Leading the Charge: Carl Setzer & Beijing's Great Leap Brewing are at the forefront of China's craft beer movement
INTERVIEWED JUNE 17, 2017
AT GREAT LEAP BREWPUB #12, BEIJING
Whether it’s current issues like North Korea, South China Sea, political figures and/or international trade, Beijing is always at the forefront in China. And, it’s easy to understand why once you’ve visited Beijing because it’s the most recognizable representation of China’s past, present and future.
Dynastic sights and symbols can be viewed at the Great Wall and the Forbidden City as well as more relevant history at Tiananmen Square. Beyond the politics and the notable tourist sights, it’s just like any other major city. Modern high-rises and old buildings. Extensive subway trains and high-speed rail lines. Fancy restaurants as well as your global chains like McDonald’s and Starbucks. Trendy locals with their smartphones and endless selfies. And last but not least, craft beer has made its presence known in Beijing albeit one pint at a time.
Currently, China is being touted as the biggest beer market, seeing how consumption is reaching record highs as of 2017. However, most of that beer consumption is still relegated to commonly available, mass-market light lagers. However, craft beer is inching its way throughout China and Beijing (along with Shanghai) are at the forefront of this movement. We sat down with Carl Setzer, Founder & Brewmaster of Great Leap Brewing in Beijing to discuss the opportunity to brew craft beer that is unique to Beijing and China as well as building trust and value for Chinese beer drinkers.
Carl, what's it like operating a brewery in Beijing?
It's like operating anywhere else but with specificities. It's not that different than when Pete Crowley opened Haymarket Pub; you gotta build it, install it, brew the beer, license it, make sure people like the beer. So, I think there's a common misconception that because China is harder for some people to understand that it means “China is irrational” when it comes to trying to set something like this up. But, it's really just trying to show value to local regulators but also have some level of professionalism on display so that you're not just in it for quick money.
Reasonable enough. How would you describe the craft beer scene in China?
I wouldn't say China is an established market by any stretch of the imagination. There’s probably 20 to 30 legitimate craft breweries in the entire country. And another 100-250 breweries that either contract brew or are homebrewers that sell at their friend's bar. You really don't have too many choices but the choices that you do have are well-managed, well-crafted beers and you have a market that's dominated by 3-4 major breweries.
What we're experiencing now in China is like the late 80's/early 90's in the US, where this is the first run of a very vibrant economy that just went through a period of economic stability; has some liquid capital and a lot of entrepreneurs have more money but they don't necessarily care about craft beer. They just like coming into a place like Great Leap and seeing a bunch of money go into the cash register. That'll fail and then from the next phase, we'll see a much more serious, more focused and passionate domestic craft beer scene after all.
So, what's Great Leap's backstory? What's the journey been like?
We were the second craft brewery in China and opened in 2010. Shows you how quick things move here compared to the states (laughs). We started our original location in the hutong (alley), GLB #6. It was a 200L stockpot brewkit that I built myself. I was the brewer, bartender, garbageman; my wife was the accountant, HR director and the government relations person and that was it.
So, for the first year, we ran it on our own and we had a couple of friends from the US help us out around 2011. Then, we tried to make it work through a lot of interesting government and market scenarios and a changing Beijing. Drinkers were starting to get introduced to high-end cocktails and craft beer when we opened. Beijing was a very different city before the 2008 Olympics than it is now. 2013, we found this location, GLB #12, and decided it was worth to try to raise some money with new investors and put in a real, functioning, purpose-built brewpub kit that's analogous to a German brauhaus or something similar to what you'd find in Chicago or Cleveland or Pittsburgh or anywhere else. We're really proud of this place.
In 2015, we opened the third location, GLB #45, which was our first, brand-new brewhouse. All of our equipment comes from Allied Beverage Tanks (ABT) in Chicago. So, same guys that did the original Piece Pizzeria & Brewery, original Haymarket, the original Revolution Brewery, Corridor and Dryhop; pick one.
Sounds like you're well-versed with breweries in Chicago.
Well, all these guys buy equipment from China, so where do they come to drink when they're on their way to Harbin to look at their tanks and their brewhouses? Pete Crowley and my wife and I are really close, the guys at Half Acre have come through a couple of times, one of the majority shareholders of Revolution Brewing is a close-family friend. We meet good people and good people like good people.
But, from Chicago, we've met a lot of other American craft brewers. So, it's been a really fun 7 years in terms of trying to understand where American craft beer fucked it up and what we should be prepared for when it comes to AB-InBev, that already knows how they've fucked it up in America and most likely won't make that mistake again in China. And, just trying to understand the history, the culture, the motivation and make sure we don't make the same mistakes.
So, how about yourself? How'd you end up here in Beijing?
On a plane. I knew a guy that came on a boat. Okay okay, jokes are over...
I came right after college. I moved from Montgomery, AL to Shiyan, Hubei province which is the 2nd generation industrial city that was built by Mao to try to diversify industrial strategic production away from easily bombable cities that were close to Russia. So, I was there in 2004. That's where I met my wife; we were just good friends for 6 years. I was in Shiyan for a year and a half; realized halfway through that you have to have more of an education and a handle on the language in order to do anything meaningful here.
So, I went back to the states, did a masters degree in University of Pittsburgh at Carnegie Mellon and got funding to go to Taiwan to study Mandarin. Then, in 2007, I got hired to do Information Security Consulting for a couple of different companies but the one that I ended up with was opening a China office so they asked me to learn the ropes of the business in the US and then be the liaison for the China team in the states. So, I did that from 2007-09.
The week after I got promoted to General Manager for China & Director of East Asia, I quit to brew beer. We were tired of working 20 hours a day for somebody else and dealing with stressful stuff that had no positive side.
So quitting your job and deciding to brew beer, how difficult was it? In the US, we've got existing infrastructure where if I quit my job and decide to brew beer for a living, it’s a bit easier since we have access to these supply chains.
Well, my wife was 10-weeks pregnant with our son, so it was pretty stupid. I probably shouldn't have done that.
And she was on board too?
She was tired of me being upset getting phone calls at 3am, having to be on the 1st flight to San Francisco the day after you get the phone call. And, just having everything uprooted while we're trying to plan a family. So, she was more adamant about me leaving that job; we had saved some money and it paid well.
We've talked about it every once in awhile, looking back, would we have done it again? Knowing what it was going to be like would we try to do things differently? But, we don't have any regrets. It was a very big risk to take.
You hear a lot of American entrepreneurs talk about how hard it is to survive the American market because of banks and you got this, you got that. But, China, there's no support network; you can join the American Chamber of Commerce but they'll just tell you to pay your taxes (laughs). They're not super helpful when it comes to navigating regulation here.
We did it. So, it's not impossible, but it was definitely a bit stressful.
Well, it seems like you guys are pretty successful; you have 3 thriving bars.
China's the kind of place where no one's satisfied with anything. If you have one successful restaurant and you don't turn it into a franchise, you're a bad businessman. We've always looked at it from a perspective of wanting to do things right, we don't want to expose ourselves to risk, we have a very specific standard for what we want, the beer, the design, the service, the food, we don't want to leave that into a 3rd-party's hand. And, we don't want to take bad money.
Y’know, we don't want the Chongqing Hot Pot businessman that comes in and says “I’ve got a billion RMB and I'm going to take you places.” You just politely ask that guy to leave because he's just going to steal everything that you have. We've second-guessed a lot of decisions until other craft breweries started opening up and more eager, aggressive but less educated owners would just fall hook-line-sinker for stuff like that.
So, the same guys that were coming in asking us to do stupid partnerships and we said no to, they just went to the next brewery that was in China Daily or Timeout, whatever. Then, you hear “oh, this guy's opening a brewpub, his 3rd brewpub in 18months in Chongqing”. We're like “hmm, I wonder how he got that idea”. But, we've never second guessed our conservative mindset in terms of control. At the end of the day, if the beer's not good enough for the people to recommend it to their friends, then you're just going to die on the vine.
What are the hiccups that you have to deal with supplies, materials, standards and quality? It seems like it can be frustrating when trying to brew Chinese-influenced beers while trying to secure Chinese ingredients.
Imagine what your average American brewery 10 years ago would have to deal with if their malt vendor would send you roasted barley and not malt. Or hops that were 4-years old and oxidized and damaged. There are brewer supply groups in the US that guarantees everything they send out to small batch breweries.
But here, we couldn't go to any malting company because they require an annual consumption of 1,000 metric tons per year before they would open an account for a brewery. So, we had to find breweries that had that kind of relationship that were willing to sell us out of their inventory. But, usually, the brewery doesn't know. It's just the malt inventory guy is stealing from the brewery and selling you whatever he can get away with selling.
So, all of it is just a nightmare. But also, back then not having any definition around the Qingdao flower hop in 2010. Not knowing the first shipment of Qingdao flower hop we got was just called bittering hop; it didn't even have a name.
How'd you even find Qingdao hops?
Talking to brewers that would come through the old nano-brewery that we had or meeting Germans that were brewing in China or commercial brewers that were fascinated by what we were doing. They would just tell you their standard operating procedures for raw materials and quality control. Commercial brewers in China don't give a fuck about Qingdao flower aroma and flavor, they care about bittering. Germans will only use traditional hops so you're stuck with German noble or Slovenian styrian hops.
But we ended up going to the US and talking to guys in the states that built hopyards in the midwest in Michigan, Minnesota, Wisconsin. We started by asking them, “hey man, you basically brought hops to a region where they weren't supposed to exist; this is my challenge, how would you identify it?” It was pretty obvious. Go straight to the farm and then find a broker that'll be honest with you. So, we had to walk away from 1 or 2 local brokers because they were incredibly dishonest.
We did a collaboration with Baird Brewing in Japan 4 years ago and they won't allow any pellets into their brewery. It has to be compressed, whole flower. And, I wanted to use Qingdao flower for that brew and Brian at Baird said “if you can get whole flower, that'd be great. But, if not, we'll just use what we have in stock.” So, I went to the brothers at Hopsteiner and asked “how often do you guys not pelletize?” And, they tell me, in the history of China, going back to the time when the first pelletizer was imported by a downstream vendor for Tsingtao in 1920, every metric kilo of Qingdao flower that's grown and dried has been pelletized. There's never 1 bale that's saved for anybody that's whole flower. So, we just had to convince them to start withholding stock.
How difficult was it to convince them?
I assumed they were just going to double the price. But, they just hemmed and hawed about how they had to take a 50 kilo bale and cut it into 5 kilo chunks and put it in CO2 pack foil bags. But, it was actually cheaper because the guy had to do less work.
It was moreover the standard of procedure was everything went from the truck to refrigerator to pelletizer; and that's how they've done their jobs for years. So a lot of the laborers didn’t understand why they were holding off 200-300 worth of bales.
Then, we had to break the entire bale apart and do a sight inspection to remove twigs, leaves, anything that would leave a tannic bitterness in the beer. We realized the oil content is 5-6X better than the pellets and the aroma's there, the nibs, the orchid, the citrus notes are pungent and they’re in your face. So it was hard, but once they understood what we wanted, now it's automatic, they know.
The first iteration of our Little General IPA I brewed was all-pellets, 6-7 years ago. And, what we have now, is one of the best international IPA's in the world. But, it took hundreds of hours of banging our heads against the wall, trying to figure out how to use Qingdao hop. We knew there was a beautiful hop but it wasn't the genetics of the hop that was the restrictor. It was the quality of the processing.
When we do collaborations, the one with Baird or the one in the fall with Warpigs in Copenhagen, even the one I did with Pipeworks; those were all with Qingdao hops. But, a great source of frustration is Great Leap is still the only domestic Chinese craft brewery that is trying to showcase Chinese hops. No matter how many pints of beer we sell per night, no matter how many people walk through our doors, other craft breweries think “I'll get more with imported hops.” 85% of our hop consumption is local hops. Then, the other 15% minus Simcoe and Amarillo is from Hophead Farms in Michigan. So, we're very specific about how we do quality control on raw materials because that builds trust with consumers.
That's great. It only makes sense that you're a brewery in China and you're aiming to utilize readily available ingredients here in China.
Well, we get lost in the narrative. I just want people to come in here and drink a beer. We know these insider stories as a company because I'll tell the stories. Whether it's trying to find a real local connection with Chinese malts and Chinese hops.
We did a project last year with White Labs and I brought over 9 samples of the fermentation agent used for Baijiu, a traditional, distilled Chinese rice wine. So what we did with White Labs was take these things that have been historically cultivated and curated by Chinese distillers; rip them apart and had them give me the bugs. So, now we've got 24 oak whiskey barrels up in the Great Wall. In between the original nanobrewery and this brewpub, we built a 3-hectoliter brewhouse at the foot of the Great Wall.
Over the last 3 years, we've converted our small production scale and we bought 2 more conical fermentors and a bright beer tank from ABT in Chicago. We had China's first coolship built in Beijing. We imported Scotch barrels from Arran Malt in Scotland and we retrofitted the entire brewhouse with new piping just so that we could say we’re making these inherently Chinese lambic beers.
Allagash was the first to build a coolship for spontaneous fermentation in the US, but now whether you're at Jester King or Hill Farmstead... but for Great Leap to be able to say we have a mixed-fermentation program at the foot of the Great Wall is something that needs to happen for craft beer in China. If you had the opportunity brew a spontaneous fermentation project at Mount Rushmore or at any of these iconic places that identify the country you're in… there's nothing more iconic than the Great Wall for China.
Well, it looks like you're really building regional, localized beers in Beijing and with flavors and ideas that locals are familiar with. But, how are Chinese consumers responding to your beers? Are they coming in and tasting your beers and understanding your concept?
That's why we were able to get early, local consumption. Middle-class alcohol consumption before craft beer in China was relegated to just wine. And, in order to drink wine you had to take classes and shit. And if there's one thing that humans don't like is feeling stupid. Wine is one of those things where, in its DNA, it’s pretty exclusive. But, Chinese alcohol consumption is inclusive. It’s about the social aspect of building some sort of social connectivity with the person you’re drinking with; whether it’s business, love, friendship, whatever.
So, from using Sichuan peppercorns to Local Honey, Tie Guan Yin tea, Chrysanthemum, Silver Needle tea, Cinnamon, the list goes on. People walk in and they see reference to Chinese literature or an ingredient that they already consume as a habitual consumer, they go “I'll try that.” Because they know what those things already taste like. It's not foreign, it's local to them. They like to see what this common flavor is going to taste like at this weird company's beer. So, they come in and they try this and that and then they'll start realizing everything on our menu is brewed for us.
Right now, we've got plus/minus 564 mug club members and up until last year, it was 50/50 down the line expat/Chinese. This year, its 90% Chinese. And a lot it is the value. It took a couple of years before our local consumers to realize that we're not trying to rip them off. If anything, our Weibo (Chinese microblogging platform) reputation for the first 2 years this location was opened was: the beer is good, the beer is cheap, the boss is stupid, go as quickly as you can (laughs). Because our wheat beer was half the price of a Paulaner but it’s 4x the beer. So, everyone just thought we were stupid. But, the adverse effect of that is a lot of local consumers have realized is that they've been gouged by other businesses for years.
How do first-time craft beer drinkers and/or first-timers to Great Leap brewpub evaluate you guys? Do they justify the price for the quality?
Even when people are really angry with Great Leap, it’s almost never about the beer. It’s about “I couldn't get a seat or the server didn't speak fluent english” or on the local side “you have to wait until 10pm to be able to get a table, they won't let you smoke in the bathroom” (laughs). It's not like we got hammered and forgot to tighten up the beer quality.
Y'know, our draft system was installed by Bill Martin, he's Superior Refrigeration's owner. Jim Krachy from ABT convinced Bill Martin to fly over. He let me shadow him for the week he was here and then the same draft system was installed in the 2 other locations by me. So, Bill was on Skype watching me do the installation on the other 2 installs and he gives me the thumbs up. So, that's the effort it took to make sure that no one has anything to complain about the beer besides whatever bullshit they already had in their head already.
There's very little of this that I can say I did this all myself. There's 100 people behind Great Leap pushing us to be better. Every 18 year old kid that walks into an interview because it’s their first time in a big city, to the middle-aged lady that cleans our bathroom and washes our dishes, everyone that has been a part of this is the reason why. We were the 2nd brewery in China and the first one just got bought up by ABI so now it’s really just us. So, if we take any of this lightly and we fuck it up, then it’s our own fault.
How do you see craft beer evolving in China?
People want to see craft beer succeed in China more than Chinese consumers realize it. Because it validates what's happening in America, Oceania, Europe and the British Isles. If it happens in China too, then it's not just a Western, Anglo-Saxon affect of Western consumption. It means its human. If it's human then it means there's an opportunity to define it further and take it to the next level.
Based on your beer list, it's beer that I can't find in another province nor in other parts of Asia. It's as if you're establishing your own regional Chinese beer style. Just like how Michael Jackson profiled traditional and regional British styles, German styles, Belgian styles, etc. So, if you come to Beijing, you'll get this style of beer.
How does China lose if that's what 20-30 more breweries create for all of China? It'd be great. We've taken advantage of the unique opportunity of starting a craft brewery in Beijing during their defining era of middle-class consumption.
How do you guys convince beer drinkers in China that Great Leap beers are valuable?
If one consumer drinks a bad craft beer, it's almost a given that it's going to take a lot of insistence from a very persistent friend to get them to try a second one. But, if a skeptic tries one and likes it, he might not praise it but he might order a second one, and if he orders a second, you're building a trust relationship with them.
When I was the bartender at our #6 location, one guy will come in or one guy will be brought in by an expat or an enthusiastic Chinese friend, and he'll just be miserable and drink half of it. But, he'll come in by himself because he's curious and he'll drink the sampler panel, pay then leave. Then, you'll see him on a friday night with a table of 10 friends and he's acting like he discovered this place. So, there's the trust we have to build with the consumer but there's also a certain dopamine shot in the head when you introduce something cool to your friends.
So, how much beer is Great Leap brewing to meet consumption?
Well, maximum annual production across all three locations here will top out at about 4500hectoliters. But, we do a couple of house lager beers and don’t try to rush anything. The amount of beer we sell here is on par with Revolution Brewpub’s and Haymarket’s.
What’s a typical recipe build for you guys? How do you guys go about brewing?
In the beginning, it was a lot harder. Because we just threw a bunch of things together and see if it'll work. And, we were lucky a lot of the times because things worked out. At this stage, it's not about me. I like doing the spontaneous fermentation at the Great Wall because that reminds me of what it was like to be a homebrewer; because you have no fucking clue how it’s going to turn out, it’s exciting, and people high five you for it.
But, here it's making sure that the guys that have been working here for over 12 months, know that when they come to me with a recipe, we'll give them feedback. But, if it's a fundamentally sound recipe, then they can brew it. There's 11 brewers on our team. We try to create a sound team. The guy that cleans the keg and sterilizes the packaging unit for the beer is just as important as the guy that's covered in malt dust. It's a team effort and when one member of the team comes to us and says “I read about this beer”, we'll let them brew it but with our parameters. No kettle sours, brett, etc. But, we're pretty cool with it.
One of the things that keeps our brewers here, and it's a constant struggle for me, is these kids go out and have a cigarette or grab dinner with the kitchen crew, and someone who wants to open a brewery will follow them and offer them a job. We've had 3 of our guys get offered jobs and all 3 said no. Because they know that the guy who says he's going to triple his salary is also a guy that doesn't know how to operate a brewpub and is going to put all the failure of the place on the shoulder of that kid. Whereas here, there's always a new opportunity to move into a new aspect of the brewing process that we haven't experimented with or maturing of their responsibilities. So, when we start losing employees, its because I'm fucking something up.
So far, your employees are staying?
We realized retention was going to be an issue 3 years ago. So, me and the guys started an internal certification process so the crew know there's a pathway. We don't have a Siebel here. No UC Davis. We've got us and an online database of material that we can try to make a curriculum for. But, it really is about getting our guys up to some level of qualification for cleaning kegs and tanks; handling malts; brewhouse management; hotside CIP vs coldside CIP, and then run their own batch. So they see a clear pathway for a promotion structure.
You mentioned you were just in Denmark. What were you doing out there?
Mikkel (from Mikkeller) and I are pretty close and that happened because of Boxing Cat. I had known Mikkel for a couple of years because him and Michael Jordan (from Boxing Cat) used to brew in Copenhagen. I was out there hanging with Mikkel. We've done a collaboration called Excuse Me While I Kiss This Guy with Warpigs & Mikkeller and they were here in March when they came to our invitational beer fest. We've played around with a couple things; it's a natural friendship between us. He does some things that I wouldn't do such as contract brew, but he's built his career off of it. But, culturally, as a company the both of us want craft beer to stay relevant because it's meaningful.
What about collaborations? You do enough of them?
In terms of collabs, we say no to more collabs than we'll ever do. We get a lot of "hey man, I'm coming through to buy some tanks, let's brew" and I don't know who they are (laughs). We get them one or two a month.
But it's happened more than enough where we say it's against our corporate philosophy to brew with people we don't know. So, we miss out on “maybe those dudes are pretty cool” but at the end of the day, it's whatever. Collaborations are supposed to be about expressions of friendship, so when we do stuff like that, we end up having really long term friendships. Whether it's Baird Brewing in Japan, Moon Dog in Australia, Young Masters in Hong Kong, Sunmai in Taiwan, Boxing Cat in Shanghai pre-sale to ABI; we always started with mutual respect and then the collaboration was the fruit.