Craft beer boom in Sonoma County shows no signs of slowing

In many other businesses, a retail competitor moving in about 100 yards down the street would not be welcomed.

But that’s not the case in the mostly congenial world of craft brewing as evidenced recently over at The Barlow center in Sebastopol.

In August, Crooked Goat Brewing Co. opened its doors just a short walk down from Woodfour Brewing Co., which opened its restaurant and brewery in 2013.

“It’s a total rising tide,” said Will Erickson, the Crooked Goat brewmaster and partner with five others. “Especially in this day with consumers who are interested in beer, more is just better.”

Sales in the craft beer marketplace topped $22 billion nationally in 2015. In 2010 the figure for retail sales nationally was $7.6 billion, according to the Brewers Association.

Seth Wood, co-owner and brewer at Woodfour agreed: “It’s the rising tide situation... Beer is so diverse and my main fear is not saturation.”

The trend is toward clusters of breweries in select meccas such as Portland, Oregon, Denver and San Diego. Those areas are leading the way and attracting fans from around the world.

And Sonoma County is on the verge of joining those beer capitals. It already has the history - in the late 1970s, New Albion Brewing Co., widely regarded as the first craft brewery in the modern era, opened in Sonoma.

The county also has legendary brewers such as Brian Hunt at Moonlight Brewing Co. and Vinnie Cilurzo of Russian River Brewing Co., both in Santa Rosa, as well as one of the nation’s largest craft brewers in Lagunitas Brewing Co. in Petaluma and a regional powerhouse in Bear Republic Brewing Co. in Healdsburg.

And now it has the final ingredient: quantity. By early next year, there should be 29 breweries operating in Sonoma County with a population of slightly more than 500,000. There were 18 in 2013, according to the Sonoma County Economic Development Board.

Crooked Goat and Grav South Brew Co. in Cotati - the first in that city - have joined Barrel Brothers Brewing Co. in Windsor in opening their doors this summer. 2 Tread Brewing Co. is scheduled to open at its Santa Rosa Plaza beer garden location in December and Seismic Brewing Co. in Santa Rosa, founded by Christopher Jackson, the son of the late Jess Jackson, is scheduled to open in January.

“There has been talk about a bubble for a while,” Wood said. “I haven’t seen it.”

So how many breweries can Sonoma County support? Some brewers and analysts said they wouldn’t be surprised to see more than 50 if trends hold and the economy doesn’t sputter. After all, they argue, the county has 447 wineries.

“I still think there is plenty of room,” said Bill Drury, co-owner of 2 Tread, who has been working on opening a brewery for three years.

His brewery will join Russian River and Third Street Aleworks, as well as a few independent taprooms, to create a downtown Santa Rosa craft-beer cluster. 2 Tread will have a beer garden featuring a range of styles, from hoppy India pale ales that are ubiquitous in the region to sour beers, and also will serve food that goes beyond the traditional pub selection.

Looking to the future, Portland offers a good example of the scale that’s possible, though its population is much more dense compared to Sonoma County. There are 65 breweries in the City of Roses that serve a population of 632,309 and 96 breweries in its metro area of 2.4 million people, according to the Oregon Brewers Guild.

“It seems to me it’s supporting enough people. They get enough customer base to make it work,” said Lisa Morrison, majority owner of Belmont Station, a taproom in Portland.

A recent spate of breweries have just opened in the southeast sector, Morrison said. It’s in an area with available warehouse space that made it easier to open a brewery. Startup costs can range from $500,000 to $5 million, depending on how elaborate the brewing system as well as rent.

“It’s really becoming a destination,” Morrison said of the new Portland hot spot. “Before, I would never go there.”

The future of the industry growth will be on the neighborhood level, with new breweries producing beer that can be sold directly to consumers on site or to-go with a growler or a 32-ounce aluminum can that can be sealed at the taproom, said Bart Watson, chief economist for the Brewers Association, the national trade group that represents craft brewers.

On-premise sales in California taprooms and brewpubs have increased in recent years, Watson noted, going from around 1.25 million gallons in 2013 to almost 3.5 million gallons last year. Those sales are also much more profitable as the brewery doesn’t have to allow wholesalers and retailers to take a cut of the profit.

“If you are trying to get on taps and shelves with Bear (Republic) and Lagunitas, that’s going to be tough,” Watson said. “They’ve got to differentiate. If this is a new brewery, can you say in one sentence how they are different than others that have opened?”

Crooked Goat distinguished itself by creating its flagship Ibex IPA, which features citra, simcoe, and amarillo hops that produce a subtle bitterness. But it also has added creativity to the mix with a grapefruit version as well as a blood-orange double IPA. The taps also have a toasted coconut dark lager and a blackberry wheat ale.

“I think people really like the infused beers, much like cocktails have become that same way,” said Erickson. “They want something new.”

The taproom features three large glass garage doors that open to make the space feel almost like a beer garden, with communal tables to encourage customers to talk with each other. The brewery is paying higher rent to be in The Barlow, but Erickson said it was worth it for the foot traffic that it brings in, especially tourists who weren’t specifically out to grab a beer, but came across the taproom. Customers can bring or order food from other restaurants at the shopping complex.

“We wanted something that would be a desirable place to come to, as opposed to a hole in the wall,” Erickson said.

Woodfour offers a different drink selection, as its primarily known for its sour and barrel-aged beers, with its sour farmhouse ale developing a following. The BeerAdvocate website notes its sour farmhouse has “fruity apricot aroma with light funky notes and sour dry finish.”

“We don’t brew an IPA, which we catch a lot of flak for,” said Wood, who added that he is concerned about a monoculture developing in craft beer in the North Coast centered around the style of hop-forward beers. “We just have a different niche.”

The brewery is expanding by 1,000 square feet so it can triple its production now that it has 400 retail accounts and it ships its beer as far as Scandinavia, Wood said. Woodfour isn’t as reliant on foot traffic given its distribution business and it has been able to self-fund as opposed to relying on banks, he said.

Even with the bullish views, there are signs of caution during this boom phase. Warped Brewing Co. closed at The Barlow after it failed to attract crowds like Woodfour, despite being right next to the Rialto Cinemas. The Bloodline Brewing Co. also closed its pub on Mendocino Avenue.

“It’s amazingly easy to lose money in a brewery,” Hunt said earlier this year when he announced this summer that Lagunitas had taken a 50 percent stake in Moonlight.

“It’s not like the key to success is to open a brewery and everything runs fine,” Hunt said.

And on Thursday, Stone Brewing Co. of Escondido announced that it was laying off 5 percent of its workforce due to “an unforeseen slowdown in our consistent growth and changes in the craft beer landscape,” CEO Dominic Engels said in a statement.

Stone, the 15th largest brewer in the country, has been one of the most aggressive in expansion efforts, opening a new facility in Berlin along with plans for a brewery in Richmond, Virginia, and a small brewpub in Napa. A spokeswoman said the Napa plans will not be affected by the cost cutting.

The craft beer segment should grow by 8 percent in volume in 2016, but that is a decrease from 18 percent in 2015, Watson noted.

“Some of this is we are a big industry now, and it’s just hard to grow at 18 percent if you are a big industry,” he said.

California had 518 breweries in 2015, which ranked first in the nation, according to the Brewers Association. However, the Golden State had an average of 1.9 breweries for every 100,000 of legal drinking age, which was only 24th in the country.

As the local industry matures, it will have to develop its own infrastructure so it can grow like other beer meccas. In fact, there are already a few companies that offer one-day excursions to visit local breweries. Richard G. Norgrove, brewmaster and chief operating officer at Bear Republic, sees an opportunity to pair beer more with the fine dining in the county, which was born as a result of the wine industry. He noted that restaurants have a local wine list, but fewer have a beer list featuring local breweries. “The servers are focused on the wine side,” he said.

Norgrove remains bullish on the sector, especially as Bear Republic plans to open its second brewpub in Rohnert Park, and said he could see at least 10 more breweries opening in the future. But Norgrove said he believes the focus will have to be on the micro level as a neighborhood pub, similar to what is being done at Crooked Goat.

“Smaller may actually be really good,” he said.

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