Southern California’s largest craft brewery poised to grow

BY PETER ROWE

ORIGINALLY PUBLISHED MAY 18, 2011 AT 6 A.M., UPDATED MAY 18, 2011 AT 11:11 A.M.

Stone Brewing Company, whose recession-defying growth has made it Southern California’s largest craft brewer, is announcing Wednesday $26.6 million in expansions and new businesses. When these projects are completed — some are open, and the others should be by late 2012 — much of the county will be less than a stone’s throw from a Stone venture.

Major components include:

• Bringing a 400-seat restaurant to Point Loma’s Liberty Station, complete with bocce courts, an outdoor space for movie screenings, a 19,000-square-foot beer garden and a small brewery.
• Expanding the company’sEscondido home, more than doubling its footprint and allowing it to produce about a half million barrels of beer a year.
• Running an 18.7-acre farm in North County to supply organic produce to the company’s two restaurants — Liberty Station and the existing Stone World Bistro & Gardens in Escondido.
• Opening a shop in South Park on 30th Street’s “beer corridor,” selling Stone ales in bottles, kegs and half-gallon “growlers.”

These plans are underway even as Stone tries to become the first American company to open a craft brewery in Europe. That project is moving slower than anticipated, company officials say, due to legal and regulatory hurdles. But they insist the dream of a Stone brewery in Berlin or Bruges, Belgium, is still alive.

Tackling a half dozen projects at once — adding 250 employees, acquiring 35 acres, building 125,000-plus square feet of work space and spending almost $27 million — may seem reckless.

“But it’s just our time right now as craft brewers,” said co-founder and brewmaster Steve Wagner.

This industry is in ferment. Within the vast United States beer market, craft beer — beer made with traditional methods and ingredients — accounts for just one in every 20 pints sold. But while overall American beer sales dropped 1 percent in 2010, craft beer sales rose 11 percent, reported the Brewers Association, a trade group based in Colorado.

San Diego has become a center of a craft beer movement, thanks in part to Stone’s innovations. The brewery’s quirky, aggressively hopped beers — Arrogant Bastard Ale, say, or Stone Sublimely Self-Righteous Ale — quickly propelled it past the area’s oldest beer maker,Karl Strauss. This year, Stone expects to sell 150,000 barrels of beer (each barrel is 31 gallons), 30 percent more than in 2010 and about triple Karl Strauss’ figures.

While Karl Strauss has focused on Southern California, Arizona and Nevada, Stone has built a rabid coast-to-coast following. These beers, all brewed in Escondido, are distributed in 36 states and the District of Columbia. An online poll at BeerAdvocate.com named this the “Top Rated Brewery of All Time On Planet Earth.”

While impressive, explosive growth is a familiar theme among craft brewers. Green Flash, for instance, is swapping its 14,000-barrel Vista brewery for a Mira Mesa plant with room to produce 100,000 barrels. And Chico’s Sierra Nevada, the second largest American craft brewer (behind Boston Brewing, maker of Samuel Adams), is scouting locations in the eastern and southern U.S. for its second brewery.

“Craft beer sales have kept on booming straight through the recession,” said Paul Gatza, director of the Brewers Association, an industry trade group based in Colorado. “Everywhere you go, the 15,000 regional breweries are looking to go to 60,000 or 100,000 barrels.”

But few breweries are branching out into farming, multiple restaurant locations or, um, sports.

Bocce?

“It’s a wonderful sport,” quipped Greg Koch, Stone’s CEO, “that you can do with just one hand.”

Wagner added, “So you can hold a beer in the other.”

The co-founders met in the 1980s, when Wagner was a bassist in a rock band and Koch rented musicians’ practice studios in Los Angeles. They shared a passion for good beer and, in 1993, re-connected by chance when both enrolled in a University of California Davis brewing class.

Three years later, the duo founded Stone in a small San Marcos warehouse.

Over the years, the brewery has come to reflect the partners’ values. Koch is an environmentalist — and the brewery is installing three charging stations for electric cars, including Koch’s own Volt. Stone Farm owes its existence to the partners’ insistence that their Bistro buy local organic produce. After learning that a supplier, La Milpa in Escondido, was folding, they leased these acres of greens and root vegetables in March.

Koch and Wagner, farming novices, hired an agriculture veteran, Mil Krecu, to manage Stone Farm.

They knew little about the restaurant business, either, when the Bistro opened in 2006. The Liberty Station operation, which will inhabit a World War II-era hall near the old Naval Training Center’s golf course, will incorporate lessons learned — a larger kitchen, say, and more beers on tap (40, as opposed to 32 in the Bistro).

Farm, restaurant, shop, headquarters expansion — have they bitten off more than they can chew, poured out more than they can drink?

Oddly, a different fear haunts Wagner.

“I’m afraid to answer my phone some days,” he said. “It’ll be another opportunity we’ll have to say no to.”

peter.rowe@uniontrib.com • (619) 293-1227 • Twitter: @peterroweut