ESCONDIDO, Calif. – When Stone Brewing released in 1997 its well-known Arrogant Bastard Ale, it was a hoppy revolt against an American beer market defined by bland corporate lagers. Now, thanks to craft brewers like Stone, it’s easy to find once obscure beers, from India pale ales to smoked porters, in dive bars and supermarket shelves alike.
So the fast-growing Southern California craft brewer is eyeing a new market to upend with its unorthodox brews — a place with a beer culture so deeply rooted in tradition that it’s governed by 500-year-old purity laws that restrict ingredients to only hops, barley, water and yeast.
In June, Stone opened a brewery in Berlin, becoming the first American craft brewery to operate in Germany. Its arrival could prove a test not just for Stone but for a cohort of innovative American brewers that fueled the rise of the U.S. craft brewing scene but have not yet developed large global customer bases.
The move comes as craft breweries are facing slowing growth in the U.S. After years of rapid expansion, established craft brewers are bumping up against thick competition from an explosion of small breweries they inspired and behemoth brands that have refreshed their offerings to compete. Some independent brewers have sold off to beverage conglomerates or are taking a page from their book by setting their sights on global markets.
“2015 seemed to be the first year that growth may be reaching a plateau,” said Nick Petrillo, senior analyst at IBISWorld. “Craft beer isn’t stalling, but it’s going to reach a point of maturity in the sense its growth isn’t going to be as massive.”
Stone, which raked in more than $200 million in sales last year, isn’t immune to those pressures. In October, the company laid off about 60 employees, or roughly 5 percent of its 1,200-employee workforce. Dominic Engels, who took over as chief executive in September, called the cuts “the simple evolution of a business.”
“Restructuring was a necessary course correction we needed to do to match our growth trajectory and spending trajectory,” he said. “Pressures from Big Beer are a reality in the craft industry and will continue to impact the industry’s growth.”
This year, Stone has come a long way toward diversifying its business. In July, the company opened a brewery in Richmond, Va., with a restaurant slated to launch in 2018. Across from its main production facility outside San Diego, plans are underway for a Stone-branded hotel that will focus on beer and a tap room in Napa Valley next year.
Such moves are intended to help separate the 20-year-old Stone from the hundreds of craft breweries that have popped up across the country. In San Diego County alone, there are 131 breweries, according to West Coaster magazine.
Stone’s move to Europe is part of a big bet on its future as a global beer player. In addition to the brewery, the beer maker also opened up a restaurant and beer garden there in September.
The 10th-largest U.S. craft brewery wanted to get a foothold early in Europe, which is chock full of regional influences and countries in different stages of appreciating craft beer.
“It’s something we need to start now so it can be of substance later,” he said. “There is no such thing as a homogeneous European approach that makes sense. It’s going to have to be done market by market.”