Stone’s new CEO went all Office Space, but was there a better place to cut back?
Late last week, Stone Brewing Company surprisingly laid off about 75 employees, and it had the craft beer community in utter shock. Immediate reactions ranged from “that sucks”, to the company is not doing well, to a buyout is looming. But I happen to think Greg Koch would rather call in a missile strike over his Citracado Parkway facility before selling out to big beer.
Stone was the 10th largest producer of craft beer in the country last year. They are not small, and although watching Greg Koch rail against the big beer establishment is cool and all, Stone was really a corporate sized operation that happened to remain independently owned and operated by its quirky, free-spirited leader.
Maybe it really was slower than anticipated growth in new avenues, or maybe sales have stagnated a bit. Regardless of the factors, what really happened with the layoffs was that Stone Brewing Company officially became “corporatized.”
I am not trying to sound insensitive to workers losing their jobs, but the Office Space analogy made too much sense here. The newly appointed CEO of Stone was the equivalent of the “Two Bobs” Lumbergh brought in as efficiency experts in the movie. Bob Slydell and Bob Porter interviewed employees, reviewed current processes within the company, and cleaned house as needed.
“So what would you say you do here, gargoyle?”
Probably a question Dominic Engels asked as he went over the Stone books…
Stone CEO, Dominic Engels
Even though he was touted as a great “cultural fit”, Dominic Engels already chopped heads, which is fairly commonplace in any company after a new CEO comes aboard.
Dominic’s resume includes Tommy Armour, The Gap, and POM Wonderful, so obviously he was hired as a retail expert, and one with experience in the “drink” space. He’s also not going to run Stone the same way it had been for the last 20 years.
From his point of view, the new CEO does not know, or owe, any of Greg Koch and Steve Wagner’s crew anything. He’s only there to trim the fat and move Stone to the next level. For him, it’s all a numbers game now. After all, a brewery is a business. If it wasn’t you could stop along any street in San Diego for a free pour of somebody’s homebrew out of their garage.
Stop Making So Much Beer
Although workforce cuts are always an easy place to start, maybe Stone could have looked in another area first. Like the amount of beer they brew, and the number of bottles on their massive 2016 release calendar.
As of this post (October), Stone Brewing Company had released 32 different SKUs during the course of the year. That figure does not include several “exclusive” bottles snuck into variety packs either. When you average 3 new beers a month, people are going to get tired of your stuff, and I’m speaking from experience.
I didn’t buy every single Enjoy By, and for the most part tried to keep up with everything else Stone released. By August our household had come down with a case of Stone fatigue, and stopped buying their beer all together. If they are citing growth and sales issues, we don’t think it took other craft beer geeks long to abandon ship either.
One final point is that larger breweries make TOO MUCH BEER. I know, a very stupid comment — “too much beer”, but I have felt this way for a while now. And it’s becoming more evident recently, regardless of the brand, that other large scale brewhouses seem to offer a lower price point on all of their bottles.
Although Stone’s stance on freshness is commendable, it also has to work against them when that much beer is being produced. They have pretty much obligated themselves to pick up beer past its freshness date, which then becomes a waste of cardboard, aluminum, glass, labels, labor, water, yeast, malt, and craft beer’s most precious resource — hops.
Of course smaller scale “hyper-local” breweries they referenced in their presser could be putting a dent in sales. But when you have too much product sitting on the shelf, that means one of two things: you are manufacturing too much of said product, or charging too much.
I would have rather seen Stone Brewing Company re-assess their product line and adjust as needed, before showing longtime employees the door. Their loyal workforce were the lowest hanging fruit, when the product portfolio could have easily been reeled in to lower production costs. Or (gasp) — take another look at your price points.