Bear Republic’s new Rohnert Park brewpub is its latest salvo in fight against ‘Big Beer’

Bear Republic Brewing Co. has grown like a weed from its humble roots as a small craft-beer brewpub in Healdsburg. Now, bucking an overall slowdown in the craft beer industry, the company is about to open a second brewpub in Rohnert Park complete with food-and-beer pairings and a big selection of craft spirits.

News from the craft-beer sector has been dour as it undergoes the biggest shakeout of the last two decades. Through the first six months of the year, craft beer production grew at a rate of 5 percent, according to the Brewers Association trade group, a far cry from the nearly 20 percent in past years when many breweries ramped up their expansion plans.

That slowdown has triggered a wave of mergers and acquisitions. Just this summer in the Bay Area, the beloved Anchor Brewing Co. of San Francisco was bought by Japan’s Sapporo Breweries, 21st Amendment Brewery of San Leandro was acquired by Brooklyn Brewery, and Magnolia Brewing Co. in San Francisco was purchased by New Belgium Brewing Co. of Fort Collins, Colorado, through bankruptcy proceedings.

The Norgrove family, who own Bear Republic, do have their worries given the state of the disruptive marketplace. Major brewers such as Anheuser-Busch InBev and MillerCoors are buying up smaller craft brands and using their leverage to muscle out others on the supermarket shelf. But they also realize there will be opportunities as well that the new brewpub, located on the site of the shuttered Latitude Island Grill, can help showcase.

“The fact of the matter is we’re a family, independently owned brewery that just has slow and steady growth activity,” said Richard R. Norgrove, president and chief executive officer of the Cloverdale-based brewery, which also operates its original brewpub in Healdsburg that opened in 1996.

The $2.5 million revamp of the Rohnert Park site features a new 10-barrel brewing system that Norgrove’s son, brewmaster Richard G. “Rich” Norgrove, calls his “Willy Wonka factory.” It will allow him to try out new beers such as sour ales and so-called juicy India Pale Ales (IPAs), cloudy hoppy beers with tropical flavors. The restaurant also has a large kitchen with a pizza oven produced by Healdsburg-based Mugnaini Imports that will allow for expanded menu offerings.

There is a large outdoor dining area, with both adult and children’s game sections, and a stage for musical performances, all of which overlooks a lake flanked by palm trees. In less than two years, work crews turned a site that previously resembled a hotel restaurant in the Bahamas to a more urban design, with stainless steel parapets and silos and a solar roof for electrical vehicle charging stations out front.

“What’s the 21st century beer garden look like? Europe definitely has established it. We are just kind of doing our own flair on what it is,” said Rich Norgrove.

The Rohnert Park brewpub will be the first in the North Bay that will be designed as much for the visitor experience as for brewery production, following the example of local wineries in attracting casual tourists as well as serious aficionados. It will have a dining capacity of 300.

In fact, more such destination breweries are coming online locally. Stone Brewing Co. of Escondido will open a small brewpub in the historic Borreo Building in downtown Napa by the end of the year and Russian River Brewing Co. of Santa Rosa is opening its $35 million Windsor location by next fall.

“I think one of the things those (new breweries) do is widen the scope of people who go there,” said Tom McCormick, executive director of the California Craft Brewers Association, which represents about 550 breweries across the state.

These visitor-centric breweries attract customers outside of beer connoisseurs and help expand a brand’s appeal among the broader public. McCormick noted that Stone, a pioneer of modern beer gardens including a new one in Berlin, has found that a large percentage of its visitors to its original brewpub were from out of town.

The new location also will allow Bear Republic to differentiate itself in the marketplace in two other key aspects: a greater emphasis on food-and-beer pairings and a new spirits business. The new kitchen will produce culinary items that the younger Norgrove wants to introduce on the menu, such as homemade sausage, breads and ice cream.

With a greater focus on food-and-beer pairings, the brewery is again borrowing a tactic from the wine industry in an effort to attract a broader range of customers beyond those who just want to drink beer after work. HopMonk Tavern, with locations in Sebastopol and Sonoma, has had success with that kind of food-and-beer pairing formula, though it does not operate a production brewery.

“Before Healdsburg became a culinary destination, we were already pairing beer with food. We can do it one step better (now),” Rich Norgrove said. The brewpub, however, still will offer a wide array of burgers on the menu.

The company, which has 325 employees, also has bought a 500-gallon still from a Scottish manufacturer as part of a future plan to produce rum and whiskey under the Bear Republic label.

“Craft spirits are where craft beer was 15 or 18 years ago,” said the elder Norgrove.

While Bear Republic cannot currently offer its own spirits brand, it will sell cocktails featuring premium spirits from other Sonoma County producers, such as Sonoma Brothers Distilling in Windsor.

“If someone comes in and orders a Jack (Daniels) and Coke, I’m not going to stop you. But I’m going to come in and tell you about the four other spirits that you will be able to buy,” said Rich Norgrove.

The efforts come as Bear Republic finds itself in a unique spot in the $23.5 billion craft beer industry: It’s a mid-tier brewery that produced 80,000 barrels last year, ranking as the 40th largest craft brewery in the United States, according to the Brewers Association. The privately held brewery, which does not have a public valuation, sells its products in 22 states and seven foreign countries.

“That’s a hard place to be right now,” McCormick said. Like others in their size range, Bear Republic faces a continual choice over how far to expand its reach, whether to focus locally and regionally or step up growth nationally and internationally.

The result is that Bear Republic has to continually calibrate which markets to focus on as opposed to Russian River, which is primarily distributed locally, and Petaluma’s Lagunitas Brewing Co., which is served throughout the United States and has now ramped up major expansion plans in Europe and Mexico under full ownership of Heineken International.

“This is the major discussion my father and I have every single day,” Rich Norgrove said.

The brewery learned firsthand about setbacks in the marketplace in 2013 and 2014. It pulled out of about 20 markets, including Boston and some overseas locations, because it could not get additional water from the city of Cloverdale, even though it made about $500,000 in advance payments to speed up construction of two new wells. Richard Norgrove said that contributed to about two years of stagnant growth at Bear Republic.

“We basically had to take all of the beer we would have been shipping to the East Coast or overseas and just funnel it back to the core business on the West Coast,” he said.

The company, however, has found a new receptiveness in the South, in states such as Tennessee and Alabama, where consumers are just being now introduced to craft beer brands from California.

A main challenge Bear Republic faces is not to be complacent and rest upon the laurels of its flagship beer, the highly regarded Racer 5 IPA. Indeed, Anchor Brewing Co. ran into problems by relying too heavily on its main Anchor Steam label for years and not fully embracing the more hoppy West Coast IPAs that became the dominant style this decade among beer consumers.

“It’s one of those iconic brands and it still has a lot of traction,” said Peter Kruger, Bear Republic’s master brewer, of Racer 5. “A lot of kids come up and say, ‘That’s the beer my dad drank.’”

Millennials, however, have matured by appreciating different tastes as opposed to previous generations, enamored by ubiquitous energy drinks such as Red Bull. “Their (millennials) flavor profile is typically sweet and tropical. The juicy IPA is going to appeal to people who have such a palate,” Kruger said.

The growing consolidation in the industry makes Bear Republic’s job more difficult. “All of our competitors are walking in and have 10 new flavors and many different versions on an IPA with fruit and whatever else,” Rich Norgrove said.

The brewery’s main task, he said, is educating consumers to know the difference between independent beer brands and those owned by large multinational corporations, which have advantages in distribution and production. The Anheuser-Busch Brewery in Fairfield, for example, brews beer for its craft subsidiary Elysian Brewing Co. that is based in Seattle.

“As the bigger guys continue to make craft beer, the average consumer doesn’t know and is uneducated,” Rich Norgrove said. “The big guy is a wolf in sheep’s clothing.”

In fact, he said he wants to push for truth-in-labeling laws at the state level so consumers know that the beer they are buying comes from an independent brewery.

When given a choice in the marketplace, Rich Norgrove said he believes consumers will opt for brews that do not come from “Big Beer.” The company’s focus within the next year is to maintain its market share in California and other key areas while exploring areas outside the state where there is greater receptiveness. A revamp of the Healdsburg brewpub is also planned.

“I’m hunkering down as a business owner because I think we are just about to see the fallout. Our timing is very good because people recognize how we are focusing on our locals,” he said.

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.