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Lagunitas Brewing Co.'s Tony Magee talks about the post-Heineken future

Founder and owner Tony Magee at Lagunitas Brewing Co. in Petaluma talks about his role one year after the merge with Heineken. (BETH SCHLANKER / The Press Democrat)

BILL SWINDELL,

Tony Magee is having fun.

Almost a year after his Lagunitas Brewing Co. announced a 50-50 partnership with Heineken International, the 56-year-old is brimming with ideas and plans to grow the business of craft beer both domestically and globally.

The roughly $500 million deal with his Petaluma-based brewery rocked the industry, which continues to experience enormous change as consumers embrace craft and move away from the big three, Budweiser, Miller and Coors. The craft sector showed a 13 percent increase in volume in 2015, according to the Brewers Association, a national trade group.

The announcement was not without its critics, specifically craft beer purists on social media who noted the irony of the iconoclastic Magee, who readily throws verbal barbs at mega-brewers AB InBev and MillerCoors, teaming up with one of the largest brewers in the world. But the flack has largely subsided given news of other major deals in the industry as well as the activity at Lagunitas. Earlier this year it bought stakes in Southend Brewery and Smokehouse in Charleston, South Carolina; Independence Brewing Co. in Austin, Texas; and Moonlight Brewing Co., the beloved Santa Rosa brewery operated by craft beer pioneer Brian Hunt.

“Some people had the idea that I sold out. The truth is that I bought in,” said Magee. “I really haven’t worked more in the last five years than I have in the last year. Now there are so many of these doors whose knobs have been unlocked. My job is to move the brewery into all these doors.”

Magee’s ambition comes as top executives at some competitors such as Ballast Point Brewing Co. in San Diego and Stone Brewing Co. in Escondido have left their breweries or have taken on different roles and investments. Magee still maintains his focus on Lagunitas, which he founded in 1993 and of which he is now executive chairman. He is still very involved in certain tasks such as label design. Lagunitas opened a Chicago brewery in 2014 and will open a third facility in Azusa in the San Gabriel Valley next year. It’s also expanding into other countries, mostly in Europe, though Mexico is in its sights as well as it enters the retail market south of the border.

Press Democrat staff writer Bill Swindell sat down with Magee recently to go over the past year and the future, including news about the opening of two London pubs; a new European brewery likely in the United Kingdom; a Lagunitas meat business; and why he will not enter the legalized marijuana business.

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Q: Is there one thing with the partnership with Heineken that you realize now that you didn’t expect beforehand?

A: This is going to sound like spin... There is not a single fricken thing that was expressed, a tone, an idea, a vibe, a general willingness that has moved at all in those first conversations. The Heineken I met on the first day is the same company I know now... It’s truly a 50-50 thing.

Q: Can you talk about your international travels and the reception to American craft beer you have encountered so far? Has anything surprised you?

A: Social media has carried the story of American craft into the entirety of the developed world. For instance, before the Heineken thing, we launched in Ireland. A couple of good local brewers came to our promos and wanted to introduce themselves. ‘We just opened up about a year ago, we want to make beers like you. This is so great. We love what you guys are doing.’ We go to these places and we find people doing things that we have all pioneered here in the U.S. In the developed world, craft is going to be as unstoppable as it is in the United States. So, we get to lead Heineken, in many ways, on their participation in craft.

I say to these guys (Heineken executives): ‘I feel that our job at Lagunitas is to take over Heineken.’ They laugh a little bit, nervously when I say it... I don’t mean ever sitting in the big seat, but kind of infiltrating its culture.

Q: What are you looking for in terms of beer culture, vibe and business environment in foreign places? Will you build a brewery in Europe?

A: In the European Union, we’ll build at least one brewery. Heineken will build it for us to our specifications, using our equipment suppliers. We still have to chew our own food, so we lease it from them. It’s not as if here’s your rich uncle.

I say a brewery that provides for the European Union, but it’s likely to be in the United Kingdom. In the U.K., Heineken owns a couple of thousand pubs. It’s very common. These are tied houses. So we are going to take two of those pubs in London and turn them into Lagunitas pubs. We are going to be able to meet people and engage with them in the first person. We can invite retailers to have a beer with us and put on events for them.

Q: Will the Brexit vote have any effect?

A: It could because there is likely going to be trade tariffs now going back into the E.U. Who knows? If those things turn out to be burdensome, then we will build another brewery on the continent. Either way, we already feel that we have a good business in the U.K. and we can make it better.

Q: Can you name a country or place where you have been impressed with the receptiveness to craft beer?

A: Puerto Rico and the Bahamas. There’s a great thirst for craft beer. We didn’t create it. It’s just there. It’s exciting.

Q: On the domestic side, Lagunitas took a more small-ball approach instead of swinging for the fences on a splashy acquisition. Why?

A: I want to play long ball. These relationships we made, we financed them ourselves. We play small ball. I don’t want to do two (deals). I want to do a lot of them. I think the biggest brewers in the country to some extent have treated the United States as it’s one place. It never was. It’s increasingly less than one place. There is a rising regionalism.

What I want to do is develop a network of these relationships that allow us to behave locally and have partners locally. It’s all partnerships. It’s not acquisitions. Some people who have a narrow view of things see what we are doing as consolidation. What Anheuser-Busch is doing, and what Miller is doing, is consolidation.

Q: Lagunitas is going into Portland and San Diego, arguably two of the top craft beer cities in the country, with a much more low-key approach by opening up tasting rooms for nonprofits. Was it a conscious decision not to be ostentatious going into those places, or concerns about a fear among local residents that Lagunitas is trying to take over another town?

A: That’s pretty much on the mark... These are two of the most crowded beer markets probably in the world, certainly in the United States for craft. They’re good places to try to build affinity without disturbing the water. We’re not going to learn anything from this next week, next month or next year. Affinity takes time. This is playing long ball. My guess is that in five years we will have a sense on whether we are able to move the needle. The truth is maybe we just grow the way we have always grown. And maybe that is the move of the needle.

Q: You came around to canning Lagunitas beer after previously vowing to keep it in a bottle. The company this year introduced its 12th of Never ale in a can. Was that just a reflection that you had to keep pace with consumer acceptance of craft beer in cans, especially with millennials?

A: It’s good to have principles. I still think cans are not as green as other breweries have played them to be. You don’t mine aluminum. You mine bauxite. Bauxite mining is messy business.

Principles are valuable but they can also be expensive. We started realizing that so many breweries were doing cans. The first guys did it because you could sell it to airlines. You could sell it to beaches and golf courses and stadiums. But it didn’t matter because there wasn’t much business in those places for craft. Now all these breweries are making cans, and now cans have found their way into those places. So now I feel we shouldn’t lock ourselves out of those venues. If I can make unique products in cans that are unique to the can line, then that’s great.

Q: You are a big music fan, even playing in a band called Alice Drinks the Kool-Aid. Are you looking to grow in the music space given that Lagunitas has two venues in Petaluma and Chicago, sponsors NPR’s Tiny Desk Concert and its own Couchtrippin concerts?

A: We got something ridiculously exciting in the hopper.

Q: You also smoke marijuana. Would Lagunitas ever enter that space if it becomes legalized in California this year?

A: I’m not a farmer. This is going to sound Pollyanna-ish. But we’re not really about money. We are about trying to make something valuable. Those guys (marijuana farmers) have been spending 20 years learning how to grow. I’ve learned how to make beer. Congratulations for seeing it through. I’m not going to step in and try to capitalize on it. I will be a good customer.

Q: What other initiatives do you have going?

A: Behind the brewery (to the east) there is 20 acres that we bought because we were afraid that there would be a McMansion on the top of the hill.

Well, what are we going to do with it now? One of my guys grew up in Tomales on a dairy and raised beef cows. I said why don’t you put some cows up there?

Now we sell a lot of beef. We raise them up there and then they go from Marin Sun Farms and then to Golden Gate Meat Co. to be packaged. And we bring it back here as beef and lamb. It’s a burger that you have not had before... finished with brewer’s grain. It’s a different animal.

We know fundamentally how they are treated. We know there’s no antibiotics, there’s no hormones. We have about 25 (cows). We’re working on trying to buy some property in west county here and we are going to expand it and move it into retail.

Q: Lagunitas introduced Aunt Sally, a dry-hopped sour mash ale, to the marketplace earlier this year. How is it doing and do you believe that sours can grow to a greater acceptance beyond their niche fan base?

A: I don’t know if you can call Aunt Sally a sour. Sour is one of its elements... It’s a hybrid sour, there’s no two ways about it. We are making as much of it as we can. It’s a difficult beer to scale up and we are learning how to manage the bacteria. There is a lot of learning going on. You could call it Aunt Sally with a question mark and you wouldn’t be wrong.

Q: Is there any more room to grow or expand in the market for hoppy beers, most notably India pale ales (IPAs), which continue to dominate the craft beer industry?

A: We ain’t seen nothing yet... There are a lot of people who are going to continue to make different IPAs. Our IPA is the best selling IPA in the United States of America and it’s been that for a long time. That might mean it’s the best-selling IPA in the world, and yet it’s still growing at 22 percent.

Nobody can see what is going to happen with IPA, but hop-forward beers, whether they have a hop-forward label on the front or not, it’s the future. It’s just such an adventure. It’s really the new hop varieties that are being pioneered by Jason Perrault in particular (a hop grower in Yakima Valley, Washington State) that have engendered this enthusiasm for it. These flavors never existed on earth before.

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.