Not Shocking – Thoughts on The Golden Road Brewing Acquisition

As The Full Pint was boarding our plane headed for GABF, our phones lit up with the news that Golden Road Brewing was the next craft brewery to be acquired by AB-InBev.  While it had provided a quick shock, it was not at all surprising given the history of the brewery.  While I have many friends who have worked at Golden Road including our very own Franny Fullpint, I will not be sharing office gossip, but rather my own observations as someone who lives in the Greater Los Angeles area and someone who has been covering this booming beverage sector.

Conception of Golden Road

During the second LA Beer Week in 2010, there was a big buzz that the owner of Tony’s Darts Away, a heavily hyped new California craft only bar in Burbank, and Meg Gill, the lady I knew from Speakeasy Ales & Lagers were going to start a brewery in Los Angeles. I thought, wow, that sounds cool. I like both of these people from what I know of them.  This was great news, as at that point, we were still pretty embarrassed with the first incarnation of Angel City Brewing, Skyscraper Brewing and Nibble Bit Tabby.  Finally, some people who understood craft beer where going to invest in bringing Los Angeles some drinkable craft beer so we don’t have to rely so heavily on the great suds of San Diego.

Unthinkable Launch

I’ve visited many startup breweries on up to mid sized breweries in California as well as around the country. To my shock, Golden Road Brewing had constructed a three ‘mega-warehouse’ compound in Atwater Village, an industrial area outside of Downtown LA and Glendale.  I wasn’t the only one shocked at the business model of ‘start with a huge brew house’ and hope the beer catches on.  It’s usually start small and grow as demand does.  It was explained to us that this ‘start big’ approach would make it easier to expand without going to lenders every three years. While I could dig that, other people in the industry were already rolling their eyes at this, claiming Golden Road was simply throwing money at craft beer, not crafting good craft beer.  My personal stance was to wait and see, as Tony and Meg’s vision of an LA made IPA sounded awesome.  Big hop aroma, easy to drink. Count me in!

Then the doors opened and the beer started flowing.  It was not good….at all.  The IPA was nearly undrinkable, at least compared to any other available option in a 500 mile radius.  All the while, GRB was pandering to local media (a theme that will continue) to stop by for mixers to try the beer and understand that they are a staple of LA that was here to stay.  After failing to captivate the beer geek audience (which is admittedly a vocal minority), Golden Road dumped buckets of money into mainstream press.  All of a sudden, President Meg Gill was in every local newspaper and was being covered by the likes of Forbes Magazine and many other national lifestyle magazines.  The campaign however had little to do with beer but more about Meg’s upbringing, college sports success and outlandish claims  of how she is a female pioneer in the craft beer industry.  Perhaps Golden Road thought this was money well spent (and I’m sure they argued they didn’t pay for this press), this further alienated the local craft beer drinkers from wanting to embrace this product, which was pretty mediocre at the time.

Editor’s note:  For clarification, I am not implying that journalists were given money to pay for coverage of Meg and or Golden Road. I am saying that Golden Road uses PR firm/talent agency type services to strongly push established mainstream publications to pitch/ cover the brewery and brewery owner. This has been confirmed to me by multiple sources. Also of note, I am not implying that my friend John from the L.A. Times was ever paid to cover Golden Road Brewing, in fact it is his job to cover the blooming LA Beer Scene, which Golden Road is a part of.

Still pushing forward with their business plan to take over LA, Golden Road would stack 4 packs of their flagship brands to the ceiling of retailers from the floor to the ceiling, showing everyone else they were the new player in town.

Damage Control

After spending a ton of money on faux mainstream kudos and not captivating beer lovers, Golden Road changed head brewers.  The beer drastically improved.  It also seemed that they were conscious that the campaign involving President Meg Gill pounding her chest was a little off-putting and scaled back on that.  Make no mistake, she is a hard working, successful woman but the campaign screamed anti-craft beer.

Owner Tony Yanow is a very successful pub owner, and came up with another gimmick to pull in and win over local fans, more specifically local industry members and beer writers. They launched Chloe’s at Golden Road, which was designed as a secret club house/speak-easy for members of the industry.  Hidden behind the Gold Road Pub was this warm and cozy ‘man-cave’ with wooden paneled walls, a fireplace, leather booths, pool tables, couches, etc.  No doubt, it was amazing, it didn’t serve as a spot for industry folk and quickly became a place for catered parties.

Golden Road also became more beer blogger/writer friendly, hosting events and nurturing those covering the Los Angeles beer scene.  During this era (2012-2014), Golden Road began slowly winning over some beer geeks and were finally catching on after a very rocky start.  All shenanigans aside, Golden Road was pumping out some decent hoppy beer, one I was particularly fond of, Heal The Bay IPA.

The Reality

Golden Road Brewing set their sites to be The Los Angeles craft brewery, and be in the hands of every Los Angeles casual drinker all the way up to the enthusiast.  With better local options like Beachwood, Smog City, El Segundo and better California options like Ballast Point, Firestone Walker and Stone Brewing, this kind of foiled Golden Roads plans to take over one of the largest untapped (no pun intended) beer markets in the world.

I would stroll into a random Whole Foods and would see a towering display of Golden Road Beer that looked like nobody plucked from. I would go to the cold case, flip over a six pack to see a 6 month old box of IPA and was wondering if there was trouble in paradise. I mean, there are enough people in Los Angeles County for Golden Road to work regardless of their marketing or beer quality.

Soon enough, Golden Road had to back pedal on their hyper-local dream of filling out Los Angeles, and began expanding to San Diego, San Francisco, eventually venturing out of state to Nevada and Arizona.  Remember, Golden Road was bought with investor money, beer had to be sold in order to pay back that money.  By 2015, it seemed as if Golden Road didn’t have the momentum it had in its beginning stages.  Local bars didn’t want to carry their handles, as The Pub at Golden Road, Mohawk Bend and Tony’s Darts Away (All owned by Tony) were able to undercut retail prices (Editor’s note for clarification, these were sold at the same price to the pubs and sold for less than other establishments), and those jealous of Tony were also not buying the beer.  Within the last six months, many employees from the executive line on down were leaving the company, allegedly due to the high pressure environment that was once a fun one. Signs were pointing to sales targets not being met.

Conclusion

There were two major signs that pointed to Golden Road Brewing being a ripe target for an AB-InBev acquisition. The first was their larger than normal business model, starting with a gigantic facility using aggressive sales techniques to infiltrate retail and the second sign was when they had a noticeable exodus of employees this year.

This probably won’t be the last time we see a money grab in craft beer.  I feel sorry for the locals who embraced Golden Road whole heartedly. I feel bad for those nice people who work there currently who felt passionate about working for a craft brewery, and for those same people who might be fearing their job is now on the line.  Los Angeles and soon Orange County will have AB-InBev presence in their backyard thanks to Golden Road, hopefully you too will be able to spot this type of deal coming a mile away. I know I did.

Link: Original post announcing acquisition.

Link: Dan’s praise of Golden Road once they turned around their beer quality.