Good Beer Hunting

Critical Drinking

Critical Drinking — Can Beer Jesus Make a Stone So Heavy Even He Can’t Lift It?

This isn’t a hot take. It’s more of a cold one.

Stone Berlin didn’t need to change a culture. It didn’t need to drastically alter the beer-buying habits of a continent—or even a nation. All it had to do was sell enough beer to cover its costs. Or enough of its costs, anyway. It didn’t.

All the same, it made a dent—not in proportion to the splash and noise and bluster, of course. But to make a dent in one of the world’s greatest, oldest, and most conservative beer cultures is no small thing. German beer aisles look different than they did five years ago. These days they tend to offer more variety, more beer in cans, and more—and higher—price points. That would have happened anyway, to some degree. But it would be disingenuous not to give Stone some share of the credit.

Illustration by Remo Remoquillo

Illustration by Remo Remoquillo

In the summer of 2014, America’s ninth-largest brewery (by volume) announced a bold venture. It would set up a 100-hectoliter (85-barrel) brewery and sprawling restaurant and beer garden in...Germany, of all places. The chosen site was a gem: a century-old, red-brick gasworks in South Berlin. A $29 million investment would give Stone a production plant capable of supplying fresh beer to Europe.

Greg Koch—Stone’s lanky, long-bearded, big-talking executive chairman—amused the German media. A local newspaper dubbed him “Der Bier-Jesus aus Amerika.” But as it turns out, he couldn’t walk on water. Not even five years later, Stone announced it was selling the whole thing to Scotland-based BrewDog.

So, what the hell happened?

“It was a compound fracture,” Koch tells me in an interview at the brewery, a few days after announcing the sale. He seems tired. He’d arrived the previous day from Shanghai, where Stone opened a bar last year. Then, he says, he was up until 1 a.m. drinking and talking with the brewery team. It sounded like a wake.

Koch says there was a cascading series of problems that added up and led to the sale. It wasn’t only the costly construction delays. It wasn’t only slow sales in Germany and other markets where people are used to lower prices. It wasn’t only the high operating costs of the restaurant, which had yet to turn a profit, though he says it was growing more successful.

“It wasn’t just anything,” Koch says. “It wasn’t just any of those, but when you compound and compound and compound, it just kind of got away from us a bit. It’s natural—the tendency to be reductionist is natural. But we live in a three-dimensional world. It’s a little more complex than that.”

Many German brewers—not only the giants, but also smaller independents—operate on razor-thin margins. After five years of living here, it's become clear to me that Germans are justifiably proud of their beer—but they’re not used to paying much for it.

Berlin’s best-selling beer, for example, is Berliner Pilsner from Berliner-Kindl-Schultheiss-Brauerei. That brewery is owned by the Radeberger Group, which, in turn, is owned by Dr. Oetker—a multibillion-dollar global food company based four hours west of Berlin in Bielefeld. Germans associate the Oetker name with frozen pizzas, because their supermarket freezer sections are stuffed with its products. So are their beer aisles, whether they know it or not. A crate of Berliner Pilsner—that’s 20 half-liter bottles—costs the equivalent of about $15.

Translated to American pricing, imagine if you could buy a six-pack of Reinheitsgebot Pilsner for $3.17. Not bad, right?

Certain well-regarded German brands fetch a more “premium” price. A crate of Munich-brewed Augustiner Hell in Berlin costs about $23. Brands like Weihenstephaner, Schlenkerla, and Schneider Weisse land in the same range. An American-sized sixer of those would still cost less than $5.

If this is paradise for consumers of good, plain, comforting Lager and Weissbier, it’s also a challenging market for independent brewers who have higher relative costs and hanker for higher profit margins. I’ve heard more than one brewer complain that German beer is too cheap.

They’ve got a point.

A few years ago, more “craft beer”—often spelled in English, as something exotic and special—started appearing at our local supermarkets. These included 33cl (11 fl oz) cans of Stone IPA (€2.49 each) or half-liter cans of Arrogant Bastard (€3.29). Occasionally someone buys a can or two. Often they collect dust.

A compounding issue is that most German drinkers—much like U.S. beer consumers of the not-too-distant past—associate cans with cheaper, inferior beer. Credit where it’s due: Stone has helped change that perception, somewhat. At the very least, it’s become more common in the past few years to find colorful cans of specialty beer at local grocers.

Greg Koch amused the German media. A local newspaper dubbed him ‘Der Bier-Jesus aus Amerika.’ But as it turns out, he couldn’t walk on water.

“I was hearing that from the team,” Koch tells me. “The adoption rate of cans has been going strong. Because the bottom line, regardless of the perception of Germans, [is that] cans are a superior package. We know that.”

Nonetheless, Stone bore the early costs of trying to change that perception. “Pioneers get the arrows, they say,” Koch says.

The price differences are less stark in local bars and restaurants, where €3.50 is a mid-range rate for a half-liter glass of, say, Berliner Pilsner on draft. In the hipper taphouses slinging international lineups, it’s typical to find an IPA—including Stone’s—for around €5 or €6. But there’s competition for taps in these venues, and Stone has become a familiar name among patrons who are perpetually after something new.

Behind Britain, Germany is Stone’s second-biggest market in Europe. It tallies up to about 20% of the company’s sales. The Berlin brewery sends beer to 26 countries, most of which account for smaller slices of the pie, and Germany is not the only place where people are used to paying less.

On a 2016 visit to Poznań, Poland, I visited a sleek bar called Ministerstwo Browaru. One of its 14 taps was Stone IPA. A half-liter of it cost 24 złoty—a bit less than $6. While that may sound reasonable to most U.S. readers, the catch was that perfectly decent, locally brewed IPAs were going for about half that price. So was another German beer on the menu, the Hofbräu Oktoberfestbier. Poznań is only about three hours from Berlin.

Back in the gasworks at Mariendorf, the heart of Stone Berlin—now BrewDog Berlin—is a tall, shiny, 100-hectoliter (85-barrel) brewhouse. Its potential yearly capacity is 150,000 hectoliters (127,000 BBLs). In an interview published last August, brewmaster Thomas Tyrell said that Stone was brewing just 45,000 hectoliters (38,000 BBLs) per year. Maybe that was the goal. I ask Koch if they brewed that much last year. He says he doesn’t know the exact number, but does confirm it was less than the number Tyrell cited.

Later, brewery spokesman Colin Lenz gets back to me: In 2018, Stone Berlin brewed about 20,000 hectoliters (17,000 BBLs) of beer. That’s less than 14% of its potential capacity.

“We needed to grow our business and hit critical numbers, and the curve…ultimately was not steep enough,” Koch tells me. “That doesn’t mean it hasn’t been going very well, though that may be hard for people to understand. This is not an implosion on any level. It was going well, just not enough. Plus the compound fracture of all the other elements.”

Pioneers get the arrows, they say.
— Greg Koch

Stone’s initial reported $29 million investment didn’t include unforeseen costs from construction, or the daily operational costs of the brewery and restaurant. For his part, Koch declines to say how much Stone lost on its Berlin adventure.

“We lost substantially,” he says. “That does become a bit of Schadenfreude.”

There’s obvious sense in the sale to BrewDog, which will continue to brew Stone beers as well as its own. Now, instead of making beer for one well-known international “craft” brand, the under-used brewhouse will crank out beer for at least two of them. BrewDog also plans to make the 10-hectoliter (8.5-barrel) pilot kit available to local brewers on a contract basis.

Stone isn’t leaving Europe. But there will be a dog instead of a gargoyle on that beautiful old gasworks.

The day Greg Koch used a forklift to drop a boulder on a pallet piled with cheap, international beers was a nice one. July 19, 2014 was warm and sunny—you couldn’t have asked for better beer-smashin’ weather. At the gasworks site in Mariendorf, before an invited crowd of beer enthusiasts, media types, and brewers, Koch did the thing he’s become increasingly great at over the years: he made a scene.

And it worked. German news outlets showed up in force, and gave the stunt plenty of publicity. American commentators, meanwhile, expressed the kind of embarrassment we save for fellow countrymen who talk too loudly on foreign trains. On various social media channels, people threw around the phrase “ugly American.”

We needed to grow our business and hit critical numbers. The curve ultimately was not steep enough. This is not an implosion on any level. It was going well, just not enough.
— Greg Koch

Koch is not the second-guessing type. When asked how he might do the Berlin brewery announcement differently, if he could go back and start over, he scoffs. “I’ve often heard the phrase, ‘If I was to do it all over again,’” he tells me. “In my entire life I’ve never been inclined to say that. Are you kidding me?”

Later in the same conversation, though, he mentions the infamous boulder incident. While the beers smashed were not only German, many interpreted the stunt as a swipe at the country’s long, rich brewing tradition. Others simply said that insulting other beer brands sent the wrong message.

“To me, that’s not insulting beer, because the insult was already made at these breweries,” Koch says. He adds that the gesture was meant as a show of support for Stone’s “artisanal, artistic” side.

“I would not do it again, because that message did not get conveyed,” he says, contradicting himself. “It was just too distracting. I would have given the same message, but I would not have delivered it in such a way.”

One of the people in the crowd that day was BrewDog co-founder James Watt.

Beyond beer aisles and launch events, this culture clash also made an appearance on the brewery’s construction site. As I write, a film festival in Berlin is screening a documentary about the travails of getting Stone Berlin up and running. The film is titled The Beer Jesus from America. The promotional materials sum it up like so:

“Willing to risk millions on a vision to bring his beer to Europe, Greg Koch may be making the biggest mistake of his life.”

When I ask Koch about the construction problems, about the spiralling costs and unforeseen delays, he suggests I go see the film. (Confession: I haven’t yet.) In the trailer, however, Koch discusses the setbacks in a pained sort of voice:

“You know, ultimately, I think I’m going to be happy with the result here, and I’m going to look at it on a beautiful summer afternoon and I’ll feel like it was worthwhile. I mean, I’m just holding on to that idea. But it’s times like this where it’s difficult to make that connection, mentally…Then we learn about these technicalities…It’s a new one every single turn. And time and money just tick away...That’s the cost of being a romantic. Or a fool.”

I’ve often heard the phrase, ‘If I was to do it all over again.’ In my entire life I’ve never been inclined to say that. Are you kidding me?
— Greg Koch

The plan was to open the brewery and restaurant in 2015. Instead, it was April 2016 when the Library Bar in one corner of the building finally started pouring beer—the rest was still under construction. The bigger restaurant and beer garden opened later that summer, with a Grand Opening bash in September—a year later than they had hoped.

In Koch’s farewell message, he singled out the local construction industry as a target for his ire. “The real challenge was the tendency of our contractors to stop everything when a problem arose,” he wrote. “The refrain I heard over and over was, ‘These things take time.’ Got a question? Stop everything. Unanticipated challenge? Stop everything. Review the contracts. Stop everything. Reconsider. Throw the baby out with the bathwater. But most of all, stop everything.”

The Stone way, he said, was to keep working, never stop, and to “consult smarter people, accept acceptable solutions, just get it done. Our Berlin contractors simply couldn’t or wouldn’t do this. It cost us dearly.”

After the sale announcement, Koch received several messages from local brewers and bar owners expressing shock, support, and sympathy. He showed a few of them to me. One came from Oli Lemke, who founded Brauhaus Lemke on Hackescher Markt in 1999. He now runs three Lemke breweries in Berlin. I’ve edited his email slightly for spelling and clarity:

“I want you to know that I’m really sorry to see you go, you had great influence. I hope you managed to come out financially ‘OK’ at least.

As sad as it is, I really had to smile when I read your statement, because it contains so much pitiful truth about my country and believe me, you missed the worst parts...

With the experience of being an entrepreneur in Germany for 20 years myself, I can honestly say that, for many reasons, [for example] the regulations, work laws, the authorities, the widespread stinginess, the unwillingness to try new things, the combined tax burden and numerous other things, this is probably the last country in the Western world somebody should open up a business in.

Not knowing this, great entrepreneurs like yourself from all over the world come, try, and fail, again and again. So please don´t take it personally, this is just no country for entrepreneurs.”

News of the sale brought the sort of inevitable, knee-jerk reactions that thrive on social media. Critics pounced. It was a very public failure on the part of someone who has made himself central to his company’s brand—the Arrogant Bastard himself.

But I’ve seen and heard very little exuberance among people in Berlin.

“The Stone development has been incredibly rattling for me,” says Cristal Peck, brewer at Berliner Berg. “Stone has been a pioneering force in a scene that I’m deeply connected to. They’re one of a very few who have pushed and pushed for consumers to be less complacent about beer. Quite frankly, I’m not sure if I’d still be here had it not been for the injection of promise I was given for the scene when Stone came to town.”

Oddly, much of the second-guessing and criticism of Stone Berlin concerned its restaurant, the World Bistro and Gardens. It was supposed to be an accessory to the main business, but it ended up being an important piece of the puzzle.

Great entrepreneurs from all over the world come, try, and fail, again and again. So please don’t take it personally. This is no country for entrepreneurs.
— Oli Lemke, Brauhaus Lemke

The site is well south of the city center, and not easily accessible by public transport—the nearest station is a 15-to-20-minute walk along the railway tracks. The prices were also high by local standards. It was never going to be an everyday place for most people. Instead, it was a destination, a special-occasion venue for business dinners, birthdays, or lazy Sundays. The California-esque cooking—hoisin chili duck tacos, tempeh burgers, Korean-style pork ribs—was well-regarded. Its 75 taps are the most of any drinking establishment in Germany.

Anecdotally, the Bistro steadily gained local fans over the past couple of years. On a recent holiday it was packed, with children running around playing while parents enjoyed their “Bottomless Berliner Weisse Brunch.” (The buffet price was €12, but for an extra €6 you could enjoy all the White Geist Berliner Weisse you could drink—orange or grapefruit juice optional.) I sat there with family and friends, looking around and guessing that the restaurant might be doing all right.

Koch says the Bistro was not yet turning a profit, but “it was making strides” and not doing badly. “It was working out in so many ways,” he tells me. “But just layers and layers and layers of difficulties and expenses just cumulatively proved too much.” Meanwhile, the Stone Tap Room in Prenzlauer Berg—not far from where Koch lived while working on the brewery—will continue.

He says they began to have serious discussions about getting out from under the brewery at the beginning of the year. He declines to say whether they shopped it around, or what the price was, only that BrewDog was a natural fit.

Quite frankly, I’m not sure if I’d still be here had it not been for the injection of promise I was given for the scene when Stone came to town.
— Cristal Peck, Berliner Berg

“These are people that not just cared about their own business, but cared about what we were doing as well,” Koch says.

BrewDog gets the keys to the place on May 1, which is normally the start of beer-garden season in Germany. In its announcement, BrewDog said the brewery would be closed for “a certain time” while they make the place their own, “similar to the vibe we have created at our Columbus brewery.” Berliners and tourists can expect pinball machines, arcade games, and shuffleboard. The kitchen is likely to go in a simpler direction than Stone’s—pizza, wings, burgers, and the like.

The BrewDog bar in central Berlin has gained a strong neighborhood following of its own. There is good pizza, pinball, and interesting guest beers. No doubt there will also be interesting guest beers at the new BrewDog brewery in Mariendorf. But I have to admit to being curious about how many of those will be from Stone—and how much they’ll cost.