After a rough year, Bear Republic Brewing of Sonoma County looks toward a bullish 2020
Bear Republic Brewing Co. intends to be bullish on 2020.
The new year can’t come quickly enough for the venerable brewer, which helped define Sonoma County as a craft beer capital. The last year has been rough on the Cloverdale company and many other craft breweries, as well.
The obstacles were varied, but included the rising cost of operating a restaurant in a high-end Wine Country town; a consolidated beer distribution network that makes retail placement in stores much tougher; and changing tastes among younger consumers who have little loyalty to brands, even to the brewery that has produced one of the legendary beers ever to come out of Sonoma County: Racer 5.
Richard G. Norgrove, who co-founded the brewery with his father and served as brewmaster for many years, was blunt on his assessment of 2019.
“I took my lumps,” said the 50-year-old Norgrove, who took over earlier this year from his father, Richard R. Norgrove, as chief executive officer for the brewery they founded in 1994 right off the Healdsburg Plaza.
The brewery has seen its distribution network shrink in recent years, from 27 states at its peak to 22 states today. Production dropped to 55,000 barrels this year, down from 68,000 at its peak. Sales, too, have slumped, on track to fall 2.5% from the previous year.
There have been staff cutbacks as well. The company, which employs 145 people, will shed 35 workers this year. The cuts include jobs tied to the upcoming closure of its Healdsburg brewpub, which will shut down on Nov. 22 after Norgrove could not work out any extension with the landlord.
The new year, however, will bring new opportunities. Norgrove plans to offer a cannabis drink with a local partner, introduce a line of spirits and ramp up a new hoppy India pale ale - an “IPA brewed for California” - that is built for younger customers and will be less bitter and more aromatic.
“When people think ‘who is the quintessential IPA producer in California,’ I want people to think of Bear Republic,” Norgrove said.
Plight of middle-tier brewers
What Bear Republic is experiencing is not unique. Many other middle-tier breweries across the country are in the same plight as Bear Republic, the 49th largest independent brewery in the country last year, according to the Brewers Association, the Denver-based trade group that represents such brewers.
It doesn’t have the market share and economies of scale of the big brewers, such as Petaluma’s Lagunitas Brewing Co., nor the nimbleness of smaller startups that have found growth with rapid-fire new releases of limited beers that are sold within a narrow retail footprint. Cooperage Brewing Co. and HenHouse Brewing Co., both of Santa Rosa, are two local boutique breweries that have had success with the latter formula.
“That middle spot has always been challenging,” said Tom McCormick, executive director of California Craft Brewers Association. “The consumer always wants something new. ... It’s hard to fulfill when you are in that middle spot.”
Attracting and keeping the attention of distributors has been tougher. The nation’s largest beer wholesaler, Reyes Holdings, has been purchasing rival distributors in the Golden State over the past two years, reducing the number of channels brewers use to place their brands in retail outlets.
There is irony in its recent troubles: the brewery is a victim of its own success with Racer 5, a quaffable India pale ale with a good balance of hops and bitterness that embodies the West Coast style of IPAs. It represents close to 90% of overall sales, Norgrove said.
He contends some of his smaller competitors would note in their pitch to distributors, “Why are you buying Racer 5? That’s old school. Why don’t you buy my IPA?” Norgrove added: “I have to try to figure out in this new world how to be small while being medium size.”
Norgrove has doubled down on outreach with his distributors and is expanding his product line. “That’s the issue of having a juggernaut like Racer 5. Everybody knows Racer 5,” said Peter Kruger, who went from master brewer to chief operating officer this summer.
Bear Republic also took a page from the new startups. The Cloverdale plant has a new canning line that makes “tall boy” 16-ounce cans in a four-pack with varying styles in a limited release run. They include an “uber dank” IPA; a dry and sparkling wine-like finish version in a “brut style;” and a low-alcohol beer that has an alcohol content of 4%.
“The dilemma is that we got to start letting these guys have fun more,” Norgrove said of his brewers.
Search for its next big seller