Sierra Nevada is 40 -- an interview with Ken Grossman

Sierra Nevada Brewing is 40 years old this year. They've released a 40th anniversary beer (6.0%, 65 IBU), I suspect there will be much hoopla later in the year, even for a company such as this that is still using labels that look almost exactly the way they did 40 years ago.

Ken Grossman has been at the helm from the beginning, and running things solo for over half that time. He's starting to step back now (more about that below), but make no mistake: Ken made Sierra Nevada what it is, what it became, and what it's been. There have been huge contributions from other folks, but Ken's hand is on the tiller.

I got an opportunity to interview him today, and I wanted to get that right up. I also sampled the 40th, and tasting notes are at the end of the interview. (As is usually the case, I talked to Ken on the phone and took down what he was saying as fast as I could...but some of this is direct quote, some of it is paraphrase. When I had problems, I asked him to repeat himself. Generally, though, he was pretty thoughtful and slow.)

I'm in italics, Ken is in plain type. I didn't do my usual bolding except for the first few words to make it easier to pick out when things stop and start, and a few things I found exceptionally interesting, like the statement on Sierra Nevada hard seltzer, and one of the "argued over" issues, and the Sierra Nevada whiskey that never happened.

Ladies and gentlemen: Ken Grossman, founder and owner of Sierra Nevada. 

Congratulations on 40 years! I've been drinking Sierra Nevada on the regular since 1987, and enjoying the hell out of the ride. But my favorite Sierra Nevada beer is still the Pale Ale, which I never tire of (my wife splits her fave: Celebration when it's in season, Torpedo when it's not). Do you have a favorite year-round or annual from the line-up?

I drink Pale, but I don't stick with one style. I drink through the portfolio pretty regularly. In the past few weeks, I had Porter, 40th, Bigfoot, Pale, and some of our new Kombucha. I went over to [the Sierra Nevada Torpedo Room in] Berkeley and tried some of the small batch beers there. I try to always keep tasting and enjoying everything. I'll rotate through the seasonals when they first come out. I really enjoyed the Bigfoot this year. You know, I get that question a lot, and I usually tell them it's like trying to pick your favorite child.

Yeah, sorry, people ask me my favorite whiskey all the time. But it brings up a sadder question: which Sierra Nevada beer that didn't make year-round or regular annual status do you miss the most? For me: Glissade, a wonderful lager we still talk about. How about you?

Glissade, that was a great beer. There are plenty of them, but the realities of the market, the support you need from wholesale and retail involves a certain velocity. So even if the beer's fantastic, if the volume's not enough, the retailers will pull it, the wholesalers see that, and we're supporting something that, for whatever reason, isn't making it. Do we want a brand that's not in a good growth mode, or something that's more where the consumers' tastes are? And it might be tastes, might be the branding, or it might be something else. Hazy Little Thing took off more than we expected last year, it was 98% growth. It caught us a bit off guard. We'd predicted 40,000 bbls. First year doubled that, and then doubled that again.

The 40th seems to be a very Sierra Nevada beer: a 3C (Cluster, Cascade, Centennial hops) IPA, relatively dry, and a very drinkable 6%. But what about the oats and acidulated malt? Is that a regular thing that I just don't know about, or is it something different for this beer?

We do oats in quite a few beers for the mouthfeel; in intentionally hazy beers we use a lot of them. We do use levels of acidulated malt in a number of beers, just for balance of acid. It's a malt that goes through a lactic step before kilning, it helps with pH balance, gives a softness in the flavor.

The hops...we were trying to go back to 1980. Cluster was the American hop, Cascade wasn't quite as popular then as it would be, and then Centennial would come later, the super-Cascade.

You know, Cluster never really got a fair shake in America. It's been around for years in variants. This aromatic hop, it was so different from what the German brewers were used to using, those subtle Noble hops. The American brewers were mostly German trained, so they weren't used to that in-your-face aroma. But it was considered an acceptable source of bittering, not as an aroma hop. As more aggressive, higher-alpha (acid) hops were bred, the Clusters fell to the wayside. It has a unique character, and we've played with it in various formulations. It's about 6% Alpha, and you've got bittering hops with triple that now. It doesn't yield that well (per acre), and doesn't have a competitive place as a bittering hop. We've grown some Cluster, and we've gone out and picked wild Clusters outside of Chico [in the area of an old hop farm]. It adapted to the climate down here and does well for what it is. It seemed like a no-brainer.

Cascade we used in a lot of our early beers, and Centennial is just a great all-round hop. You've probably heard of beers that are focused on Centennial that are in the top few beers in the country.

It's hard being an established and large craft brewer these days. It hardly seems fair, to have done the hard pioneer work, to be making some of the best beers you've ever made, and see attention and sales go to new, small, "cool kid" brewers. Is there a path to continued success as a large craft brewer? Do you just keep making good beer?

That's table stakes. The majority of the small brewers are now making good beer. To be considered in the competitive set when people pick a beer to buy, we have to make great beer. We've been innovating, spreading our wings. We're looking at other alcohol beverages than beer. We just put on our first hard kombucha. We've got a great team put together for using bacteria and other yeasts.

We're about to release Wild Little Thing, a lactic, somewhat tart beer, should be out in a few months. Just tasted the latest batch. We want to appeal to a wider band of beer drinker. Hazy Little Thing appeals to people who are not necessarily core Sierra Nevada drinkers, may not even be aware of the traditional Sierra Nevada beers.

And we're working in alternatives: Kombucha is one, and we're looking at others. I don't know that we'll do an alcoholic spritzer. We'll want it to have some more meaning and soul, more in line with what we are than just fermenting sugar and putting flavor in it. The Kombucha we hope will appeal to a similar consumer. We worked really hard at making it, the cultures are ones we intentionally put together. Most of them are combinations of yeast and bacteria that just happened, passed on from a friend's uncle. We've been purposeful about that: a little funky but not a lot, lower alcohol, organic. I think it has a lot more to offer a drinker that wants something that's better for them. We wouldn't call it a health beverage, but the things people are concerned about: carbs, alcohol, it meets those needs in an organic package.

But to get back to your question? Just make great beer and keep up with the changing drinker. We have to, you know. The younger folks drink more than us as we age.

Looking back on all that you've done -- starting a successful family-owned business, creating the American pale ale and American barleywine styles, pioneering estate brewing and wet hop brewing, going solar, creating 100s of jobs -- what things are you the most proud of having accomplished?

There is a lot. The industry is nothing like what I thought it was going to be 40 years ago, more than 40 years ago, when I was trying to raise money. (Brewing industry pundit) Bob Weinberg was predicting the beer industry would be down to 2 or 3 breweries in 1990.

I'm proud we were part of the revolution that changed the face of beer in America, and set the stage for a change of beer on a global scale. The breweries here weren't innovating, didn't have the cachet of countries like Czech, Germany, UK. And now it's come full circle, we're known for beer more than those people. I played a part in that transformation, and I'm proud of that. Some of our early labels and tools are in the Smithsonian, from our fledgling industry. And with Boulder (Brewing) closing, we're the last man standing, and haven't been sold, so we're the oldest of the pioneers. 

Any regrets? Anything you wish you'd done, or Sierra Nevada could have made happen, or in the way craft brewing has turned out?

I wouldn't say regrets. I talked to Fritz Maytag about this when I saw him at the Smithsonian. One of the things I wanted to do in 1980, and I still have the copper pot I was going to do it with: I was going to make an American scotch whisky in 1980. We did supply some wash for St. George back in the late 1980s. One of the guys was just saying a couple months ago, 'If you'd done that when you first got here, you'd have 30 year old whiskey now!'  (Would you, though? Would you have kept some that long?!) I like to think we'd have kept at least one bottle!

You've always seemed like a very 'no drama' kind of guy, and Sierra Nevada reflects that: solid, continuing brands, packaging that rarely changes, beers that clearly pay homage to classics, but often make solid advances. Why has Sierra Nevada been so steady all these years, still the same beers at the core, still the same colors and graphics? Is it because of your company culture and your personality, or is it something you could do because you were in this very, very early? Is that a strategy you've followed because it worked, or because it's the way you know? 

Several times over the years we've hired firms to do a major refresh of the pale ale. It ended up being the artwork for the XXX package. That's one of the versions that was done for refreshing Pale Ale. There was internal angst about such a big shift – and I love that label – but our family argued over that. That statement on the sixpack; that's one of the things we argued about! 

We see other brewers – what's the industry saying, every time you do a package refresh you get a 5% sales bump? But I've seen some brewers go through a half dozen or more in ten years and I think it can do damage to brand equity. I don't think it's all upside. Some brands need a refresh, but every year or two seems like a lot. A homebrewer friend did the original labels, he was in the Maltose Falcons club. Chuck Bennett.

You've got 40 years in, more than that, counting start-up. That's a career for most people. Are you looking to hang up your boots any time soon? Is there an exit strategy for Ken Grossman, and what does the company look like on the other side of it?

We hired a CEO, promoted the COO Jeff White into that last year. I've been slowly unloading stuff that I'd rather not be doing. I'm working less, trying to work myself out of the job. I like the technical stuff, so I still play a role in that. I've got two children involved in the business out here. Brian oversees the customer experience side at all three places. Sierra is on the people side and in the leadership group.

I'm just trying to stay out of people's way, and I stick my fingers in where it makes sense. My wife is always after me to work less, so I took a bike ride this morning, I only have one meeting after this, and then I'll head home. I have a woodshop and a metalshop at home. I bought a welder and a lathe, first pieces of equipment I bought, and I've still got 'em both. 

Thanks, Ken. For everything. 

Tasting Notes on Sierra Nevada 40th Hoppy Anniversary Ale -- Oh, that beautiful fresh yeast smell. Nothing like a Sierra Nevada ale. Beer's a little bit hazy, with an apricot nectar color and a crunchy white head. Noses pine and pith, with a bit of orange candy. It plays slick but sharp on the tongue, with firm hop flavor -- that pine and citrus again -- but not the gripping bitterness of a Celebration.

In fact, this is a beautiful feat of brewing: they've taken the basic building blocks of their brewing, a brewing tradition (you can certainly say that after 40 years of it) that includes Pale Ale, Bigfoot, Celebration, Torpedo, Tropical Torpedo, and Hazy Little Thing...and once again they've taken those basic ingredients and created a beer that slides into that formation without infringing on any of the others, and yet clearly belongs in that formation. These are all beers that are individuals, and only Bigfoot does that by being hugely different. 40th does it almost all with mouthfeel. Well done!

Massively Increased Beer Choice: Good, Bad, or Ugly?

Way back, around 1996/7, craft beer growth in the U.S. flatlined. It had long been predicted -- which seems weird and self-fulfilling, in retrospect -- as "the coming shakeout," and it arrived with force. When it did...we started looking for why. (Funny thing is, not many people talked about why before there was a shakeout (or why everyone referred to it as a 'shakeout') but they seemed certain there would be one...and there was! Amazing, what we do to ourselves.)

There were a multiplicity of factors -- under-capitalization, lack of brewing skill, market manipulation, industry in-fighting among them -- but one that got a lot of play was the thought that consumers were flummoxed by too much choice, and were standing in front of craft beer shelves in a fibrillating logic loop, like some Star Trek-era computer that had just received some verbal bullshitsku from Kirk and Spock (Kirk, out-thinking a computer, now there's quality plotting)...and then turning, zombie-like, to go back to Good Old Bud Light.

 

We were told this had happened -- you know, by marketers -- but I remember thinking at the time that it sounded crazy, that it was something the big brewery marketers had come up with to help the executives sleep better at night. Wine had that many choices, and more, and that was extolled as a great thing. There were more Scotch whiskies all the time: sales were going up. I remember getting too many bad beers -- lot of quality control issues back then -- but more choices was a good thing.

At least, I thought so. Then Barry Schwartz came out with his book The Paradox of Choice: why more is less in 2004, and that seemed to ice it. It was in a book, you nerds; more choice paralyzes consumers! End of speculation.

I like books, but...this is something that's always bugged me, and I just saw two pieces about it (thanks to Our Girl Tara Nurin at CitySearch.com Philly for that!), so here goes. The first piece, from February, is a short one from the always curious Harry Schuhmacher at Beer Business Daily. Harry notes that he'd heard Jim Koch speak about the phenomenon in today's market, about

"the great proliferation of choices in the beer aisle today, giving Americans the most choices and a wider variety of beer in any time in history. But he also warned that there is a law of diminishing returns, as too many choices can actually paralyze the consumer into buying less, or even buying none, because no matter what he/she chooses, the consumer is left with an unsatisfied feeling that they may have not chosen the best beer."

Classic Schwartz, right out of Paradox: choice paralysis comes from the 'fear' of not making the best choice, and Harry quotes Schwartz to back it up...on the subject of picking mutual funds. And Harry follows with examples of people paralyzed at the craft beer selection...and also inspired by it, and ends with "What do you think?"

Mostly, I thought, picking a good beer is not as hard or as crucial as picking the best mutual fund. I mean, what's the downside? You're out $15, as opposed to maybe $50,000 if you pick the wrong fund? Screw it, let's double down and get two sixpacks!

Then I read Jeff Linkous's Beer-Stained Letter blog post about it. After he speculates a bit, and notes the great 2010 numbers from the Brewers Association...he talks to Barry Schwartz, who, it turns out, "by and large gives the beer industry a pass from his premise that a plethora of choices turns consumers off..." Ha!

The reason beer gets an exemption: choosing a brew – sixpack or single bottle – from the wall of eye-popping labels, and picking one you're ultimately unhappy with, is an error that's easily [sic] to correct, easy to move beyond given the lower price than a car, computer or clothes. Plus, with those latter items there's the expectation of keeping them for a while.

Yeah, well...you look at my garage, fridge, and basement, you'll see I apparently have that expectation about beer, too! Anyway, Schwartz adds that the difficulty of making a choice may come out in ways other than walking away:

the hyper array of beer choices could end up favoring well-known or familiar brands (or beers that have the most engaging packaging or labels for that matter). Opting for the familiar is a way of dealing with a problem that seemingly can't be solved, steering away from a random choice. "Nothing will bring brand loyalty back faster than a proliferation of options," he says.

So...where's that leave us 14 years ago? I think Schwartz is eminently pragmatic about the price of the product making the "paradox" less pressing, and I believe that puts an unstoppable hole in the "overwhelmed by options" theory of The Shakeout. I put my money on the number of sub-quality beers in the day (packaging problems, largely), the angry quarreling among craft brewers and a couple of vicious smacks from the big brewers that had an outsized effect, and a rush into the market by people with more money than brewing passion.

Today's threat of choice paralysis is, I believe, greatly overstated by Jim Koch, and I can't help feeling that he knows that: after all, Boston Beer is cranking out a lot of new beers lately, hey? We're seeing more and more beers every year -- more beers and more breweries and more kinds of beers -- and yet the sales just keep going up and up along with it.

Hmmm...quality of beer is WAY up, there's next to no in-fighting (we have to make up squabbles about extreme vs. session beer just to keep from getting bored, apparently), and the rush of "stupid money" into the craft industry that I was concerned about four years ago never really materialized. I'm thinking there are much better ways to explain The Shakeout, and much more important things -- malt prices, tax increases, Four Loko lapover effects, price of capital for expansion, wholesaler consolidation -- to worry about...than too much choice. Give us all the choice you got, brewers; bring it on!

Ask Not For Whom Red Bell Tolls

I'm compiling the archived files of 15 years of Malt Advocate stories, including back when we still covered beer, and I wrote a column called Short Sips that gave me a chance to poke fun at what was going on in the beer world...and sometimes things right in my own beer backyard. Such as this, which I I just copied out of a file from mid-2001. I know Jack remembers, and I know some of the rest of you do as well, the days when Red Bell provided the kind of comedy that H.L. Mencken used to have to rely on the Congressional Record to provide:

The following is a condensed composite of actual news articles from the Bloomberg news service, BusinessWire, and the Philadelphia Inquirer.

March 24: Shares of Red Bell Brewing of Philadelphia will begin trading on March 27th. Red Bell had about $11.5 million in sales last year and the company will generate $12.5 million to $14 million in revenue this year, said Chief Executive Jim Bell. Red Bell owns breweries at several area stadiums and arenas, including Veterans Stadium, and plans to open a brewpub at Penn State University in July.

April 9: Red Bell announced today that certain inaccuracies were contained in a March 24th article. Red Bell had gross revenues of $514,720 in 2000, not $11.5 million. The article also incorrectly stated that Red Bell would generate $12.5 million to $14 million in revenues this year. Subject to completing, opening and operating its proposed [Short Sips TruthItalics added] Penn State brewpub as well as acquiring and operating at least 2 existing brew pubs, Red Bell could generate $11.5 to $12.5 million in revenues per year. Also, at the present time, Red Bell does not own or operate any brewpub locations [in stadiums or anywhere]. Finally, while Red Bell has applied for the listing of its common stock, Red Bell is still waiting for final approval of the application.

Well, well, well. Some days the news is so damned bizarre we don’t even have to say a word.

I never could figure out why the Inquirer always swallowed Jim Bell's press releases whole, no matter how many times they were burned.

Steve Nordahl... Anyone recognize that name?

I opened the Brewers Association Forum e-mail this afternoon, and a name caught my eye: Steve Nordahl. Not a common name, Nordahl, and I knew I'd seen it before. He was writing from a new brewery, Lone Peak, in Big Sky, Montana, asking for advice on pulling the trigger on a small canning machine. Hmmm.... Steve Nordahl....

Then it hit me, and Google confirmed it. Steve Nordahl was the head brewer -- and original brewer -- at Frederick Brewing (and that's a wildly incomplete entry, even for Wikipedia), the Maryland brewery that did a really spectacular expansion (one of the first beer stories I ever wrote about) and similarly spectacular IPO, built a huge, beautiful brewery outside of Frederick, Maryland...and then crashed, hard, when they apparently staked their future on the success of Hempen Ale, a beer made with sterilized marijuana seeds (which was good enough, but not amazing).

I talked about Steve and Hempen in a story I did later.

"It was an odd moment. I was in the Frederick Brewing tasting room, idly sifting through a bowl of marijuana – er, hemp seeds and talking to brewer Steve Nordahl about Hempen Ale. I had just realized that Nordahl and his partners were staking the future of the brewery on the success of Hempen Ale, brewed with those seeds. "You’re betting the brewery on a gimmick?" I asked. "No!" said Nordahl, eyes gleaming. "It’s not a gimmick, it’s a novelty!"

It turned out, as I said in the story, to be a distinction without a difference. Hempen generated a lot of first time sales on the dope imagery, but not many repeat sales. It may have been ahead of its time, a beer with "too much flavor" for the people who were interested by its promise. Nowadays, it might have a better chance.

The last I heard, and it was strictly a rumor, Steve Nordahl was day-trading stocks out of an RV. That was about ten years ago, and it was a sad loss, because Steve made some damned good beers. (Funny thing: the brewery managed to stay open, one way or another, through some incredibly hard times, and has now been bought by Flying Dog...who actually closed their brewery in Colorado and landed completely in Maryland.)

Anyway, it was a weird moment. I e-mailed him, and hope to hear what he's been doing, and what the Lone Peak story is. No one ever truly leaves brewing, eh?