2/3/2014 4 Rules for Marketing Like an Arrogant Bastard: Lessons from Stone Brewing Co. | Inc.

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How to Market Like an Arrogant Bastard

BY ROBIN D. SCHATZ

Stone Brewing doesn't spend money on advertising, but they still manage to get
their message across loud and clear. Here's how they do it.

America's love affair with craft beers was still in its infancy when Greg Koch and his
partner, Steve Wagner, started Stone Brewing in 1996. At that point, many Americans had
never heard of craft beer, much less tasted it. To make matters worse, the majority of
people who tried Stone's strong brews found them unpalatable. "It was too intense for
them," says Koch, the CEO of the Escondido, California-based company.

With no money in the budget to spend on advertising and a public unfamiliar with the
product, the company faced a hard road winning customers. Rather than tone down their
beer, Koch and Wagner amped up the attitude and created a brand that took pride in being
outside the mainstream. Stone found a following among craft-beer enthusiasts and is now
the 10th-largest craft brewer. Below, Koch shares his tips for building a $100 million
business without spending a dime on advertising.

1. Attitude is everything. Rather than try to downplay the public's early reaction to
their beer, Koch and Wagner wore it as a badge of honor. Besides giving one of their
earliest brews the eyebrow-raising name Arrogant Bastard Ale, they proudly stated on the
beer's label, This is an aggressive beer. You probably won't like it. The strategy created a deep
loyalty among the drinkers who did like it. Koch likens his branding philosophy to that of

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the heavy-metal group Metallica. "Metallica never cared if you didn't like Metallica," he
says.

2. Pick a fight. Stone revels in its anti-corporate, iconoclastic image. "We enjoy poking
fun at sheeplike consumerism and taste," Koch says. Part of that means throwing some
playful barbs at the giants in the industry, such as Budweiser and Coors. Stone's T-shirts
and stickers carry the slogan: Fizzy yellow beer is for wussies. And Koch himself frequently
takes up the cause against mass-market brews. "I'm picking a fight with mediocrity," he
says. "I'm picking a fight with the idea that beer is nothing more than the industrialized
stuff of the TV commercials."

3. Don't fit in. When Stone's brews first hit retail shelves, the company chose to sell its
beer in what the industry calls bomber bottles--22-ounce containers that stand out
against traditional 12-ounce bottles. Koch says it was a good package size for people who
might want to try the beer for the first time. Selling single bottles also allowed Stone to
give its beers a premium price, along with a higher profit margin. "For a young brewery
trying desperately to find its way to breakeven, it was a smart move for us," Koch says.

4. Ally with other outcasts. From the beginning, Koch realized a rising tide would lift
the whole nascent craft-brew industry. In 1997, he co-founded the San Diego Brewers
Guild, an organization created to promote and educate the public about locally brewed
beers. Today, San Diego boasts more than 80 craft brewers. "We took a bit of a leadership
position," Koch says. "It fostered a competitive industry." Stone also carries its competitors'
beers as part of its distribution business and keeps them on tap at its two Southern
California restaurants.

IMAGE: COURTESY OF ARROGANT ALE/STUDIO SCHULZ

F RO M T HE F EBRUA RY 201 4 ISSUE O F INC . M A GA ZINE

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