week was touch and go whether we were gonna be around in a few months. But we were looking at trademarking, and I remember sitting in the office with an ad agency here in town. I think it was gonna be called Fat Bastard, but that was trademarked. We were on the phone with my attorney, and I remember going, “What about Dirty Bastard?” and people looked at me like, “You can’t do that.” And I remember going, “Come on, we’re not even gonna be in business in a few months. Who’s gonna give a shit?” One of the creatives from the ad agency started speaking in a Scottish brogue, and that was it. The attorney called us back in 10 minutes to tell us it was available. That’s the beer that put us on the right path. It was the beer that everyone said we shouldn’t do, so this was a big confidence builder for the couple young guys in their twenties who started this trainwreck. All of a sudden, instead of having a red ale, a pale ale, a porter, we had Dirty Bastard—a big, beefy malt bomb, clocking in at about 8% alcohol.
You guys probably didn’t have any idea that you were accidentally at the forefront of “extreme beer” before it was a thing.
Not then. At that point, we were gonna make beers we wanted to drink. Dirty Bastard was immediate. It wasn’t, like, six months later when we said, “Oh, look, we’re seeing a nice positive trend.” Back then we didn’t even talk in “trend” talk. We were like, “Yeah, it’s sellin’ awesome!”
But it was good timing, right? To create that as people were starting to appreciate bigger, weirder beers?
We’ve made a lot of mistakes along the way, and we’ll make more, but we typically don’t make the same mistake twice. Also, when we have successes, we’re pretty keen on clueing in on those early on. So, we immediately saw a different vibe with Dirty Bastard. People started talking about us. BeerAdvocate and RateBeer started kicking in. All of a sudden, we realized we had a voice with consumers, and I think the consumers liked that we were actively participating in forums. The fact that we gave a shit. There’s a lot of misinformation online, so immediately, Mike and I would go online and read blogs and do searches, and when people would ask something, we’d answer it. When we saw the success of Dirty Bastard, we immediately decided to change our path. Every beer got bolder, more complex, more aromatics. We never did focus groups or say, “Oh, this is what people want.” We brew beer we want to drink, and the beers got bigger and bolder and more complex. That’s when things got fun, [when we made] beers like Breakfast Stout, Curmudgeon, Devil Dancer.
To that end, tell me about your barrel-aging space. I know there’s an art museum storing stuff down there too, but how did you find out about this storage facility, and what other kind of local businesses keep their stuff in these caves underneath Grand Rapids?
Well, everything down there’s private, so I can’t speak to that. But there’s six miles of storage space. These are the old gypsum mines; they used to harvest gypsum for construction. I wish there was some sexy story to tell you, but the reality is that, when we started experimenting with bourbon-barrel aging—the bottom line is bourbon barrels take up a ton of space. We were in our original facility with 12-foot ceilings, and the first year we had four barrels, then the next year we had 16 or 32. They started taking up a lot of space. We were introduced to the mines by one of our friends, a college buddy. His family owns and operates these mines. It’s a storage facility. He’s a friend and a customer, and he was in the taproom one day and started talking about it, and we rented some space from him. This was probably 2002.
How many barrels do you have down there now?
In 2014, we were contracted for 4,700 bourbon barrels. So yeah, it’s a lot. We’re 85 feet underground, and then, within that space, there’s a labyrinth of tunnels. They have refrigeration in there, so it’s at a constant temperature. But if we want it down to 32 degrees—if you wanna freeze a room, they can freeze a room. It’s crazy, though. The width of the tunnels is about the width of my office, but then off the main drag there’s multiple other little rooms. It’s pretty crazy.
Going back to the beers, the origin of Dirty Bastard parallels All Day IPA in that it was almost a happy accident. You were making something you wanted to make, but you kinda stumbled into being trendy.
As far as innovation goes, we were one of the first with barrel-aging, but we we're also one of the first breweries to explore chocolate and coffee. Breakfast Stout came out in 2002, maybe 2003. Then we started playing around with rye malts—not a super popular thing to do back then. But then All Day came about, and I have my story, and Jeremy [Kosmicki, Founders brewmaster] has his idea, and Jason Heystek and Mike—it was just this one kind of flavor profile that we were all kind of looking for, but I think we all have different stories about how it came into existence. But I tend to drink more hop-forward beers. Centennial and Red’s Rye are my go-to beers at the end of the day. When I leave here, I’m just a dad, and every night, we read to our children. And it’s like, I have a lunch beer or two, then maybe another meeting beer at 3 or 4, and by the time I’m going home, I’m a little tired. Next thing I know, I’m reading to my kids and falling asleep before they do.
We started developing this recipe in 2009. It came out in 2012, but it was intended to come out much earlier. Quite frankly, we couldn’t come up with the recipe that was like, “This is it.” We don’t make many knee-jerk reactions anymore. But we started exploring a session beer. And the way I remember it, we had a beer called Solid Gold. It’s not my favorite beer. We produce a lot of beers, and we have a lot that are not the kind of beer I wanna drink over and over again. I put all fruit beers in that category as well—I will drink one of them.
When we opened this facility, a lot of people were coming into the craft beer category, and they kept saying, “What do you have like Miller Lite? What do you have like Coors?” So we had this beer that had a very low hop profile, pretty tight, crisp. Because of the lack of hop character, I didn’t care for it. That beer went from Solid Gold to Super Gold, we eventually called it “extra pale ale” or something like that. But ultimately, I ended up wondering why we couldn’t have a beer that has all the hop characteristics a typical Founders beer would have, but low in alcohol. So we started exploring that. We were bringing in hops from all over the world—brand new varietals that were new to the market. But we ended up with Amarillo and Simcoe.
I remember that Mark Sparkles VanDunk came in as I was walking up the stairs. He brought me a little snifter, and I remember grabbing it, [smelling it], and going, “I don’t have time for a Double IPA right now.” And he looks at me and he just gave me a nod. I was like, “No way!” I took one sip, and fuck, that was it.
It’s rise to popularity has been kind of astounding. I know it was 25% of Founders’ volume in 2013. How much will it be this year?
We’re gonna be north of 50%. The beer has just taken off. Now, that said, it’s also available in more packages than anything else. The 15-pack is sellin’ like hotcakes.
That’s a weird thing to have happen 16 years in. How strange is it to get your flagship that far in, and then also—
We never said “flagship.” We don’t call it a “flagship.”
What do you call it?
We call it our “highest volume beer.” [laughs]
Your highest volume beer, then, to have that happen 16 years in — what challenges does that present? It seems like you’d have to make less of another beer to make room.
Well, we don’t make less of something, we just continue to invest in stainless steel, just expand the facility. But no, you’re absolutely right. Let me ask this, though, let me turn it around on you: what would you say our flagship was prior to All Day?
See, I don’t know.
And see, that’s the joy of Founders. Some people know us for Dirty Bastard, some people know us for Centennial, some people know us for Devil Dancer, some people know us for Breakfast Stout. We never had a beer that was significantly higher volume than everything else. For years, Dirty was our highest volume, and then, following consumer trends, when people started acquiring a taste for hops, Centennial became our highest brand. And then, we released All Day in 2012, and immediately, that beer took off.
Does that shake up your perspective, though? It’s such a gamechanger for the company. Before, any beer could’ve been the one that Founders is known for, but now, more often than not, it’s going to be this one.
I’m not gonna say we haven’t had meetings about it. This is unchartered territory for us. I guess it’s like going off a high dive for the first time. We’ve already jumped. There’s no question that it’s very exciting for us. The data on it is remarkable, how well this beer is doing everywhere. We’re picking up a lot of draft lines, but the 15-pack is just crushing it right now. We’ve never had this phenomenon. We’ve never had anything take us by storm.
I come from Georgia, where the beer laws are kind of shitty. We’re one of the few states where breweries can’t sell directly to customers. I can’t walk in like I do here and just get a beer, I have to buy tickets and do the whole dog and pony show. But I wonder how much that helped Founders’ quick rise, that robust community experience where people can walk up, eat, have an All Day, then walk out to other nearby bars and restaurants.
When we moved downtown, there really wasn’t anything here. But we were a major part of that [revitalization]—Founders moves in, all of a sudden there’s student housing and coffee shops. It’s been great, but yeah, we are a major manufacturing facility. This whole area has really grown up in the last eight years. Our taproom has always been a big part of who we are. Quite honestly, the first 10 years, the taproom kept us in business because of that constant cash flow. The taproom is the personality. It’s the heart and soul of Founders Brewing Company.
You made the announcement of the 30% stake with Mahou San Miguel in December. How has the dust settled in the past six months?
I don’t know how much dust we ruffled, quite honestly. There are a lot of headlines. Honestly, it’s been great. I will say this: I’ve been to Spain a couple times now, but our team has visited their facility, and part of this deal was to learn how we take craft beer to new markets. How do we take North American craft beer to Europe or Asia or Africa? And the folks at Mahou have been doing this for a long time, and there are a couple things that really struck us. They’re a brewery, that’s what they do. They just celebrated their 125th anniversary. They are family-owned.
As you said when you came in, this is one of those times to reflect back. Mike and I thought, “Maybe this is a great opportunity for us to learn from somebody else and who has really created a solid legacy.” Hate to say it, but when you get to be in your mid-forties, you get to thinking about what’s gonna happen when we’re not here anymore. We want to set the stage for our children and our children’s children.
This wasn’t an outright acquisition, of course, but unlike a lot of deals in recent years, where a craft consumer might think, “Well, I know how I feel about Anheuser-Busch InBev,” or, “I know what I think about Duvel,” what is the typical reaction to this deal?
A lot of head-scratching! [laughs] “Huh, that’s weird. Who?” We did the same thing. I didn’t know who Mahou was. They had very little presence here in the States. And that was very refreshing. It became part of the conversation: how are people gonna react to this? But speaking to that, there’s been a lot of acquisitions. There are gonna be a lot more. The one thing that scares us, as an industry, is that there are a lot of private equity firms right now. They’re looking at breweries because the craft category is growing. But private equity, their job is to make money for people. And when they do that, they typically have a fund that acquires these companies. But those funds only last 5-7 years. So what they do is they build it, dump a ton of money into it, put the right management in there, and in 5-7 years, they’re flipping it. And who are they flipping it to? Either another private equity group, or maybe they spin it off as an IPO. So, that’s one of the fears: what is the landscape gonna look like 7-8 years from now? Some of the largest breweries in the United States aren’t going to be run by brewers. They’re going to be run by business people, by banks. That’s scary. We wanted to partner with somebody who was a brewer, who’s been doing this for a while.
How will this change your foreign-market presence? I read that your volume outside the United States is 5%. What’s the strategy to increase that?
I don’t even know if it’s that high. We want to continue to explore foreign markets, but like I said earlier, we don’t do many knee-jerk reactions. We’re going to continue to explore UK and Spain. We’ve kinda looked at it like a project. There’s no question that there’s a need for North American craft, but just like we’re seeing in the U.S., if you wanna take it to the next level, you have to build relationships and get your brand out there. But I’d say the same thing if we were making belts. You have to work.
You guys have shot up the list of big producers here in the States. Last year alone, you went from 26 to 17. I have to assume there’s a competitive advantage to skipping ahead of those next 16 by having more of a presence overseas.
Well, we look at the numbers. Founders and Ballast Point both grew about 74% last year. We were the two fastest-growing breweries in the top 50. But we don’t look at it and say, “Next year we’re going to be 11.” This isn’t a race. We’re not trying to beat anyone else. But we’re still growing 45% in our home market. It’s ridiculous. It’s awesome.
Is there a ceiling in the U.S., though? Do you need something like a deal with Mahou to help your foreign sales to keep growing like you guys are growing?
I don’t know. When you look at the top 10 largest breweries, their growth rate isn’t north of 50%. Typically, you’re talking about breweries that have been around for quite a while—Sam Adams, Sierra Nevada, New Belgium, you know the list. Their growth rates are right around the 6-9% range. We’ve never done that, which is kind of scary. As we keep going up the list, we know things are gonna plateau, but they’re still going to be going up and to the right.
Clearly, you guys are gonna keep growing quite a bit for the foreseeable future. And I was thinking about the slogan on your Twitter account, which says “we have focused our efforts to one simple pursuit…ignore the mainstream.” In my hometown of Atlanta, SweetWater has been saying something similar for years: “Don’t float the mainstream.” You guys are two very similar breweries: about the same size, growing quickly, making decisions now that are gonna affect the next 20 years. That anti-mainstream mentality becomes trickier when All Day is everywhere, and when, to some people, Founders is kind of the mainstream of craft already.
Well, we are a large manufacturing company. We’re a large small brewery, however you wanna say it. But every week, there are a couple breweries opening up somewhere in the United States. We really were one of the first breweries to push the boundaries. We were one of the first “extreme” breweries. We’re on a little different scale than a lot of guys that might have one or two wholesalers. We’ve got 130. But those guys are doing anything they can to pick up a new handle in their home market. The biggest challenge our sales crew has is “local.” Every town has like eight breweries now. We just keep preaching, and I hope retail follows suit, that “local” does not mean “quality.” There is just a shitload of really bad beer out there. Not just in Michigan, but everywhere—across the United States, across the world. You don’t support local if they’re making crap. The bottom line is everyone’s running a business. If you’re a great restaurant, just because the brewery’s down the block from you doesn’t mean you should be pouring their beer. Our industry needs to hold ourselves accountable for making a quality product. That’s one of the biggest challenges we have right now.