Flying Dog loves the ‘F’ word

Hop-market-1

“You can say f— in front of the CEO and it’s not a big deal,” says Flying Dog CEO Jim Caruso. In fact, as unbelievable as it might seem, profanity helps explain Flying Dog’s meteoric rise to the top of the craft beer world. Crude language is a key part of the brewery’s edgy vibe—it makes Doggie Style Pale Ale and Raging Bitch Belgian IPA, among other tongue-in-cheek brews—and its willingness to have fun.

“We’re making beer, we’re here to have fun. If we’re defiant, it’s humorously defiant and this is who we are,” says Caruso, who suggests that his customer base views such irreverence as a sign of “genuineness.” Each Flying Dog beer features a label designed by provocative English artist Ralph Steadman, best-known for his illustrations and cover art collaborations with the gonzo journalist Hunter S. Thompson. Indeed, before his death, Thompson himself penned a toast and essay paying homage to Flying Dog beers, further playing into the brewery’s one-of-a-kind image.

But along with f— and fun, there’s another f-word that Flying Dog frequently invokes: freedom. Describing Flying Dog as a “libertarian brewery,” Caruso says it operates by the principles of free markets and freedom of expression.

Flying Dog’s history proves these principles are more than mere words, as the brewery has twice brought—and won—First Amendment challenges against overreaching government regulators who tried to censor what they viewed as Flying Dog’s “offensive” beer labels. The brewery used the damages it collected from these victories to establish the 1st Amendment Society, which hosts banned book seminars and endows both a speaker series and a scholarship program in investigative journalism.

Caruso, who holds undergraduate and graduate degrees in economics, is as comfortable talking about markets as he is speech. “Here’s what I stand for: free enterprise, sound economic policy and transparent government,” he says. By contrast, in the alcohol industry, Caruso says “you instead have crony capitalism, special-interest legislation and back-room politics.”

The irony that an unabashedly free market company would find itself in among the most cronyist, special-interest-laden industries in America is not lost on Caruso. Unsurprisingly, he’s critical of the many protectionist laws that currently govern alcohol—including the antiquated three-tier alcohol distribution system prevalent in most states, which forces breweries to work through middlemen distributors instead of being free to sell their beer directly to consumers.

In Maryland, Flying Dog’s home state, Caruso views the alcohol regulations as particularly onerous, at least as compared to Colorado, the state in which Flying Dog originally was founded before moving cross-country in 2007. “I probably committed a felony a month when we first started [in Maryland], just because there was so much regulation out East compared to Colorado,” recalls Caruso.

Perhaps most frustrating of all, Maryland’s three-tiered system limits how much beer breweries can sell directly to consumers in their on-site taprooms. When Flying Dog opened their doors in Maryland, breweries in the state were not allowed to sell any beer to visitors touring the brewery. “We’d have people come from Amsterdam and Russia” to visit, Caruso recalls, “and I was like, I’m sorry.”

Over the years, Flying Dog has had some success chipping away at Maryland’s stifling legal regime. State law eventually was changed to allow on-site taprooms to sell up to 500 barrels per year, but Caruso still found this inadequate. If he chose to promote Flying Dog’s taproom, he claims they would hit the 500-barrel cap by September each year. The Maryland General Assembly crammed through a controversial beer bill earlier this year that raised the cap to 2,000 barrels, albeit at the same time that it created additional restrictions for new breweries that open in the state.

Despite the fact that Flying Dog was grandfathered and would thus avoid many of these new regulations, Caruso still calls the legislation “a crappy bill.” As he puts it: “Name another business that has a license to open its doors to the public, and then has a limit on how much you can sell. Imagine if you opened a diner and said, ‘Here’s your food-service license, you can sell a hundred eggs a week.’”

More fundamental changes to Maryland’s taproom law seem unlikely in the near term, as beer distributors, protective of their monopoly status within the beer-distribution supply chain, resist most efforts by breweries to sell more beer directly to consumers. Caruso is careful to note that he is not anti-distributor, but he feels the craft beer industry has failed to articulate why loosening some of the strictures of the three-tiered system could be beneficial for everyone involved.

“We’ve simply failed to make the case that, if it weren’t for craft beer, the beer industry would be doing very badly,” he notes. In Caruso’s view, allowing breweries to sell more directly to their customer base actually helps distributors: “The smart distributors and retailers recognize, sure, let [breweries] sell a couple hundred barrels out of the taproom. That’s getting more and more people turned onto Flying Dog and they’ll go right to the liquor store and buy more.”

Perhaps the most noteworthy part of Flying Dog’s ethos is its refusal to abandon its free-market principles despite growing into a craft beer titan in an industry riddled with cronyism. Many companies start out preaching the gospel of free markets, only later to use political power to crush their competitors once they’ve reached a certain size. Flying Dog certainly has had opportunities to engage in such backroom dealmaking—state politicians occasionally have offered Caruso sweetheart deals—but thus far, it has refused to play ball.

“I’m not interested,” Caruso says, “because [special interest deals] do several things. No. 1, you’re memorializing the crappy laws for the other 65 breweries in the state, and two, once you get into that game, the [political] contributions never stop.” For Caruso, the overriding principle is that “if you live by the political sword, you die by the political sword,” which is why he characterizes Flying Dog as “pro-free enterprise and pro-consumer choice,” rather than pro-business.

Don’t expect Flying Dog to change its mind anytime soon, either. Caruso describes free enterprise as “a master value” to him and says he is “constitutionally incapable of not standing up” for what he believes in—a trait seen in Flying Dog’s willingness to call out oppressive government policies in its free-speech lawsuits.

Caruso remains defiant toward those who criticize the company’s willingness to rock the boat, either through its boundary-pushing beer names or by calling out government bureaucrats. “I think people who really do this for the right reason don’t give a sh–. I don’t need your gold star.” Instead, he asks: “How about the beer? We really want to be the best part of your day. At the end of the day, have a beer and set the world right.”


Image by Flying Dog Brewery

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