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Craft Beer Scene Readies to Build on Its Successes of 2015

The California Craft Brewers Association recently announced that there are now more than 600 craft breweries across the state, generating $6.5 billion in annual revenue. California is by far the largest U.S. state for craft beer production, which has implications for all types of companies serving the industry, including producers of hops, barley and related ingredients and brewing supplies.

The latest national and local numbers for 2015 won’t be available until spring, but it’s clear that the nearly 115 craft brewers now based in San Diego County represent close to 20 percent of the California total. In 2014, according to National University System Institute for Policy Research, local brewers had $600 million in regional economic impact, as sales topped $847 million and industry employment surpassed 6,200 jobs.

The 2015 numbers are likely to come in much higher, as many local brewers have reported a significant boom in production and sales, spurred by rising demand for West Coast-style craft beers not only nationally but globally.

Local brewers to watch in 2016 will include Escondido’s Stone Brewing Co., which will go full-scale with its new brewing and restaurant operations in Berlin as it also starts East Coast production in Richmond Va.; Mira Mesa’s Green Flash Brewing Co., which launches major East Coast operations in Virginia Beach, Va.; and Miramar’s AleSmith Brewing Co., which begins a joint venture with Danish brewer and majority stakeholder Mikkeller called Mikkeller San Diego, housed in Miramar and the first brewing operations to be established locally by a European company.

Perhaps the most attention for now is on Miramar’s Ballast Point Brewing & Spirits, which recently became the first local brewer to be acquired for $1 billion, by New York-based macrobrewer Constellation Brands Inc., maker of popular multinational brews including Corona and Modelo. (It was also the biggest official acquisition price tag announced to date in the increasingly consolidating U.S. craft beer industry.)

The Billion-Dollar Breakthrough

“To me, a San Diego company being bought for $1 billion says a lot about this industry and this region,” said Jonathan Dale, a San Diego-based first vice president and senior commercial banker with California Bank & Trust, who handles financing for beer companies among other clients. “You don’t see a company from Portland being bought for $1 billion yet.”

The research firm IBISWorld Inc. foresees significant growth potential still ahead for U.S. craft brews, particularly among college students and young professionals increasingly exploring alternatives to macro-brews. Nationwide, craft beer revenue grew nearly 19 percent annually during the past five years, and is on track to grow another 5.5 percent annually over the next five years.

The Colorado-based Brewers Association, a nationwide industry trade group, reported that the dollar value of craft beer sold in the U.S. during 2014 was $19.6 billion, representing 19.3 percent of all U.S. beer sales — up from about a 14 percent share in 2013. Craft’s volume share of beer sold hit 11 percent in 2014, more than double the share five years ago and the first time ever that the volume share hit a double-digit percentage.

While it celebrates progress, the craft beer industry is also watching for larger industry trends in 2016. Among those is the potential competitive impact of the recently announced $104 billion acquisition of brewing giant SABMiller by the top-selling and even larger macrobrewer Anheuser Busch InBev, which would create the largest brewing company in history. Regulators still must sign off on the deal, and will likely require both companies to divest some current holdings if it is approved.

The California brewers group said it will “carefully review any industry movement or change that might limit the growth, access to market or vibrancy of the craft brewing industry in California.”


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