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