Greg Koch brews and sells beer. He doesn’t advertise though -- and he doesn’t care if you don’t like his beer. He knows that only 3 percent of the world likes specialty beer, and he wants that 3 percent to enjoy his brews at Stone Brewing Co.
“We do essentially nothing to try to convince people to buy our beer," said Koch, the CEO of Stone Brewing who discussed his business philosophy with students as California State University, San Marcos Wednesday. For all he cares, the 97 percent can keep their fruit-infused, caffeine-induced beverages.
If one is wondering about the economic angle of that decision, rest assured that Koch has thought it through. As he told the students Wednesday, he’s passionate about beer, good business ethics and a moral imperative to improve the industry.
“I don’t want to sound Pollyanic here, but we started the company with a desire to improve the world in some way,” Koch said.
All the food is organic at Stone Brewing Co., after a recent switch to organic potatoes. The cost of using chemical-free food from local farmers is about three to four times the expense, versus using non-organic foods. Koch said people aren’t willing to pay more for the natural products, so his profit margin is smaller than most restaurants.
Still, he said he feels that he can’t feed people food that he wouldn’t eat himself, and said it goes back to the moral imperative. It’s the same reason why he’s spending millions to install solar panels at the restaurant, using biodiesel fuels in his trucks and planning to lobby for permission to recycle the brewery’s wastewater.
“It’s one of those business realities,” Koch said about the water expense. “We pay for the water, pay to use it and pay to get rid of it.”
Koch tries to balance his morals with his passion for beer and business. He told the students he operates without a business model -- much to the chagrin of their professors -- thinks with his heart and sometimes just shoots from the hip.
“Ignorance can play to your benefit sometimes,” he said. “There can be a lot of strength in not knowing you can’t accomplish 'X' -- or not knowing you can’t do it a certain way.”
A music aficionado, Koch moved from Ohio to Hollywood in 1984 to attend music school. In 1989, he took a beer enthusiast class, and met his now-partner Steve Wagner. The two formed a relationship over their love of specialty brews and, in 1996, started the brewery from the perspective of enthusiasts.
“We don’t advertise,” Koch said. “We’ve never done what is called price promoting, which is discounting our beer. We feel quite comfortable communicating with the world that they might not like our beer.”
Beyond beer, Koch follows standard best business practices. He only hires people who are passionate about the brewery -- even if it means keeping a position open for a long time. He said it helps him work with his 230 employees -- they all envision the business as something that will be around for a long time.
“I don’t feel responsible for them,” Koch said. “What we do is so much a mutual thing. Nobody in the company works for me. They work, maybe, for Stone, but really Stone works for them.”
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