Colorado Governor John Hickenlooper joins the show to talk about his past life as a founder of Denver's Wynkoop Brewery, Colorado's beer explosion, New Belgium Brewing, the three-tier system, and potential 2020 Presidential campaign.
This episode is sponsored by Stith Family Farms:
So you're the Governor of Colorado. Previously you were the Mayor of Denver - and before that, you were a brewery owner - Wynkoop Brewery there in Denver. And I want to talk a little bit about that - how you got into that business to begin with. You were previously a geologist, right? What was that transition from oil to beer like?
Well, basically I was going from one liquid to another and they both have a gas liquid form. So, in beer its carbonation and in oil its natural gas - methane.
The price of oil had collapsed in the early 1980s. There was a long recession throughout the 80s and you know, more than 25,000 geologists got laid off and there were no jobs. I was out helping [my brother] fix his roof in Berkeley, California - he showed me Triple Rock, which had just opened. This was in the Fall of 1986. And I came back to Colorado. I kept telling all my friends about how cool it was and how I would drive a half an hour out of my way to be able to have a beer that wasn't quite so fizzy...and had real body, real flavor. And as time went on, a couple of friends kind of started working on the idea.
You know, as a geologist, what did I know about business? But I had an aptitude for it. We went down to the library and got out a book on how to write a business plan. I mean, we didn't know what the word 'pro forma' meant. That's how backwards we were. But in 1987, I started working on it full time and then we finally got it opened...it took two years to raise all the money and we were just trying to raise 400 grand so it wasn't like a huge amount. We had $125,000 loan from the city, kind of an Economic Development Loan from Denver, and then we had a $50,000 loan from one of the local banks. But I mean we had to put up our houses as collateral. It was ridiculous. But anyway, that process of raising money allowed us to really talk to a lot of people. We got a lot of no's. I handed out over 200 copies of our business plan - my own mother wouldn't invest. But we finally got it open on October 18th, 1988. A day that will live forever in my fond memories.
Correct me if I'm wrong, but I believe Wynkoop was the first craft brewery in Denver, post-prohibition, right?
Yeah. It was the first craft brewery post-prohibition in Denver. Boulder Brewing Company had opened a few years before - they weren't a pub. They were a microbrewery. I think we were one of the first dozen brewpubs in the country and at that time, you know, there were less than 100 breweries in the whole country at that point.
What other initial struggles did you all face when you were opening Wynkoop?
Well, we had so little money. I mean we were really trying to do it on a shoe-string. So we took an old warehouse down at the corner of 18th and Wynkoop - what's now called LoDo - Lower Downtown. The Warehouse District was so abandoned that the rent was $1 per square foot per year. I mean, it was almost free. And even with that, or partly because of that, we finally did raise $400,000. We had $50,000 from a bank and $125,000 from the city. We bought a whole new brewery which cost us about $160,000. We bought all of our kitchen equipment, furniture, chairs, everything from auctions. So we ended up having to fix a lot of it ourselves.
My brother is a carpenter and he came out from Berkeley and spent the last six weeks working seven hours a day to build all the tables and the booths and the back bar, the bar top. I mean we did everything we could ourselves. And partly because of that, we ended up opening about eight months late.
So we talked a little bit about how few breweries there were at the time when you first opened. Fast forward 20-30 years later, the Colorado beer scene has exploded. What made beer so popular there and why did everybody just decide to open up a brewery?
Everybody has their own theories about why Colorado became this beer Heaven. I think one part of it, and people don't often say this, but I think it was the fact that we had four seasons, right? So we have a cold winter with snow, so that you want a richer stout, porter - darker, richer beers. But then we also get pretty hot in the summer. It gets up into the 90s. So, a lighter pilsner or a wheat beer. But again, a craft beer that's got some body and flavor to it. You know, you have more motivation to want a broader array of beer styles in your regular rotation. Even today you don't see anywhere near as many craft breweries and brewpubs in the South as you do in the North.
So I think that was part of it. The other part was, you know, Colorado has always been a place where young people come out for a few years. They'll work as ski bums or they'll try to make a living as a musician. I mean, there's just a very vibrant culture of young people here. And that was true even back in the nineties. I mean, nothing like it is now - it's exploded and we got young people everywhere. You can't walk through LoDo without bumping into a millennial. But anyway, we had a lot of energy around the city. And then certainly...let's say, from the last two decades...we had just an explosion of bike trails there. Now, over a thousand miles of bike trails in Metro Denver.
We've had an explosion of music. There are more live music venues now in Metropolitan Denver than there are in Metropolitan Austin or Metropolitan Nashville. And then last the brewpub explosion has just---now we're approaching 400 craft breweries in the state of Colorado and there are only five and a half million people here. So on a per capita basis, we're close to the top of any state in the country.
How do breweries affect the community? You mentioned earlier that you received a loan from the city of Denver when you were opening up Wynkoop - as an Economic Development Loan. So clearly the city - local government - sees a purpose in opening a brewery.
I'll tell you from two sides. I think making things by hand - craft manufacturing of all different varieties is essentially a job creator and can be a key part of an economic revival. And certainly in brewing. When you have, let's say...in Colorado now, let's just say 400 breweries...and let's say on the average, if you include the distributors and the retailers, you're talking about 12,000-14,000 jobs just from that one industry. I mean it's hard to get any brewer to come, who knows what they're doing, who's going to come to work for less than, you know, $40,000 a year. Some of the small places when they first start out, they maybe pay a little less than that, but they're pretty good paying job. So they give back to the community just in terms of the economy.
But also, craft breweries...you see them at the cutting edge of community involvement. And I like to say that we helped start that - at least in Colorado - because we got asked to support charities all the time. We kept saying, 'well, we're a pretty small little business...we don't have a whole foundation to give things away." And we spent a couple of years trying to figure out - what is the thing we can do - for each nonprofit, each charity that comes and asks for help -that we can say 'yes' to all of them? And the one thing was that, once you've got your brewing system up, we could produce a keg of beer for under 20 bucks.
And so we thought we can give everybody a keg of beer and if you sell that keg of beer - if they go out and have a fundraiser and they sell it for, you know, 3 bucks for a 10 ounce glass...you end up raising over $700 bucks out of that keg of beer. So that was something we felt that we could do for every charity. And we had, we had a couple of years where we would give away 400-500 kegs of beer. It became pretty popular in the nonprofit community. People go to the charity and they see Wynkoop beer and they're all about. "Wow, how did they get Wynkoop beer here? That's great. You know, it's spectacular. What a good company they must be to be donating to this charity."
You have New Belgium in Colorado - just from a "community impact" standpoint - they're one of the leaders.
Yeah. Kim Jordan has created a culture there. I always tease her that her brewery isn't quite as old as the Wynkoop. But you know...when I was the chair of the Association of Brewers and she was the chair of...whatever the BAA was - Brewer's Association of America, the two of us...engineered the merger to create that combined integrated support organization for all craft brewing.
In doing that we got to know each other really well. And one of the things that distinguishes Kim from many other small businesses (obviously she's more of almost a large business now) is that she felt that everything they do should be improving the economy and improving the world. So she was trying to create as many jobs as she could. She was really focused on being green. I mean, she was one of the first craft breweries to sell it - "we're not going to use any electricity generated from the combustion of coal or oil."
And I think by taking that leadership role - and reutilizing any lost heat...all the different ways they are conservation-minded, they became a symbol for the rest of the business community. And I think New Belgium really has stepped up and become one of the most admired craft brewers in the country.
And so many other breweries started following their lead. And then all of a sudden, we're all kind of helping out our communities.
Exactly it has become, it's become part of the identity, part of the brand of craft brewing itself.
There is a new law in Colorado - starting in January of 2019, [higher ABV] beer will be sold in grocery stores. What does this mean for independently owned liquor stores and breweries?
Well, we'll see. Certainly the competition will be much more significant. That being said, there's a lot of discussion about whether overall it might drive a growth in sales to compensate...and that maybe there won't be that many of the small retailers that fail...When the General Assembly was creating that legislation, they did try to protect the smaller retail stores....
Let's say the Trump Administration made you 'Czar of Beer' - you can change anything you want in the industry, as far as regulatory stuff goes. Would you? I mean is the three-tier system working or does it need to be changed?
Well, you get into the details of it and obviously there are always things you could do to improve it. You know, I look at the big picture. And again, it's such a great job creator. If you look at smaller cities and towns that are trying to reinvent themselves, the ones that are succeeding almost always have a brewpub close at hand.
There's a book that came out months ago called Our Towns. The couple that wrote the book look at dozens and dozens and dozens of small cities that had been really struggling and then were succeeding over the last 20 years - their economy turned around...Every time, it seemed there was a brewpub involved... So I think they really are a benefit to communities. And you know, one thing I look at is...we have to make sure that we preserve the existing lower tax rate for craft breweries when you compare them to the really large breweries. And I know the large breweries have their own opinion on this. But they don't create the same number of jobs that these little guys do.
Were there - during your time as Governor of Colorado - were there states out there that you all kind of tried to emulate? [in terms of beer?]
No, I don't think we really emulated anybody in terms of beer and economic development. I became Mayor in 2003 and we talked about beer and we talked about entrepreneurs, about trying to make, you know, our vision for Denver (and then when I got elected Governor in 2010, our vision for Colorado): we wanted to be the most pro-business city and the most pro-business state, but with the highest ethical standards, the highest environmental standards. And I think that's kind of the cutting edge of what cities and states should be doing all over the place. And I think that there's a vitality in the craft movement - craft beer -but all kinds of things that are handmade and I think are really is reinvigorating a lot of our local economies.
I'll put it this way then - do you have a favorite state other than Colorado that's making good beer?
Oh sure. I mean, obviously Oregon. Portland is one of the great beer towns of all time. I've gone up there just for weekends to taste beer. Same thing with Seattle and Washington. You know, the Pacific Northwest. Again - four seasons. San Francisco has become a great beer town as well. It's amazing now how the whole Metropolitan Boston area has really kind of come alive in beer. Philadelphia is a great beer city...but I think Oregon is probably at the top of the list.
Do you have any general thoughts on the potential "Bubble Burst" of the craft beer industry? That's the buzzword that's been thrown around...we just reached 7,000 breweries in the United States. I'm wondering if there is going to be a breaking point of just how many people we can serve and what breweries we can go to?
Well, again, when I opened in 1988, there were less than 100 breweries and I remember there was a kind of a bubble in the early nineties...a whole bunch of brewpubs and microbreweries opened...we just kept saying "this bubble, it's done. It's like 800 breweries. There's no way they're going to stay in business." And you know, it's a craft. And it's funny if you look at, if you look at super premium beer, which is how you would, based on price you differentiated, we're now at about 18 or 20 percent of the total beer market. I think in terms of dollars spent. And yet super premium coffee is 40 percent. So have we reached the limit? Probably not.
I mean, there'll be a contraction, I think. It's like stairs. You go up very steeply and then there's a flat spot and then you go up steeply and a flat spot and maybe even a little decline and certainly it's more competitive than I ever imagined it could be, but I think I've outgrown predicting demise. Predicting a burst of the bubble or a cataclysmic contraction. I still try to go to new breweries and brewpubs whenever I see them - and the energy and the enthusiasm and love-of-beer is still just as fresh there as it was 30 years ago when we were started Wynkoop.
Do you have a favorite beer style? It's a little chilly right now. So I imagine you might be drinking something a little bit darker.
Well, my favorite beer is always a local beer. As we used to put on our business cards, "Beer is food." I generally, again, like anybody, I drink more light beer in the summer and then I move more towards the darker beers. My late partner Russell Schehrer, who was in 1985 a national homebrewer of the year, made one of the most wonderful porters. And so I've always had and still have a fondness when it's cold weather...To go to a porter. I love Guinness. I love a lot of the craft stouts we had. We used to have a beer called Sagebrush Stout - with just the faintest hint of a prairie bouquet.
Your two terms as Governor are ending and you'll be moving on from your current position in just a couple of weeks. What's next for you? Are going to be getting involved in any breweries or anything like that?
No, I don't think so. We're trying to figure it out. I did eight years as governor - first brewer to be elected governor since Sam Adams in 1791. When I got elected, we were near the bottom. We were 40th in job creation. For the last few years, Colorado has had the number one economy in the country and, the more important thing is, I think we've been able to bring people together in a way to resolve conflict and create compromises. We've been better at doing that than just about anywhere else in the states.
My wife and I are trying to figure it out - we might just go ahead and run for President in 2020. We're trying to make up our mind by March. My friend gave us a bumper sticker that said, "Put a brewer in the White House."
We'll make a decision and you know if we decide to go that route, you know, the first primary states are Iowa and New Hampshire and Nevada and South Carolina...I think I'll be visiting a lot of breweries in those states.
Kentucky doesn't matter that much [in the election], but...you should come to Kentucky.
I love Kentucky. Kentucky's got some great breweries - you go down to Louisville - its target rich.
Thank you so much for your time today. I obviously wish you nothing but the best going forward in whatever you choose to do. Happy Holidays. Merry Christmas and Happy New Year.
You too. All the best.