Last week Stone Brewing announced the sale of their Berlin facility to BrewDog of Scotland for an undisclosed amount. Stone has owned the brewery since 2014, but has now decided to leave the Germany market.
In an August 2014 edition of this blog, (Sound strategy starts with having the right goal.), Greg Koch, Stone’s co-founder, blamed the closure of the brewery on multiple issues, one being building complications and the resulting delay in construction. Koch claimed that when concerns arose, construction was halted and no solutions were presented. He added that the delays cost Stone both time and money, stating that the project was “too big and bold” for Germany. Koch lamented that the brewery should have started smaller, thus giving all involved the opportunity to gain insight into what was necessary for successful growth.
In the same post referenced above, the challenges that Stone Brewing faced in building a facility in Germany were outlined. And as it turned out, those challenges were real and Stone is, in fact, closing.
Various posts have addressed the topic of foreign ownership and management faced by beer companies hoping to establish in the U.S. market. Such companies continue to fail or fall short of their goals by not adapting to the U.S. beer industry model. Leaders, who have been successful in other countries, fail to understand the American systems or they try to incorporate their countries’ systems in our country. The result is frequently failure.
ABI, MC, Pabst, Heineken (to some degree) and others breweries are managed by non-American leaders. But the ongoing theme seems to be: is this working for these companies?
Jeff Alworth, who writes a blog entitled Beervana, criticized Koch when he, Koch, announced the Berlin project by smashing a pile of German beers with a rock. Shortly thereafter, Koch exclaimed that “Berlin is not really a beer city yet.” That is like saying Augusta, Georgia is not a golf town yet. That statement surely endeared Koch with many of the Germans.
Simply because a brewery finds success in their home country does not mean that same success will be duplicate in another country. It does not matter whether you are dealing with the U.S. or another country, the facts are the same. As we discussed in the 2014 post, Germans have local breweries and support them, just like Americans support our local crafts. The German’s might have tried one of Stone’s beers, but in the end, they will support their own countries’ beers.
Based on Stone’s approach to the Berlin brewery, the chances of success were slim at best. The same can be said of other breweries that approach business in a similar fashion. It is an historical fact. Having spent many years with German breweries, Stone’s struggles come as no surprise.
Hindsight is a wonderful thing.