Landmark Seattle craft brewery Pike Brewing celebrates its 30th anniversary this month (today in fact!), which, in craft beer years, is closer to 300 years old. To honor the occasion we called up co-founder Charles Finkel to contrast the opportunities and challenges of the business now versus when he and his wife Rose Ann opened up shop in 1989. What was the key to their success then and does it still translate now?
Charles Finkel is essentially an adult beverage oracle. Before founding the first craft brewery in downtown Seattle, Charles opened up the first beer importer in the country, Merchant du Vin, and one of the first wineries. The first floor of Pike Brewing’s The Pike Pub brewpub is also a de facto museum of brewing history, adorned with items and artifacts from Charles’ archives. He’s also an evangelist for Seattle and the Pacific Northwest. During our chat he loved pointing out all of the other successful businesses and cool things happening around him. (Seriously, take a drink every time you see one shouted out below).
Honestly, after about an hour interview, we barely got into my questions about what makes a successful brewery. And thank god because the stories Charles told instead paint a much fuller picture of what success and staying power looks like in this industry than any lame questions I had.
The story of Pike Brewing from 1989 to now
From day one, way back in 1989, when there were only about 250 breweries in the country, Pike Brewing has had a reverence for brewing history and culture.
Charles: “It was our goal from the very beginning to have a pub in addition to a brewery, and the main reason was that my previous experience had been as the founder and president of Merchant du Vin, the first craft beer importer in America. We were the first to import Belgian beers to America, the first to import craft beers from small breweries in Bavaria and Yorkshire, England. So, it was based on the exposure that we had representing those breweries, all of whom have public houses that go along with their breweries. It’s just a European model, and it’s a model that I knew and then forwarded it in America. I think that the first brewpub in America was right here in Washington state, Grant’s Brewery in Yakima, also the first IPA.
The Finkels chose to open as a brewery before adding the restaurant, and they wanted to be in Seattle’s historic Pike Place Market.
“It’s the oldest continuously operated food market in America. About as old as some of the New England ones that went out of existence and then were restored like Faneuil Market in Boston. About 12 million people a year come to Seattle to visit the Pike Place Market. There had never been a brewery there before, although a hundred years before there’d been a couple in the neighborhood and gone out of business before Prohibition. So we thought that would be a really dandy place to have a brewery.
“We started our enterprise with a small four barrel brewery with a copper kettle made by a company here in Seattle called Alaska Copper that had last made a copper brewing kettle 50 years before that. They almost forgot how to do it, but they did a great job, and we were off to the races from the very beginning.
“Seattle is built on hills, so the idea of a gravity flow system was perfect for this environment, and we found a space in the Pike Place Market that occupies three and a half floors, that allowed us to do it. We also have a private utility company around the corner that supplies steam to 200 downtown hotels and hospitals and our brewery.”
Pike Brewing collected accolades instantly, from features in broad media outlets like the New York Times to bibles of the industry. Famed brewer Michael Jackson rated Pike among the 5 best breweries in the world. Et cetera.
“Pike IPA, we introduced in 1990. And I believe that it is, if not the oldest among the longest continually brewed IPAs in America. … When we were able to get local malt from the Skagit Valley Malting Company in Mount Vernon, Wash., we switched the recipe slightly because our goal from the very beginning was very high quality beer, and you can imagine in 1989 brewers were hard pressed to get great malts.”
The brewery expanded in 1996, but by 1997, Charles and Rose Anne were ready to take a little bit of a break. They sold both Merchant du Vin, and Pike Brewing Company to take a sabbatical. By 2006, they had the itch again and bought Pike back.
“In that period of time, the brewery had sort of languished. We had no smoking and the new owners installed smoking. We had no Coca Cola, they installed Coca Cola. We had no Budweiser, they had Budweiser. So when we bought it back, we essentially renewed our vows, if you will, to follow our passion for one sustainability and local ingredients.”
When the Finkels bought it back, they expanded the capacity of the brewery and to the extent that they could, their downtown location. In 2017, they realized the space right above their long-time home (formerly a series of retail stores) actually had potential to accommodate further expansion of the brewery.
“So, we took over another floor of our building, right above the pub, and in concert with the gravity flow system. We extended our spiral staircase through the pub where the brewing kettle is, and we’ve built a bridge and added six additional 60 barrel fermenters to the floor above our brewery. We also built a really nice kitchen that specializes in fish and chips.
“We built a second restaurant, and that’s an oyster bar and seafood restaurant. Different style than the pub. The pub has great food, but it’s more casual, whereas Tankard & Tun is more upscale, and overlooks Puget Sound as a seafood restaurant should.”
Pike is a model of staying to true to itself and not overextending in pursuit of “growth.” Its primary markets are Washington, Alaska, Oregon, Idaho, Montana, Colorado and select distribution to other states via Total Wine.
Oh, and Japan.
“About six years ago, we were approached by an importer in Japan about the possibility of selling our beer there. We are the closest port in America to Asia, and so we started that and that’s turned out to be a really good business relationship.”
Pike even has a hub in the Flight of Dreams pavilion in the Nagoya Centrair Airport, one of the largest and best airports in the world. Along with Starbucks and Sushi Bar and other Seattle-specific brands is a Pike Brewery Restaurant and Craft Beer Bar.
“We did it, really, because Japan has been a good market and our importer felt that by having that presence there, it would promote our brand more and it has done that, because our sales have continued to increase.”
What has changed in the new era?
Pike Brewing is no longer the exclusive brewery in the Pike Place Market, and Charles can rattle off about 20 breweries in Ballard about eight miles away. Not to mention the 400 or so breweries in the rest of the state and the 7,500+ across the country. Have those numbers changed anything about how they’ve approached the market?
“Not really. We’re the old kid on the block. You know, everyone’s interested in what the new guy’s doing, and so I think that we do brew really good beers and we do brew the best beers that we can, and I think that speaks for most of the craft breweries. One of the reasons we built the expanded brewery on the third story of our building is to give us more flexibility in terms of trying to compete with small breweries that have more flexibility (with its Third Story series).
“But, you know, there are only so many ways you can cut the pie. One thing that is also changing is the nature of retailing. And for that matter, wholesaling. We’re fortunate that we’ve always had a good relationship with our wholesale distributors. Our wholesale distributors that we sold to for years, called Click Distributing Company, sold, in turn, to a large retail wholesale distributor called Odom, and they changed the name to Northwest Beverage a couple of years ago.
“So you have 400 breweries, you have a thousand wineries, and you have that many more imported from Europe or from California, Oregon, beers and wines, not to speak of spirits — and you have only three major distributors. You have our distributor, you have Anheuser-Busch and you have one called Columbia, and they dominate the market. Even if you are with those distributors, you’ve got to fight for your life, because every one of those other brewers is on their case. So that’s a challenge.
“And then regarding the retailer, we have a big local chain here, called QFC, and that got bought by Kroger, which is from your state (Ohio). So in order to see the buyer of that chain, guess where you need to go? Cincinnati. That company, by the way, inundates the airwaves with local, local local, but what they don’t tell you is that their buyer’s in Cincinnati.
So, are things harder now compared to launching when no one knew what craft beer was?
“Really, I think it’s six of one, half-dozen of the other. There’s a lot of competition. There’s no question about that. That falls into the what else is new category. … Here in Washington, there are a thousand wineries. I was associated with the second one. Now, 40 years later, there are a thousand. Most of them seem to be doing a pretty good job. And the same with the breweries. There have been several that have gone out of business over a period of time, but not that many, really.
“When I started Merchant du Vin, there were two craft breweries in America. No one knew what an IBU was. We were, for example, the first brewery, I believe, in the history of humankind to put the IBUs and the original gravity on our beers. … IPA was a non-entity. There were no IPAs when we started. Whereas now, IPA is on the lips of every consumer out there.
“I think 14 percent of the beer that’s being consumed is craft beer and that means the rest is the mass marketed beer. That still sounds pretty daunting. But on the other hand, when we started, the percentage of craft beer was zero. So, it’s competitive right now, no question about that, but at the same time, people are buying beer. Buying the kind of beer that we’re buying. Thank goodness for Dogfish Head; they taught people that good beer is worth spending a little bit more money for.
“There’s no question that there are consumers out there that want to buy good beer. I think that’s the positive, and it outweighs the competitive nature of having so many beers out on the market.”
What the future holds
Will Pike ever expand to other markets by establishing a taproom and becoming a “local brewery” in another totally different market, versus growing markets via distribution? (We wrote about that trend here)
“The reason that we did the Japan pub is because essentially we franchised our brand. I designed the restaurant and did all the artwork so it looks like the Pike Pub, but they run it. They invested in it, they run it, they manage it and all we do is ship them beer. Otherwise, there’s no way in the world that any sane person — at least a sane person with our financial resources — would do such a thing. And when I see all these companies expanding here, expanding there, oh my god, I know how hard it is. We have one restaurant above, literally one floor above us, and it’s challenging with just the two of them.
“We have one of the biggest airports in the world here in Seattle Sea-Tac Airport, and we have had interest on the part of people at the airport to put a Pike Pub in there. So we’d like to do that, but we don’t have any immediate plans to do it.
“Before we did the expansion to the space that I mentioned to you earlier, we considered another brewery in Seattle. To do that you have to hire another brewing staff, and you have to manage it, and you have to have more real estate and … I’m so happy we did what we did. We expanded our capacity about 30 percent and we stayed, essentially, in the same location, using the same kettle and system, that our limitations were not based on our brew lab but rather on our fermentation capacity.
“So the possibility exists. Right now, we’re working with a nonprofit called Carnation Farms. They make condensed milk and ice cream, and they were very famous. They were purchased by Nestle 20 years ago, and then ultimately Nestle sold the farm. It’s a really beautiful spot in an area that’s being encroached significantly by urban encroachment, and so in order to protect that, they made it a public trust and they are now growing barley. We’re going to start using barley — malted by Skagit Valley Malting (drink) — and we’re going to try to do a collaborative hop area, and we are just in the initial stages of trying, maybe, to do little bit of a satellite, small pub out there. It’s further afield.
“Once again, they would manage it, we wouldn’t. I mean, it’s in Seattle, it’s in this area, but it’s an hour to get out there. We’re not trying to conquer the world. We have just fewer than a hundred employees, many of whom have been with us for a long time, and our goal is to have a local business.
“We’re a contributory to, not only the local economy, but also, we try to be good citizens and we participate in every conceivable, charitable enterprise in the city. And we have these few cause beers, one is our Pike Place Ale, that’s our first beer, and it supports the Market Foundation, which is part of the Pike Place Market, and it’s a component that has low income housing, childcare, medical services and a food bank. Every year we do a big event called Women in Beer and proceeds of that go to Planned Parenthood.
“That’s kind of where we are. We’re excited and proud that 30 years later, we’re here and we’re brewing and people like our beer and come to our pub.”
So, one of the first wineries, first importer, one of the first craft breweries. What’s the next thing that no one’s doing right now that you’re going to be the first one to do?
“I’m going to be the first one to just take care of my wife and go to the beach, occasionally … I wasn’t trying to break any records. I just happened to be at the right place at the right time with the right interest.”