Brewer Spotlight: Morgan Cox of Ale Industries, Part 3

Photos © Brian Stechschulte

In the final installment of my interview with Morgan Cox, we discuss the origin of the brewery’s name and logo, how production pressure has forced him to cut back on festival participation, his search for a new brewery location, brewing philosophy, the future of craft beer in the Bay Area and more

If you’re just checking into this interview, be sure to read part 1 and part 2.

So tell me about the name of the brewery and how you came up with it?

So I really like the idea of not having such and such brewing company, because if you look back a few years ago, every single company was something brewing company. I was out fishing on the Delta with a bunch of friends and it was a late night, we were drinking and somebody said, “Why don’t you just call it Ale Industries?” It instantly stuck. I thought it was an absolute stroke of genius, but it does give some people the impression that we don’t make lagers. When I kept hearing people ask if we did, we made a lager. I didn’t want the main thought process for people to be the name of the brewing company. I wanted people to think about Ryed Piper, Orange Kush and Uncle Jessie. I want them to think about those individual beers.

The logo has a really nice handmade quality. Why did you choose that style of design?

We deliberately wanted that look and feel. The funny thing was, as soon as we did it, we got two different sets of feedback and both sides were really passionate once again. At this point now, whenever I get really passionate positive or really passionate negative, I know that I’m staying true to Ale Industries, because that’s how it seems everything goes. Regular Joe Shmoe people, they like the logo. Anyone who has anything to do with design hates the logo. I get probably, once a month, people writing saying “I came up with this logo for you, because yours stinks.” I always write back and say they really need to change their sales pitch. Graphic designers are always noticeably upset with the logo.

When I have designers or someone else who’s not happy with it, I always challenge them to look at the logos of the top one stock market hundred companies. I ask, “Would that be something you’re proud of? All their logos are just crappy, but that’s not the point. The point is remembering, and if people are passionately for or against it, they’ll always remember the next time they see it. They’ll say, “There’s that goddamn logo.”

Has the popularity of your beer affected how and what you brew? Do you have enough room to experiment?

The summer time is rough. We’re doing less then half the amount of beer fests then we did last year. I think we’re doing four this year? It’s just tough to consistently tell customers that I don’t have any beer for them, and then go and give away two kegs of beer at a festival, that’s great free advertising I don’t need right now. We’ve kind of cut that out. That’s a way for us try and solve a problem. We also aren’t doing the Oregon Brewers fest this year, that’s twenty kegs. We’re not doing the Lafayette Art and Wine Festival like we have before. That’s another twenty kegs. We’re also saving our pennies and we should be able to plant a few more fermenters in here by mid to late July, which will be a little tight, but we feel we’ll be in this spot for another twenty to twenty five months, so we’re actively looking for a new space throughout the East Bay.

Will you stay on this side of the Oakland Hills?

We’re looking at buildings on this side, and we’re also looking at buildings on the other side of the hills. I think if we were closer to BART and Oakland, I think whatever the difference in our lease would be, is well worth it. It’s all about balancing things. We’re in our fourth year here and I was with EJ Phair for eights years, so twelve years I’ve been brewing beer her in Concord. There’s a part of me that wants to keep brewing beer in this area, but it doesn’t have to be Concord. I have a lot of regular customers who’ve been buying beer for their kegerators for the last decade. They come in every three or four weeks with their keg and I still have a crusty check somewhere as a deposit for the keg. I would hate to lose those people. I have good relationships built up so far.

So when he fall comes around you’ll be able to make a few more different beers?

You know, that use to be the way we looked at things, it’s just our growth speeds up in the summer. It slows down in the fall, but we’ve basically put the brakes on adding new accounts, expanding our area, until we get more tanks in. If we can get them in place and online by fall, that will take care of some of our main beers and hopefully will be able to play around more. What we have done though is made space for seventy-two barrels, which is one of the reasons we hired Jesse Warren, who’s helping to spearhead our sour program. As a homebrewers he’s done some fantastic sours and he’s come in to start playing around with a few I have going and do some blending.

How would you describe your brewing philosophy? Are you the kind of guy that shoots from the hip, or do you see yourself as someone who brews a certain range of beers?

I always try to brew beers that I like to drink. Up until recently, I went on a two and half to three year experiment only drinking what I brewed. I didn’t drink other people’s beers because I always found it brought me back to a center, and I was like “Oh yeah that’s right, that’s how beer is supposed to taste,” which would change what I was doing. I finally said, “Okay, just stop it. Do your thing and study what you’re drinking. Drink your beer only.”

There are certain beers I don’t brew. I don’t make Belgian beers. It’s just the phenols that don’t work for me, so it would be tough for me to brew it and put it out. I don’t brew a lot of stouts. It’s not something I drink a bunch of.

Is brewing a creative process for you?

I think so, but it’s really a science. When you look at it just as an art, it reminds you really quickly that it’s an exact science when you dump a batch. I guess you lead yourself on your own journey with it.

What’s your perception of current state and future of craft beer in the Bay Area?

On a consumer basis, the actual end customers, their tastes are rapidly catching up with Bay Area’s creativity in brewing. I think they’re raising the bar on us.

So they’re forcing you to experiment more?

Absolutely. Once a month we go to Portland for sales events and it’s such a night and day difference, because the consumers there have been pushing the industry for six or seven years. That hasn’t happened yet in the Bay Area. Portland has sixty-two breweries supplying 600,000 people, compared to 2.7 million people in the East Bay, which has seven production breweries. We need more tank space soon. Not at the moment, but soon.

There are a lot of new companies in the Bay Area that are trying to fill the void by contracting their beer, but that doesn’t fill any void. That just rebrands beer that would have been produced anyways. We need brick and mortar tank space. All the people who are doing that, I applaud them if their direction is to get a brand launched and open their own brick and mortar brewery and start doing it. In the next ten years we’re going to see a major bottleneck when it comes to Bay Area Beer. Lagunitas is expanding super fast, but people can’t just drink Lagunitas.

Brewer Spotlight: Morgan Cox of Ale Industries, Part 2

Photos © Brian Stechschulte

In part two of my conversation with Morgan Cox we delve into when and how he started brewing, his experience working at EJ Phair, what it was like during the first six months of operation and how the far East Bay beer scene has changed over the last four years.

Did you miss Part 1? Check it out here.

So tell me how you got into beer and where you got started in the industry?

I actually had a neighbor who was a homebrewer. I had always been interested in it and when I turned eighteen he gave me his old Charlie Papazian Joy of Homebrewing book for my birthday.

He highlighted right in the preface that in the United States you can be eighteen years old and brew your own beer legally. He also took me down to the homebrew supply company, which at the time was Hop Tech located in Pleasanton. So I went with him and bought myself a beginner’s kit. He kind of helped me out with the first couple batches and I just took off from there.

I was never one of those teenage kids that drank. I think I drank like one time before I was eighteen. So because I was getting really into homebrew, I was also never a kid who grew up on Coors Light or Natural Light. I never had that transition like starting with Anchor Steam or Sierra Nevada Pale. I never had that. I was always just drinking homebrew.

Lucky you!

I have a rule that when I go to somebody’s house and they offer me a beer, I always say yes. If it’s a beer that I don’t particularly care for I smile and drink it, but I’ll never accept the second one! So anyway, I started homebrewing and I just went head over heals with it. By the time I was twenty-two I left the job I was working binding books.

Binding books? Was this on a small or large scale?

A large scale. The piece of equipment I operated was about the size of our brewery. It was a six million dollar piece of equipment and I was in charge of twelve workers. For a twenty-two year old without a college degree I was making more money then my dad was. It was pretty neat.

I remember telling the owner of the company when I put in my six-month notice, in a very cocky fashion, he said, “Well I tell you what. My parents own a winery. You can’t just become a brewer or a vintner. You have to go to school and stuff like that,” and I was like, nope, I’m going to do it. He asked me to retract my notice and instead tell them when I got a job, but I refused. So the time came, I left, and didn’t get a job in brewing until four months later when I ended up cleaning kegs for EJ Phair, which was in this exact building.

You ended up buying their equipment correct?

Yup. I worked for JJ, the owner of EJ Phair, for eight years and we brewed out of this location until they wanted to move. My job as the brewmaster then was to get the equipment setup at the new spot and sell the equipment here, and I kind of had that light on, aha moment, “Wait a minute, maybe I should buy this equipment?”

So tell me what it was like during your first six months of operation.

It was crazy. I think the thing that came to light was that any connection I had in the brewing world before opening up and having beer ready to sell, didn’t matter, especially on this side of the tunnel. I went into a lot of businesses and distributors had a lock down on them. I would go in and they would say, “Oh, you’re self distributed? No, no, no, I can’t do that. I only do stuff by the law.” And I was like, “No it’s legal, here’s our license and it allows us to distribute,” and they would say, “No, no, we only go through distributors. I like to keep things legal.” I actually saw a brochure that was put out by the California Distributors Association that talks about the illegalities of buying directly from breweries and according to the Constitution of the United States it’s a three-tier law. It also said they should buy from a distributor, and by buying from a distributor your supporting local business, as opposed to buying from these mega corporation breweries. I was reading this and going, “Oh my god.” So this is what we deal with in Concord, Pleasant Hill, Danville, San Ramon, Pleasanton, but you get over into Oakland and whatever those distributors have been trying to do over there is wiped out now. Oakland is an absolute hotbed of craft beer in the Bay Area I would say.

How has Concord and the overall region changed in the last four years since you opened?

It’s a slow, but steady growth. Basically the growth is in new businesses coming in and opening up, it hasn’t been existing businesses loosening their ideas on where and whom they should buy from. On the other hand, I can go fifteen miles over the Oakland hills and it’s a night and day situation. They welcome you with open arms and they call us. It’s a completely different story. This area is jammed full of Applebee’s and Chili’s for a reason, so I think it really is consumer based.

When you first started out here, did you see this location as being advantageous due to the smaller number of breweries?

I was oblivious really to what I was going to be dealing with (Laughs). I thought it was going to be an advantage for me, but I didn’t really appreciate the severity of the beer drought in this area. I guess the thing I saw as an advantage was the equipment already being setup. That saved me forty grand, but being in this area has cost me hundreds of thousands of dollars in sales I’d say. If we were Ale Industries from Temescal and selling our beer in Oakland and San Francisco it works. Being in Concord, we go into San Francisco and sometimes people wonder, “Where’s the brewery? Concord? Is that over by Chico?” And I’m like “No, it’s Concord by Walnut Creek,” and they’re like “Ohhhhhh yeah, I had a friend that went out there once.” That’s some of the feedback we get in San Francisco. Now we just say Bay Area.

Read Part 3

Brewer Spotlight: Morgan Cox of Ale Industries, Part 1

Photos © Brian Stechschulte

Right now, countless homebrewers are racking their brains over business plans, they hope, will launch them into the professional ranks. Some will succeed, and sadly, others won’t. Funding, marketing and distribution are just a few factors that contribute to success. Just making good beer isn’t enough, and a lot can change when the rubber hits the road. Morgan Cox, brewer and co-owner of Ale Industries in Concord, drove that point home in a very honest conversation we had back in April. During the wide-ranging discussion he told me how he got started, what he’s learned along the way and about the future of his brewery.

Like many breweries in the Bay Area, Ale Industries is growing fast in just its fourth year. Soon, Cox will be adding fermenters that will move total production from 700 to 1200 barrels per year. One particular beer, Orange Kush, has been driving that growth and now accounts for nearly 60% of the brewery’s sales in California, Oregon and Washington.

The success of Orange Kush, its peculiar love it or hate it status among consumers, and how it was born out of a hop shortage was the first topic of our discussion. Cox also talked about the difficulty of selling certain beers to new accounts.

Due to length and plentiful insights, the entire interview will be published in two more digestible portions over the course of the week. Part two will cover Cox’s brewing origin, what it was like during the brewery’s first six months, the difficulties of self-distribution and his thoughts about operating in the East Bay.

Every brewery seems to have one hot beer that pushes growth. Is that the case with Orange Kush?

Originally, that’s how it was for us. It’s what we started brewing first and then we added Ryed Piper. We began with Orange Kush because right as we were opening the whole hop crisis happened. We’re a self funded, zero debt company, so that means we didn’t have 50K to setup a hop contract. We buy spot market hops and at that point spot hops were about twenty-seven bucks a pound! Orange Kush is basically a gruit and the reason why we used some hops in there is because gruits, at one point, were looked at a little bit differently taxation wise than beer. It couldn’t be labeled as a beer. It had to be labeled as a malt beverage, which we didn’t want, so there’s just a little bit of hops built into it.

So the hop crisis basically forced you to create something that in essence became your best selling beer.

If you look at the whole brewing industry, a lot of what’s been created was driven by what brewers had available to them. You can look at all kinds of different breweries and see the same thing happened. There’s a reason. It’s not always just somebody’s whim. That’s one of the cool things I’ve learned about business.

With the summer approaching Orange Kush must be in high demand.

Yeah, and the neat thing about it is we have a huge core group of people that on Fridays send me pictures of their refrigerators stacked with Orange Kush.

Really?

There are also people that are way into the beer industry and they’ll be like, “Sure, I’ll try a taste of it,” and then say no thank you.

Orange Kush seems to be a love it or hate it kind of beer.

You’re absolutely right. I think it’s a coriander thing like with cilantro. Some people just hate cilantro. A lot of people blame it on the chamomile, but as soon as they smell chamomile when I give them a chance, they’re like, “Oh my god, that smells so good.” Then I think there are some people that are just put off with the whole concept of it. They’re like, “I don’t want to be that person who enjoys light refreshing beer, I want to be a imperial drinker and only drink Russian imperial stouts or IPA’s.” It’s the same with Ryed Piper. Some people love rye beers, seek rye beers out, but there are other people that just flat out won’t order a rye beer.

The Ale Industries’ tasting room

You must have smiled a little bit when Sierra Nevada swapped out Glissade in their rotation for Ruthless Rye.

Sure. We’ve been pretty lucky here. It seems like we’ve been able to get ourselves into a position that’s mobilized within the market before something becomes a trend, like with Orange Kush being a 4.4% session beer. We’re in our fourth year and have been making it since we started. Back then we were preaching about session beers.

You’re still obviously a firm believer in the session beer movement.

I think there is a time and a place for every beer out there, including Russian imperial stouts, session beers, double IPA’s, pilsners and everything else. I’ll always have at least one beer to sell that’s a session beer. I just think that it makes sense. If you’re going to convince somebody to keep buying one of your beers, sell them a second one, you know? You may as well. When we started out we were doing draft, so I was thinking about when I go into a place it’s really rare for me to have a second beer at lunch. If my first beer is 4.2%, I’ll convince myself to have a second one. I think that things are opening up.

During the summer we’ll make Bliss, which is a mild, and it’s a shame that it’s called a mild because that turns people off. I tend to not even call it a mild anymore. I simply say its 3.1% alcohol. When we first started coming out with it I would say, “I’ve got this beer, it’s really neat, it’s light brown, it’s got this pistachio nuttiness to it and the Vienna malt is all built up.” Then people would say, “Great, great, but what’s the alcohol percentage? People would just flat out pass on it when I was going from bar to bar trying to sell the beer. So we learned to not even mention the term session. Now it’s definitely getting a lot easier. There are other companies pushing it as well, like Dying Vines. Not every beer they make, but their primary focus is session beers and I appreciate that.

Do you think the push back was because the bartender or bottle stores were trying to focus in on the high alcohol trend, or did you think it was just and out and out discrimination?

You know, my original goal was to simply open up a brewery. When I got it open, after the first six months, I realized I was spending a lot of time in the office and that what I had actually done, is start a business that happened to make beer. So these bar owners, they’re not making the decision because they don’t like lighter beers or because they think that those beers don’t sell well. They’re making a decision because that’s flat out what the consumers go for. A businessperson isn’t going to shoot themselves in the foot, at least industry wide they’re not going too.

Sometimes there can be lack of education and that’s what we’ve been working on. Our pitch to them is, “You’ve got the person in your door, so sell them a third beer that’s sessionable. You can sell them a third beer, where normally they’re going to leave after one or two otherwise, which gives you the chance to tack four more dollars on their tab.” As soon as you sell them with that concept, they’ll give it a shot.

When you’re running a brewery your customer is not the end consumer. Your customer is the person who runs the bar or the beer program, which is what’s nice about our taproom here. It actually gives us an opportunity to meet with the end customer and get feedback from them and find out where they go to drink.

Read Part 2