The Audacity of Hops: The History of America's Craft Beer Revolution (37 page)

C
ameron Healy and Spoon Khalsa's
Kona Brewing Company launched operations in an old newspaper pressroom in Kailua-Kona, on the western edge
of Hawaii's Big Island, in the spring of 1994; its first beers, Pacific Golden Ale and Fire Rock Pale Ale, rolled out in (mostly) kegs and bottles on February 14, 1995. Healy brought in Mattson Davis from Portland, Oregon, as the CEO and president within two years, and the brewery enjoyed steady though modest growth with three thousand barrels produced in 1997. It didn't make a profit for the first few years and had to battle a state government that taxed brewers like they were going out of style (which, of course, they had been): Hawaii charged brewers ninety-two cents for every gallon of beer produced. Kona would not move into the financial clear until it entered the brewpub business late in the decade. That also meant tangoing with the state, which capped production for brewpubs at five thousand barrels annually.

Brewpubs were very much in vogue by then nationally. In 1993, 70 brewpubs opened; in 1994, 101 (only six closed); and more than 360 were in operation by the spring of 1995, besting the number of craft breweries by more than three to two. These numbers were helped in no small part by legal changes in big states like Florida and Texas,
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and the ranks now included legendary pioneers like Bill Owens's Buffalo Bill's in Hayward, California; Bert Grant's in Yakima, Washington; and the Mendocino Brewing Company's Hopland off Highway 101 north of San Francisco alongside appendages of the most notable early standalone breweries. Not least among these was Ken Grossman's Sierra Nevada, which opened a brewpub next to its new Chico, California, brewery in 1989 that quickly became popular not only with the locals but also with hikers, bikers, and sundry fellow travelers venturing north from San Francisco.

However prolific brewpubs might have become, they were still new enough in some places to produce firsts, just like breweries. John Hickenlooper was a Colorado geologist who had just gotten laid off from an oil company—with two years' severance—when he visited his brother in Berkeley, California; they went to the Triple Rock Brewery and Alehouse on Shattuck Avenue, a brewpub started in March 1986 by two brothers in their mid-twenties, John and Reid Martin, who had to first convince even America's arguably most liberal city that what it considered a factory was not a bad thing for the downtown area. Hickenlooper was blown away by the beer and returned to Denver with the idea of opening the Mile High City's first brewpub. The Wynkoop Brewing Company opened in October 1989, after Hickenlooper and his partners raised $575,000 through a bank loan and investors (including an aunt in Scotland, who put up $10,000). The brewpub at Eighteenth and Wynkoop Streets helped transform a gritty area of Denver into a fashionable enclave, and inevitably
became a major tippling point every time the Great American Beer Festival came to town.

Finally, there was the phenomenon of the brewpub chain. The idea of a restaurant serving beer that it brewed on-site was novel enough in the decade before, but now it had been proven time and again in different locations by owners of different temperaments and levels of business savvy. Frank Day saw an opportunity to take it up a notch. Day was a Harvard MBA and former Chicago ad man who started in the food-and-drink business with a run of popcorn concessions in the Midwest. He eventually grew a chain of pizza parlors specializing in Chicago deep dish and then tried brewpubs with the Walnut Brewery and Restaurant, which opened in Day's adopted Boulder (he was born in Denver), in 1990. The following year, he and his partners took over the struggling Boulder Brewing Company.

The ballyhooed brewery that began in 1979 in the converted goat shed on Al Nelson's farm was by 1990 on its sixth ownership group in five years. Nelson, Stick Ware, and David Hummer's decision to turn to venture-capital money had saved the brewery and paid back original investors; it also unleashed a romping ride through craft beer's growth spurt, where the brewery increased capacity to keep up with demand. Its profit margins ultimately suffered—it was the “tyranny of fast growth” that Tony Magee described in his own experience with Lagunitas in California. In 1990, $2 million in debt, Boulder Brewing declared bankruptcy, and Day and his partners, including Boulder city councilman (later mayor) Bob Greenlee, stepped in. Under the direction of Gina Day and Diane Greenlee, Frank and Bob's wives, they changed the name to the Boulder Beer Company, went private, and added a restaurant to make it the city's first brewpub.

The Walnut and Boulder Beer served as catalysts for what many of the same investors opened next: the Rock Bottom Restaurant and Brewery. Located thirty miles southeastward in Denver, it opened in November 1991 in nine thousand square feet of the first floor of Prudential Plaza, off the Sixteenth Street Mall, and quickly became a major hangout. Lines queued out the door; there were even crowds on Sunday nights. Inside, patrons could see jazz bands and brew kettles simultaneously, and bartenders put on their own show, with twirling glassware and trivia centered around the five beers overseen by Mark Youngquist, the brewmaster brought in from the BridgePort Brewing Company in Portland, Oregon (the red ale was a particular hit). It was a party as much as a restaurant-brewery. Revenues soon exceeded $1 million annually; the formula seemed invincible. Plans were soon made to expand nationwide. The Rock Bottom in Houston, Texas, would have twice as many
seats as the original in Denver; Portland, Oregon, and Minneapolis were early additions, too; four more Rock Bottoms were slated for 1994 and at least three more for 1995.

Rock Bottom was at the vanguard of a brewpub-chain trend. Jon Bloostein, a one-time Wall Street investment banker, spent $2 million renovating an old kayak store in Manhattan's Union Square and another $250,000 on brewing equipment to open Heartland Brewery in 1995. That a brewpub would be part of the city's mid-1990s gentrification under the Giuliani administration struck nobody as unusual. The
New York Times
mentioned Heartland, which would grow to seven brewpubs in the city, in the same breath as the neighborhood's Barnes & Noble, the incoming House of Blues nightclub, and the regular farmers market in Union Square that featured local produce from New Jersey and Upstate New York.

Hops Bistro and Brewery had four locations in California and Arizona by the spring of 1995, including in San Diego and the original eighty-five-hundred-square-foot spot in Scottsdale, Arizona. A similarly named though different operation, Hops Grill and Bar, had nine in Florida. The latter, which would grow into the largest brewpub chain in the country, was started by David Mason and Tom Schelldorf, two restaurant executives who logged time at the Steak and Ale chain, founded by the man behind Bennigan's. Wynkoop's John Hickenlooper was said to be involved in a total of eleven brewpubs, including ones in Nebraska, Kansas, and Oklahoma.

Gordon Biersch Brewing started in an old theater in downtown Palo Alto, California, in 1988. Dan Gordon had worked in restaurants since he was fifteen, and Dean Biersch had studied brewing in Munich before internships at the Spaten Brewery there and Anheuser-Busch back home. The pair's idea was a knockout almost from the get-go; the venture grew to five locations in under eight years, including Hawaii's first brewpub, which opened in late 1994 with expectations of as much as $7 million in revenue annually.

It was that kind of business—its growth seemed to have no end in sight, and financial expectations were high from opening day. And why not? The beer produced could be sold at a considerable markup: pints selling out front for three to four dollars each could be made in the back for twenty cents. The model was not without its critics. The kitsch came in for tongue-clucking, with comparisons to the faux Irish bars that had begun springing up nationwide starting in the 1970s; like those, with their O's and Mc's in the names and the beer-brand mirrors on the walls, the brewpub chains seemed at times a tad too formulaic: slightly higher-end bar food, a little music, and the beer. Comparisons to other chains like Chili's and Red Lobster in the trade media that were
meant to be favorable were instead taken as warnings of what Larry Baush, publisher of the
Pint Post
newsletter out of Seattle, called the “McDonaldization of brewpubs. I think that's the real danger to the whole brewpub sector, especially if we see the restaurant chains get into it, and there's definite interest in that.”

But the focus on the beer was undeniable and redeeming, regardless of the decor and the sound system. These chains, like other lone brewpubs, produced some of the nation's most celebrated and coveted beer. Most important, they provided perhaps millions of Americans with their first encounters with craft beer. Rock Bottom's four-hundred-seat Houston location alone could whet the palates of more consumers in a month than most craft breweries could in a year through their tours and tastings. Still, the restaurant chains were circling; so were the investment bankers. Like with standalone craft breweries, the business of brewpubs seemed too sure a thing to leave alone.

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Texas joined forty-four other states and DC in legalizing brewpubs.

I
t was like a scene straight out of
Goodfellas.
Two big limousines pulled up in front of a construction project in a gritty, isolated area of Brooklyn. Somber, serious men in bulky overcoats got out as the construction workers scrambled for cover. In heavy Brooklyn accents, the men from the limos asked to speak to “the man in charge.” That man was Steve Hindy, the construction super told them, but he was out to lunch. That was OK, the men said; they could wait.

The construction project was for the new Brooklyn Brewery. Hindy and Tom Potter's operation by 1995 had made a leap that other contract brewers routinely talked of making though rarely did: creating a physical brewery to take over a large chunk of production. They had found an old warehouse space in the Williamsburg neighborhood of Brooklyn, which, a century before, had served as the nexus for the city's brewing industry. The neighborhood, although it would in a few years become synonymous with hip (in no small part owing to the Brooklyn Brewery), was then far from fancy, which was why Hindy and Potter were able to plant their flag there. They had looked
first in Manhattan. Through real estate agents, they sized up an old jazz club in Greenwich Village. The original estimate to build out the space into a brewpub was $3 to $4 million; Hindy and Potter showed the estimate to Milton Glaser, the legendary graphic designer who had been given a stake in the brewery in exchange for designing its logo. Glaser told them it would cost almost twice that much. The pair abandoned Manhattan for their brewery's namesake borough.

And why not? Brooklyn resonated as a brand in itself the world over. Hindy especially knew the borough's reach from his former life as a foreign correspondent. A friend of his from the
New York Times
had been seized without any press credentials by the Palestinian Liberation Organization during the 1982 Israeli siege of Beirut. A hooded interrogator asked him where he was from. Brooklyn. What street? Flatbush Avenue. What was the name of the baseball team that left? The Dodgers.

“You seem to know something about Brooklyn,” the
Times
reporter said.

“Yes, I live there,” the hooded interrogator replied.

The brewery space that Hindy and Potter found in the fall of 1994 was actually across the street from the windowless, gas-heated office they were using to coordinate the distribution and marketing of the now more than eleven thousand barrels annually being brewed at F. X. Matt in Utica. What looked like one red-brick building was actually an old matzo factory over three smaller, adjoining ones totaling around twenty thousand square feet and including a five-thousand-square-foot space with twenty-five-foot ceilings and no columns: a perfect brewhouse. Hindy and Potter arranged a five-year lease with an option to buy the space for $1.1 million. The landlord included the option to buy only reluctantly: there was a sense in the mid-1990s that New York City was changing for the better and that the right kind of business in a space like this could really do well—for itself and for the neighborhood.

Deal in hand, throughout 1995 Hindy and Potter, along with brewery staff as well as the contractors and subcontractors, planned and renovated the space. The partners were careful of cost overruns, like those sustained by Matthew Reich's old New Amsterdam brewpub in Manhattan. The costs, however, did run away from Hindy and Potter at times: new floor drains, $13,000; a new sidewalk, $20,000; new wood beams in the crawl space to support the brew kettles and tuns, another twenty grand. It was a common refrain in brewery build-outs. Still, the construction work heralded something big for the area, and that's what the papers wrote about—and the somber men from the limos read about.