California’s 1,000-plus craft brewers help fuel state’s economic engine

LONG BEACH - Despite worries over the national slowdown within the craft beer sector, the California market remains strong with more than 1,000 licensed breweries.

The sector’s robust growth was the main storyline Thursday from the California Craft Brewers Association’s fifth annual summit at the Long Beach Convention Center. Craft breweries have become a significant economic driver throughout the Golden State, including Sonoma County which has about 30 breweries and has become a popular beer destination for tourists.

The state has 863 active breweries and 1,255 active brewery licenses, and the sector is expected to get even bigger, said Bart Watson, chief economist of the Brewers Association, the main trade group for independent brewers.

The craft beer market in Sonoma County, one of the most competitive in the country, keeps expanding. By year-end, at least five brewery taprooms will have opened to compete with local stalwarts like Lagunitas Brewing Co. in Petaluma, Bear Republic Brewing Co. in Cloverdale and Russian River Brewing Co. in Santa Rosa.

Given the stiffer competition in the sector, there will be more craft brewery closings statewide, among those that don’t offer good tasting beer or have other business problems, Watson said. Locally, Two Tread Brewing Co. went out of business in January at Santa Rosa Plaza. The brewery, which opened just before the October 2017 fires, was hampered at the start by not having its own beers on tap. Overall, there have been more than 100 brewery closings in California from 2015 to 2018, Watson said.

“We are starting to see that competition take hold and that closing rate go up,” he said.

Breweries are looking to differentiate themselves in a tougher market, Watson said, which may result in trying to develop a different beer style to stand out within a local area or offering food to go with the beers.

The craft brewers’ conference also featured a discussion with some of the pioneers of the sector in California, including Vinnie Cilurzo, the brewmaster and co-owner of Russian River Brewing, which was founded in 1997.

Cilurzo said when the industry ramped up in the 1980s the consumer was unfamiliar with the taste of hoppy beers, known as India pale ales, now dominant in the marketplace.

“It existed, but there was no way the consumer was probably going to go for it,” Cilurzo said of the IPA style.

Russian River made its mark with Blind Pig IPA and has expanded with even hoppier beers, including its seasonal Pliny the Younger, recognized among craft beer fans as one the best brews in the world.

Overall, the state of the craft beer industry has changed tremendously in the last 20 years, Cilurzo said, noting that banks are now willing to lend to upstart breweries that decades ago they would conveniently ignore.