Firestone Walker Brewing Co. remains one of the hottest players in a segment whose leaders are seeing their sales cool significantly. The Paso Robles, California–based brewery is likely the envy of many rival craft brewers these days, having grown at an average annual rate of 30 percent from 2010 to 2016. Indeed, the company has struggled to keep pace with demand for its 805 blonde ale, which has emerged as one of the top-selling craft beers in Southern California.
In 2017, Firestone Walker reached volume of 400,000 (31-gallon) barrels, about a 15-percent increase over 2016. While growth has slowed marginally, Firestone Walker is still significantly outperforming the craft category, which was up just 5 percent last year. Sales revenue for the company, which employs about 400 people, was around $125 million in 2017, according to cofounder David Walker.
The California brewer distributes to 30 states and a handful of overseas markets, but its home state is by far its most important. “California drinks 75 percent of the beer we make, which is the way it should be,” Walker explains. “The sweetest beer to drink is closest to the brewery.” He acknowledges that while Firestone Walker’s reputation for well-made beer has ratcheted up demand in markets further afield, “our fortunes will always rise and fall within a day’s drive of our brewery in central California.”
All In The Family
In 1996, Walker, a British native, teamed up with his brother-in-law Adam Firestone—the third-generation winemaker at Firestone Vineyard—to open the brewery, initially located on the family’s vineyard in Santa Ynez Valley. Five years later, they moved up the coast to the former SLO Brewing Co. facility in Paso Robles, the heart of the Central Coast wine country, and hired brewmaster Matt Brynildson, who’s still with the company. For its 10th anniversary in 2006, Firestone Walker released Ten, a 100-percent oak barrel–fermented double barrel ale, which is now the anchor of its extensive barrel-aging program.
For the last five years the company has worked to expand production, and it began canning its beers in 2015. Its Barrelworks facility in Buellton, California—dedicated to the production of wild ales—was unveiled in 2013, and in 2016 the company opened its Propagator pilot brewhouse and restaurant in Venice, California. An expansion of the Paso Robles brewhouse debuted in 2017, and additional fermentation capacity and cold storage will be operational later this year. A new bottling hall is slated for completion in a few years. Walker says that when the expansion is complete, the brewery will have an annual capacity to produce one million barrels of beer. “After maxing out our last major brewhouse investment within four years, we needed a new piece that will serve us for many more years to come,” Firestone adds. “We finally have some breathing room, as well as a long-term foundation for brewing in Paso Robles.”
Walker notes that in the early years it was difficult to keep the operation going. “For the first five years we boot-strapped and hustled our way to 5,000 barrels, and we both did everything, reaching across each other’s desks to keep the brewery alive,” he recalls. “As things began to grow, Adam took on building the physical brewery and I, the brand. It’s worked well.”
Of course, the sale of a majority stake to Belgium’s Duvel Moortgat in 2015 also provided a lifeline. “In order to manage our massive growth—250,000 barrels in five years—we sought out a financial partner, and we settled on Duvel Moortgat,” Walker explains. “Like us, they’re an independent family business committed to beer culture and to creating an enduring legacy.” Duvel Moortgat also owns Upstate New York’s Ommegang and Kansas City’s Boulevard breweries. “We’re separate companies, but committed siblings,” Walker says. “Our relationship grows stronger every year, and we share technical and market information all the time.”
Walker says the company’s winery roots still run deep today. “The origins of our brewery are rooted in the story of the American wine revolution,” he explains. With Firestone’s experience running a family winery, “the notion of starting an artisanal craft brewery and understanding what that would involve always felt familiar. The dynamics of beer are different from wine so our growth path has been more aggressive, but the core principles of family enterprise—creating something meaningful with quality and craftsmanship at its heart—are the same.”
First bottled in 2012, 805—named for the Central Coast’s area code—was quickly embraced by local beer drinkers and before long, demand for the 4.7-percent abv ale spread throughout the state. The beer has emerged as Firestone Walker’s top brand, outselling brews that are fermented or aged in barrels like its original flagship, Double Barrel British pale ale (DBA). Walker concedes that while 805 might be “less multi-dimensional than some of our beers, it’s full-flavored and immensely drinkable. We discovered a whole new demographic of broader beer-drinking customers interested in our brewery.” Indeed, 805 has an average annual growth rate of 35 percent and accounts for about half of the brewery’s volume.
As for other Firestone Walker beers, performances are mixed. “Our IPAs are performing stronger than some of our stalwarts like DBA, which were so important in the first 15 years,” Walker says. “That’s disconcerting, as all of our beers feel like our children and it’s sad to see them being overlooked.” He adds that it’s impossible to guide today’s craft beer consumer, noting that it’s better just to listen to them and “brew great beer.” Walker cites the company’s innovative IPA program—which features new and experimental hops, used in limited beer series like Luponic Distortion and Leo V Ursus—as thoughtful responses to consumer demands. Brand innovation will continue, he pledges. “We have an enormous range of beers—lagers, IPAs, pale ales, barrel-aged beer and wild ales,” he says. “And we’re doing collaborations and one-off releases out of our Venice pilot brewery. We’re engaged in beer culture and love making interesting beers. If some of them catch the eye of our customers, we’ll knuckle down and make more.”
Like most other craft brewers, Firestone Walker doesn’t rely on traditional marketing practices to promote its beers. The 805 brand is supported with the “Authenticos” campaign, which includes video profiles of local Central Coast personalities on YouTube, Vimeo and other social media platforms. And for the last six years, the brewery has hosted the one-day Firestone Walker Invitational Beer Fest in Paso Robles, featuring more than 50 craft breweries. But overall, the company relies on grassroots marketing to tell its story. “We spend most of our resources telling our story on bar stools and in places where people want to talk about great beer,”
Each of Firestone Walker’s facilities features some sort of on-premise component where visitors can sample the company’s brews. But Walker maintains that there’s no interest in rolling out a chain of taprooms and that the three-tier system has helped the craft beer industry thrive over the years. “It’s not our intention to open a pub chain,” he says. “We have thousands of friends who operate those much better than we could.” He adds that while the three-tier system “can seem unnatural, it’s a model that protects small brewers from large brewers’ overwhelming advantage. If they’re allowed to dominate, choice will return to an era that existed prior to craft being a force.” Walker notes that while there may be factors in need of overhaul in some states, “I’ll take the framework of the system we have and work hard to optimize it.”
Indeed, he says craft brewers owe retailers a “debt of gratitude. Without their support, the American craft beer revolution would have struggled to migrate out of home brewing.” He adds that as long as beer retailers continue to respond to the wishes of consumers, “we’ll see steady growth for all.” Off-premise accounts, driven by supermarkets, make up 57 percent of the company’s sales.
Walker doesn’t downplay the changing craft beer industry landscape. “Competition is becoming a factor as more and more breweries open,” he concedes. “This both accelerates interest in beer and dilutes the impact of any one brewery.” He’s also concerned that consolidation of major beer marketers and their subsequent craft acquisitions are “going to play more of a role as they leverage their advantage in the chain markets.” Still, he acknowledges, “It’s a natural cycle. Craft will survive and the brewers who aren’t engaged in running sound businesses will struggle.”
Firestone Walker is unlikely to be a brewery that struggles any time soon. With brewery buildouts ongoing, expansion into new markets provides a lot of opportunity for the future. “We’ll steadily add more states when we’re able to fund the support necessary to develop those markets,” Walker says.