Before we really dig into it, lets handle some overall house keeping in regards to this article. I will be counting Ballast Point and Saint Archer as craft beer for 2015 as they were for the majority of the year. Most of the statistics I will be throwing out come from National University System Institute for Policy Research (NUSIPR) reports, the Brewers Association resources, and West Coaster SD brewery list and articles. NUSIPR is the leading authority on providing these statistics, the Brewers Association is considered the governing board of craft beer on a national level, and I think we can all agree that West Coaster is a good source for anything regarding San Diego craft beer. If you see any issues with accuracy, do not hesitate to email me or comment below.
2015 was a year of prosperity in SD craft beer. Overall, we saw a 17% increase in the regional economic impact, going from $726.6 million in ’14 to $851 million, a 17.5% gain in total breweries in operation (from 97 to 114), which exceeded the national brewery growth of 15%, and a massive, 20% rise in total jobs, which were at 4,512, up from 3,752; the national average job growth was 5%. There were 17 breweries that opened their doors in ’15, just to add another “17” to this paragraph. Twenty one breweries embarked on or completed major expansions; I’m categorizing opening a satellite tasting room and/or a significant increase in production capacity a major expansion. The biggest expansions of the year were accomplished by Ballast Point and AleSmith. Three breweries also announced plans to build remote locations: Mother Earth in Nampa, ID, Green Flash in Virginia Beach, VA, and Stone Brewing in both Berlin (now online) and Richmond, VA.
One of the brightest spots of the report for me was the increase in craft beer’s density within our own county, Vince Vasquez (author of the NUSIPR report), “Last year, one-third of the beer bought in San Diego was craft. We are going to get to the point like Portland, where it’s 40, 45 percent.” We have some of the most educated and informed craft beer drinkers in the world here in San Diego and their support of the local industry is vital to its growth continuing.
The industry in San Diego is very healthy overall, but there has been some hiccups lately. I liken it to your friend that is always hitting the gym but never backs down from an extra slice of pizza. ’15 saw healthy growth in the regional economic impact but average wages of those employed in the industry fell slightly and have allowed other beercentric regions to catch up to our level of compensation. For a brewer or other key personnel, the much higher cost of living in San Diego compared to Boulder or Portland, may make them consider their options. The compensation of those in this sector are still the highest in the country but that will not be the case if average wages don’t climb this year.
The craft brewing workforce here is 52% full time and 48% part time. The smaller, newer breweries and the largest, most established ones have a higher ratio of full time employees. There are many people that maintain part time employment at several companies; I would like to see further growth in full time employment. Employee benefit packages in the market have also been improving, notably AleSmith and Modern Times have set the bar high. I feel both compensation and benefits will need to increase if our county is to continue to attract the best and brightest within the craft industry. There’s more at stake than just money though, as Shannon Rogers from Burning Beard says, “The brightest, most creative minds will follow where they are treated best, where creativity is cultivated and pay is not just sustainable, but enables a breathable quality of life.”
“What only those truly paying attention saw coming was the voluntary surrendering of independently owned brewing companies to macro-brewing giants and international conglomerates,” Brandon Hernandez AleSmith & West Coaster SD.
The success of the industry has brought out the big guns, using the advantage of economies of scale, big beer is not playing nice (nor has it ever). “It’s easy to look at the numbers and say craft beer is a very, very small percentage of total beer sales. It’s even easier to say they, “Big Beer”, is unwelcome here and try to mobilize against them. But like Smaug from The Hobbit, Big Beer wants it all and simply doesn’t care what you think. Our awards; our vocal support; and our fantastic beer have brought the dragon here. Hopefully it’ll sleep on its recent conquests and leave the rest of the villages alone.” Karl Prohaska, Mad House Comedy Club
“Unfortunately for legitimate independent craft brewing companies, the result of purchasing beers from Saint Archer or Ballast Point or any other corporate sellouts is that the money spent on their beers – San Diego mainstays or not, delicious or not, extract-laden or not, cheap or inexplicably more expensive than all other comparable beers on the market – will be used to further tilt the playing field in favor of Big Beer and attempt to slay real-deal local businesses. This is Big Beer’s mission and it hasn’t changed for countless years,” Brandon Hernandez.
I’m optimistic that other businesses will be able to leverage the valuation of these transactions to attain the funding necessary to expand/grow their own way and maintain their independence. The future is certainly in question though:
Alex Van Horne, from Intergalactic “I think their is this perception that you can open and expect to be the next St. Archer at some level. It takes way more than great beer to become that successful, and sadly a lot of breweries are not even making good beer now. While I still maintain that San Diego beer is the best in the world, there has been a lot of mediocrity to open in the last 2 years and I don’t see it slowing down, actually I see it getting worse.” Not everyone is concerned:
“People think that the sale of a few breweries is a warning shot. I don’t. I think it was inevitable, but much like the farmers market vendor or any niche market, there are going to be people that will stay small and local. Craft beer was started by people who wanted better beer and shunned the corporate oversight,” Nate Soroko.
Quality of beer should be the first concern of the consumer, Mike Sardina, President of the San Diego Brewers Guild puts it simply;
“Do not support breweries making low-quality beer.”
As consumers we should demand and be rewarded with excellent beer quality. “2016 should see more consolidations and some closures. Public demand for quality will help show who is doing a good job, thus keeping them in business. Slick marketing only goes so far, quality always sells.” Pat McIlhenney, Alpine Beer Co. I will also honor the current definition of craft, until the industry and Brewers Association decides to alter the term. Independence is 1/3 of the definition of craft beer; will the new trends of big beer purchases and private equity mergers end up challenging that? Many purchased breweries, local and not, are asserting that they still make craft beer, even though they do not meet the current criteria of what craft beer is.
George Thornton, owner of Home Brewing Co., “I think the dialogue within/surrounding the scene has shifted away from how to identify/appreciate quality products made by small, independent, locally owned companies, into a discussion about whether or not so-and-so is a craft brewer because they still crack coriander”. “We all love good beer for our own reasons, and for some, it goes beyond just the taste of beer – it’s about supporting the greater whole of maintaining the integrity of the Craft Beer community/culture & its businesses. You may not think there’s a big deal that “X” brewery gets bought out because “nothing will change”…but what about in 5 years? 10 years?,” Rudy from Craft Beerd.
This topic is a hotbed of conversation within the industry and community locally, with extremely passionate people on both sides of the fence. Among my circle of podcaster, blogger, and beer geek friends, it was the most discussed issue of ’15. Most of us are on the #indiebeer side of the fence, it’s cool if you’re not though.
Cosimo Sorrentino, head brewer of Monkey Paw and South Park Brewing, started the SD Beer Forum to discuss this issue, and others, facing the community/industry. The first meeting had a gigantic turn out, clearly indicating the community’s/industry’s desire to wade through these complicated issues and come to some form of consensus. I was honored to be a speaking member of the panel and hope to do so at future forums as well. While on stage, the energy of the room and panel members was palpable. It was a great start; it’s also evident this matter will not be “solved” easily but I’m glad the dialogue remained respectful. We can have disagreements and remain civil in these debates. I really identified with Bill Batten’s, head brewer of Mikkeller SD, comment, “The biggest threat to the soul of craft breweries is belittling or bashing other breweries”.
The success of the local industry can largely be attributed to a collaborative and supportive environment.
“When I started writing about local beer 20 years ago, people working in different breweries displayed a striking spirit of camaraderie. They were all in this venture together, little craft operations against the macro brewers,” Peter Rowe, Union Tribune.
The breweries in our city help each other, without hesitation, in every aspect of brewing: ingredients, processes, strategies, vendors, and most importantly, the quality of the finished product. Keeping that atmosphere is significantly important to the future prosperity of our region. “San Diego is the craft beer capital of the world. The beer produced in San Diego is more imaginative, aggressive and progressive than any other place on Earth. And it’s a direct result of our brewing community being more collaborative than combative,” Beau Schmitt, The Brew Project.
Another important cog in the success of the region is the home brewing scene. We have amazing brewers, clubs, and supply stores in our county. Arguably, the most important home brew store is Home Brew Mart. This was the starting grounds of Ballast Point and their contributions to the success of the local industry cannot be denied. Until mid 2015 there were more home brew supply shops in town than remote brewery tasting rooms.
My favorite store is the Homebrewer. It’s in my neighborhood, owned by a genuinely awesome human, and staffed by extremely knowledge employees. I have a theory that more certified Cicerones are employed by George than at any other craft business in San Diego; go ahead, prove me wrong!
The most notable home brew club here is Q.U.A.F.F. At least 18 local breweries have been started by members (past and current) – 32 North, Alpine, AleSmith, Benchmark, Border X, Burning Beard, Council, Duckfoot, Fall, Groundswell, Home Brewing, Intergalactic, Mission, Oceanside Ale Works, Rip Current, San Diego Brewing, Societe, and Stumblefoot. There are several other clubs in SD, some are Mash Heads, Society of Barley Engineers, and San Diego Suds Sorority, but there are many more.
Looking at the beer we drank specifically, 2015 was a year of an enormous increase in the variety of beers offered by breweries. The knowledgeable consumer demands this, you cannot simply have 3 IPAs and a stout on tap and hope to succeed in San Diego any longer. You must provide your customers with a variety that appeals to a broader base of clientele. As the number of craft beer drinkers continues to swell, having a wide range of beers available will be an advantage to the brewery or craft beer bar. “2015 brought out an explosion in fruited beers, sours, and coffee beers like we haven’t seen before,” Paul McGuire, SD Hop Addict. I also add pilsners and “session” beers to that (any beer is a session beer if you believe in yourself). While variety is a good thing that should continue, I feel the fruited beer world is getting crowded again.
To remind us that this has all happened before:
“Many of the new breweries are owned by people young enough to have missed the last “great fruit beer phase.” Many weren’t around or don’t remember how fruit beers came and went and appear to be on a 20 to 25 year cycle. A reminder to do your research. If it isn’t already popular then it really isn’t that good. Look for more “beer flavored beer” in the coming months,” Pat McIllhenney.
The breweries are listening and giving us what we say we want, “The marketplace has exploded with so many new offerings- some from the new brewers but also many from the established breweries. These are beers utilizing non-traditional ingredients and pushing the style categories to their limits and beyond,” Peter Zien, AleSmith. Some of the breweries that always seem to have a wide range of options include Rip Current, Alpine, Green Flash, Stone, AleSmith, Modern Times, Intergalactic, Kilowatt, Council, Monkey Paw, Karl Strauss, and Coronado.
2016 has already seen this trend increasing at a seemingly exponential rate. There are more fruited beers, goses, berliner wises, coffee beers, pilsners, ESBs, and session beers available in San Diego today than I thought possible, even just a few months ago.
That leads itself into the importance of the staff that interacts with the customer, “Consumers wrought with options will go where the beer isn’t just good, but that they’re treated genuinely. 2016 will see the rise of the Beertender. This isn’t just a stepping stone position anymore, it’s a weaponized one. Beer Education at every level will become increasingly pivotal to a business model and integral to its survival,” Shannon Rogers. In the beer education department, San Diego is helping to lead the way. We have many opportunities in our city to deepen the your knowledge of craft beer. The two most prevalent programs are the SDSU Professional Certificate in the Business of Craft Beer, of which I’m a student, and the UCSD Brewing Certificate. There are also the BJCP and Cicerone programs on a national level.
Breweries that participated in the survey for the NUSIPR indicated that 57% of their employees had participated in the Cicerone program, 39 % had participated in the UCSD Brewing Certificate program, and 32% had participated in the SDSU Professional Certificate. If you are looking to join the craft beer industry, each of the above paths will increase your likelihood of becoming employed.
It was a banner year for beer awards as well. At the GABF, San Diego collectively brought home 19 medals. Gold medals were earned by New English for Zumbar, Societe for The Coachman, Lost Abbey for Veritas ’15, Green Flash for Le Freak, Rip Current for Break Line Bock, and in arguably the most competitive category, BNS won gold for their Revolver IPA. Rip Current also earned the distinguished title of Very Small Brewery of the year! AleSmith brought home 4 gold medals and title of Champion Brewery from the San Diego International Beer Festival. Speedway Stout also won my contest, The Sore Eye Cup, and is the first beer retired to my Hall of Champions.
Two national, beer related conventions chose San Diego as their location last year. The 59th Annual Hop Convention and the National Homebrewers Conference. At the NHC, QUAFF missed out being named Home Brew Club of the Year by 8 points, competing against a national club, The Brew Network.
So, where will 2016 take us? The one thing that’s guaranteed in this industry, it will continue to change swiftly. We’ve already seen eight breweries open – Bitter Brothers, Pure Project, Resident, Culver, Burning Beard, Belching Beaver (Oceanside), Oceanside Brewing, and Mikkeller. Unfortunately, two breweries have also closed, URBN and Twisted Manzanita. We will be loosing Ballast Point’s and Saint Archer’s contribution to the overall craft beer economy this year. Their contributions last year totaled $116.3 million, but that was mostly Ballast. Will the influx of new breweries be able to make up that gap? I don’t see that happening. 2016 will see the first decline in the regional economic impact of craft beer that San Diego has ever seen. The main cause of that, of course, is the sale of Ballast Point.
Are we reaching the peak? Have we already passed it? With 40+ breweries in planning, it would certainly seem we have much more growth ahead of us.
“All of this may seem unsettling in 2016 and beyond, leading to unanswered questions and an unpredictable future about the state of beer in San Diego. Will the buyouts affect the other breweries operating here in San Diego? Will brewers fall short on hop contracts? Will breweries be denied access-to-market? Will pay-to-play maneuvers become more prevalent, more damaging to this industry? Will the community stick together or will it faction?” – Mike Sardina.
Personally, I cannot speak to the broader industry questions that Mike asks, but I can speak about the craft community. I have seen some divisiveness, specifically with the purchases of breweries. Many, like myself, are aligning ourselves with the BA’s definition of what craft beer is and using that to help guide where we spend most of our beer money. The other side of the fence appears to have the attitude that the ownership of the brewery is insignificant in their beer purchasing decisions as long as the beer is high quality. While amazing San Diegans still make terrific beer for Ballast and St. Archer, I believe it does matter who ultimately owns the business. I can be happy my friends that work there have jobs and not support the parent company at the same time. There is no right answer here other than being an educated consumer and consciously deciding where to spend your money (or not).
We are certainly seeing an industry/community maturing into something special. The Capital of Craft is more than just a slogan, it’s an embodiment of decades of effort by truly visionary people and brewers. San Diego didn’t stumble to the top, it was forced by will. It took extreme effort and long term dedication to the art of making world class, artisanal, and innovative beer. We have earned that title and will hopefully continue to defend it for decades to come.
Proclaimed assuredly, the State of San Diego Craft Beer is “We are the Champions”! San Diego is the preeminent craft beer economy in the nation (for any single county), even surpassing the total economic impact craft beer has in 30 states. We have more breweries than any other county in the USA, heck, we have more breweries than 43 states. Four breweries in the top 50 Craft Breweries (by volume produced) are in San Diego, ranking higher than 48 states (We’re part of CA’s 12 – Colorado has 5), and to cap it all off, the beer made here is some of the highest quality in the world! Did you hear that Belgium and Germany? The Capital of Craft is nipping at your heels, and we’re bringing boatloads of hops (Stone’s already there)!
I’ll conclude with more words of wisdom from Mr. Sardina,
“Be passionate about beer and continue to educate yourself about what is quality beer and what is not. Attention to beer quality, as well as being vigilant about pay-to-play and unfair market practices, will be vital in 2016 and into the future in order to keep San Diego as the best beer city in the world and to maintain a healthy state of San Diego beer.“
Please note: I received an amazing amount of input about the State of SD Craft from both the industry and community. I will be releasing those statements, in full, in a series of posts to follow this.