with Alan Kornhauser

Pabst Brewing, Asia

July 1, 2010 By Julie Johnson

How did you become involved with the Lhasa Beer project in Tibet?

When I was at Portland Brewing, one of the things we offered was consulting for other breweries. The Lhasa people came to me and said they were interested in brewing a beer in Tibet. I liked what they had to say. That was within a month or two of Pyramid buying Portland, so, when it was time to go to Tibet, I was no longer employed at Portland Brewing Co. and I went as Kornhauser Freelance Consultancy—KFC.

I flew to Tibet, looked over the operation there, and saw what they were capable of. This is a brewery that was built, I’m guessing, 15 years ago, so it’s not that old. The equipment was pretty good. To give you an idea of the quality, I did the initial work on this in August, 2004, and by January or February, Calsberg had come in and bought 51 percent of the brewery. And Carlsberg doesn’t play around with crap.

We looked for a kind of beer that would be quite drinkable, but would still have some twists of its own that would make it stand out from the crowd. There’s a unique hull-less barley indigenous to Tibet, and they malt it. We tried it, and the flavor was quite good, slightly different. So we’re using 30 percent of the hull-less Tibetan barley and 70 percent Australian malted barley.

There’s a lot of research going on, especially in Canada right now, on developing hull-less barleys, because you get a lot more bang for your buck—you aren’t paying for excess weight that doesn’t give you any extract. There also are malt mills in German—more there than elsewhere—that divide the husk from the barley kernels, so you just mash the kernels, and add the husks separately to the lauter tun, so you don’t get the tannin flavors from the husk. It’s one of those German overkill things. If there’s a simple way to make beer, the Germans can add three steps, to make it a little more complicated.

I thought the hulls were useful to a brewer?

Yes, they form a filter bed for lautering, but you don’t need 100 percent. Obviously, German wheat beers are 55 percent malted wheat, and that has no husk.

The other significant point about Lhasa Beer is that we’re using a tremendous amount of Saaz hops. We couldn’t dry hop there, which is what I wanted to do, so we went to the next best thing, which is the whirlpool tank. We’re using Czech Saaz hops and it has a very, very nice aroma. I tried to make it in the style of a European lager—good-selling beers—but somewhat more distinctive.

And it’s got a great story, with the proceeds going for Tibetan development efforts. Who started this venture: beer people or non-profit people?

Both. It was a combination of a guy with an interest in Tibet, and a guy that knew a lot about beer. George Witz is the CEO and he’s our beer guy.

Tibet was completely eye-opening. The Tibetan people are not Chinese, they’re their own ethnic group. I’ve never seen a more religious group of people in my life. People walking down the street and prostrating themselves on their way to the temple. Tibetans are so kind and cheerful—they’re just the nicest people in the world. It is a kind of mystical, magical place.

Is the beer in Lhasa brewed for export?

It’s entirely for export. They have a brand called Lhasa Beer in Tibet, but that is a Carlsberg recipe, and it’s their license for China and Tibet. We hold the license for the United States and it is our own recipe—it’s a completely separate beer. The beers in China are for the Chinese market, and the beer in Hawaii is for the Hawaiian market.

Where did you grow up?

I grew up in Rhode Island, and I believe I am the only native Rhode Islander who lives outside of the state and is not in the witness protection program.

As a kid, we used to drive past the Narragansett Brewery, and those big old Gothic-looking breweries built in the 1890s. They made the beer that my father drank. From the time I was in grade school, I thought that would be kind of a neat place to work.

You’ve worked at every level in the beer industry. What’s your brewing history?

I started in the union at Huber Brewing Co. in Monroe, WI, in packaging. Then I sent myself to the USDA course in Brewing and Malting Science in Madison, back when nobody did that—mostly it was only big guys.

At that course, I met the then-head brewer at Anchor. My goal was to go to Heriot Watt in Scotland. But Anchor offered me a job and, since I had no money, I thought it was better to have someone pay me to learn how to make beer than to pay somebody else to teach me to make beer.

So I went to Anchor. I was there for a total of 18 years, but in the middle I took a one-year leave of absence and moved to Kyoto to study Japanese. Then I was offered the brewmaster job at G. Heileman in Milwaukee—they were reopening the Blatz plant, which had been closed for five years, so I was brought in to recommission it and be the brewmaster there.

I did all the R and D brews for corporate Heileman, and we did some contact brewing as well. Then, as Heileman was having their going-out-of-business sale, they sold the plant and me to Miller. Miller decided to make it into Leinenkugel Brewery number two. I formulated the first Leinenkugel brews there.

Since I knew Heileman was going to sell us, I had done a little fishing, and I actually had three other offers on the table, and one of them was Portland Brewing Co. in Portland, OR. So, off I went to Portland, and I was there for two years. I enjoyed it, but then Pabst offered me the job of brewmaster for Mainland China and I signed a two-year contract with Pabst.

Two years in China was enough and I came back to Portland for four years until Pyramid bought us. Portland had been contracting our canned beer at August Schell in New Ulm, and when it was apparent Pyramid was not going to keep me on, August Schell offered me the brewmaster job in New Ulm. About a year later, Pabst offered me the job back in China. I really liked living in Asia and so I went back to China for a year and a half, which, again, was about all I could take of living in Mainland China.

I love living in Japan, and I like Hong Kong, but the Mainland can be a little wearing at times. I worked out a deal with Pabst where I work every other month in China and in between…well, in between, I mostly don’t work. And I kind of like that.

I was commuting between the United States and Asia—I went to Asia eight times in 2007 and 2008. I was getting a little tired of that, so I relocated to Japan.

Our U.S. brewmaster for Pabst, Bob Newman, lives in Lehigh Valley, PA. But even though he is physically closer to Hawaii than I am in Kyoto, I can get there a lot quicker on a direct flight out of Osaka into Honolulu. He’s got to go Allentown, Philadelphia, Chicago…you know. So Pabst geographers have decreed that Hawaii is part of Asia.

You’re background is old school, yet you’ve managed to make the transition to what the new guys are doing. Is your background as unusual as it sounds to me?

There aren’t a lot of people that have done every side of the street imaginable. I started with an old regional brewery, I went to the original craft brewery—but it was still an older brewery. I’ve been with the big guys, and back with the regionals again. I appreciate both sides: I like the specialty formulations and those kind of beer, but at the same time I really appreciate the big guys’ expertise. I’m a blend of both.

From your perspective, what are the strengths and weaknesses of the different sectors where you’ve worked professionally?

The weakness on the craft side is that, initially, you had people who were just so pleased that their beer had more flavor than Budweiser, without realizing that half of those flavors were off-flavors. Now the craft brewing industry has gotten so much better. You have some very good ones, although you still have some guys who were homebrewing yesterday and think they can parlay that into professional brewing tomorrow.

I don’t really see a big schism between mainstream and craft production…or at least there shouldn’t be. Whichever camp you are in, both brewers should be trying to make a consistent product with an absence of flavor faults no matter what the desired profile might be. Developing full-flavored beers is fun and challenging, while making consistent mainstream beers is in many ways more difficult, not the least of which is because any off flavor is going to stick out like a sore thumb.

Which aspect of brewing is most fun for you?

I still like formulating specialty beers. In fact, with Pabst, I just made the first specialty beer in Mainland China. There’s almost no ale in China: I had to smuggle the yeast into the country. I formulated a special high-gravity ale called “1844.” It’s all malt, and we use caramel malts from Germany. The initial aging is dry-hopped rather heavily. Then we do a secondary aging in new uncharred American oak whiskey barrels. We bought 750 brand new barrels to the tune of $100,000. This is a very special beer; it’s retailing for about over $40 U.S. for a 720 ml bottle.

There’s an audience there for it?

There’s the nouveau riche, and in China, perception is everything—look at me, I’m rich. Then also, there is another group that may be part of our market, and that’s state banquet dinners. Normally, you’d drink brandy, and this beer kind of has the look of brandy—it’s a reddish-brown color, but it won’t hurt you as much.

The beer combines a new flavor and a Western status symbol. Apart from the prestige, how are you selling these new tastes?

It’s new on the market, so I’m not sure exactly how it’s going—I have very little to do with the sales side. There is a TV commercial that’s quite attractive, that uses old still photos of the early days of Pabst, back when they used wooden barrels there.

What’s Pabst’s story in China?

We were the first foreign brewery in China, since the liberation in 1949—as it’s called there. We’re doing about one and a half million barrels there. Our first brews were, I believe, 1993; I didn’t get there until 1998. At that time, the largest-selling foreign brand in China was Pabst Blue Ribbon.

So now you’re the peripatetic brewmaster for how many breweries?

My title with Pabst is Brewmaster and Chief Representative-Asia. We have one brewery in southern China and one in northern China. I’m in and out of Lhasa, and I work with our craft brewery in Hilo, Mehana Brewing, that brews some of our draft Primo for Hawaii. And I live in Kyoto.

China is a huge beer market? What are consumers there excited about? What possibilities do brewers see?

Because it’s such a huge market, every major brewer is there. Like I said, when I was first there in ’98, we were the largest foreign brand in China. In ’99 when you had  the downturn in the Asian economy, people fled for their lives. Fosters cashed out and I think lost $65 million U.S.—which to me is real money. But now with the growth in  the Chinese economy, every major brewer is in there with both feet. And so while our volume has increased some, everyone else has increased exponentially because they have so much more money. However, a lot of them aren’t making money, because it’s a very cutthroat market. There’s beer out there is very, very cheap.

These are local beers?

Even though state-owned enterprises are supposed to be going by the wayside, there are still an awful lot of them around, because to close them would put a lot of people out of work. Then you’ve got civil unrest, and that’s a no-no.

So you have these state-run breweries, and many of them are selling beer at below cost. It’s very hard to compete. I’ve seen beer on the market—very low-gravity beer, 8 Plato or so—in a can for 14 ½ cents. The price of the can to the brewer is about the same as it is in the West, so the can’s got to cost 7 or 8 cents. I defy any you to carbonate any liquid and put it in a can for the other 7 cents.

Who are the other players?

Since the late nineties, Tsingtao has bought something like 35 to 40 breweries. So many of these local breweries have been absorbed by the big guys. The biggest brand in China is Snow, which is 51 percent owned by SAB. InBev owned a tremendous number of breweries, and they bought Budweiser, of course, and Budweiser had already bought Harbin Brewing Group in China—and Harbin had quite a few breweries. A new Bud plant has just opened near us in Chao Qing.

I’m reminded that when A-B became this country’s largest brewer, they did so with something like 8 percent of the market. At a time when there were masses of breweries and no national brands, 8 percent could put you on top. I get the sense that China has just now moved past that stage.

But not that far past it. Tsingtao, Snow, Yanjing are the three biggest brands, I believe.

Who are you competing with?

We are medium-upper priced. At the very high end, you have Heineken, and they’re about a dollar a can—that’s a lot. We’re more like 55 cents a can, and the cheap stuff comes in at 25 cents a can—then you’ve got these very low priced brands. There aren’t a lot of U.S. imports. Most of the U.S. beers in China are brewed in China. Coors Light, Bud—and they’re more like 60-65 cents.

And now you’ve got this new beer in a class all its own.

And so far, knock on wood, we have no competition. But in China, the sincerest form of flattery is intellectual property theft, so that’s one thing everyone’s worried about, that someone will try to steal our thunder.

How’s your Chinese?

Very, very poor. I’m kind of ass-backwards: I can read more than I can say, because the characters went to Japan and they’re often the same or similar. I can go into a store in China and write down what I want. They’ll look at it, and show it to all their co-workers and get a big kick out of it, then give me exactly what I asked for. I can even play Liar’s Dice in Cantonese!

And do you know all your brewing terms?

I’ve got some of them. When I come up with words for “bright beer tank,” they do a double-take.