Many tasting rooms are standing-room only these days. Bottle shops can’t keep beer on shelves. Breweries are brewing practically non-stop.
Yep, the craft beer craze just keeps getting crazier, especially right here in San Diego County, where there are now 72 brew houses in operation. Only two years ago, the number was less than half that. And with many more in the planning stages, San Diego could top the century mark by next year. The numbers are impressive and so is the beer. But the meteoric rise of craft beer has some people contemplating gravitational pull, meaning what goes up, must come down.
So is the craft beer boom heading toward a bust?
Leave it to Greg Koch, San Diego’s voluminous craft beer crusader, to put all this talk in context. “How many mass extinctions have we had in the history of our planet? I think five,” said the CEO and co-founder of Stone Brewing Co. “I think you can say that human existence isn’t permanent, let alone the rise of the current growth rate of craft beer. Yes, there’s a threshold, it’s between .01 percent and 99.999 percent. We know it’s somewhere.”
But where? And when?
“Everyone is scrambling for volume right now – adding equipment and tanks at a breakneck pace with no eye for a possible snarl ahead,” Koch continued. “And I’m not saying there is a snarl ahead. I am not predicting the future. But I do think there is going to be a bump in the road because there always is a bump in the road.”
Whatever obstacles the industry may face eventually, many brewers and fans believe this time it will be much different than the rise and fall of craft in the 1990s.
Charles Leask, a longtime craft beer enthusiast and tasting room regular in San Diego, said today’s beer consumers are more evolved than they were 15-20 years ago. And so are the brewers.
“Consumers are a lot more educated about beer,” said the Oceanside resident. “And if they’re not, at least they are willing to try and learn.”
As for the brewers, Leask sees a lot of camaraderie that he didn’t see before.
“There’s a lot of people here who are genuinely concerned and make a major effort to help other people in the business,” he said. “Everyone is helpful to each other instead of being competitors. Sure, there will be fallout, but I don’t think the bubble is going to burst again. If the beer is good and the tasting rooms treat people well, people will come back.”
Speaking of taste, that is much different nowadays too. And that commitment to quality is playing a huge role in the growing popularity of craft beer. While the law of averages dictates that not every brewery is going to produce award-winning beer, Koch argues that the percentage of mediocrity today is lower than it was in years past.
“(Low quality) drove the saturation point in a negative direction to a point of a crash,” he said. “Today, we’re willing to go somewhere and try something we don’t know and get surprised if the beer sucks. Our expectation is that it will be at least not bad and maybe even awesome.”
Paul Sangster, co-owner of Rip Current Brewing in San Marcos, is in his first year of operation and said he’s not concerned with volume at this point. For Rip Current, quality comes first.
“If we were to make only 500 barrels, but that beer was really good, I’d be happy with that,” he said.
Todd Davis, a commercial real estate agent who specializes in San Diego’s craft beer market, agrees that quality will go a long way in sustaining the popularity of craft.
“As long as breweries continue to make better beer, I don’t think saturation is going to be as big a problem as some people make it out to be,” said the Cardiff resident. “It’s great knowing you don’t have to drive a half-hour to find a good brewery.”
Added Sangster: “Look back at the days before Prohibition. It seemed every neighborhood had its own local brewery. I don’t think breweries, even in San Diego, have reached that number yet.”
So maybe all this talk about boom or bust isn’t necessary right now. Maybe the fans, the ultimate beneficiaries, just sit back and enjoy the ride for however long it lasts. If you ask Koch, he says absolutely not.
“If you want it to last longer, then being passive isn’t what you want to do,” he said. “Help in the navigation. Actively pay attention, lobby and support with intent, knowledge and education. And a lot of people are doing that. The consumer doesn’t have to take on that responsibility, but if they do, the industry will be better off because the industry will always be consumer-driven.”
alan says
Germany is 1.19 times the size of CA, with over 1300 breweries. Germans are pretty fanatical about fresh, real, true German beer. I think we are OK for awhile on the bubble as long as quality is prominent. Attrition will come but that’s with everything. Cheers American craft!!!
Richard Witt says
A great article and some even better comments, which is sometimes a welcome surprise, kudos for some well thought out insight. I fall inline with some of Brian’s sentiment. Big brewer(s) are not going to be happy losing what I see could be a significant % of business to craft brewers. Will their response be to gobble them up or will they creatively pursue there own products in-house? Hyper-vigilant may be the perfect business focus idea for crafters. Personally, what a beertastic time to be in San Diego. 🙂
Patrick says
One huge upside for locals regarding the number of breweries is the access to fresh beer on tap. Especially in a county known for IPA’s. Seems like the battle for tap handles will be the real shakeout, at least here in town.
Kyle Whitcomb says
Great points being made in the comments. I agree with Mike that a lot of the neighborhood breweries/brewpubs will continue to thrive even in the event of the “bubble bursting.” I’m not even entirely convinced that there will be a burst as much as a culling of the herd. There is so much phenomenal beer in this county, that I can’t imagine a brewery with substandard product surviving very long. I think Omar and Brian have hit the nail on the head. The most important factor is quality. Jacob McKean wrote a great piece (http://beerpulse.com/2012/03/why-i-think-im-mostly-not-crazy-for-opening-a-brewery/) early in the Modern Times planning process that discussed some of this. He included a quote from his former boss, Greg Koch of Stone: “There’s always room for another great restaurant on restaurant row.” Jacob rightly noted that the key word in that sentence is “great.”
Michael Skubic says
When I ran the number to start H*** Brewing Co. I figured there could be between 110-150 breweries in SD county. That assumption was that the majority was ON-premise. i.g. less than 3,000 bbls per brewery. It really comes down to a total number of locally produced barrels of beer. If the market in SD continues in the direction it is going we could support a HUGE number of barrels locally… but we need folks to stop drinking crap beer. Unfortunately there are too many tourist/military/college peeps here… so that may never happen in the way that would really be ideal.
Brian Marvel says
I understand having this conversation is of importance and I have asked this question many times about the equilibrium point of brewers in San Diego County. With that said, we should focus on nurturing a plan on sustainability and growth. Omar said it best, as long as the quality and safety are maintained I can’t see too many issues on the horizon. Some of my concerns are how the large manufactures respond to the increased market share craft beer is having on their business model.
Mike Strickland says
While the increasing number of breweries may make it more difficult for those wanting to grow as large as Stone, Green Flash or Ballast Point, there will always be room for the neighborhood-based brewery (think Thorn St. or any of the Pizza Ports). While some industrial park-based breweries may face more challenges to get people to come to their tasting room, these walkable community anchors will always have a strong local customer base. Provided the regulatory reform currently underway in SD continues, of course….
Omar Passons says
Bubbles are a phenomenon that have been studied in other economic contexts almost endlessly. I think it would have been interesting to hit up a local economist to help frame this particular discussion. Craft Beer still makes up a small percentage of the overall market, but I’d be interested to know what that number is for San Diego proper. And even more interested to know what the markets look like both for converts and expansions within existing fans. Seems like these questions are particularly relevant to the conversation. And the other thing not mentioned, but hugely important, is the remaining room for growth in Craft Beer tourism. This includes both people who travel to the San Diego region because of our insane craft beer and people who travel here for other reasons but are pulled towards the quality once they are here. This is a different market that won’t probably keep a brewery afloat, but certainly can’t hurt its operations. And then that leads to a clamor for this beer when those tourists return home-opening another market in Pittsburgh or Tokyo or wherever the tourist came from. As long as the Guild and brewers themselves are hyper-vigilant about quality and safety, it’s hard to imagine a rough landing soon.