Stone Brewing Layoffs – When Craft Goes Corporate

This opinion editorial was submitted by our partner and friend Jason Harris. Jason is a podcaster and homebrewer. He is the fourth brewer on the Four Brewers Podcast and occasionally makes his beer opinions known anywhere there is a comment section.

Two weeks ago, many in the craft beer world were surprised to hear of layoffs at Stone Brewing Company, the 10th largest craft brewery in 2015. Somewhere between 50 and 100 employees were sent to polish up their resumes and join the job hunt, many of whom who had been long time fixtures at the company.

On it’s face, this is a pretty normal occurrence in the big business world. A company is looking to cut costs, has some rough months, needs to appease investors and make that quarterly report look better. An easy way to do that is to trim the fat, look at the balance sheets and see who brings in the most money and get rid of the ones who don’t.

But this isn’t just any company – this is Stone Brewing. The company that rode to success on the backs of a beer called Arrogant Bastard that dared you to drink it. The company that defined themselves as the antithesis of corporate lagers, and proudly declared fizzy yellow beer as being for “Wussies”. The company that has declared themselves as fiercely independent, committed to craft, and is offering to kindly invest in any breweries who don’t want to sell to the evils of big, corporate brewery buyouts. Don’t join the bad guys, join Stone! Stay True Craft! One big, happy, beer family! But how different is the Stone Brewing of 2016 from the Stone many craft beer fans came to love craft beer with?

The Evolution of Stone
Stone Brewing’s rise has mirrored, and often outpaced, the meteoric rise of craft beer in the US. Barely making the list as the 48th ranked craft brewery by volume in 2005, they had rocketed to 14th by 2010, and in 2015 they were ranked #10, just above their recently acquired – for a reported $1 Billion! – neighbors Ballast Point Brewing and Spirits. As their star shined, Stone expanded in some creative ways. They purchased their own farm with the goal of supplying organic food for their Bistro. They opened remote breweries and company stores throughout Southern California. The news of Stone beer being available in a new region became commonplace as they spread to being available in the majority of US states. A destination hotel was announced near the main Escondido brewery. A new brewery was announced in Richmond, VA. An ambitious brewery project was crowdfunded in Berlin with mixed results. Stone was popping up all over the world in hopes of taking over!

At the same time, there were subtle changes in the beer and branding that started to surface. Stone surreptitiously created a new brand to sell “offbeat” beers called Stochasticity, and then backed off of the sleight of hand and let everyone know they made it. Stochasticity Project released half a dozen beers to middling reception before the line was killed entirely.

Soon after, in a surprising move, Stone Brewing decided they were going to spin off their Arrogant line of beers. No longer would the Arrogant Bastard be a Stone brand, it would be part of “Arrogant Brewing” a new sub-company created from Stone. The goal here seemed to be to distance the parent company from the brash, confrontational, and, well, arrogant branding that had gotten them to this point.

What about the beer?
Branding, new locations, and new things aside, what was going on with the beer side of the brewery? That’s where the real heart of any brewery lies. As it turns out, quite a lot was going on with Stone Brewing’s beer line. Outside of the Arrogant beers, Stone had long histories with Ruination “The First Ever bottled DIPA!” and Pale Ale. These beers were iconic and almost inseparable from the brand – but had seen slumping sales with the rise of more choices in the craft beer world. This led to “2.0” versions of these beers – new recipes formulated for modern palates without the baggage of a recipe dating back to the 1990s. We also saw some newer beers get the axe, like Sublimely Self Righteous Black IPA – seemingly another victim of the fading Black IPA/Cascadian Dark Ale fad.

Many craft beer drinkers (myself included) chalked these changes up to staying current – you can’t build a successful brewery on old recipes forever. Then when the 2016 beer roadmap came out, it seemed like something at the core had shifted. A blonde ale? Citrus Wit? These aren’t the kind of beers that an aggressively strong flavored brand puts out. An even bigger shock was Arrogant Brewing (the new brand to contain all of the sassy Stone marketing of yore) releasing a “Who Ya Calling Wussie?” pilsner in 16oz cans.

Would the Stone Brewing of 2005 even recognize the beer line of 2016?

Where is Stone Brewing now?

After the beer, there are the business moves. Greg Koch, longtime CEO and face of the company, vacated the CEO position. It lays vacant for a long time before going to Dominic Engels, who was formerly the CEO of POM Wonderful who is best known for selling juice and nuts.

There were a lot of small, concerning factors about Stone Brewing leading up to this. Retiring core beers, spinning off other core beers, bringing in beers they claimed to hate, and bringing in outside corporate CEO’s to run the company.

Then, there were layoffs announced. A company who in this same year had opened breweries in Virginia and Germany, on top of announcing hotels and other expansion projects, was suddenly in such dire straights that they needed to lay off 50-100 people to cut costs.

The explanation? “Lower than expected growth”…if we unpack that, the company still made more money year over year than it did before, but it expected to be making a certain amount MORE money, and thus long time employees are now on the unemployment line.

How is this “True Craft”? The brewery that positions itself as “fiercely independent” and “committed to craft” is laying off dozens of long time employees within weeks of opening new brewing facilities all over the world and long before seeing if these investments have paid off. This smells a lot like your typical corporation – manage to make the quarterly results look good, to appease the shareholders. But this isn’t a typical corporation, this is Stone Brewing – the fiercely independent brewery. Reading their press release on the layoffs, it’s hard to find something that makes the decision seem like anything but a cold, calculated decision to slim the payroll and increase the next quarter’s profits. But what will this do for next year? And the year after that?

Stone hasn’t been bought by another, bigger brewery. They haven’t sold their company to another one, or given up a majority share to a venture capital company. They have made every attempt to be an independent brewery, safe and separate from big beer.

As a company, Stone Brewing has distanced themselves from or outright discontinued many of the products that people associated with the brand. They have brought in a typical corporate CEO from outside of the beer industry and quickly followed up by gutting the staff of long time employees. They have branched their product line into categories that they vehemently raged against before, all in the name of growth. When you’ve gone against all of the values you stood for in the industry, and become more like the thing you claim to be the opposite of – are you better as a company? Was it necessary to chase constant, massive growth at any cost? Is this bigger, broader Stone Brewing an improvement over the Stone Brewing many craft beer fans loved over the years?

From where this author is sitting, it’s seeming like not selling to big beer looks a lot like becoming big beer. Is that really better?

Is this an interesting topic to you? Follow this link to hear Dan’s take on this story on The Full Pint Podcast.