photo by Matthew Curtis
With facilities on both U.S. coasts and Berlin, Stone Brewing will extend its physical presence into China this summer when it opens a new taproom. According to Stephen Yu, the "CornerSTONE" sales director for China, the multinational company will place another pin on its expanding map when a Stone Brewing on-premise location soft opens in Shanghai in June. The decision comes after months of overtures toward China, which began with an initial shipment in October 2017, an official launch in December 2017 and recent visits from top-level Stone leaders for a tap takeover at Shanghai's World of Beer with executive chairman and co-founder Greg Koch, CEO Dominic Engels, and brewmaster Joel Grosser.
In addition to the new taproom and Yu's position to help facilitate on-premise accounts, Stone also recently posted a job listing for a regional sales representative to be based in Shanghai, Beijing, Shenzhen, or Guangzhou. The mid-level position asks that the applicant be fluent in Mandarin and English as a means to help "bring fresh, cold-chained Stone beer to the growing China Craft Beer market."
Alongside Stone, the move has been supported by a marketing company owned by the private equity firm that invested $90 million into the California company in 2016. According to West Coaster, Hillhouse Creative, an arm of VMG Partners, helped lead the charge into China. The magazine also reports that VMG's minority stake in Stone has grown the last two years.
Stone’s U.S. staff didn’t respond to multiple attempts for comment, but in an email, Lizzie Younkin, PR manager for the company, said that the project was in place.
The move is among Stone's broader efforts to expand its physical reach, which shifted beyond its Escondido, California HQ to include Richmond, Virginia and Berlin production facilities. Despite being a self-described "Europhile," it became clear in recent months Stone co-founder Greg Koch also had an affinity for Asia, if only for its business potential.
“I returned from China energized and blown away by the welcome we received,” Koch said in a press release, referring to his visit in fall 2017. “Our reputation had evidently preceded us, and I loved being there as our fans enjoyed the bold and complex aromas and flavors of über fresh Stone beers for the first time.”
Of course, Stone isn’t the only American brewery trying to make inroads in China.
In February, GBH reported on Anheuser-Busch InBev's plan to launch Goose Island locations in China, which included production facilities in Wuhan and Fujian Province. At the end of last year, ABI CEO Carlos Brito told CNBC that he saw the future of Chinese beer in the premium and super-premium price categories, of which Stone is most certainly a part. According to ABI's own analysis, the "Asia Pacific" region is expected to provide more than 50% of beer's worldwide volume growth through 2025. According to global marketing research firm Euromonitor, China’s retail sales of beer doubled in the decade between 2008 and 2017, amounting to roughly $80 billion U.S., or about 75% of what Americans spent on beer in 2016.
Despite foreign markets providing greater options for their local drinkers, and impacting U.S. craft beer sales in the process, “Asia Pacific” has long been a strong location for Brewers Association-defined “craft” beer, of which Stone is also a part. In its annual export report for 2017, the trade organization changed its public reporting to show total export percentage to key countries, but in previous years issued stats on volume growth percentage. In the three years leading up to the most recent report, “Asia Pacific” registered 38% growth in 2014, 12.5% in 2015, and 12.9% in 2016.
Clearly, China and its neighboring countries have a taste for American craft beer, and Stone is hoping that an ongoing worldwide influence of hoppy (and therefore “American”) beer stays true in coming years. As part of its outreach into the country, Stone has touted its “uninterrupted cold chain delivery approach from San Diego” as a means to send a fresh portfolio of beer from the U.S.
How fresh that beer might be when it arrives and is sold is another question. In a report by GBH last year, Koch noted that an importer used by Stone to sell beer in Australia wouldn’t accept date coding to label a bottle or can as fresh within 90 days. “Retailers will not accept beer even with 90 days on it,” he said at the time. For Australia, Stone set some of its maximum “fresh by” dates at 120 days, but as noted by writer Glen Humphries, its Go To IPA extended all the way to 365.
Stone’s cold chain process will help mitigate some of that worry, but it’s unclear what the company’s date coding plan will be specifically for China.
Oddly enough, this move comes at a time when Stone’s brands continue to perform strongly and grow at home. The brewery's IRI-tracked dollar sales in grocery, convenience, and other stores grew from $65.5 million to $75 million from 2016 to 2017, and its new Stone Scorpion Bowl IPA was the most checked-in beer on Untappd in March 2018. The choice to have deeper roots in China isn’t a desperate move as much as a power play, setting stakes before other competitors get to set the stage—and the terms—of what it means to be a hop-forward American brewer selling beer in the most lucrative foreign land.
—Bryan Roth