THE STATE OF CRAFT BEER
Wave of local brands brings competition — and a new guard to Bay Area beer
The year in Bay Area beer was eventful, to say the least.
San Francisco stalwart Speakeasy Ales & Lagers shut down, reopened and sold to an East Bay investor for a measly $2.5 million. For about the same price, Haight Street’s beloved Magnolia Brewing, embroiled in bankruptcy proceedings, sold to Colorado’s New Belgium and Belgium’s Oud Beersel. 21st Amendment gave an equity stake to Brooklyn Brewery. Lagunitas founder Tony Magee handed over the remaining half of his brewery to Heineken (and followed it up with a now-famous Tumblr post).
And then there was Anchor, America’s original craft brewery, which Japanese brewer Sapporo purchased in August. Anchor’s sale may not have been a surprise, exactly — longtime owner Fritz Maytag had sold it to investors in 2010 — but to many locals it still felt like a punch in the gut.
If these established, cherished, widely distributed beer brands couldn’t make it, does it mean we’re in trouble? All signs point to that proverbial bubble bursting, right?
Not necessarily. “There’s always a lot of pain when a company struggles to the extent of Speakeasy and Magnolia,” says Tom McCormick, executive director of the California Craft Brewers Association. “But it’s a natural and healthy stabilization of the industry.”
While the legacy players may be struggling to stabilize, the little guys — the small craft breweries who increasingly define Bay Area beer culture — are doing just fine. In fact, the attractiveness of craft brands to global beer companies is a sign of the industry’s maturity and anticipated growth. (Look at North Carolina’s Wicked Weed, purchased this year by AB InBev, and Florida’s Funky Buddha, by Constellation.)
Twenty-nine new brewery licenses were issued in the nine-county Bay Area between December 2016 and December 2017, while the total number of breweries in California topped 900 — triple what it was in 2012. Growth at that rate can’t continue forever, McCormick says: “I do think that we’re going to see fewer breweries starting up, and I do think we’re going to see more breweries closing their doors.”
That’s because Bay Area craft beer has gotten a lot more competitive — a reason some established companies have foundered. “A lot of the bigger breweries are struggling to adapt to a rapidly changing beer world,” says Jesse Friedman, owner of San Fran-
cisco’s Almanac Beer Co. “There’s a real changing of the guard happening in the Bay Area.”
This new guard is characterized by a commitment to staying local, eschewing global (or even statewide) expansion; they’d rather distribute their beers themselves than submit to a wholesale network increasingly controlled by AB InBev. That’s a reality that Friedman and his business partner Damian Fagan could scarcely have imagined when they first launched Almanac in 2010 with the goal of producing nationally distributed beer. Now, although a small portion of Almanac’s sour beers — much more stable and ageable than IPAs — are sold in other states, the lion’s share of sales comes from local accounts and from Almanac’s Mission District taproom. A second taproom, attached to a new brewery in Alameda, opens this month.
“I think we could really use more small breweries,” Friedman says. (There are over 220 brewery licenses in the Bay Area.) Like Almanac, many of our new-guard success stories are content to stay small, focusing on taprooms (often, multiple taprooms) and on producing new beers practically every week. Think of such breweries as Fieldwork or Cellarmaker: You don’t know them for a flagship product — an Anchor Steam, a Speakeasy Prohibition Ale, a Lagunitas IPA —but for a constantly changing cast of tap handles.
“Calling a beer ‘year-round’ is almost like marking it for death now,” says Friedman. “If you tell people a beer is regularly available there’s a drop in interest immediately. People want the special, the one-time.”
Fresh. Original. Personal. Above all, local. These principles are responsible for craft beer’s rise. Now, some brewers are asking: Have we taken this fetishization of “local” too far? “I do think the dominant trend right now is localization,” says Collin McDonnell, CEO of Petaluma’s HenHouse Brewing. “It would be a misstatement to say people care more about quality than they do about locality.”
The data support that claim. Ultimately, consumers are still often looking to their own communities when they think about buying craft beer. By the end of 2017, according to the Brewers Association, 83 percent of American adults lived within 10 miles of a brewery. The proliferation of brewery taprooms actually may be replacing other watering holes: As of 2015, Nielsen data showed that neighborhood bars were closing at a rate of six per day, while the number of craft breweries just crested 6,000 nationwide.
But as Sam Calagione, the influential founder of high-profile East Coast craft brewery Dogfish Head, said, “local does not mean good; local just means local.” From his perspective, brewing nationwide is “on the precipice of a shakeout moment” where the local breweries producing quality beers will hang on, and those that don’t will shutter.
That moment hasn’t quite arrived. But it is coming. McDonnell has been running an almost daily Twitter campaign since late October reminding brewers to “take responsibility for your beer.” He believes that consumers are beginning to wise up to what constitutes a well-made brew.
“I definitely think the consumer is coming around,” he adds. “They’re checking dates, they care more about cold storage and they’re trying to buy beer from breweries who are investing in quality. It makes me proud when I go to the grocery store and see our beer on the shelf and people checking the dates on the bottom of the beers.”
By the same token, drinkers’ loyalty to their local breweries also means they’re willing to give just about any beer a shot, as long as they trust the brewer. That’s helped funky and sour beers, for example, proliferate around the Bay Area. Now sours have become something of a status symbol for a successful beer company, since they’re expensive, labor-intensive and difficult to produce. Cellarmaker, Moonraker and Russian River are all building new accommodations specifically for “funky” beer production.
The popularity of sours — much like the New England-style IPAs that have flooded menus this year — is not unique to the Bay Area. What is unusual about our local beer culture, however, is newfound attention to an oft-overlooked ingredient in brewing: malts. When made in small batches, malts like barley, oat, rye and wheat have the power to define the backbone of a beer while imparting the terroir of where they were grown. Unlike hops, whose variety and source are advertised on practically every bar menu, malts are for the most part available only from massive producers, and little attention has traditionally been paid by the public to their provenance.
The recent arrival of Admiral Maltings, a brand-new artisan malting facility in Alameda, stands to redefine that aspect of craft beer. Admiral has finished about 130 tons of barley so far, and most of the 10 collaboration beers brewed for this year’s San Francisco Beer Week were made with their malts. Expect to see more local brews utilizing the product.
After all, what place pays closer attention to ingredient sourcing than Northern California, where the farmto-table movement was born? That’s just one example of the indelible mark that Bay Area beer has made on craft beer at large.
“It’s really thrilling to know that we in California have revolutionized beer culture in America, and to a certain extent around the world,” says McCormick. “Whatever the re-juggling of mergers and acquisitions, the bottom line is that the new era of beer going forward is flavorful and authentic.”
“A lot of the bigger breweries are struggling to adapt to a rapidly changing beer world.” Jesse Friedman, owner, Almanac Beer Co. in S.F.