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San Diego
Saturday, May 18, 2024

Head to Head Competition

Creative, competitive and highly independent, local breweries have placed San Diego County at the center of the growing market for handcrafted beers.

The region has one of the largest craft brewing communities in the country, said Jim Crute, president and head brewer of Lightning Brewery in Poway.

“It is going to keep growing,” said Crute, who serves on the board of the San Diego Brewer’s Guild. “Some of the smaller companies are going to start pushing to get bigger and be more competitive. A big chunk will start moving their product out of the county as well.”

There are more than 50 craft breweries of various sizes around the county. The Brewers Association, a national trade organization, defines a craft brewery as independent, traditional and small, with a production rate of less than six million barrels per year.

Among local brewers, annual production ranges from fewer than 100 barrels to more than 170,000, said Mike Hess, proprietor and chief brewing officer of Hess Brewing in the Miramar area. San Diego Beer Week, an annual festival, has helped spread the word about the growing local beer scene. A spinoff business is beer tourism, bus tours of local breweries.

Some brewers have mixed feelings about busloads of tourists disrupting the laid-back atmosphere they have cultivated in their tasting rooms.

“People are running shuttle services,” said Jeff Silver, president of Rough Draft Brewing Co. in the Miramar area. “It’s like going on a wine tour, but you’re going to breweries. On Saturdays we get three or four buses.”

Crute says banks also have gotten involved in the industry by financing new breweries.

Beer With Personality

Although craft beer is made with traditional ingredients, such as malted barley, local brewers assert their individuality by adding their own ingredients for taste and distinctiveness.

“A lot of it is personality,” Crute said, with a laugh. “That translates to the product.”

Most brewers are passionate about what they do. Daniel Guy, owner and brewer at the recently opened Fezziwig’s Brewing Co. in Carlsbad, says the payoff is creating something special that your patrons truly enjoy. When he talks about his beer, Guy sounds like a proud father.

“You spend your days making a product you have handcrafted,” he said. “You have an idea in your head. You get the ingredients from around the country. You watch it ferment and mature. You finally put it on draft and serve it to customers.”

Guy said he learned his craft by watching other local brewers at work. Although they are in competition, San Diego County brewers often help one another. There is a sense of camaraderie and shared experience.

“The community is pretty open to that as long as you are up front with them and not a pest,” Guy said. “You can be the fly on the wall.”

Beer making typically has a low profit margin and starting out usually takes a substantial capital investment, says Crute. Smaller companies can’t leverage the same economies of scale as large traditional brewers. If your beer is not both tasty and distinctive, you are likely to fail.

It Has to Be Great

“When I got into the trade I thought I could make beer a little bit better and develop the brand,” Crute recalled. “You have to make great beer. It has to be different from everyone else’s. It has to be recognized as superior. Then you have a chance.”

You have to brew and sell enough product to cover your costs, which include labor and leasing commercial space. Most craft brewers begin by distributing their own products locally, making deliveries and getting to know their customers, he said. The personal touch puts them in touch with clients, but they often find that it makes sense to work with distributors who can carry their products beyond the county’s borders.

Crute said his company did its own distribution for several years, then entered into a distribution agreement with a larger brewer. Kevin Buckley, a co-owner of Latitude 33 Brewing Co. in Vista, said he and his partners are determined to break out of the local market.

“Right now we are only in San Diego County,” Buckley said. “We just celebrated our one-year anniversary. We are starting bottling now. We are moving into Orange and Los Angeles counties. We are looking at going into Santa Barbara and San Francisco as well. Early next year, we want to start shipping out of the state. It is what we are shooting for.”

Beer Lover’s Town

Buckley says his group acquired its current brewing facility from a more established brewer that now operates in Mira Mesa. His company is in San Diego County because of the local market for craft beer.

Drinking beer has long been part of the local popular culture, said Crute. While San Diegans always have enjoyed their brew, before the development of the local beer industry, there weren’t nearly as many opportunities to sample handcrafted products, said Jeff Motch, co-owner of Automatic Brewing Co. in Normal Heights.

“This town was a Coors Light, Bud Light city,” he recalled. “The choices weren’t huge. There were a lot of people wanting to brew beer. They went out and started their own thing.”

These days Motch worries that there are so many breweries that the San Diego market is in danger of becoming saturated. That concern hasn’t stopped would-be master brewers from starting new companies.

Breaking into the market is not easy. The competition is hardest on new breweries, said Mike Hinkley, CEO of Green Flash Brewing Co. in Mira Mesa.

“At some point there will be so many new brewers that are small, I don’t know if they can grow to a critical mass to sustain themselves,” Hinkley said.

Each of the new brews is fighting for shelf space, said Motch. No one is sure where it will end.

“The choices are huge,” he said. “Maybe craft beer can keep growing and growing, but that is a tough battle.”

Emmet Pierce is a freelance writer for the San Diego Business Journal.


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