Craft brewers urged to think local

SACRAMENTO - California craft brewers gathered in Sacramento on Friday at the end of the biggest week in their $6.5 billion industry, one that featured a pair of blockbuster deals that will accelerate the transformation of the state’s brews from cult status among beer aficionados into an international product.

But the message for the approximately 1,500 attendees at the first California Craft Beer Summit was decidedly against the grain of the headlines from this week, when Petaluma’s Lagunitas Brewing Co. announced a 50-50 partnership with Heineken International and San Diego’s Saint Archer Brewing Co. was acquired by MillerCoors LLC.

Instead, the message they heard was go local, very local.

“Particularly in beer, people think local is important in their purchasing decisions,” said Bart Watson, chief economist for the Brewers Association, the national trade group for craft brewers. “Millennials, in particular, they love local.”

California has an estimated 570 craft breweries, those that produce less than 2 million barrels annually, according to the California Craft Brewers Association, which sponsored the two-day summit at the Sacramento Convention Center. About two new ones open every week.

While the state is home to some of the largest craft brewers in the country such as Lagunitas, Escondido’s Stone Brewing Co. and Chico’s Sierra Nevada Brewing Co., most are much smaller. More than three-quarters, or around 440 breweries, produce 10,000 barrels or less annually, according to Watson.

In comparison, Lagunitas is expected to produce 850,000 barrels this year between its Petaluma and Chicago plants; it will open a Los Angeles area plant in early 2017.

Production of craft beer jumped 16 percent last year in California. As the number of craft breweries increases, it is getting harder for brewers stand out in the market - and get their products into supermarkets and pubs.

“Where it’s going to get difficult is access to market,” said Tom McCormick, executive director of the California Craft Brewers Association. “It’s going to be very competitive.”

Locally, Sonoma County has about two-dozen craft brewers, likely the most per capita in California, McCormick noted. They range in size from Lagunitas and Cloverdale’s Bear Republic Brewing Co. to Santa Rosa’s Russian River Brewing Co. and second-generation upstarts like 101 North Brewing Co. in Petaluma and HenHouse Brewing Co., which will soon move into a new Santa Rosa facility. All are figuring out where they fit in a fast-changing marketplace.

One emerging train of thought is the growth must come at the hyperlocal stage, especially small-batch producers who operate a brewpub or small facility that can sell on-premise bottles or growlers. That is crucial given that beer has a much shorter shelf life compared to wine or spirits, placing a premium on freshness.

In California, 75 percent of residents live within five miles of a brewery. But only 21 percent live within a mile, Watson said.

“I think the goal is that you don’t have to get into the car to get to the brewery,” said Lee Doxtader, co-founder of San Diego Brewing Co.

The hyperlocal effort could spur beer sales beyond a brewery. For example, in some states, convenience stores and independent taprooms can fill growlers of beer to take home, Watson noted. Convenience stores are the largest beer seller in the United States. “Craft has not penetrated that very well,” he said.

No one at the summit could predict when growth may plateau, but Watson noted that California has room for much more growth because craft beer is less than 10 percent of total beer shipments.

For example, if the Golden State had the same amount of craft breweries as Minnesota and Wisconsin combined relative to its population size, it would have 737 breweries.

“I don’t see a reason that California can’t take a ton of more breweries,” he said. Watson added that the Central Valley has a dearth of craft brewers compared to hotbeds such as San Diego County and Sonoma County. Los Angeles County has historically lagged, but has caught up in recent years.

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