As a longtime resident of the city of Angels, I was extra excited to join the Aleheads as it would be a chance to share with others the burgeoning beer scene that is surfacing here in LA. A few weeks back, I was able to sit down with Rob and learn about his brewery and beers, and get a brewers take on everything from opening a facility to expanding a product line. If you ever find yourself in Los Angeles, make sure to swing by El Segundo Brewing Company and sample the goods. Their Summit hopped Pale Ale is one of my favorites and I guarantee that if you like craft beer and the idea of an individual pursuing their passion, you’ll like what they are doing.
You were a home brewer for 10 years and you worked in the aerospace industry, which has a large presence here in El Segundo, at what point did you decide to start brewing for a living?
When I was in college, I read a few beer books and had the idea of doing something like this, but I didn’t give it much thought after that. Fast forward a few years. I kinda just stumbled into a home brew kit that one of my friends gave me, he’d never even used it. I went down to the home brew shop and the guy set me up with a recipe and I went home and did it right away. The beer was probably just the worst thing you’ve ever tasted but I thought it was great. So as any home brewer knows, after that first batch you’re thinking “oh man I really want to do this.” I’ve always been a beer fan. Back in college I really started getting into craft beer. So I did the home brewing thing for maybe 8 or 9 years and then things started to happen that would eventually provide the opportunity to do this for a living.
So to get a little into my background, I have a degree in finance and a masters in industrial technology. When I started working in aerospace, I was at TRW. I got bored there, then went to Hughes, which was bought by Boeing. I didn’t like it so I went back to TRW, which was bought by Northrop. TRW was a neat place to work. Northrop, not so much. In 13 years of working in aerospace, career wise I was doing fine, I was in a really good position for my age. I was 34, I was reporting to the director of finance, I was 2 steps from CFO. I was going to CFO weekly staff meetings with all the other directors in the company, on the path to a really stable corporate career. I was in the right place but I swear there was never one day in 13 years that I ever said “wow this is great, this is cool.” Maybe it was my midlife crisis, I don’t know, but It got to the point that if I was going to do something about it, I started to think that now’s the time. So about 3 years ago, I started piecing together a plan for what I wanted to do and who I wanted to get involved, when I finally got out of my current career. The moment of truth came in November of 2010, when Northrop had a layoff and it was going to hit some of my staff. I knew that it wasn’t the place for me, so I spoke to my boss, and I said “I’m going to UC Davis for the anyway, I’m going to take the brewmaster course, so give me the severance package and save my guys.” So I was laid off and I got a check to walk out the door, and there was no looking back then. If I was gonna get out that was the right way to go. But it was still pretty gnarly walking out the door going “shit I don’t have insurance, I don’t have a paycheck any more,” obviously I had saved up some money so we could live for a while but you know… that’s not infinite, it was pretty hectic. One day before all of this started happening, as I started getting a little bit more serious about it, I was at one of my daughter’s soccer games. This was maybe 3 or 4 years ago now, there were two guys sitting in front of me -I have no idea who they were- but they were talking about opening a brewery. And I was sitting there, I’m born and bred here in El Segundo, this is where I wanna be so I knew that I’m gonna be kicking myself in the ass for the rest of my life if somebody else opened a brew company and it wasn’t me.
So you got the degree, you got the funding, you got the business plans. What about setting up the actual brewery? Can you talk about securing the space, dealing with the city of LA and getting to the point to where you’re ready to make beer?
How long have you got? Well the space, the space was kinda was just serendipity. I was looking over this way, and since this is El Segundo, there are a lot of industrial buildings, you know 1920’s through 1960’s brick buildings made for manufacturing. I was thinking that would just be a natural fit. So I started looking around, it was actually kinda difficult to find some with 20 foot ceilings. And then one of my buddies who’s also my accountant, said “go talk to one of my friends about doing business with the city.” It was going to just be an information session, so we went out to lunch, and I started telling him what I was looking for. The guy I met with owns the bakery two doors down here, and knows a lot of people here in town. After lunch, he said “Hey why don’t you come look at my space, I’m just using the back part for my warehouse for all my boxes and some of my ingredients, I’m not doing anything with the front.” The front space had 20 foot ceilings and was on the main street, and what would become the tasting room was below the sidewalk level, so it had a cool speakeasy sort of feel to it. It’s certainly not optimal for me because every time I’m kegging, I’m rolling full kegs out through the warehouse down to my fridge down here, but the trade for being on main street and being very visible in downtown El Segundo is totally worth it. And the landlord/ tenant relationship is great. They like what I am doing here and are very supportive. Plus, he runs a bakery so I’ve been able to build relationships with his suppliers for things like yeast and grain.
What was it like dealing with the City of El Segundo versus the City of LA, can you talk about the differences?
The City of El Segundo was absolutely fantastic to deal with, they were great. The planning commission were really sharp people they saw what Rock & Brews was doing. I mean Rock & Brews is probably the biggest draw for out of town traffic for El Segundo. People don’t come to El Segundo to go to a burger joint on main street, but people will come from out of town to go to a place with the sort of beer handles that they have across the street. Brandon, the guy who’s the GM over there, has a really good beer program. I don’t know if people always appreciate what they’re getting.
Yes, their beer selection is one of the best in town.
So when the commission heard that we wanted to do the brewery, they were completely supportive. You go from that to some other agencies, LA County Health for example, was just an absolute nightmare. El Segundo doesn’t have their own health department they send you to LA county and they don’t really know how to handle breweries, especially if it’s not exactly like the previous one. When we came on, they had most recently done Angel City, years ago. Angel City downtown I don’t think had opened yet as far as I know. They had done Strand, but we’re a little bit different than Strand because we have a tasting room.
They did Eagle Rock?
They did Eagle Rock, but we’re different from Eagle Rock because they have a different type of licence. They’re type 71, which means that they can serve other peoples beer, we only serve our stuff. Those little nuances, believe it or not, make a difference and LA, frankly, didn’t know how to handle it. They’re not equipped for it, there’s no code for the specifics. They try to lump you in as a bar, well we’re not a bar. They try to lump you in as a restaurant, we’re not a restraint. If you look at the ABC code we are a tasting room. It’s crystal clear, it’s our beer, made on site. No food service of any sort. We are a tasting room, we’re not a bar and they don’t have rules for this sort of situation. Their systems are out of date, but still mandatory. They still don’t have an online application system, you have to go in and stand in line, and that blew my mind. They took forever of course, they guarantee you a 20 working day term, it was easily three times that.
LA County, if you don’t do wholesale, food or otherwise; one person does oversees everything, for the whole county. We went in and I said: “My beer, we serve it on site, in our tasting room.” They said: “You guys go to wholesale.” I said “Okay, but we’re doing beer on sale to the public.” “Yeah you’re wholesale, go to wholesale.” So I went to wholesale, they had me write up a document on the use of the tasting room, stuff for sale, all that kind of stuff. We had plans built to their code, they stamped them, approved them, everything was good. We do our construction. We go for our construction check, so at that point no code had changed, no law had changed, but internal health department process had changed. So now, Wholesale is no longer doing breweries, and they tell me that they’re not going to license us. Now, I have to go and talk to retail for the tasting room. I said okay, I call retail, and they sent some retail person down here and they’re throwing retail code at me. I’m saying: “I built these plans that the person who sits next to you approved and stamped.” They proceed to tell me that they are sorry and that now they are going to make me seal the windows and seal my skylight, which would have killed me because all our electrical calculations were based off percentage of daylight and all that kind of junk. They wanted to force me to put a floor sink in here. I was down to dirt three weeks ago and I built to their plans that were approved, now they want me pull out all the concrete that I just had poured in and put in a floor sink? I was going back and forth, very frustrating. I had an attorney look at everything and he thought that we could win the case, but that it would take about 18 months to do so, which would have been a dilemma. Fortunately at that point in time a law had just been passed, and this was at the end of last summer, that gives brewery tasting rooms the same rights as winery tasting rooms. You guys have been to wineries? Basically you can do whatever you want. Card tables, serve it out of a rusty bucket, whatever. What it does is it gives us those same rights and it gets local health out of the picture. So we already report to the state health board, we’re already overseen by the TTB, we’re already overseen by the ABC, we have a lot of help already. It gets them (LA County) out of the picture. So that finally cleared the way, everything got approved and we got opened. But going back to the city. I have the city building and the El Segundo planning guys going back and forth with the health department on my behalf. So I have nothing but good things to say about El Segundo. As far as getting open, if you ever deal with So Cal Edison, give yourself an extra three months.
What’s the deal with not being able to fill a growler from one brewery at another brewery?
California ABC, that is a packaging law. I know there’s a movement out there to get a common kind of growler, but I don’t really see it happening cause California is just so up on process. I mean every time I come up with a new beer, I have to price it out, then I have to post all my prices and so it’s public, I can’t change any of that. Even my keg colors, the keg colors go on top and all have to be approved.
Is it like going to a hotel and saying it’s $500 a night here, but another place is like $400? Are you allowed to match prices?
No, it’s not a match price situation. My prices are posted, if you are my best account in the world and I want to take care of you, I can’t it’s just not legal. I can’t take one cent off the price I sell to you versus anybody else.
How long of a process is it to create a new beer?
It takes about two weeks. ABC is not a bad organization to deal with believe it or not. I mean they have a bunch of stupid rules, but the individuals you deal with, at least the individuals I’ve dealt with were actually pretty good, you can talk to a person, they’ll actually sit down and help you. It’s not speedy by any stretch but they’re much more reasonable and they’ll help you. I even got in a pinch and I had to get a beer out and I talked to the lady on the phone in Sacramento and she helped me get my posting at like 6:00 on a Friday. So I thought that was really cool. I have pretty good things to say about ABC even though they’re a pain in the ass.
So let’s talk accounts now. You guys have had a pretty good market penetration here. I can remember drinking your beer for the first time over the summer at Naja’s Place in Redondo, long before the brewery had opened to the public, and I know they have you guys at Prince ‘o Whales. You have a pretty good presence at beer bars. What kind of marketing have you done and how is it so that you’ve spread so quickly?
That’s mostly Tom. As I said he’s the Cicerone, he’s the GM at Library Alehouse, so he knows the right people. We get along personally, which helps. It just turned out that he was the right guy to have here for sales and getting us out there, cause I knew he was interested in what we were doing. And that’s exactly what did it. If you look at our accounts, the first couple batches of beer were nuts, because I don’t think the first couple batches were all that good. But those first couple batches, we were in, the Daily Pint, Library, we were at every A list place in LA, with those first couple batches of beer. And I, I mean, I frankly just didn’t even like them. I think it was a little bit risky but I have absolute faith in Tom’s taste. I mean that’s what he does, he’s a Cicerone. I know these beers so well throughout the process, I taste these beers every single day for 2 weeks before they go out, 2 to 3 week before they go out. I know them all too well, every beer.
I would be happy to be you.
You know it sounds great, but sometimes coming in and tasting beer at 8 in the morning is not that good. Especially when it has just started fermenting. But each of these beers, every batch has it’s own nuances. Unless you’re Budweiser and you’re perfect, every beer has its nuances, they all have character. I get so fixated on a characteristic that I know is in there, that I kinda zero in on it so that by the end of the fermentation that characteristic is all I can taste.
Have you ever had to dump any of it?
Those beers are your bread and butter.
Yeah, we’ve got a lot of regular accounts. We’ve got to keep that going.
Speaking of sales, what about bottling plans? Do you have plans to do that, and as far as profitability what’s better for business keg sales or bottle sales given the distribution model and everything?
The whole margin per ounce is way higher with bottles, but you’ve got a whole extra set of logistics that you’ve got to deal with, it’s a different sales game out there. I mean not only do you need a presence in the supermarkets, you’re out there making different sales. I need to have bottles, I need to have a labeler. The reason I didn’t do it in the beginning was that I thought I was biting off enough as it was. I could just imagine coming in on a Sunday morning and going “oh shit I’m out of glue on the labeler,” or something like that, so it’s a whole set of headaches that I chose not to deal with, because I really am a one man operation. Brewer, run the tasting room, distributor…I drive the van when we make deliveries. I do everything except for sales. We’ve been talking to a couple of distributors, but it’s tough to make the case close right now. Like I said a really sweet deal is like 26% of gross I’d probably be looking at 30% of gross because I’m small potatoes, so it’s tough. We’re going to double into second quarter. We’re figure we are going to double again from that size in a year and a half and we’ll figure out where to go from there.
What’s your current output?
Our capacity is about 14 -1500 barrels a year, we weren’t even close to that. This is a 15 barrel brew house, those are 30 barrel fermentors. For the first three months or so I was doing single batches and moving them through so we were at about half capacity, now we’re going full speed. Last year was nowhere close to what the capacity was, we should be closer this year. And we’re still not, I say we’re at 85% of what we could be doing right now, because we’re not just blasting and rushing everything through.
For as big a city as LA is, it is a surprise that there’s only a handful of breweries within the county limits.
People are so thirsty for a local beer in LA and so far it’s just been all open arms, everywhere we go. It’s the most bizarre industry you’ve ever seen. You know the people who were the greatest help to me getting open, as far as questions and sharing their numbers with me, actually brewing on their system, were Strand, down in Torrance. In any other sense I am their closet competition, in location, market, product, any way you want to do it. But they were nothing but helpful to me. I think it’s that there is so much demand out there for local beer. People’s tastes here in LA are coming around like crazy, everything that’s opening up is craft beer focused. So I don’t think we’re anywhere near saturation yet. I don’t think we will be for a while either, I mean look at San Diego. Much smaller community, 22 breweries, and big breweries. Stone, Ballast Point, Green Flash.
I see people, that light bulb go off in their head every single day, they’re finally getting the craft beer thing. They’re not going back, and I think it’s just, it’s like wildfire right now. I’m not worried about it in the short term, I think it’ll be interesting to see what happens once a few more small boutique kinda places get online next year, there might be a little bit of fighting over accounts. But I mean, honestly I mean it is kinda like this brotherhood kinda thing, where I’m not going after Strand handles, I want that Bud handle. Its like, why are you pouring big beer you when we’ve got decent local breweries down here? You know three years ago that was perfectly fine, but I think we’re making quality beer that can stand up to some of the larger craft operations.
Do you think LA has a ever has a potential to be like a North County or San Diego as a whole as a beer destination, 5 or 10 years down the line?
I could see it happening in more of the Santa Monica or South Bay are than LA proper. But I think so, I think as some of the existing breweries are continuing to get better, I think that the other guys are getting better, I know I’m getting better. And if you keep keep seeing that kind of improvement you’ll start seeing a destination. You’re already starting to see LA beer tours operations starting to pop up as well as more breweries. I know there’s two more in Torrance coming in this year.
What I think will be more interesting will be to see if LA develops any of its own kind of character. Right now… If you look at all of the existing breweries, we’re all pretty different, where as San Diego is a much more cohesive style. It’s that, generally speaking, it’s that hop-y, higher alcohol, you know, bitter IPA. And San Diego is kinda the epicenter… and most of those breweries are on the same page. But what I’m doing is really different from what Jeremy is doing at Eagle Rock, and what Evan is doing at at Cismontane…we all kind of have our own styles going right now. So it’ll be interesting to see if LA has any kind of emerging style of it’s own.
Are you testing some new styles in addition to the flagship beers?
I want to have my core beers and I wanna have my regular accounts. So I’ll continue with the pale and the IPA. We transitioned from the old IPA cause of the issues with hop shortages, to the white dog. So I want to keep focusing on those, so I’ll mix in more styles as I can. If I can find fermenter space in my brew schedule I’ll throw some other things in. That being said though, I want to get a second IPA going, and I want to do a couple other things. I want to do a big double IPA for our first anniversary. But as far as regular styles, you know the stout is starting to pick up a few accounts so I’m going to keep going on that maybe brew one every other rotation. I want to continue to move the volume of the IPA and the pale as I have been.
Okay so final question: What are your favorite beers? Other than your own, what breweries put out some of the beers you enjoy most.
Alpine Brewing out in Alpine. That’s my favorite brewery, mine included. I love Alpine, but you really have to get it from the brewery. I mean those guys have, what 5 IPA’s in their regular rotation? Every single one of them is distinct, and every single one of them is just amazing. So those guys are absolutely my favorite brewery. Who else? Green Flash, I’m a huge fan. What I really like from those guys right now is the 30th street pale, I think that is the best pale out there right now. I love Sierra Nevada just because of the consistency is amazing. You know what’s just rocking my world right now? Knee Deep, up in Lincoln. This Knee Deep Extra Pale Ale with Citra hops this might be my favorite beer on the market right now. And I drink a lot of different beers. This stuff is as good as Kern River’s Citra, which is a great beer too.
Thanks for speaking with us Rob. We really enjoy the beers that you are making here. Can I actually get another Pale with the Summit hops?
Sure!
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ALEHEADS 
Good God almighty that is a ton of words. I’ll read this in chunks throughout the day.
Great interview, Hoppa. That bueracracy they went through sounds brutal.
I have to give major props to anyone who quits a lucrative corporate aerospace job to found a brewery. I can’t say I’d have the same drive. I’d probably just invest my aerospace money into a pimped out home bar and brew system.
Great interview. Sounds like Rob’s going to be really successful in that market.
Loved the interview. When the cash flow increases I definitely plan to get out and check out our local breweries here in LA. I knew about Eagle Rock, but not about Strand and El Segundo Brewing Company, @BlueHouseAles …new things to look forward to in 2012!
And as nice as it is to get a $3.00 draft in Hollywood at Maui and Sons (next to Egyptian Theatre on Hollywood Blvd), there is something great about a locally brewed beer!
Even better is to get a dark locally brewed beer, similar (better) in taste to Samual Adams for instance.