CBB As of September 1, 2019, breweries across Texas had a new opportunity that they haven’t had in the past. How does that affect Jester King in particular?
JS Yes, deregulation just occurred in Texas, and we became the 50th state to allow production breweries to sell beer to go. Jester King has been able to sell beer to go for years because we’re licensed as a brewpub, but now, for instance, our friends at Live Oak Brewing Company will finally be able to sell up to one case per day per customer, to go. Interestingly, if we were to switch our license to a production facility, we could still sell beer to go (which we need to as it’s a big percentage of our revenue), and we could also make wine and cider as well as beer under the same license. So we’re going to begin experimenting with making wine with grapes from the 2020 harvest with the potential to release wine under the Jester King brand in 2021.
There’s going to be a legal casualty to this ability to make beer and wine together—we will lose our ability to buy and sell guest beer, which we’ve always prided ourselves on. If you look back through our blog, you’ll find a myriad of posts championing breweries such as Jolly Pumpkin, Brasserie de La Senne, The Rare Barrel, and Fonta Flora Brewery. We celebrate all of these breweries and sell a thoughtfully curated list of these breweries’ beers. But being out in the outskirts of Austin, near the bedroom community of Dripping Springs, we get a surprising number of light-beer drinkers or macro-lager drinkers. It hasn’t been a hard sell to get them to try a Live Oak Pilz or something like that, whereas convincing them to order a mixed-culture fermentation beer has been more challenging. But within the next 12 months, we’ll lose our legal right to sell guest beer because we’ve cast the die that it’s more important to us to be able to make wine (and probably cider and mead as well). So we’re planning to brew our own simple pale lagers, just for on-site consumption. The decision is part business, to fill that gap left by losing these guest beers. But also, our brewers are pretty excited to brew some pure-culture fermentations, which is something we haven’t done since 2012.
CBB It’s interesting to look at those trade-offs and how the opportunity to make wine means leaving a gap in the hospitality program for the brewery that you’ll then have to fill by making this broader range of styles. From a brand perspective, Jester King has been built around the concept of mixed-culture fermentation. How do you think your various customers will respond to this change in approach?
JS It’s something I’ve thought a lot about. At the heart of it, we have to provide a well-curated lineup of beers. We’ve set the goal internally of being the best place in Texas for beer, and to do that, we have to have excellent representations in other styles and not just farmhouse ales and wild beer. So we’ll put our money where our mouth is and maintain a couple of taps of hoppy pale lagers. We’ll still have almost forty taps of wild and mixed-culture beer across all of our draft- service locations, so I don’t think we’ll be accused of betraying our values.
CBB That speaks to the fact that in addition to being a beer-product brand, Jester King is also a hospitality destination brand in Austin. As such, it creates some interesting challenges in the way you balance both the brand idea behind the production brewery and that hospitality experience. We’re seeing some of your peers make the same concessions as they move into more general hospitality approaches—for example, Casey Brewing & Blending’s taproom in Glenwood Springs, Colorado, that will feature a wider array of pure-culture styles in addition to the mixed-culture beer they’ve been known for. How do you balance the vision for the products the brewery makes with that need to provide a compelling and enjoyable hospitality experience for a broader audience?
JS Curiously, we get a significant number of customers at the brewery who say things along the line of “We didn’t know you brewed beer; we heard from a friend that this was a cool place to hang out.” We get a fair number of those people for whom the beer is a bit of an afterthought, which is a real luxury. That’s great, too, because the dynamics of the beer market are changing. Beer releases were more impactful 3 years ago than they are now, and we leaned on them more heavily than we do now. We have to depend more on the experiential side now because of the changes we’ve seen in the market with the gravitation of the beer “nerd” toward big stouts and hazy IPAs. But we’ve always done beer releases and provided the experiential side, so it doesn’t feel a whole lot different for us. We see a lot of change around us, but it doesn’t feel like we’re changing that much relative to so much of the rest of the industry right now. On one hand, that unnerves me a little. On the other, there’s value in keeping a simple outdoor environment with community and high quality.
CBB Conjecture about this may matter more among the press and your peers than with your customers themselves?
JS If we provide our customers the high-quality experience they expect, I don’t think they’ll care, or even notice, that the brand we’re serving them is our own and not a guest brand. I’ve been to Asheville a few times since the Wicked Weed acquisition, and their taproom is always packed. General awareness of some of these issues that the industry focuses on does not always filter out to the general public. But to riff on this a bit more, the experiential side has become enormous for us, not necessarily in terms of sales, as bottle releases are still our most significant source of revenue, even though we’ll be the first ones to admit they’re not as impactful as they were in 2016–2017 and before. However, as far as energy and excitement go, we’re enjoying growing and developing the event side of the business. We’ll try anything once, as long as it fits within the idea of the brand, and the number of events and programs we’re doing now adds more reason than bottle releases to visit Jester King. Off-site events, such as attending festivals, we still do, but it’s not as much of a focus as it used to be for us.
CBB On some level, though, it seems like this idea of being a hospitality business and event site with a higher-end restaurant, hosting weddings, and such, is a less-sexy idea than being a small and edgy beer brand with metal-inspired imagery that travels around the world going to all the best beer festivals. Is this change a result of the way the beer market is changing, a result of personal priorities changing, or just a general growing-up?
JS All of the above, but I’ll try to speak to each of those points. The easiest one—that we’re doing fewer outside events—is that with kids who are now young people who I can have a relationship with and have an emotional bond with on a personality level, it’s extremely hard to leave. I’ve pretty much limited myself to traveling to one event per quarter. But that’s not the primary driver. Number one is the industry. Let’s pick a year, say 2016. While at 2,000bbl per year, everything we do is pretty small, in 2016 we could hold a beer release with 5,000 bottles, limit three per person, and pretty much count on it selling out that weekend or at least by the following weekend. But that’s just not the reality anymore. We’re able to sell out a 1,000-bottle release, and just did last weekend, so it’s not like it’s a night-and-day change, but there’s definitely not as much demand for our beer, or for that of our friends who brew similar styles—wild fermentation, or “sour” beers (if you will—we’ve always preached the gospel that farmhouse doesn’t equal sour).
CBB I know you mentioned before that you think that has something to do with the shift in interest to stouts and IPAs. Do you think it has something to do with the rising quality of wild and funky beers and their availability around the country now?
JS Definitely! I was in Florida earlier this year at Green Bench Brewing’s Foeder for Thought and randomly ran into a high-school classmate of mine who had started a brewery in Sarasota, Florida. It’s funny that now I run into old high-school friends who own breweries—who doesn’t own a brewery?—but he handed me a glass of a raspberry fruit refermentation, and it was every bit as good as our Atrial Rubicite. If you want quality, you can find it locally, whereas back when we got going, we did it because we could not get the few high-quality mixed-culture beers on the market from breweries such as Russian River or Jolly Pumpkin. When we launched, there was Allagash, Crooked Stave was just starting, and there was a handful more but that was kind of it.
CBB So with this growing demand for that style of beer around the country, it meant that your local beer fans could line up and move beer out in an informal distribution network of private individuals trading it across the country. Now, with quality representations of those styles available from breweries in most markets, as well as routinely on store shelves and distributed, there’s less need to trade and less compulsion then to line up for your releases?
JS Yes. I don’t know if it’s completely true if you run all the math on it, but I think it’s true that the reason we’re independent—owning our own land, having our own farm—is that it became legal to sell on-site in 2013, and there was a base of beer geeks who were willing to essentially distribute the beer for us, so we could earn 100 percent margin on it. I think that’s 100 percent true and the reason we’ve been able to expand into what we are now and protect the land we have now. That land is our last line of defense because it never gets lame to drink outdoors under a live oak tree with friends. If it does, that’s when I’ll start worrying. But because of the scenario you just described, we were able to grow and be sustainable. But even though that has become not as strong as it once was, it’s still the largest segment of our sales. Having said that, it’s the reason we’re working to diversify our sales. If that’s where they were in 2016, where will they be in 2026? So let’s make sure we have strong food sales, strong event sales and event programming.
CBB At the same time, in your local market, you’re starting to see new breweries pop up with a similar approach—outdoor beer gardens, food, destinations. They’re definitely looking at the success you’ve built and are looking to develop something similar for themselves. How then do you remain competitive and a compelling experience? How do you go from being an innovator in the space to not giving up ground to new competition?
JS At the risk of sounding like a corporate cliché, it always has to start and end with quality. We’re never going to beat anyone on price. We’re never going to beat anyone on efficiency. But our quality always has to be—at least to our palates—the best. I think that there are enough people with discerning taste to support our small business that aims to produce only 2,000bbl per year. Within our segment of beer, we’ve been able to achieve a very high level of quality, and now we’re trying to do the same on the food scene, and we’re seeing some traction there.
CBB Because you’re comfortable in your own skin, brewing 2,000bbl per year, you have the luxury of an indie rock band to decide to not be a pop band and need to infinitely grow your audience. Being more meaningful to a smaller audience—choosing to be small and high-end and a leader in some sense—helps future-proof you relative to new competition?
JS Yes. Speaking from a business perspective, putting on weddings and rehearsal dinners isn’t what got me into this industry. But the vehicle of beer and what that’s provided for us has allowed us to tap into a complementary business that crushes the margins we make off of beer. We are a business, and we are focused on becoming a better one. With our service, we used to roll up the door, turn on our POS system, and that was it. When the beer was gone, we’d roll down the door, and say, “See y’all next week.” We just did a whole overhaul on how we provide service, just did a reorientation for all of our staff, focusing on providing high-quality service as well. The increased competition we’ve seen over the past few years has forced us to make sure that we’re not lagging behind in other areas that people care about, such as service.
CBB How do you keep the creative spark going in your business as the craft-beer market continues to mature?
JS I drink beer every day, or close to it, and after 15 years of being a beer geek then a homebrewer and then a professional brewer, I’ve experienced diminishing marginal returns. The “Oh wow” response when trying a new beer occurs less and less often. So learning about other styles of fermentation that fit with what we do now provides that excitement. We’re about to have the handcuffs taken off of us from a legal perspective, and the things we’ve wanted to do for a long time are going to be possible. I don’t know whether it’s my brother and I driving the staff or the staff driving us, but it seems like we’re all on the same page. When we get in new products from other producers, for example Texas Keeper Cider—my favorite Texas cidery—when we get a new release, it often doesn’t make it to our customers because our staff buys it all. After doing the same thing for nearly a decade—yes, people still get excited around here when we release a new batch of Le Petit Prince—it’s a natural evolution to what’s new and exciting to us but still in the same vein. When I drink naturally fermented beverages from non-beer producers, it doesn’t feel like as much of a departure as when I drink an imperial stout and am like “holy shit, what is this?” We’re excited about the experimentation angle of it.
CBB How do you balance that artful exploration with the day-to-day demands of business.
JS I’m embarrassed in a way because while I always knew I was starting a brewery, it only dawned on me five to six years in that it’s a business, too. I went from spending all my time focusing on expanding my brewing knowledge to actually paying attention to a small business and trying to become a better businessperson. We were in a situation where we had this beautiful, high-quality location. I was very afraid that should this location go away, it could literally crush our business. The owners of the property and the restaurant put it up for sale—thankfully, they put it up privately and gave us the first chance to negotiate with them and buy it—and thanks to some of the shadow distribution we talked about earlier, as well as other factors, we were able to qualify for a SBA loan and buy them out. It came with a restaurant, which has led us to where we are now—a business with more complexity, more people, more challenges. As a small businessperson, you have to learn how to operate more effectively as a businessperson. And that’s what I’ve been focusing on, in addition to brewing and fermentation. It’s been fun and eye opening—the market is forcing small independent brewers to grow up and learn how to run a good business.
This interview has been edited for length and clarity.