Craft beer production increases in 2017, but growth continues to slow

Craft beer producers sold more beer in 2017 but saw their growth continue to slow as the market matures, a trend that is forcing North Coast brewers to focus more aggressively on expanding their businesses at home.

Craft brewers produced 25.4 million barrels last year, a 5 percent increase in volume from 2016, according to data released Tuesday by the Brewers Association, the Colorado-based nonprofit group that represents independent brewers.

Growth, however, has slowed well below the double-digit increases enjoyed by craft brewers as recently as five years ago.

The retail value of the product was $26 billion last year, up 8 percent from 2016, according to the trade group. Nearly a quarter of all money spent on beer in the United States now goes to craft brewers, who continue to make gains at the expense of larger beer companies.

“Growth for the craft brewing industry is adapting to the new realities of a mature market landscape,” said Bart Watson, the group’s chief economist. “Beer lovers are trending toward supporting their local small and independent community craft breweries.”

One troubling trend is the increasing amount of brewery closures, which reached 165 last year.

The latest example, Green Flash Brewing Co. of San Diego, announced Monday that it was closing its Virginia Beach plant to save money as the company scaled back its nationwide distribution.

“I think we are going to see that number continue to rise,” Watson said of closings. “We are in a more competitive market than we have been in the past.”

On the North Coast, two well-regarded breweries - Mendocino Brewing Co. in Ukiah and Carneros Brewing Co. in Sonoma - both closed their doors this year, though the latter intends to return to the retail marketplace in the future.

At the same time, area brewers also are seeing opportunity by focusing on their local customers rather than expanding statewide or nationally. Most notably, Russian River Brewing Co. of Santa Rosa will open up its new Windsor facility this fall to boost production to regional retailers as well as accommodate more visitors than its often-crowded downtown brewpub can handle.

Moonlight Brewing Co. of Santa Rosa this week started putting its flagship beer, Death and Taxes, into cans and is making four-packs available to retail outlets such as Local Barrel in Santa Rosa, Beercraft in Rohnert Park and area Oliver’s Market stores.

Moonlight beers have previously only been available on draft at local taprooms.

“You can only ignore a huge demand for so long,” said Brian Hunt, founder and co-owner of Moonlight, which he started in 1992 and is one of the pioneers of the modern craft beer movement. “Old dogs can learn new tricks.”

Lagunitas Brewing Co. of Petaluma, owned by beer giant Heineken International, bought a 50 percent stake of Moonlight in 2016, but Hunt said its executives have allowed him to grow the brand organically and not push for aggressive benchmarks that would be required for investors such as banks or private equity. He’s on pace to increase production modestly to 3,500 barrels this year.

“The plan is not to go crazy and just do it right,” Hunt said. He added that he would like to put other beers, such as his Reality Czech pilsner, into cans in the future.

Likewise, HenHouse Brewing Co. of Santa Rosa is expanding in the marketplace, opening a new Petaluma taproom last weekend that also provides more capacity to house its barrel-aged beers.

“There are a lot of folks here (Petaluma) who would like to come up more frequently, but can’t,” said HenHouse co-owner Collin McDonnell.

HenHouse also is installing a new canning line this spring and plans to double its capacity from 5,000 barrels annually to 10,000 barrels.

“We’re not intending to go into new markets,” McDonnell said. “There’s plenty of people here who want to drink our beer.”

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

Bill Swindell

Business, Beer and Wine, The Press Democrat  

In the North Coast, we are surrounded by hundreds of wineries along with some of the best breweries, cidermakers and distillers. These industries produce an abundance of drinks as well as good stories – and those are what I’m interested in writing. I also keep my eye on our growing cannabis industry and other agricultural crops, which have provided the backbone for our food-and-wine culture for generations.

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