As of February 2, Karl Strauss Brewing Company has officially been open for business for 30 years. Karl Strauss Old Columbia Brewery and Grill opened on that date in 1989, serving three house beers: Amber Lager, Gaslamp Gold golden ale, and Downtown After Dark brown ale.
1157 Columbia Street, Downtown San Diego
Three decades later, more than 130 distinct beer companies have made San Diego craft beer a billion dollar industry, most of them founded by homebrewers who saw opportunity to join a thriving marketplace. For the guys behind Karl Strauss, opening a brewpub was a bright idea with potential.
Chris Cramer and Matt Rattner were college roommates who each went on to earn an MBA from their alma mater, Stanford University. While in school, they agreed to partner up and launch a business together, but didn’t yet know what type of business. Cramer had a head start on Rattner, so once he earned his degree, took off to travel the world, visiting 50 countries on six continents, partly in search of inspiration.
“I was collecting ideas for businesses we might start,” Cramer says, “I had about 100 ideas.”
It was in the town of Freemantle, on the west coast of Australia, that he found one that stuck. “I walked into a pub called the Sail and Anchor,” he recalls, “and it changed the trajectory of my life.” Cramer ordered a beer and found it better and more distinctive than most of the mass market beers he’d tried back home. When they told him the beer had been brewed in house, a light bulb went off. “I realized you can do this on a smaller scale,” he explains, “with a business model that didn’t put you in direct competition with [big beer].”
He and Rattner got an apartment in south Mission Beach, where they’d toss a football by lifeguard tower 10 while drawing up a business plan. “People were looking for more extraordinary taste experiences,” they thought, “We’d seen it in the Bay Area with coffee roasters,” he says, “and wines in Napa and Sonoma. We thought that this was going to happen with beer.”
Adding to the viability of their plan was Cramer’s ace in the hole, a family member who’d just retired after a nearly 40 year career as a master brewer with Pabst Brewing Co., the brewpub’s namesake, Karl Strauss. The young MBAs figured, if they could get this industry vet on board, he could help them achieve the brewing quality of a big brewery, on a microbrew level.
“I cornered Uncle Karl at a party at my parents’ house,” Cramer says, “and he said something that really surprised me.”
“You know Chris,” Strauss replied, “I believe this could be the wave of the future.”
It’s easy to look back all these years later and see that he was right. Over the years, Karl Strauss the business has expanded to eleven California locations with more than 1100 employees, and it continues to grow, seeing double-digit growth over the past couple years. Last year, the national Brewers Association ranked it the 41st largest craft brewer in the country in 2017, and it looks poised to rise higher this year.
However, despite its size, Karl Struass’s brewpub model allows it to produce small batch beers at year round, gauging customer response to pinpoint which beers should be promoted to off premise distribution. This process is responsible for two of Karl Struass’s top sellers, Mosaic IPA and Aurora Hoppyalis. Revenue for the later increased 55 percent over the first three quarters of 2018, contributing to a 12.3-percent rise in off-premise sales.
So, while much of the craft beer market sees uncertainty going into 2019, Karl Strauss has reasons to celebrate that go beyond entering its fourth decade. Cramer and Rattner couldn’t have predicted just how impactful San Diego’s brewing culture has been to the beer world at large, but they could see themselves hitting the 30 year benchmark, and beyond.
As Cramer puts it now, “We wanted to build a hundred-year company.”