There Are Two Kona Breweries, and One is Independent
The new, state-of-the-art, Kona brewing plant Craft Brew Alliance built—but doesn’t own.
Five years ago, I toured the Kona Brewery on the Big Island’s west side, in its namesake home, the town of Kailua-Kona. On that visit five years ago, Craft Brew Alliance (CBA), the collective of which Kona was a part, was planning a new, multi-million dollar, state-of-the-art brewery a few blocks from Kona’s original site. Kona is on the dry side of the island, and the new facility was going to be very green and take advantage of constrained natural resources.
The project continued to inch slooooowly along, not yet actively underway almost two years later, at the tail end of 2019. That’s when AB InBev (ABI) announced it had purchased CBA, which didn’t really surprise anyone. While the two central CBA brands were withering, CEO Andy Thomas had been trying to engineer the buyout by putting all the company’s eggs in the Kona basket. Kona, he believed, could be a major national brand—and ultimately ABI agreed.
Yet the story was not quite finished. The US Department of Justice decided that the deal would create too much consolidation in Hawaii, and demanded that ABI spin off the Kona brewery before they’d approve the CBA acquisition. ABI complied, and the result is a very weird situation in which there are two separate businesses selling the same beer. They use the same branding. Google one and you might find yourself on the webpage of the other. Yet the beer they make is sequestered—with help from the Pacific Ocean—one brewery serving just Hawaii, the other everywhere else. If you visit Kona, you’ll see a brand-new brewery and one of the prettiest pubs on the planet, all with the familiar branding and the familiar beers. But Anheuser-Busch has nothing to do with it.
In fact, as long as Kona has been made on the mainland, there has always been two Konas, so this really formalizes a reality hidden to most people. I noticed the biggest difference following my first visit to the island in 2008. Sitting underneath the umbrellas at Kona’s exceptional pub, I sipped what remains one of the most memorable beers I’ve ever had. Wailua Wheat was a pretty standard Oregon-style wheat beer, but it was suffused with locally grown liliko’i (passion fruit). Picked fresh, this fruit has an intense and fairly acidic tropicality. Used in the beer, it created a “juicy” effect that was similar to hops—though the passion fruit flavor was vividly complex and lush. When I got back to the mainland, they started contract brewing the beer at the Widmer brewery and it was nothing like the original.
Lilliko’i are funny little fruits with a shell like an egg and a custard filling stippled with edible seeds that pop when you crunch them. McVeigh and his team shucked hundreds (thousands?) of them to make a batch on their old 25-barrel system. That was out of the question for mass production at the big brewery in Portland, so they used some kind of flavoring or puree, and it was a shadow of version made in Kona. All the famous beers that used local infusions (fruit, coconut, coffee) tasted a lot different in Hawaii than they did on the mainland.
Beyond that, beer, like everything else, is just a little different in Hawaii. People never got into hazies there—they like bitter West Coast IPAs, red ales, and pale, sparkling sippers. Longboard Lager was the beer that built the brand in the islands, while CBA pushed Big Wave on the mainland. The Kona-based brewers were aware of their mainland doppelganger, but on Kona things functioned at a brewpub scale, not the national juggernaut CBA was trying to build. The upshot is that, while I was somewhat disoriented to think of two separate companies using the same branding to sell the same beers, this is not completely new to the folks in Kona. It has always felt like a small island very far from the North American mainland.
One thing that was very new, however, is the sparkling brewery down the street from the pub, which takes us into the next chapter of the story.
When CBA started this project, they wanted to create one of the most eco-friendly breweries in the US, and that’s exactly what Kona Hawaii now has. Ryan and president Billy Smith showed me around the place—and it’s impressive. On the Kona side of the island, the water filters through a volcanic aquifer and is somewhat salty, and worse, it’s highly variable by season and conditions. One of the features they installed was a water recovery system that pulls the salts from the water—and also allows them to reuse their own waste water. A component of that process feeds a methane recovery system that helps them power the brewery. It works with twelve hundred solar panels that generate about a quarter of the power the brewery needs. They’ve also added a CO2 recovery system, which given their remote location and the recent supply disruptions, looks pretty smart now.
The new building is a 30,000 square-foot facility that has the kind of efficiency and spaciousness you get when you design things from the foundation up. The old brewhouse was a weird experiment by an early fabricator that had a cone inside the kettle and a gas-fired flame; it worked really well at heating the wort fast, but had the unfortunate tendency to scorch it. (And therefore you don’t find many systems with this design.) The new brewhouse has a capacity of 100,000 barrels, and starts with a mash filter/press system. Ryan brews at higher gravity, using cold water in the whirlpool to bring things down to target gravity.
It was a pretty slick deal that the newly-independent company inherited this amazing new facility, but it didn’t come without complications. A group of Kansas City investors formed PV Brewing Partners (including a former A-B exec, a Bain Capital exec, and a financial advisor) and bought Kona Hawaii for $16 million. That sounds like a steal, because the new brewery alone had a sticker price of $20 million, and the company also owns pubs in Kailua-Kona and Honolulu. Indeed, Maui Brewing, currently the state’s largest brewery, thought it was a bit too good—and noted that Dave Peacock of PV Brewing was a former president of Anheuser-Busch. They sued to stop the deal.
The DOJ ultimately rejected that suit, and when I talked to Billy and Ryan, I think they were right to. The initial facility was designed to be a component of the larger CBA project. The old brewery could only produce 14,000 barrels a year, so CBA sent some mainland-brewed Kona back to Hawaii to meet demand. Yet there isn’t 100,000 barrels of demand in Hawaii right now. They’re growing, but Kona Hawaii is currently only using 40% of their capacity. It will take time to get hit 100,000, and they may never do it. In the meantime, they have this big, expensive plant still puttering along in second gear. In order to make things pencil out, selling this part of the business as a solo brewery was never going to fetch maximum dollar.
And all of this was going down in the middle of Covid, which no doubt unnerved the buyers even more. It was really rough during the pandemic for Hawaii, a state ten million people visit each year. Although tourists were back by this winter, the Covid hangover is really evident in the way everything shuts down by nine or 10 pm. Ryan and Billy talked about how hard it was to survive the pandemic financially, even while trying to finish the new brewery. Everyone seemed to be breathing a lot easier now that the brewery and sale are complete. But as with most places, the ground isn’t entirely firm underneath their feet.
The mash press.
The methane digester.
After a pint, a quarter-mile stroll and you’re in position for the sunset.
The future is going to be interesting. AB InBev is positioning Big Wave (a golden ale) to compete with Mexican imports as a national lifestyle beer. This year that brand should pass a million barrels—a massive amount of beer, and far more beer than CBA ever made collectively (the company was making a bit more than 600,000 when ABI bought it). The “Kona” brand may just become Big Wave.
Meanwhile, back on Hawaii, McVeigh and company will continue to do what they’ve always done—making beer they think Hawaiians will enjoy. In the coming years, the trajectories of the two companies will deviate more and more. It’s a fascinating situation.
Does it matter? I’m not sure anyone in Hawaii knew that Kona was owned by a mainland collective before ABI bought CBA, and I’m not sure they know about the backstory now. CBA has gotten in trouble suggesting all the beer came from Hawaii in the past, and ABI is certain to downplay Big Wave’s domestic provenance. For the people who were aware of this drama, I suspect they have no idea that the Hawaiian Kona is an independent brewery again. Perhaps the differences will become clearer as the companies diverge.
In any case, the next time you’re in Hawaii, make sure to track down one of the more exotic beers Kona Hawaii makes. The motto has always been “liquid aloha,” but you really appreciate it when you taste the flavor of the local farms. And check out that brewery, too (they give tours); it’s something to see.