Oral history interview with Aaron Goss and Steve Bauk, 2019

University of North Carolina at Greensboro

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0:15 - Interview introduction

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Partial Transcript: If we could start, could you please say and spell your names?

0:50 - Biographical information

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Partial Transcript: So if we could start, if you could each just tell us a little bit about yourselves.

Segment Synopsis: Mr. Goss and Bauk discuss their early life and how they came together to create the Carolina Brew House.

3:46 - Interest in the industry and what led to the opening of the Carolina Malt House

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Partial Transcript: So my next question is how did you get interested in this industry?

Segment Synopsis: Mr. Goss and Bauk discuss how they got interested in the malting industry and what led the to open the Carolina Malt House.

6:39 - Choosing Cleveland and naming Carolina Malt House

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Partial Transcript: I think you touched upon this when you were talking about the grain belt, but were there particular reasons you selected Cleveland as your location?

Segment Synopsis: Mr. Goss and Bauk discuss why they chose to build their company in Cleveland, North Carolina and why the chose the name Carolina Malt House.

7:16 - Describing Carolina Malt House

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Partial Transcript: How would you describe Carolina Malt House to those unfamiliar with what you do?

Segment Synopsis: Mr. Goss and Bauk describe what the Carolina Malt House is and does.

12:07 - Process of malting

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Partial Transcript: Let's go ahead - and can you talk a little bit about then turning barley into malt?

Segment Synopsis: Mr. Goss and Bauk discuss their process of turning barley into malt.

17:45 - Main mission

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Partial Transcript: What would you say is Carolina Malt House's main mission?

Segment Synopsis: Mr. Goss and Bauk discuss the main mission of Carolina Malt House.

21:52 - Challenges opening

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Partial Transcript: Did you run into any particular challenges while you were opening the malt house?

Segment Synopsis: Mr. Goss and Bauk discuss the challenges they faced opening the Carolina Malt House.

24:55 - Location, space, and capacity

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Partial Transcript: As we sit here in Cleveland, can you describe actually your location, your space, and your capacity?

Segment Synopsis: Mr. Goss and Bauk discuss the company's location, space, and capacity.

29:31 - Role as co-founder and malting school

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Partial Transcript: What's your role here as a co-founder?

Segment Synopsis: Mr. Bauk discusses his role as a co-founder and malting school.

Keywords: education

32:27 - Part II: role as co-founder

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Partial Transcript: What's your role?

Segment Synopsis: Mr. Goss discusses his role as a co-founder.

33:36 - Designing and building their own machinery

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Partial Transcript: What's your thought process when you're talking about "I need a new machine"?

Segment Synopsis: Mr. Goss and Bauk discuss designing and building their own machinery.

36:43 - Average week

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Partial Transcript: Given the fact that you guys are obviously busy, how would you describe your average week?

Segment Synopsis: Mr. Goss and Bauk describe their average week.

38:33 - Resources

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Partial Transcript: What resources would you say that you've drawn on to help you open and growing the business?

Segment Synopsis: Mr. Goss and Bauk discuss the resources that they have used to open and continue to grow Carolina Malt House.

41:23 - International Craft Malt Conference

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Partial Transcript: So, speaking of the malting conference. On February 2nd this year y'all won third place at the International Craft Maltsters Conference.

Segment Synopsis: Mr. Goss and Bauk discuss winning third place at the International Craft Malt Conference, the experience, and their malt that won.

43:48 - Growth in the future

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Partial Transcript: How do you both see Carolina Malt House growing in the future?

Segment Synopsis: Mr. Goss and Bauk discuss future growth for the Carolina Malt House.

46:03 - Working with local farmers, process of choosing barley, and benefits of locally sourcing ingredients

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Partial Transcript: You all are 100% Carolina grown barley/malt. Can you talk about your work with local farmers obtaining your raw grain?

Segment Synopsis: Mr. Goss and Bauk discuss working with local North Carolina farmers, their process for choosing barley, and the benefits of locally sourcing ingredients.

56:25 - Changes in the brewing and malting scene and working in the industry today

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Partial Transcript: How would you say, since there's not really a malting scene, the brewing scene has changed since you first went into business?

Segment Synopsis: Mr. Goss and Bauk discuss the changes they've seen in the brewing and malting scene since they opened and working in the industry today.

60:11 - Trends

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Partial Transcript: Are there any particular trends today that you really do like or dislike?

Segment Synopsis: Mr. Goss and Bauk discuss trends in the brewing and malting industry.

61:12 - Role in North Carolina brewing and malting industries

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Partial Transcript: What role do you feel that you all, as a malt house or you all as Carolina Malt House, have played in the North Carolina brewing and malting industries?

Segment Synopsis: Mr. Goss and Bauk discuss the role Carolina Malt House house has played in both the brewing and malting industry in North Carolina.

62:25 - Future for the industry

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Partial Transcript: If you had a crystal ball, where would you see the industry going in the next three to five years?

Segment Synopsis: Mr. Goss and Bauk discuss where they think the brewing and malting industries are headed in the next three to five years.

64:38 - North Carolina malt and beer

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Partial Transcript: What do you see as unique about North Carolina malt and beer?

Segment Synopsis: Mr. Goss and Bauk discuss what makes North Carolina malt and beer unique.

69:20 - Favorite North Carolina beers and signature malts

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Partial Transcript: Do you all have any favorite North Carolina beers?

Segment Synopsis: Mr. Goss and Bauk discuss their favorite North Carolina beer and Carolina Malt House's signature malts.

72:28 - Interview conclusion

0:00

Richard Cox: Okay, so if we could start, could you please say and spell your names?

Steve Bauk: My name's Steve Bauk. Steve, S-T-E-V-E B-A-U-K, Bauk.

Aaron Goss: And I'm Aaron Goss. That's A-A-R-O-N as in Alpha-Alpha-Romeo-Oscar-November. Goss, G-O-S-S as in Georgia-Oscar-Sierra-Sierra.

Richard Cox: Awesome. And today is Thursday, July 18th of 2019, and we are at Carolina Malt House in Cleveland, North Carolina. I'm Richard Cox talking today with Aaron Goss and Steve Bauk, co-founders as part of the Well Crafted NC Project. If we could start, if you could each just tell us a little bit about yourself?

Aaron Goss: Well, a little bit, I'll try to do that.

Richard Cox: Or a lot.

Aaron Goss: Yeah. My name's Aaron Goss. Steve and I got interested in starting a 1:00malt house back in 2015. As far as me personally, my interest started when I started brewing beer while I was getting my law and MBA degrees at Wake Forest University. At the time, my spare time wasn't worth anything, so it was a way to get cheap beer. But then I kept with it after I graduated and my time was worth something, and the beer was then real expensive, but it tasted good so I kept doing it. A lot of home brewers start out with kits and then some move on to all-grain brewing. I moved on to malting my own grains. That's where I developed the interest in malting.

Aaron Goss: Let's see. A little bit more about myself, prior to going to law school I was a computer programmer. I did that for eight years. Let's see, prior 2:00to that I graduated from college when I was 16 years old, so I've had eight more years of work than most 36-year-olds, which I feel has been good for me. I think the rest will come out in other questions.

Richard Cox: Okay, great. Steve?

Steve Bauk: Yeah. Aaron and I knew each other growing up. Our moms are actually friends. My background's actually in soft drinks, so when I graduated college we started to talk about some ideas. Brewery wasn't on the list yet, but we actually developed a mobile app together. We launched that in 2013, a little drawing, captioning app that ultimately didn't make us the next Mark Zuckerbergs, but we learned a lot, worked well together. Didn't quit our day jobs, barely put any money into it. I knew he made good beer. My background 3:00being in soft drinks, he asked me if I wanted to help start a brewery, and I said, "Heck yeah." I thought I could help him brand and sell a good beer.

Steve Bauk: Really doing our homework and there's such good beer in North Carolina, we didn't think that we had enough of a population to support another brewery. As it turns out, that's way wrong. Yeah, I mean diving into learning about the history of North Carolina, especially in our area, of small grains growing and just seemed like it made perfect sense. We moved from thinking about brewing, and still we will probably brew someday, but to malting, and I think that's where we need to be.

Richard Cox: Yeah. My next question was how did you become interested in this industry. I'm assuming it's through your interest in brewing more than anything else?

Aaron Goss: Yeah, I'd say so. I made all the beer for my wedding back in 2013, nine kegs. It was all gone at the end of the weekend.

4:00

Richard Cox: What kind of beer did you make?

Aaron Goss: Well, I made a banana bread wheat beer, a Russian imperial stout, an English light mild, a nut brown with hazelnut flavoring.

Richard Cox: It's been a while.

Aaron Goss: Guess my memory's fading on what all I made.

Richard Cox: That's a wide enough variety.

Aaron Goss: It was seven different styles.

Steve Bauk: I don't remember either, but I had eight of them. I liked seven of them. The one I didn't like is the hazelnut one, which I'm pretty sure I'm allergic to hazelnut, so that may be why.

Aaron Goss: Yeah. I think the average beer consumption was five per person, and we did also offer wine and liquor.

Steve Bauk: Yeah. Just where we are in the state, just being able to get to Asheville two hours west, Raleigh, Durham, Chapel Hill two hours east, Charlotte an hour south, West Greensboro an hour north, we thought that we're in the perfect place to distribute to the breweries as much as ... while population here isn't so high, we can get to everything around here.

5:00

Richard Cox: Yeah. And building upon that question is can you talk about what led you to open Carolina Malt House in May of 2018?

Aaron Goss: We're both from Rowan County, which is right in the middle of North Carolina's grain belt. Our whole childhood we had connections to people who were farming small grains. So when we were looking into opening a brewery and looking into where we could get malt from, it struck us like, why can't we get it from the North Carolina grain belt? There are a couple other small craft malting operations in the state, but we wanted to make that commitment to all locally grown. It really makes an awful lot of sense. It adds a specialty crop, which benefits our growers because they can get more per acre, more money per acre, which is important. Farmers need money.

6:00

Steve Bauk: Diversify.

Aaron Goss: Then also it adds to the crop rotation, so I mean it's a great thing for North Carolina agriculture. It's a great thing for individual North Carolina farmers. It just made a whole lot of sense. We started looking into the economics of it, and we were just kind of like, "Why hadn't somebody done this already?"

Steve Bauk: As beer has become less decentralized from all produced in the Midwest and now the ingredients and the other parts of the supply chain are also spreading out. Didn't really think that we were on the cutting edge of anything. It just seemed like it made sense to us and why not?

Richard Cox: Yeah. Why not? I think you touched upon this when you were talking about the grain belt, but were there particular reasons you selected Cleveland as your location?

Aaron Goss: It's right in the middle of the grain belt and also convenient to highways 70, 77, 40, yeah, 85. Yeah, good distribution center.

Steve Bauk: And real estate's pretty cheap.

Richard Cox: Sure, okay. And why Carolina Malt House other than you're in Carolina?

7:00

Aaron Goss: Well, you know, you keep it simple. Got people out there trying to remember your name. What's the name of that Carolina Malt House? Oh, Carolina Malt.

Richard Cox: It's marketing.

Aaron Goss: Yeah.

Steve Bauk: If you google North Carolina Malt, you find us.

Richard Cox: There you are. Yeah. That's great. How would you describe Carolina Malt House to those unfamiliar with what you do?

Aaron Goss: Well...

Steve Bauk: There are no hops here.

Aaron Goss: Yeah. That's the first thing that's important to say. I still have people asking me all the time, "Hey, how's the hops business?"

Steve Bauk: All the time.

Aaron Goss: It's probably worth stating that beer classically is made from water, malt, hops, and yeast. If you were to say that wine is made from grapes, it would be equally true to say that beer is made from malt. Hops get a lot of focus and they're an important flavor component, but if you look at the 7 to 9,000 year history of people making and drinking beer, hops are a relatively recent addition, only in the last few hundred years. They do stabilize the beer, 8:00and they add a unique flavor, but malt is what makes beer beer.

Aaron Goss: As far as what we do, do you want to...

Steve Bauk: A lot of times you describe a beer as beer's hoppy, beer's not hoppy. Every beer has malt in it, and then some are more malty than others, but you cannot make a beer without it. Well, I guess that's true.

Aaron Goss: Well, and then the color comes from the malt. Steve is drinking a light beer, yellow color. You can't see inside this can, but you have to take my word for it. But it's a stout and it's dark. That darkness comes from malt, the malt that's in that beer. Some of the malt that's in that beer has been roasted to bring out different colors and flavors that I enjoy.

Steve Bauk: Malt's also a very bulky product in terms of dollar per pound. If you're going to import anything, you're going to import your higher density products like hops and yeast. So to make the biggest impact environmentally, 9:00we're keeping trucks on the road. You're making a barrel of beer, you're using about half a barrel of malt roughly or more.

Aaron Goss: So as far as what we do here, we make malt, and the way you make malt is you start with small grains, wheat, barley, oats, rye. You can malt any pulse really, so you could malt... I think I heard of somebody malting lima beans one time. You could malt peanuts if you wanted to. You can malt corn. But the classic things that you would want to make beer out of are oats, rye, barley, wheat.

Aaron Goss: The malting process is all natural. The only inputs are the grain itself and water and energy to run the machines. But all we're doing is activating some biological processes that the grain is already primed to undergo, and we just create the right climate conditions for the barley to 10:00undergo those processes to become malt. Well, I mean, I say barley. Barley is the most common thing that you make malt out of, but we also offer malted wheat. And we're working toward malted rye and malted oats.

Richard Cox: I was going to say I think the wheat is a recent addition, right?

Aaron Goss: Oh, yeah.

Steve Bauk: Brand new, yep. I think a lot of people do try and compare brewing and malting. Cleanliness is very big. It's a craft. You refine it your whole life, but really they're not that similar. The processes are totally different. Equipment's totally different. And ultimately, it is a craft and we're refining, making our own personal thing, but it's not that similar to brewing.

Richard Cox: What would you say you're more similar to if there was something?

Aaron Goss: Ricin production.

11:00

Richard Cox: Okay.

Aaron Goss: I mean just terms of industrial processes.

Richard Cox: Yeah. I mean, I was just curious because it's obviously a largely-

Aaron Goss: You're probably going to want to cut that.

Richard Cox: No. It's largely more of an agricultural endeavor than a brewery is in name.

Aaron Goss: Well, yeah. It is.

Steve Bauk: Well, even that, that's a really good question.

Aaron Goss: I mean it's like agriculture in that if you're growing a crop, you plant it and then you deal with all the variables that Mother Nature throws at you. We have to very carefully control our environment and not all grain is the same. It's a little bit similar in that we get this grain in, and then we've got to deal with all the variables that come at us in terms of the variations in the grain itself, the differences in weather throughout the year, things like that. I mean yeah, a little bit of an agricultural process in that way.

Steve Bauk: People think there's a lot of cooking to be done in malting, like in our big steam tank. Ultimately, we do dry it out and use some heat on it, but 12:00it's actually kept very cool throughout most of the process.

Richard Cox: Let's go ahead and can you talk a little bit then about the process of turning barley, for example, into malt? What is that? Because we're touching on that already, so let's go ahead and...

Steve Bauk: I'm sorry.

Aaron Goss: Steve's our head malt steward, so I'll make him field that one.

Richard Cox: This is your question.

Steve Bauk: Basically, the barley or the rye, anything that we start with, is essentially a seed. It's got a 99% germination. It has been dormant for as long as it's been in our bins, and it's really ready to go and start growing. The first thing that we do is to steep it in water, and this basically simulates that the grain has fallen to the ground. The first few days of its life it's just going to pull as much water as it can until ultimately we control up to about 45, 48% moisture. That kick starts its germination process, and then from 13:00there on it is essentially, it's germinating, it's sprouting as it would in the ground. It respires is actually the way we do it, breathes oxygen, exhales CO2. It's not using photosynthesis to make energy from the sun yet, so that's why light is not a thing that needs to be done. It just has water and air.

Steve Bauk: The main challenges of malting are that this grain will create its own heat, and it will create some CO2. So you have to keep it cool and aerated. And also these rootlets grow together, so a big, big part of malting is you agitate the grain that it doesn't have these clumping, beaver pellets are what they call them in the industry, that reduce airflow. It could create problems with mold. It can create inconsistency within the malt itself.

Steve Bauk: I mean malting is a controlled germination. We're essentially 14:00letting it do what it's supposed to be doing and then we let it germinate to where we want it. And then we dry it out and it halts that process and it preserves the enzymes that we need. Depending on what temperatures we go to, we give it flavor that we want and color and clean it and bag it, and it's out the door.

Richard Cox: Awesome.

Steve Bauk: I'm sure I missed something.

Aaron Goss: Oh, no. No. That's the long version, and the short version is get it wet, let it sit, dry it out.

Steve Bauk: Yep. Just kind of agitate it so it won't grow together.

Aaron Goss: Yep. Most craft maltings in the country do what's called floor malting, which is the way malt has been made for 7 or 9,000 years. Floor malting doesn't yield as consistent a product either within the batch or batch to batch, so we designed and built our own malting machinery that allows us to do pneumatic malting, which is a more efficient process in energy use, space, a 15:00variety of other things. We designed and built the machine that's behind me over here from scratch.

Richard Cox: Wow.

Aaron Goss: Yeah. But that allows us to malt in a four-foot-deep bed instead of a six-inch-deep bed on a concrete floor.

Richard Cox: Okay, yeah. I was going to ask what the differences are between doing the pneumatic versus floor, so there you go.

Steve Bauk: In this system we actually kiln in here as well, so cool, humid air going through for several days, five or six depending on style and time of year. It's taken us 30, 30-some hours to dry it out. You can't hit it with too much heat, otherwise you'll caramelize the sugars and you'll destroy the enzymes that we've been producing in here. Well, in some styles you actually do want to do that. It's very slow drawing out that water from the grain. It keeps it from collapsing on itself. Ends up with plump kernels that are ready to go. We dry it 16:00down to under about 6%, really usually under about five. That preserves it. It can stay... We try to sell everything within a couple months, but up to six months or so it's really pretty good.

Richard Cox: Cool. Why did you decide to build everything, necessity? I mean because a lot of your equipment, if not all, is hand manufactured basically locally.

Aaron Goss: I'm lazy. I don't want to pull a rake.

Steve Bauk: With breweries there's some options for buying brewing equipment. With malting, there are a few people producing malting equipment. A lot of them are all-in-one systems. They're early on. They're not really that refined. I think it's pretty generally known to build your own that you can physically walk inside of and you can sample. You can see every day. Malting, unlike brewing, I think brewing you do a lot of work in one day and then you let it sit. You make 17:00sure and you check on it, but with malting we're in here every day taking samples. We can't just say, "Oh, five days and then kiln it." We have to watch it. If it's cold outside and our temps are a little low, it'll slow down. It'll take another half a day. If it's warmer, it'll take less than that.

Aaron Goss: We have to do all that in order to create a consistent product so that the brewer can just have, "Oh, here's my recipe and I'm going to put the following ingredients into it." We have to make those ingredients consistent for them, and so that means dealing with all these variabilities in the process.

Richard Cox: Cool, excellent. What would you say is Carolina Malt House's main mission other than malting?

Aaron Goss: Malting. I think I mentioned that, I may not have, pre-Prohibition there were a lot more breweries in the country. I mean, maybe not in North 18:00Carolina compared to how many there are now. I want to say pre-Prohibition there were maybe 143 breweries in North Carolina, something like that, but Prohibition kind of wiped all that out. Then the industry when it rebuilt, we were during the industrialization phase of America, and this is all my history that I've pieced together. I'm not a historian, so...

Richard Cox: That's fine.

Aaron Goss: Hey, you're doing oral history, right? It kind of rebuilt during the industrialization phase of America, so it rebuilt heavily centralized around the giant Midwestern grain fields. But pre-Prohibition, at least from what I've gathered, North Carolina had about 15 malt houses supplying those breweries. Most states had a few malt houses. I'd love to see that model come back. We own all our own intellectual property. I mean this facility that we're sitting in 19:00here is built for three more production lines just like this, and I'd love to see other states... People ask, "When is the craft beer fad going to die off?"

Aaron Goss: I look at it as well, people have been drinking beer for 7-9,000 years, and for most of that history it's looked a whole lot more like it looks right now than heavily centralized production. I mean even with refrigeration and all the modern technology we have, the beer just doesn't taste as good after it ships out from Fort Collins. The beer really does taste better. I know some people who say they can't taste a difference, but a lot of people can and they care about it. I would love to see craft malt follow that pattern that's been set by craft beer and decentralized.

20:00

Steve Bauk: Even in craft malt, we're pretty unique in that we're pretty far south. Canada is actually pretty well known for malting, and there's a few reasons for that. It's easier to keep it cool. We spend a lot of energy on keeping it cool in here and just to maintain our quality.

Aaron Goss: Yeah. I mean it's funny, say like you were mentioning the being in the South, people say, "You can't grow quality malting barley in the South." People say that about all kinds of different areas, like saying, "In order to get your quality, you got to grow in the Midwest." Well, I mean barley is the oldest and most widely adapted crop known to man. The oldest recorded name of a human being is on a receipt for the purchase of barley, and the guy's name was Kushim.

Richard Cox: You are a historian.

Aaron Goss: The ancient Mesopotamians had a god of beer. So I mean yeah, we're 21:00talking about the oldest and most widely adapted crop known to man. We can grow it in the South and get top quality.

Steve Bauk: And the varieties we grow are a little bit... they are malting specific. They're not exactly what you'd grow for a feed barley, but yeah, I mean the grain we grow here is not the same as grown in the Midwest. It shows. It malts different. It tastes different. Yeah. I mean I think really more of what I was trying to say with that is that we're in the South. We're just not generally considered where most of it's historically been... Not historically, that's not the right word, but recent history hasn't been malted here all that much and so yeah, it's a good opportunity. We're showing it.

Richard Cox: Yeah. Did you run into any particular challenges while you were opening the malt house?

Aaron Goss: Well, it's funny. I said it earlier. We were looking at doing this, and we asked ourselves, "Why hasn't somebody already done this?" Then we built 22:00one and we found out. We could do a whole interview on the challenges.

Steve Bauk: We had to make our own equipment. Banks didn't understand what we were doing at all.

Richard Cox: Oh, wow. Yeah.

Aaron Goss: We had to build a grain elevator, grain receiving, grain cleaning.

Steve Bauk: It's a newly cropped area.

Aaron Goss: Because on-farm storage in this area really isn't suitable for maintaining malting quality over time, but brewers are really responding to the locally grown message. And I think we mentioned this a minute ago that there's a local character to the malt, and fortunately that local character tastes real good. It'd be kind of lousy if we had a local character that turned out not to taste good, but we knew it was going to taste good because I'd made home brew off of it.

Richard Cox: Oh, right.

Aaron Goss: It's a really nice flavor.

Steve Bauk: And we're using varieties that are derived from German varieties. I 23:00mean they are obviously what our standard is. Really, our barley in North Carolina is a lot more similar to German barley than it is to the Midwest, Canadian barley, so we're real authentic.

Richard Cox: Yeah, exactly. I was curious because you mentioned a minute ago some of the challenges. You mentioned like banks not really understanding what you were trying to do. How did you talk to them to explain what this is?

Steve Bauk: I think people know that craft beer is popular, and I think it's beginning to show that it also can be profitable. When we went to banks, I think they were interested to know, but they said to us, "Are you a brewery?" No, we're not a brewery. "Are you a farm?" No, we're not a farm. We are in between and so...

Aaron Goss: I'm going to claim-

Steve Bauk: ... can we find a plan?

Aaron Goss: Yeah. I'm going to claim some magic attorney powers there and just...

Richard Cox: Well, it's an interesting magical sweet spot just as you described 24:00it because you're point B and A has to get to C, and there you are and just to show the necessity there, right.

Steve Bauk: We are just one ingredient in beer, and people say, "Oh, you're just a middleman." I'm like, "No, there is a malting process. There's value added, so it's not just as easy as taking it and distributing it."

Aaron Goss: But that's kind of a nice thing that I mean, we can explain this whole process to somebody and they still don't get it. Somebody else wants to go off and open a malt house, go for it.

Richard Cox: You'd love to hear their stories about opening, yeah.

Steve Bauk: Yeah. Then beyond that, maybe some of the environmental concerns. Our water management was something we didn't exactly expect to have to... It was a good thing. No, we just had a great plan and that got us by.

Richard Cox: Yeah. Right, sweet. As we sit here in Cleveland, can you describe actually your location, your space and your capacity, so like what's going on here?

25:00

Aaron Goss: Let's see. We're sitting on 60 acres south of Highway 70 west of Cleveland, North Carolina, just out in the middle of rural North Carolina among the grain fields. One of our farmer's grain fields is right across the street. Yeah, we're here on 60 acres. The reason we own that much acreage is the process uses a lot of water and in order to be compliant with environmental regulations, we needed to do something with that water and so we irrigate it onto the property.

Aaron Goss: The actual facility is comprised of 11,800 square foot building that we're inside of right now, plus a grain elevator, which if anyone looks at a picture of the facility, they'll see the four big grain bins to the side of the 26:00building with a loop system that feeds grain in and out of those bins. Up at the front of the property you passed our grain receiving station. We have a full grain grading lab.

Aaron Goss: We contract directly with growers so they can bring grain directly to us out of the field at harvest. That was important to us because it gives us total control over the barley from the time it leaves the field. We grade it on the way in to make sure we're only taking top quality malting-grade barley, and then we have control over it from that point forward.

Aaron Goss: We also have a grain cleaning room in the back that allows us... I mean it's necessary to clean any grain you take straight out of the field. We have a two-stage process that gives us just really absolutely top-grade stuff going into our process. Then this room that we're actually sitting inside of 27:00right now is our germination and kilning vessel. This is where the grain spends most of its time during malting. Malting takes about nine days, so we get a whole year's supply in the bins outside.

Richard Cox: Oh, wow.

Aaron Goss: And then we bring it in one batch at a time over the course of the year. This room has some very robust climate control to keep the grain from heating up excessively. There's a germination floor with perforations underneath to allow air to flow up through the grain and a grain turner to keep the grain stirred up.

Aaron Goss: The rest of the building is storage, offices and final cleaning of the malt before it goes out the door, but what we've done is take a top-of-the-line industry standard pneumatic malting system like the largest operations use and scale it down. Take the best ideas that we saw from all the 28:00germination and kilning operations out there and just incorporate them into this box. We're very happy with what we've built here, and this gives us, I mean, some of the best consistency both within the batch and batch to batch that anyone has.

Aaron Goss: Steve mentioned that we collaborated on an app earlier. We actually designed our own censor system for this box.

Richard Cox: Oh, cool.

Aaron Goss: We take over 15 million readings on each batch. I used to do database work, and so we synthesize all that information to allow us to get, like I say, really good consistency within the batch and batch to batch.

Richard Cox: Yeah, great.

Steve Bauk: The system itself is a 22 ton system. When we clean the grain, there's obviously losses. So we're using about 26, 28 tons to make 22 tons of 29:00good barley, and what we clean out of there is actually a perfectly good crop for our farmers around the area to feed their pigs and cows and whatever they got. Yeah.

Richard Cox: Cycles back in as feed.

Steve Bauk: Exactly right. It's good.

Aaron Goss: Need a drinking vessel.

Steve Bauk: Yeah. No, no, no, no.

Richard Cox: Now you're experimenting. Well, I can start the next question with you then real quick.

Aaron Goss: No, it's good. It's good.

Richard Cox: What's your role here as a co-founder? What do you do?

Steve Bauk: I'm right now head maltster.

Richard Cox: Maltster, yeah.

Steve Bauk: And that has been kind of thing that Aaron and I really, we malt together. I think if anything, I did take on more malting while we were raising money and designing everything. He was doing most of the designing. I took it on. I probably malted 50 lots in my basement. Because he had done it more and 30:00then I went to malting school. Yeah, I think we both really... we really don't make any decisions without talking to one another about anything. Yeah, I mean it's just mostly because he's busy on everything else.

Richard Cox: Where'd you go to school?

Steve Bauk: I went to UNC, and then I got a master's from UNCG.

Richard Cox: What was the... you said malting school?

Steve Bauk: Oh, that.

Richard Cox: Yeah, sorry.

Steve Bauk: Okay, got you. That was the Hartwick College, not Hartwick. What am I trying to say?

Aaron Goss: Did you go up to Canada for that?

Steve Bauk: No. It was in Blacksburg, Virginia.

Aaron Goss: Oh, okay.

Steve Bauk: It's not IFMB. That-

Aaron Goss: Well, IFBM was there for it.

Steve Bauk: Yeah.

Richard Cox: Now, I'm just curious. What was it like? I mean, I'm curious.

Steve Bauk: I was very lucky. They hold the class different parts of the country, and when I went was in Blacksburg, Virginia. So they were talking about 31:00grain growing in Virginia and North Carolina. They were talking about the challenges and opportunities of being in this area. One of my friends in Washington state, a lot of it did not apply to him in terms of the growing and the malting side. The next year was in, I think, was it in Bozeman? Yeah, it was in Bozeman, Montana, which is actually where the conference was this year. So had I gone to that, I wouldn't have picked up as much.

Steve Bauk: It's a week-long program. I mean it's pretty intense, but everyone there has a background in malting, a practical background. You wouldn't want to go in without a good, solid foundation. Yeah, I mean from that really learned about the chemistry. There's not a lot of hands-on stuff because they expect that you've done a lot of hands-on already. That really connected a lot of dots 32:00for me in terms of what I'd been doing, what I had seen and what I wanted to get to. Yeah, I mean we're still getting better at malting. Just this area, there are a whole lot of people that are ahead of us that we have anyone to pull from really.

Richard Cox: Good. What's your role? He said everything else, but...

Aaron Goss: Everything. Well, I think it's fair to say-

Steve Bauk: He continues to design.

Aaron Goss: ... I did most of the design work on the equipment. For example, right now we've got some new equipment that we're working on, and that's eating up a bunch of my time right now. You know, HR, corporate stuff.

Richard Cox: The business side.

Aaron Goss: And then also staying on top of... Got to have two people who know 33:00how to malt because we both have to sleep sometimes, and it's a 24/7 process. I mean, I've got the title of president, so there's a lot of HR and figuring out the plan for the company, making sure the malt gets sold.

Richard Cox: A lot, yeah.

Aaron Goss: All the annoying stuff.

Richard Cox: Yeah. What's your thought process when you're talking about I need a new machine? Because you do design work and build your own things. Not getting into specifics of what you come out with because that's your thing, but what's your thought process, I need a new machine to do X?

Aaron Goss: I think so.

Steve Bauk: I mean, our salesmen will come to us if we don't already know there's a demand for something new. In this germination kilning vessel we can do 34:00up to 23-level bond, but there's some malts with way, way higher. A big part of that is that he's going to build a roaster. Now we can do darker stuff or we can do very dark stuff. The darker you get, the less of it you use in your beer, so we don't need to make 20 tons of it.

Steve Bauk: Yeah, I mean if our salesman comes back and says that something's in demand, we consider it. Right now, there is a list of things we want to make. Yeah, expansion for us doesn't necessarily mean out of volume, total pounds out, but different varieties and learn about different grains, finding burrs, finding...

Richard Cox: It's more about breadth than anything.

Steve Bauk: Yep, yep.

Aaron Goss: And then there's also, for example, we built a bagging table up front. I'll show that to you on your way out.

Richard Cox: Cool.

Aaron Goss: There's just all kinds of little stuff out here that we needed a 35:00bagging table. Well, we can look for an off-the-shelf solution, take a day to look for an off-the-shelf solution. Probably find out it doesn't exist. If you find out it does exist, it costs too much or you can just think, well, I just need a piece of steel that's shaped like this. After building this thing, we've got great relationships with a lot of fabrication shops. We know where to get our steel.

Aaron Goss: We've got our own 3-D design software, so we can generate a plasma cutting pattern, take a piece of steel to one of the half dozen shops around here we know of that likes us and likes that we make their beer better, and they'll let us use their plasma table. We get a piece of steel that's shaped like it needs to be, and we bring it back here. We've got welding in the back. Sometimes that's just a whole lot easier than shopping and negotiating and... you know.

Richard Cox: Yeah. Shipping probably.

36:00

Aaron Goss: Yeah.

Steve Bauk: And I mean when you make some of your own, if something breaks or goes on it, we know how to fix it because we built it.

Aaron Goss: That's one of the big things is if you try to buy an off-the-shelf malting system and then something goes wrong with it, you got to get the engineer from the company to come out and then he's got to figure out which part needs to be replaced and where they can fix it. I mean, you're offline for two weeks and you lose a batch of malt. With us, we built every bit of this. I mean, I decided how big every bolt in this thing needed to be, and I've got 3-D models of everything. We can build a new part. Anything goes out, we build a new part, so we haven't lost a batch yet for machinery issues.

Richard Cox: Oh, wow. That's amazing. Given the fact that you guys are obviously really busy, how would each describe your average week if that's possible?

Steve Bauk: That's pretty hard with malting. You can't say it's going to be five days here and then we're going to do this. We do look at it... It's also 24 37:00hours it's in here, so between... On weekends, we got to figure out who's going to be here on a weekend or who's got to be available on weekends. We try not to schedule big stuff.

Steve Bauk: Normal week being obviously orders go out during the week and just lining up. Because harvest all happens at once, we don't actually have to worry about a lot coming in very often. If we're getting wheat or something on a case to case basis, that's a difference. But yeah, no, as far as between filling orders and malting, really it just kind of depends. I mean it's different every week.

Aaron Goss: Yeah. Starting a new business is always a challenge, and I mean, we're starting a new industry and so there's a lot of figuring out how to run a distribution center. It keeps us busy.

38:00

Steve Bauk: Yeah. I mean we're relaying. We're not a team for every job. There's several jobs for every person, and so I mean we got to allocate when to hire somebody else and where we need them most.

Aaron Goss: And it is a 24/7 process. If the malt's ready to kiln at 3:00 A.M., it's ready to kiln at 3:00 A.M.

Richard Cox: Kiln at 3:00 A.M.

Aaron Goss: Not 8:00 A.M.

Steve Bauk: Yeah. And you got to sit there and watch it. You got to count it at 2:00 a.m. to make sure it's ready at 3:00 A.M.

Richard Cox: God. Yeah, wow. What resources would you say you have drawn on to help you at opening and growing the business?

Aaron Goss: Well, our local ag extension office was really helpful in getting in touch with growers. Let's see.

Steve Bauk: Yeah. Growing is a big thing that a lot of malting operations don't take on. That was a lot of research we did early on and now we're continuing to maintain that, but we love our barley and the varieties we use.

39:00

Aaron Goss: We probably owe BB&T Bank a thank you for taking the time to listen and learn what malt is.

Richard Cox: Yes.

Aaron Goss: And the growers in this area are fantastic. Like I say, we were told by official people that you can't grow malting quality barley in the Carolinas. And from talking to growers in this area, explaining to them what we needed, going over... I mean we did some agronomic research before we went and talked to them and told them why we thought it was possible.

Aaron Goss: Several of them said, "We used to grow barley 20 years ago on this farm before Purina took it out of the feed mix." So they knew barley would grow. I mean, we grow top quality wheat around here, so yeah, there's no reason we can't grow top quality barley and we've proven that over the last four years. I 40:00mean we've received really top quality barley, so it's been good.

Steve Bauk: Yeah. Besides that, the growing side, and then malting we learned from the same resources that a lot of people do, the Briggs books and then the Hartwick College. Your fabrication, I mean NASCAR has been awesome to have around here. We can get anything made out of metal that we need.

Aaron Goss: Yep.

Steve Bauk: Anything.

Richard Cox: That's an awesome tie in I didn't expect. That's great.

Steve Bauk: Malting and NASCAR.

Richard Cox: Yeah.

Aaron Goss: Yeah. And my sister lives in Germany, which has been fortunate. There was one point where I needed some old back issues of the journal [Brauvisin Schaft 00:40:44] from the early 1900s back when they were designing GKVs early on.

Richard Cox: Oh, wow.

Aaron Goss: There was some really good old information in there. She's in university over there, so she was able to go down to the library where they happened to have those back issues, scan them in, send them over. Yeah, really good.

41:00

Steve Bauk: I want to note that at the last malt conference someone said that of the journals, there are 10 times as many journals on hops than there are malting barley. Hops are apparently the sexy ingredient of beer.

Richard Cox: Yeah. IPAs, right?

Steve Bauk: Yeah.

Richard Cox: So, speaking of the malting conference, on February 2nd of this year, you all won third place, third place, at International Craft Maltsters Conference for the Carolina Gold pale malt. Can you tell us about the experience and tell us about that malt while you're at it?

Steve Bauk: Well, I mean I blacked out. No. I mean it was awesome. That was totally a surprise. There were 21 entries from mostly America.

Aaron Goss: But multiple countries.

Steve Bauk: Several different countries. I mean there were companies that were several decades old entering this, and we knew our malt was awesome. Just didn't 42:00know that really the flavor, everything is very subjective. Knew that ours was good and we wanted to enter it. The biggest thing I think that we can take away from that is that North Carolina can grow the grain. That defied what everyone had said.

Richard Cox: Which-

Steve Bauk: And validated our hard work because we were working on it for a really long time.

Aaron Goss: We mentioned there's that local flavor, and it's good.

Richard Cox: Yeah, and it's good.

Aaron Goss: It's world class.

Steve Bauk: And I can taste it when I have a beer that is made with our malt. I can taste it.

Richard Cox: Yeah. That's amazing. So, great. What about Carolina Gold pale malt? Well, I can't say ales today. I don't know. Pale malt, what was special about that particular malt to you?

Aaron Goss: It just tastes great, beautiful color.

Steve Bauk: Yeah. We do malt such that it has flavor. I mean if you wanted to 43:00purely get the highest enzymes, the highest sugar content, you wouldn't really be able to get a lot of flavor out of it. I mean we really do mitigate how much of each.

Aaron Goss: Yeah. We try to bring out that local flavor more than any other.

Steve Bauk: Yeah. I mean honestly I think we just nailed that schedule. As far as I'm concerned, that's going to be a big one for us.

Richard Cox: That was the 3:00 A.M. One, right?

Steve Bauk: I had pushed our pilsner a lot. I thought that was really going to be our best seller. That came out and just we knew it was good. It had great color. It's just a quintessentially good malt.

Richard Cox: Awesome. How do you both see Carolina Malt House growing in the future?

Aaron Goss: Well, like I said, I'd love to see the malting industry return to its pre-Prohibition condition. We own all our own intellectual property here. I 44:00mentioned that this facility can grow to four times its current size fairly economically. We have a lot of demand, so I'm pushing hard to grow.

Steve Bauk: Oh, and the stronger malting in the area gets, the more breweries can rely on it and can afford it. The growers, yeah, they're going to be able to commit more to that. Really spanning growing and brewing that we just think there's an opportunity. We want to expand ourselves in terms of volume, but yeah, I think there's a lot of opportunity. Honestly, everything we do could get reported to NCDA and in fact, the numbers that they show, we are a big portion of the malting barley growth in North Carolina is because of us. It's cool and 45:00we're helping to chip away at... learning more about it and that stereotype that we can't make it.

Aaron Goss: Yeah. I've been doing my agronomic research on other states' growing areas too, so just love to see the industry nationwide.

Richard Cox: Expand, yeah.

Aaron Goss: Malt, I mean people know that beer is a living product by now, I think, and malt, I liken it to bread. It can go stale and you'll get better beer if you've got a local malt house supplying you with product that is at its peak flavor.

Steve Bauk: And people do tell us, "Open a bag and just the smell." I'm like, "That's because it was bagged like 30 minute ago." I mean it's not the bottom of the barrel. It's new. There is no bottom of barrel because we're producing to 46:00keep up right now.

Richard Cox: Yeah. And you all offer 100% Carolina grown barley malt. Can you talk about your work with local farmers obtaining your raw grain?

Aaron Goss: Well, we hired a local agronomist to consult with us early on. We did a bunch of research in connection with them, but our growers are mostly very happy to have another crop to put into the rotation. Most people have heard of crop rotation and I mean practically speaking what that means is you want to grow a bunch of different crops on the same land. If you grow the same crop over and over, then the bugs know where to find it. The diseases that are able to attack that crop will always have food and they'll multiply. Crop rotation's very valuable, helps them to have another crop to rotate in.

Aaron Goss: Then also, wheat is very much an economic commodity on a national 47:00scale, so it's just whatever the market price for wheat is, that's what you're going to get. Wheat has been low the last several years, so it's nice for our growers to be able to grow a specialty crop that as long as they meet the quality requirements, we'll pay much, much more per acre than what they would get for wheat.

Steve Bauk: And it was very cool when we first put on our informational session, invited some growers out there, and there were two different people that I had known in high school. They had no idea I was doing that. I had no idea that they were... I knew that they were a farmer and they grew, but it was cool to see a father/son coming out or a father or men, two brothers or something. It's a lot more of North Carolina culture than I necessarily was actually raised in.

48:00

Steve Bauk: They were enthusiastic. They knew craft beer was cool and we didn't try to tell them how to grow their grain. They know their land. They know how to grow barley. We gave them the resources for malting barley. It's specific. It's actually pretty favorable. That and just having a good contract that was favorable to them. We only take what's great barley, and if they don't produce it, they pretty much know and they'll be able to take it to a feed mill. We haven't turned down too much barley, but...

Richard Cox: Yeah. Go ahead.

Aaron Goss: I'll throw out that agronomist's name because I think he'd appreciate it.

Richard Cox: Sure.

Aaron Goss: I was going to. I hadn't asked him about it, but anyway, Ray Coltrain.

Richard Cox: Ray Coltrain.

Aaron Goss: Invaluable there again. All our farmers have been invaluable too, it's just there are a lot of them.

Richard Cox: Yeah. Oh, sure. Yeah. You were just touching on this, but what were 49:00some of your, more broadly, early experiences in approaching local farmers about growing barley? Because you're already saying it was sort of a change for them, and you were new here as well.

Aaron Goss: Yeah. I know one or two of them that had even gotten kind of a sour taste in their mouth from growing barley for other craft malting operations before, so the fact that we built our own grain elevator tacked onto this place was a really big plus in the minds of our growers because that's one of the really big challenges is storage in this climate.

Aaron Goss: Our farmers are set up for storing feed, so in order to get it dried down to storage moisture they run it through a grain dryer. Well, if you run it through a grain dryer, you can't malt it afterward. It kills the germ. Yeah, none of the farmers were set up. I mean they could grow the quality, but none of 50:00them were set up to store it. So we built custom grain storage that is designed to store it and take it at harvest at its peak quality. Yeah, that was a big plus for a lot of our growers.

Richard Cox: It just means it showed to them that you were serious in what you were doing.

Aaron Goss: Well, that too. Yeah.

Steve Bauk: Well, and we went with multiple growers growing, no one grower or two growers growing all of our crop. Because with several growers, they could cut all on the same day. Well, when it was ripe, not all on the same day but when their barley was ready, they could cut it then. That also diversified our risk if one grower didn't know how to do it. I mean as it turns out, every plot of land is different. Some get hit a little bit harder by one storm.

51:00

Steve Bauk: Yeah, I mean just the differences there and by saying 50 acres or so, if they manage 2,000 acres, that's not really a whole lot of skin off their back. They want to do it because we offered a good price on it, and I mean most of our growers have wanted to grow more for us. We're finding who we like working with a lot, but still I think the best bet is to always have several growers because, yeah, they can... No one person can cut 1,000 acres in one day, no matter... unless they have enough equipment, I guess.

Aaron Goss: A couple of persons who work on the same farm a couple times.

Steve Bauk: But I mean it also geographically diversifies a little bit more. Even though we are very, very local, like I said, I mean one storm can crush one area and not hit another. They see that. They know the quality. They know it before they even bring it to us usually if they're going to meet grade or not. 52:00Not typically disappointed because they're aware.

Richard Cox: You just kind of touched on this, but how do you go about choosing which barley to use in creating your malt?

Aaron Goss: Choosing which barley to use. Well, I mean we grade everything as it comes in, and if it doesn't meet our very stringent quality requirements, it never goes in the bin.

Richard Cox: It slides out.

Steve Bauk: And the varieties themselves, NC State, Virginia Tech have done a lot of research on.

Aaron Goss: USDA.

Steve Bauk: Yeah. And so we do follow what's... Some varieties have seemed good and then have not been good and got used.

Aaron Goss: One thing we benefit from is having one of the three or four Department of Agriculture research stations right up the road from us. It's just 53:00nice to be able to go see those test plots, go to the field days where they talk about the results they're getting on the different varieties and just keep up with the latest research.

Aaron Goss: In the same vein as crop rotation, the USDA is waging a constant breeding war against pest and disease pressure, so there's a constant need to develop new varieties. Because if you grow the same variety of a crop over and over and over, same issue, you'll just get that disease and pest pressure.

Richard Cox: Yeah. What would you say, and we've been talking about this from minute one, what would you say are some of the benefits of locally sourcing ingredients?

Aaron Goss: Well, I mean you get everything fresher and the brewer is able to visit our facilities, see the storage conditions, see the malting process 54:00conditions. I mean they know that they're getting a top quality product. That's a real plus. In addition to that, being local, it makes it more possible to supply a fresh product. There's not as much concern about, say, the big national producers.

Aaron Goss: If you're one of these big national malt producers, you've got a few big customers, Anheuser-Busch InBev, MillerCoors, Constellation Brands. You've got a few really big customers. Not saying it happens, but there would certainly be some incentive to supply your best customers with your best product and not care quite as much about the small customers over in North Carolina. Those customers are our target market.

Aaron Goss: I mean that's the people we most need to make happy. There's a real 55:00advantage to our customers there, and then there's also the fact that as we've found that locally grown barley has a really nice terroir to it and a really nice local flavor.

Steve Bauk: Beeroir.

Richard Cox: Beeroir.

Aaron Goss: Beeroir, right.

Richard Cox: Answer to that.

Steve Bauk: I think that breweries push buy local, buy local, buy local. You don't have to explain to someone today why local is good. Sustainability, people know it's good for the environment, good for the economy. But a big thing, like Aaron said, getting breweries out here and getting taproom managers out here, they can then go talk about that and explain. I mean people come out here and are fascinated to learn that oh, you can do this here and most people are not.

Steve Bauk: So just learning about where the grain's from and yeah, I mean we've had tours out here of 20 people from a brewery and they walk away just having 56:00learned a lot about not just beer but about North Carolina agriculture and history and things that we were learning a couple years ago.

Richard Cox: Yeah. Well, I mean you've already mentioned how... you talk about malt, even how the local ingredients impact the flavor of the final product of the beer, for example. Yeah. Since there's not really a malting scene, how would you say the brewing scene has changed since you first went into business or nationally if you want to think about the malting scene and talk about that?

Aaron Goss: Well, when we decided to start the malting business, there were 118 craft breweries in the state, and last time I looked there were 284, so that's a change.

Steve Bauk: Well, I think that there are probably... breweries are getting in general smaller in terms of output, and the smaller the brewery to ship from the Midwest, they're getting hosed on transportation costs. I mean the transportation costs more than the barley. For us being we can't produce as 57:00cheap as they can in the Midwest, so we are competitive there. We love it.

Aaron Goss: Can't, present tense. Give me three more production lines, I'll get us there.

Steve Bauk: Yeah. We're getting there.

Richard Cox: That's awesome. What is it like to work in the craft brewing and malting industries today?

Aaron Goss: Tons of fun.

Steve Bauk: I love it.

Aaron Goss: A lot of people in the industry seem to love their jobs, and so I love it when we get a tour out here. Well, we've got a 30-person tour coming up next week. We had a group from Charleston come up and we cooked a low country boil for them.

Richard Cox: Oh, wow.

Aaron Goss: We've had tour groups come up and...

Steve Bauk: Sorry.

Aaron Goss: Yeah, sorry. It's a lot of work for just us. But no, we're a no-waste facility. All of our byproduct goes to feed cows or pigs or chickens or 58:00ducks. We've had tour groups up here where we've cooked a couple of pork tenderloins off of pigs that were finished on our malt byproduct. Just, there's a flavor present in the meat if you got the... Some people can't taste it, but some people can.

Richard Cox: Probably can, yeah.

Aaron Goss: Kind of like beer. But yeah, it's just it's great to have that kind of camaraderie in the industry.

Steve Bauk: It's obviously a fun industry, but we're an important part of it and we're not forcing a crop to grow here that doesn't want to grow here. It's very logical. Yeah.

Aaron Goss: I mean the best part having been a home brewer is I still get to malt my own grains, but I don't have to make my own beer anymore. I've got 280 breweries out there to do it for me, and then they do fantastic work. It's great.

Steve Bauk: Yeah. We get to make a product and then put it in these people's 59:00hand that just make such creative stuff with it. We get to refine and work really hard to make the same stuff, and they just do incredible things with it.

Richard Cox: Yeah. And you just mentioned a minute ago something I felt was interesting where you were talking about you don't have to force the barley to grow here, which is something that some people are looking at doing with hops actually.

Steve Bauk: And they tried it.

Richard Cox: Yeah, so it's an interesting comparison or contrast even there.

Steve Bauk: I mean people ask me, "I've got this acreage, should I grow hops?" I'm like, "No, I don't think so, not really," nor I do think it's really not smart.

Aaron Goss: Not without doing a bunch of research.

Steve Bauk: And I mean, maybe they will find a variety of hops that's suited here, that isn't suited... I think they're just trying to take stuff from the Midwest or Pacific Northwest and bring it here and just it's not working. I mean barley has been found growing on mountaintops and below sea level. I mean it is a very, what's the word I'm looking for?

60:00

Aaron Goss: Oldest and most widely adapted crop known to man.

Steve Bauk: Yeah. Resilient, resilient.

Aaron Goss: There you go.

Richard Cox: There you go. Are there any particular trends today that you really do like or dislike, your industry or brewing?

Steve Bauk: I mean IPAs were so big. I think that's kind of fading.

Richard Cox: Really?

Steve Bauk: It's letting the malt... Well, I don't know, maybe not. I mean hazies got big and then you're probably right, they're not. But I don't know, I mean...

Aaron Goss: A good IPA will have a good malt/hop balance though. I mean some people just want that very, very hop-forward beer. That's okay though. You still can't make it without malt.

Richard Cox: The malt, yeah.

Aaron Goss: A lot of those really, really hop-forward beers have high alcohol, and that malt's where the alcohol comes from. We're not complaining.

Richard Cox: You're still there in the middle, yeah.

Aaron Goss: But a big selling point for us is that local flavor, and if the hops are just overshadowing that, I guess there's less incentive maybe for the brewer 61:00to buy a local product because they can get the alcohol from wherever.

Richard Cox: Right. What role do you feel that you all as a malt house or you all as Carolina Malt House have played in the North Carolina brewing and malting industries?

Steve Bauk: Really committing to locally brewed and I mean local is obviously a broad term. I mean, I don't know. I know no one else is malting as close proximity wise as we are right now.

Aaron Goss: I don't know how many there are in the country that have designed and built their own malting equipment, but it's not many. I think that's our ability to rapidly expand and the fact that we really understand all the physics that go into this process. I think that puts us in a very good position to 62:00rapidly grow North Carolina craft malt. We've been getting great support from breweries so far, and I think that's going to continue. Yeah, I'm excited to see where it goes from here.

Richard Cox: Great. Good thing. If you had a crystal ball, where would you see the industry going in the next three to five years?

Aaron Goss: Oh god. I always like to plan for the worst and hope for the best.

Richard Cox: Sure. Makes sense.

Aaron Goss: So I'm not even going to say what I'm thinking. No. No, it...

Steve Bauk: I won't talk about the present.

Aaron Goss: But no, I mean pre-Prohibition America had... it was 142 breweries. That's the number. And a whole lot less population. The population today is a whole lot more urban. I guess 284 breweries is, I guess that's still more 63:00saturated than, say, Belgium, which is a highly saturated country in terms of breweries per capita. But I love seeing the little neighborhood brewery that pops up. I mean that's a great customer for us. It makes a whole lot more sense for them to buy local.

Aaron Goss: I mean they're trying to sell their customers on local, and so for them to be more local by buying our product makes a lot of sense for them. Then for us, I mean our smaller size relative to Great Western, somebody like that, means that that customer's a whole lot more valuable to us. They're going to get a whole lot more customer service from us than anybody else. No, and I would love to see that continue. I think we're doing a lot to support it really. I 64:00mean we make it very, very practical for North Carolina craft breweries to go local.

Steve Bauk: People demanding that their brewer uses local, that's what I see. It's my premonition.

Richard Cox: Yeah. That'll be great.

Aaron Goss: That's where we want to get.

Richard Cox: Yeah. That'd be great.

Aaron Goss: We really need to get beer drinkers to look for the local beer. I think they care, but we just need more people to go into the brewery and say, "Hey, where's your malt from?" Then "Oh, it's locally malted. Was it locally grown too?"

Richard Cox: Because which is another step that they might... Yeah. What do you see as unique about North Carolina malt and beer? We talked a little bit about the flavor from local because it's so close to the farm.

Aaron Goss: Yeah. Kind of have to drink one and feel it for yourself. No, it's... Gosh. Why don't you describe it?

Steve Bauk: Our probably best-selling products are two row, which is 65:00historically those malting barleys. Really would like to see six row. It's the most unique flavored. That's really, I mean if you make a Pilsner out of that, it's got a very grassy flavor to it. I'd love to see that being a little bit more prevalent. We've done really well with distilleries with that, but yeah, maybe a little more beer made out of it just because it's so different.

Aaron Goss: On that note, two-row and six-row barley are the two categories of barley. I mean when you're talking about barley growing out in the field, picture amber waves of grain in your head, like rows of wheat or barley. There's a stalk and there's a head off that stalk, and that head will either have two rows of barley kernels opposite each other along the head or it'll have six rows of barley kernels forming sort of a six-pointed star along the head. That's two 66:00row versus six row.

Aaron Goss: I could go into all of the purported versus real differences in two row and six row. I mean just for example, two row has a reputation of being lower in protein and higher in efficiency. However, we have found that when we take in six-row barley but then clean it to a two-row barley specification, we get protein and efficiency numbers comparable to what we get out of our two row. We have some more cleaning losses there, but we get a similar quality product.

Steve Bauk: It has a lot to do with the growing. We mitigate our growers, what they put on their crop, so yeah, our six row when we clean it, it has a little more losses but that's just going back to farms around here anyway. Six row is 67:00kind of historically North Carolina's most commonly grown grain. That's probably why I want to see it a little more prevalent because we've brought in a two row, a German two row, and it's great. It's awesome. Actually, it's awesome to malt too, but six row, it grows great around here. We get awesome yields, and so...

Aaron Goss: Six row makes a nice winter barley, which everything we grow around here is a winter crop. In the Midwest they grow a spring crop, winter crop around here. Six row, one theory is that the kernels help keep each other warm during a freeze and less susceptible to freeze damage. So when we're growing in the wintertime, that matters.

Aaron Goss: But another thing I like about growing around here is that our growers have no incentive to use a desiccant on their crop at harvest. You hear about some wheat being grown and glyphosate being sprayed on it as a desiccant 68:00right there pre-harvest, so right before it's going off to the wheat mill and being used to make bread you're spraying a pesticide on it right there, which a lot of people aren't... I'd rather not eat it. Especially somebody recently, I mean there was a case somebody won. I think they proved non-Hodgkin's lymphoma as a result of ingestion of glyphosate.

Aaron Goss: Now I say that, any malt house out there will tell you they do not accept grain that's had glyphosate sprayed on it. It's just nice to be in an area where our farmers have no incentive to do that.

Steve Bauk: We grow-

Aaron Goss: The grain naturally senesces at the end of the winter growing season.

Steve Bauk: We grow the way any grass is supposed to grow. It grows all winter and then it cures and dies as the days get hotter and warmer. We do not put anything on it. The growers watch it, and they cut it when they need to. There's no accelerant to do that, des, what'd you call it?

69:00

Aaron Goss: Desiccant.

Steve Bauk: Desiccant.

Richard Cox: Desiccant.

Steve Bauk: Learned a new word.

Richard Cox: That's a good word.

Aaron Goss: It kills the crop evenly so they get even harvest, which yeah, because a lot of times they harvest it before it... because it's summertime, it's not going to naturally reach the end of its growth cycle like it does here.

Richard Cox: Yeah, cool. Do you all have any favorite North Carolina beers?

Steve Bauk: Oh, gosh.

Aaron Goss: All the ones that are made with our malt.

Steve Bauk: Can't even, yeah.

Richard Cox: There, that's the one.

Aaron Goss: But no, I mean I really-

Steve Bauk: I won't be on the record saying.

Aaron Goss: But no, right now...

Richard Cox: The one you're having.

Aaron Goss: At the risk of alienating all of our other customers, but this is just what happens to be in my hand right now, got a little Ponysaurus Export Stout. It's good stuff. What else did we drink today? We drank some Sideways.

Steve Bauk: Yeah. And High Branch.

Aaron Goss: High Branch, yeah.

Richard Cox: There you go.

Aaron Goss: And they're all three made with our malt and very, very good.

Richard Cox: Very good.

Steve Bauk: Buy more local malt.

70:00

Richard Cox: What would you say is, I think you just mentioned this a minute ago, your flagship or signature malt?

Steve Bauk: I mean Carolina Gold is our award winning, internationally award winning, malt. But I mean our pilsner malt is what I pushed really hard and really what I've focused on mostly because that I thought it played up the six-row flavor a lot. But I mean, all of them. I mean...

Aaron Goss: The Vienna tastes great.

Steve Bauk: Vienna's awesome.

Aaron Goss: The third Munich has a very unique, very good flavor to it.

Steve Bauk: And I mean, we'll get this roaster soon and then we'll go to do anything. They're all tied for number one.

Richard Cox: Sure. There it is, but do you have a favorite?

Steve Bauk: I love Carolina Gold. I mean it just tastes so good.

Richard Cox: Yours too?

Aaron Goss: Yeah.

Steve Bauk: Its color's perfect.

Aaron Goss: I mean I love a stout. I love a porter. I love brown ale. I love wheat, but the classic beer is...

71:00

Richard Cox: Thunderstorms.

Steve Bauk: There's our generator.

Aaron Goss: Yeah. We're all on an automated transfer switch out here.

Steve Bauk: That's going to be a first, isn't it?

Richard Cox: Yeah. It's going to be a first. We're still going. Please, continue. Generators.

Aaron Goss: Power goes out here, the generator kicks on. We've got a 500 kilowatt?

Steve Bauk: Mm-hmm (affirmative).

Aaron Goss: We could power the whole town if we wanted to. Got it used from a... well, not used. It was just surplus from a hospital installation.

Steve Bauk: And fan's back on.

Richard Cox: Yeah. You have a good-

Aaron Goss: Well, I'm not really kidding, we could power the whole town.

Richard Cox: Yeah. I know where to go when our power goes out.

Aaron Goss: Oh. But what were you... Oh, so...

Richard Cox: Favorite malt?

Aaron Goss: Yeah. I, like a lot of people, learned to drink beer while waiting for football games to start in school. In that situation what you want is a nice drinkable, light-colored beer, and Carolina Gold really delivers on that front.

72:00

Steve Bauk: Yeah.

Richard Cox: That's all I have. Good timing for the power. Is there anything you'd like to add?

Aaron Goss: Thanks for coming out.

Steve Bauk: Yeah.

Aaron Goss: I was...

Steve Bauk: Hope you all got a lot out of it.

Richard Cox: It's a great time. Thank you both.

Aaron Goss: Yeah. Well, just thank you to everybody who's helped us get here. I mean thanks to everybody who's bought our malt. Thanks to...

Steve Bauk: Thanks, mom.

Aaron Goss: There you go. Yep, yep.

Richard Cox: Awesome. Thank you both.