The kitchen counter in Alan Newman’s house is lined with fancy bottles of beer. Craft brews in big, brown bottles with corks in the top and enigmatic names such as 13th Hour.
Years ago, these might have been beers made by Magic Hat, the quirky craft brewery Newman started in Burlington in 1994. But they’re actually part of the Barrel Room Collection brewed by Boston-based Samuel Adams. Newman purchased them from the brewery on a recent trip to see founder and brewer Jim Koch.
Newman has called Koch a friend and competitor for almost 20 years. Now he’s calling him something else: boss.
Fourteen months after he was forced out of Magic Hat, Newman is jumping back into the beer business. Only this time, he’s not doing it on a shoestring. Last week, Newman announced a partnership with the biggest name in craft brewing: the Boston Beer Company, owners of Samuel Adams. Koch has tapped Alchemy & Science, the company Newman founded with fellow Magic Hat exile Stacey Steinmetz, to serve as a craft-brew incubator for the Boston Beer Company.
Newman won’t have anything to do with the Sam Adams brand. Rather, his five-year contract charges him with developing new recipes and beer styles on independent labels that will become part of the Boston Beer Company family — “distant cousins” of Sam Adams, as Newman describes them. He and Steinmetz will also hunt for new breweries and brew pubs for Sam Adams to invest in or buy, subject to approval from Jim Koch and Boston Beer’s CEO, Martin Roper.
Even Newman isn’t entirely sure where his nebulous mission will lead.
“Ask me in a year,” he says over coffee at his Burlington home overlooking Lake Champlain.
Newman was almost ready to retire. The 64-year-old spent last winter in New Orleans penning a memoir titled High on Business: The Life, Times, and Lessons of a Serial Entrepreneur — which he self-published in September — a prerequisite for his imagined “retirement gig” as a public speaker. Newman’s last beer adventure ended on a sour note; after the financial crash of 2008 thwarted his plans to merge Magic Hat with Seattle-based Pyramid Breweries, he was contractually forced to sell his shares in the company.
He went into exile, but it wasn’t long before new business ideas starting bubbling up. For this self-described “opportunity junkie,” entrepreneurship is something of an addiction.
Alan Newman is best known as the founder of Magic Hat Brewing Company, creator of the apricot-flavored #9 ale and other concoctions, but it’s far from his only achievement. Back in 1988, he founded Seventh Generation, turning a worthless catalog company called Renew America into one of the leading sellers of Earth-friendly cleaning products with the help of clever branding and marketing. And early on, Newman had a creative hand in Gardener’s Supply Company, based in Burlington’s farm-filled Intervale.
Burlingtonians not familiar with Newman’s résumé may know him as the guy with the bushy gray beard and funky yellow glasses riding a Vespa around town. Along with Steinmetz, he’s also the person responsible for Burlington’s Mardi Gras parade. An exemplary partier, he donned an outrageous purple costume every year to lead the procession.
He is jolly, yet opinionated, with a sharp and irreverent sense of humor. Think Santa Claus meets Rodney Dangerfield.
Raised on Long Island during the height of baby-boom suburbanization, Newman moved to Vermont in 1970 “to avoid the traffic of metro New York” and to find other “long-haired, bearded folks.” He fell in with a class of hippie entrepreneurs, such as Ben & Jerry’s cofounder Ben Cohen and Jerry Greenfield, who charted a different path to profits, one now referred to as “socially responsible business.” Placed beside that tradition, Newman’s new Samuel Adams gig looks surprisingly buttoned up. No longer the scrappy underdog, he’s now working for someone else — the big dog of the craft-brewing world.
And Samuel Adams’ top dog says he expects big ideas to pour forth from Newman’s brain.
“I’ve been making Sam Adams for 27 years,” Koch says in a phone interview. “I’ve made hundreds of beers in that time, probably more beers than any brewer in the world. And Alan’s got ideas I haven’t thought of.”
Newman’s memoir, penned with Chelsea Green Publishing alum Stephen Morris, reels through his entrepreneurial evolution: from a pot-smoking hippie selling Karmelkorn at a Massachusetts shopping mall to founder of what was the ninth-largest craft brewery in the United States. In between, Newman ruminates on the rungs of his own socially responsible career ladder and the successes and failures along the way.
A considerable chunk of the book is devoted to the events that forced Newman out of Magic Hat. He recounts that he was on a motorcycle trip in Maine in June 2010 when he got an email summoning him back to Burlington to meet the “new owners” of Magic Hat.
“The new owners?” Newman remembers thinking. “Up until that moment I thought we were the owners of Magic Hat. And by ‘we’ I really meant ‘me.’ Hadn’t I started the company? Didn’t I pour my heart and soul into it for 17 years?”
The die had been cast four years earlier, however, in 2006. Magic Hat was “rolling in dough” at the time, Newman recalls, and brought on a financial partner, Connecticut hedge fund Basso Capital Management, to help it acquire Pyramid Breweries for $25 million.
“When we did the Pyramid deal, I went from majority shareholder to minority shareholder and, in doing so, I gave up some rights,” Newman explains. “It seemed like a good idea at the time because no one knew that the economy was going to tank in 2008.”
When it did, the Pyramid deal went belly up. The bank that was financing it pulled out, and Basso was looking to unload Magic Hat “as quickly as possible,” Newman says.
He made one request: Do not sell the company to KPS Capital Partners, a private equity company that owns North American Breweries, makers of Labatt Blue, Genesee, Dundee and Honey Brown. Newman wanted an owner that would be a “good fit” for Magic Hat’s brand — “maybe a European brewery looking for a strong foothold in the American craft-brewing market.”
Just the opposite occurred. Magic Hat went to North American Breweries.
Newman was in no hurry to start a new business after Magic Hat.
“I was enjoying the Burlington summer, which is about as good as it gets,” he says on a recent weekday morning. “I had my new house, which I’m totally in love with. I’d walk down to the bike path, walk downtown. My girlfriend was here. Every once in a while I’d follow my nose and explore a business idea.”
Newman’s nose quickly led him to a slew of companies he considered buying. Perhaps the unlikeliest was Burlington Telecom, the municipal phone, Internet and cable provider that has become synonymous with debt, mismanagement and political scandal. Newman wasn’t scared by BT’s $17 million debt to Burlington taxpayers or by the federal lawsuit brought by the company’s creditors.
Ever the optimist, Newman envisioned reversing BT’s fortunes by ditching the cable TV division and focusing exclusively on providing high-speed Internet, particularly to businesses that need significant bandwidth. He went so far as to contact the consulting firm brought in to manage BT, Dorman & Fawcett, but says his phone messages were not returned.
Newman also explored buying Vermont Castings. He’d owned one of the company’s woodstoves during his “hippie, back-to-the-land days” and dreamed of rekindling the brand by turning its Randolph foundry into a tourist destination, throwing parties and reaching consumers with social networking. But the vagaries of manufacturing, the sum required (upward of $80 million) and the complexities of running a foundry scared off investors, Newman says.
“It was trying to overcome the belief that serious manufacturing was dead,” Newman explains. “Do I believe that I could have overcome it? Possibly. But then I got distracted with chips.”
Specifically, Madhouse Munchies, the South Burlington-based potato-chip maker. Newman’s plan to make Madhouse a powerhouse? Build a “Willy Wonka-esque” potato-chip factory in Burlington.
“I’m kind of a one-trick pony,” Newman says. “I was going to follow the Ben & Jerry’s/Magic Hat model. I was going to come out with wacky names and unusual flavors and tie it into social causes. I saw clearly how to do that business.”
So did Newman’s investors. With money in hand, he made a bid for Madhouse Munchies. He received a counteroffer and was preparing his response when the phone rang. It was Jim Koch. He wanted to talk to Newman about a job.
The deal with Samuel Adams came together, appropriately, over a beer. In August, Newman took his daughter to look at law schools in Boston. While he was in town, he dropped in at the brewery to hear Koch’s pitch. The one-year non-compete agreement he signed with Magic Hat was just expiring.
Newman is a huge admirer of Koch, calling him “probably the smartest guy I’ve ever met. Seriously.” Koch, in turn, describes Newman as “one of the most innovative and creative forces in the success and growth of the craft-brewing industry.”
But working together? At first, Newman was skeptical.
“I said, ‘Jim, I don’t work for people. I’m not good at that,’” Newman recalls. “He said, ‘That’s OK. We don’t want you to work for us, because we’re really good at Sam Adams. But we’re really not much good at anything else.’”
Ultimately, Koch convinced Newman by offering him a “white sheet of paper” — which he understood as the freedom to write his own ticket with the financial backing and institutional support of Sam Adams. That could mean buying up craft breweries, starting one from scratch (Newman won’t say whether a Burlington brewery is a possibility) or producing single beers using Sam Adams facilities.
“At the moment, the funnel is wide open. They’re not saying no to anything,” Newman says, before adding one caveat: “As long as I keep my grubby little hands off Sam Adams.”
Under the deal, Alchemy & Science becomes a wholly owned subsidiary of the Boston Beer Company, a publicly traded company whose revenues grew by 12 percent last year, to $463 million. Based in Burlington, Alchemy & Science will operate out of a waterfront office in the gray stone building at the corner of Maple and Battery streets that once housed the Dockside Restaurant.
Koch confirms he’s given Newman virtual carte blanche in his new gig.
“Frankly, I have a lot of respect and trust for Alan’s judgment,” he says. “The whole idea here is, we’re going to fund him, we’re going to support him, and we’ll share the value created with Boston Beer and Alan and Stacey. There’s going to be some really cool things that will come out of it.”
Ben & Jerry’s cofounder Ben Cohen is a longtime friend of Newman’s and wrote the forward to his new book. Cohen calls Newman “a great guerrilla marketer” who built such a strong brand with Magic Hat that Cohen himself made a small investment in the company. If anything, Cohen says, Newman’s weak spot is “the financing and control part of the business,” as evidenced by his forced ousters from Magic Hat and Seventh Generation (see sidebar). For that reason, Cohen predicts the Sam Adams gig will be a “perfect fit” for Newman.
“Alan is a promoter, and he is really, really good at it,” Cohen says. “I don’t know if his strength is really running the day-to-day aspects.”
With the new job, Cohen notes, Newman gets to “find cool businesses that have potential and to use his marketing skills to build on it. And then he has all the support of Sam Adams to do all the operational aspects of the company.”
Newman’s gift for brand building was evident at the furniture stores where he and Steinmetz shopped last week for desks, swivel chairs and a conference table for Alchemy & Science’s new office: At the W.B. Mason warehouse in South Burlington, a table held a random display of Seventh Generation cleaning products, such as dishwashing detergent and shower cleaner. At Myers New & Used Furniture in the Old North End of Burlington, a mini-fridge for sale was plastered with beer and skiing stickers, including a big, silver Magic Hat decal.
As brands go, Samuel Adams is the 800-pound gorilla of the craft-beer world — double the size of the next-biggest brewery. Newman believes that “nobody does it better” than Sam Adams, but says the new brands he creates will remain small and independent by design.
“Independence sells. Different sells,” Newman says. “Everything we do will have its own story.”
Still, he anticipates the affiliation with Sam Adams will create some “perception issues… which I’m really bad at, because my basic attitude is Well, fuck off, then!” Newman says. “I’m really not good with people who objected to Magic Hat because we were too big or because #9 was too drinkable. Drink something else, but don’t put us down because we’re bringing more drinkers into the craft category.”
Maintaining the craft category itself presents another challenge. With more drinkers looking for craft beers, more breweries are getting into the craft-beer game — and some of the behemoths are creating what Newman calls “faux crafts,” such as Coors’ Blue Moon and Anheuser-Busch’s Shock Top. Then there are the craft-like concoctions, such as Budweiser Chelada, with Clamato.
“Did you ever expect to see a beer/tomato juice/clam product from Budweiser, the King of Beers?” Newman writes in his book. “Are they looking to be the King of Clams, too?”
Accordingly, there’s growing confusion about what a “craft” beer is. All that, writes Newman, spells “challenging times for the craft beer business ahead.”
Newman has five years under his contract to redefine craft brewing and create hit beers for the Boston Beer Company. At that point, he’ll be 70 — and, he warns, “We don’t know what I’m going to be like at age 70.”
Even if he retires for real, Newman won’t live out his days swinging golf clubs in Boca Raton. “I think of this as my last act,” Newman says thoughtfully, “but then, I thought Magic Hat was, too.”
How did Seventh Generation go from being a worthless catalog business called Renew America to one of the leading sellers of Earth-friendly cleaning products? Alan Newman, who founded the company in 1988, attributes it to a “perfect storm” of renewed environmentalism, shrewd business decisions, and a publicity “bonanza” that put him and business partner Jeff Hollender (who has also claimed that he cofounded the company) in the pages of People, Newsweek and the Wall Street Journal. But by Christmas 1991, the Gulf War and ensuing recession had whacked Seventh Gen’s business. With profits plummeting and tensions mounting, Newman felt burnt out and told Hollender he was taking an unpaid “sabbatical” to recharge his batteries. -A.B.
From Chapter 7: “The Perfect Storm”
I was still entirely engaged in the fortunes of Seventh Generation, but I consciously tried to stay out of Jeff’s hair. The last thing the company needed was a distraction caused by the perception of friction or disagreement at the top. I knew he was coping with a lot, but in my own way, so was I. There was never a doubt in my mind about coming back to the company. Jeff had occasionally ranted that there would be no company for me to return to, but I thought that was the anger speaking. After all, this was my baby, and I brought him in on it, no?
So, I gave him space. Myself, too.
Gradually, I felt my mojo return. I was ready to climb back into the cockpit, to walk over the coals. I developed a clearer vision of the company that Seventh Generation could become. I presented these ideas in a letter to Jeff during the spring of 1992, but he responded in no uncertain terms that I no longer had a role in the company. I was stunned. This was a complete reversal of the understanding I thought we had. He was extremely angry. Even more so.
Things became very personal. The rift was not only between us two individuals. Within the company there were many Newman loyalists; and within the entire environmental community the rift was perceived (at least on a symbolic level) as one between money and mission.
Complicating the situation was that we were such a highly visible company as a result of our media bonanza. Not only was there the dramatic downfall of yesterday’s shooting star, but, increasingly, there was an obvious conflict between the city slicker from New York and the happy hippie from Burlington. It was great local soap opera, and everyone wanted to know the behind-the-scenes story.
[Since my departure], Jeff Hollender has positioned himself as a prominent advocate for corporate social responsibility, the person who can bridge the gap between established corporate interests and the notion that a business can be about more than a single bottom line. He has that crossover credibility that can be accepted at Wal-Mart in a way that Alan Newman — with his beard, bare feet and yellow glasses — never could. Jeff has written books, given keynote speeches, built a great company, and raised a wonderful family. He’s grown tremendously as a business leader and, I’m sure, as a person. He has much to be proud of.
Late in 2010, Seventh Generation’s board of directors (a group that includes Jeff’s wife, Sheila) informed him that his services were no longer needed. Against his will, he was forced from the company that he had nurtured and grown. I don’t pretend to know the story-behind-the-story. But I did receive an endless stream of emails, many starting with the word “karma.”
I can’t help but wonder, however, if his own experience of being forced out of a company that he nurtured and loved has given him a greater sense of empathy for what I went through in the summer of 1992.
What He Likes in a Beer “There’s a current movement to highly hopped, high-alcohol beers. That’s not my favorite style. I like drinking beer with food — I love beer with dinner — and if I drink one of those big, bitter beers, I can’t taste anything. My personal favorites tend to be more malty than bitter, and tend to be some of the more interesting yeast profiles. I love the Belgian yeast profiles — lambics, Belgian whites, Belgian sours.”
The 99 Percent “I want to do something now called ‘the 1 percent for the 99 percent.’ I’m in the 1 percent at the moment, and I’m thrilled to be here. But I don’t disagree with the 99 percent. I totally agree with them. It offends me that after $109,000 they stop taking Social Security out of my check, and then they bitch about the shortfall in Social Security. Well, fucking charge people and have the money!”
The Glasses “We did a 10-day tour of Italy for Magic Hat’s 10th anniversary in 2006. The last day of the trip we were in Venice, and in the lobby of the hotel there was an optometrist’s display window, and these glasses were in it. It’s shocking what I’ve gotten because of these glasses: upgrades on airlines, free parking, special treatment at airport security. There’s something about these glasses.”
The “Magic” of the Vermont Brand “It’s heresy to say this, but I don’t think including the name ‘Vermont’ does anything to enhance most brands. Ben and Jerry are two Jewish guys from Long Island who featured photos of themselves swathed in tie-dye and with long, untamed hair on their product packaging. What marketing morons! Wouldn’t they have done much better if they had called it the Vermont Ice Cream Company? And instead of those goofy flavor names, they could have come up with Vermont-associated names such as Middle Berry and Calvin Coolidge Crunch.”
Beer Geeks “I have issues with beer geeks. They’re snobby, and I’m not a fan of any snobs. I am a car snob. But I don’t put down people who drive cars that aren’t what I would want to drive. A lot of craft breweries make beer for the beer geeks. We always believed you make beer for people who like beer. That was the Magic Hat philosophy.”