'Extreme' US brewers eye UK craft legacy

Mike Steven and Founders partner Dave Engbers had narrowly avoided bankruptcy for the second time when they decided to go for broke – much to the frustration of their long-suffering investors.

Having produced years of balanced but unremarkable beers, to little or no financial reward, the former hobbyist brewers decided to risk it all and find a way to stand out in the market.

The last role of the dice, and what turned out to be their break-out beer, was Dirty Bastard, an uncompromising Scotch ale, aged in Bourbon barrels and reinforced with imported malts and American hops.

It was a kind of coming of age for Founders, a beer that expressed a clear identity, through British influences and American attitude, and which helped Founders become one of the most successful craft breweries in the US.

“That was the first beer that gained us notoriety, that caught the attention of the American public and made people ask ‘what are these guys doing?’” Stevens recalls.

“It become fun after that because we saw the success of envelope-pushing in recipe development.”

Dirty Bastard led to a phase of ‘extreme brewing’, including Backwards Bastard, Breakfast Stout, and Devil Dancers.

Stevens agrees “all these crazy beers” were almost akin to avante-garde music and fashion, in blazing a trail to capture the consumers’ attention, before filtering down into the mainstream.

“If you look back at American craft, you have to really capture attention of the consumer in a bold way. We went through this period of extreme brewing, which elevated craft to greater public awareness.

“Triple IPAs, bourbon barrel aging - we were doing anything and everything we could on recipe development. It took the bubble to another place, and as we started to get attention for more general consumer, we took it back to less crazy bold beers, and the focus to consistency and perfection started.”

With real ale a key influence on Founders – not least on its ye olde world style branding – Stevens sees the influence now flowing in the opposite direction, and believes the UK scene will follow the American pattern.

Indeed to draw another music parallel, Founders eyeing the UK market is almost like a reversal of the Rolling Stones selling R&B back to the Americans.

“It’s definitely come full circle. The UK model is 5-10 years behind the States in terms of craft beer - but it looks pretty identical and I expect it to continue to see growth. Those flavour profiles are shifting and changing just like they did in the States, so you’ve got a good future ahead.”

After plenty of hard times, Stevens has found a comfortable level of success with Founders.

By volume the Grand Rapids breweries was the 15^th biggest in America in 2018, producing c200,000 barrels a year.

In 2014 Mahou San Miguel, the Spanish beer group, bought a 30% stake in Founders, which Stevens said was essential to continue growth and create a legacy brewery.

Given this Indian summer of success, would he do it all again? It’s a question he is often asked, but one he still hesitates to answer.

“In the States there’s a bit of drama around the American dream, and what that means. It’s alive, and was a big source of inspiration for what I’ve done. But would I do it all again? The first thing I think is hell no!

“It is a great story, a great dream come true. But it was extremely tough, I didn’t come from any means. It was sink or swim and we sunk for 12 straight years.”

Having defaulted on two bank loans and a lease with landlords, does he see opportunities for new brewers – in the US and UK? Opportunities yes, but long terms success, less so.

“Today, the odds of success happening sooner are greater. In the US you could find success in a year.

“But the odds of growing to a larger scale operation or almost gone. We are one of the last breweries in the States to get a national platform. There are only a dozen distributing nationally and doing it well.”

While the Mahou San Miguel investment means Founders is strictly speaking no longer ‘craft’ according to the US Brewers Association, it received little backlash from beer drinkers, and Stevens is sympathetic to the likes of Beavertown selling to larger groups to achieve scale.

“I don’t think it’s so much about the importance of the ownership structure, as opposed to having the leadership of the founders, and a desire to create a legacy at the brewery.

“I’ve never owned a majority percentage of Founders, but the love and passion still comes from the creators, whether we own 10% or 90% - that’s what’s critical.”

In fact he sees the partnerships as securing a longer term future for breweries that could otherwise fall by the wayside in a fiercely competitive market.

“As breweries develop their business, and find partnerships that might help with distribution, cash flows and learnings, these are all positive things that will help you get better odds of keeping your brew alive into the future.”

Despite becoming one of the bigger players, Founders still has its eye on disrupting the mainstream beer market, and is eager to mop up some of the volumes being spilt by the big three in the US.

One play is domestic premium lager Solid Gold, targeted at the c85% of the US market still used to mainstream lagers such as Budweiser and Coors.

Another is its flagship session beer All Day IPA, which broke the mould of c6-7% ABV IPAs in the US, and which Founders hope will do well in the UK.

“It has as much flavour as some of our longer fermented, stronger beer. It was our first gateway craft beer in portfolio and converted a lot of mainstream drinkers. It’s accessible in balance and flavour, and another key innovation that catapulted us into mainstream.”

So what of the UK market? Founders has a distribution partnership with Marston’s, but Stevens admits they are only just scratching the surface in terms of UK exposure, with market positioning still under consideration.

“We are in discovery mode – we have a brand that’s appreciated, but we need to take it to the next level.

“We are just scratching the surface right now. There’s a lot of opportunity here, but it’s a competitive market. You’ve got to do things right, and have right partnerships in place.

“Marston’s are positive partners – we’re cut from the same cloth. They came from years of legacy, which is important to us. They’re on the same page about growing the business - but respectfully and responsibly.

“It’s easy to get the quick wins and decimate a brand, but that’s not what we’re interested in. I hope my kids will be able to come here and sell beer.”