The Beer Issue
Brewers know the craft brew bubble is real, and Big Beer is lurking
I’m no longer surprised by Sacramento’s emergent and, frankly, overzealous craft-beer scene. The region’s brew galaxy will continue to expand, and without misgivings about the sustainability of such growth, or of an oft-proclaimed “craft beer bubble.” Craft is now as American as Russian subterfuge and late-night presidential Twitter rants. It’s officially arrived.
At the very least, this means we can skip the formalities: Thursday marks the beginning of another Sacramento Beer Week, a time of year when I find myself pondering the “the state of brew” and marveling at the local scene’s odyssey. And how—mercifully—I no longer have to familiarize readers with that “new thing” called “craft beer.”
That said, perhaps you’re a latecomer who needs a peek at the data. Here you go: In 2009, there were fewer than 10 breweries in the Sacramento region. In fact, some of the finest breweries in the city were shutting off their taps and closing at this time. Today, there are 74 regional breweries—more per capita than in the Bay Area, Los Angeles or San Diego.
This is not to mention all the bars and restaurants piling onto the craft bandwagon, or speculators planting hop fields from the Delta to the Sutter Buttes, and all those Midtown Instagrammers doing their best Cindy Sherman impressions with pints of suds. Our beer explosion is at once on-trend and very normal.
Yet something happened in the Sacramento beer world this past year involving a young, modest brewery some 45 minutes outside downtown Sacramento, and it reminded me that the Great Beer Acceleration we’re currently experiencing is still so damn unreal.
The brewery in question is Moonraker Brewing Co., tucked away in a nondescript commercial warehouse in rural Auburn. Moonraker opened last April, a couple of days before Earth Day. The owners are Karen and Dan Powell, and they give a damn about the environment.
For instance, there are solar panels on the brewery’s rooftop. They espouse a net-zero energy goal, and their brewing system is powered with renewable electricity, despite the fact that probably 99.9 percent of the industry brews with gas. When they opened, the Powells also decided to sell their beer in cans, instead of the standard glass bottles, because cans are 100 percent recyclable.
Well, canned beer caught fire in 2016. Local breweries such as Moonraker, Track 7 Brewing Co. and Fieldwork Brewing Co. started selling fresh IPA-style beer in 16-ounce cans, and straight out of their brewhouses instead of at stores, forgoing distribution and the proverbial middle man. These canned beers brimmed with crisp hoppy goodness, and were just days out of a fermenting tank, with an aroma and character much more alluring than the stale stuff sleeping on BevMo! or Safeway shelves.
Anyway, one of the first canned beers Moonraker sold was called Yojo, an IPA with a hazy appearance, not unlike a glass of pulpy orange juice, and with similar citrus aromatics and taste. Customers dug it. The word got out fast.
But really, no one saw coming what happened on January 30. The most popular beer website on the planet, RateBeer.com, christened Yojo the No. 1 IPA in the world. RateBeer also heralded Moonraker as the best brewery in California—and the ninth-best brewery on the whole damn planet. (Reminder: There are nearly 7,000.)
“It’s been a little surreal,” Karen Powell told SN&R this past week.
She explained how her brewery has tripled production after being open just nine months. Moonraker is now a destination for beer pilgrims from all over the state. “Our tasting room on Saturday, we had a line out the door, all day.”
So, again, while I’m seldom fazed by beer’s big surge, the fact that the local brew scene is going full-on Stanley Kubrick—that we’re seeing moonshots—is admittedly bizarre.Big Beer boom—and the bad guys
Someone has to rise to the top, however, so why not Sacramento?
I think back to a lecture by Bart Watson, the chief economist for the Brewers Association, a national trade group with nearly 2,000 beer-producing members. He also earned his Ph.D. at UC Berkeley, so he knows a thing or two about Northern California brew. This past summer, he held court in front of a standing-room-only crowd of several hundred inside the Sacramento Convention Center, part of the annual California Craft Brewers Association beer summit. To his right was a giant projector screen, and on it a PowerPoint slide that documented the stunning upswing in the number of American craft breweries.
As an example, Watson zeroed in on the year 2011, when there were just 1,813 breweries in the United States. A decent number. But then he pointed to what he called the “current explosion”—illustrated by a line between 2011 and 2015 that shot toward the ceiling. The number of U.S. breweries today: more than 5,000.
California leads the way, as nearly one out of every five of the nation’s breweries operates in the Golden State, according to statistics from CCBA, a political advocacy and education organization based out of Sacramento.
In 1990, there were just 67 breweries in California. This week, the CCBA was scheduled to announce that we’d crested 800.
A vast majority of these new breweries are in neighborhoods, a.k.a. “nano breweries,” most of which produce fewer than 1,000 barrels annually. Moonraker was locked in at around that level of production—but now it will do closer to 3,000 barrels in 2017. Still, that’s not a lot of brew. By comparison, the four largest breweries in the state—two Anheuser-Busch InBev facilities, one MillerCoors location and Sierra Nevada Brewing Co. in Chico—all put out more than 1 million barrels a year.
Tom McCormick is the CCBA’s executive director and an industry veteran going on several decades. When we chatted this past summer, he admitted that his contemporaries would never have anticipated this scope of industry advancement some 30 years ago. Which of course raises the question: Is this a “Peak Beer” moment in California?
“Not really,” was his succinct response. “Maybe if you had four [breweries] on [a] street corner. Maybe. But a community can support a number of these” smaller beer producers.
Other major California beer experts echoed his confidence.
I spoke to David Walker at the Beer Summit. He’s the co-founder of one of the largest craft producers in the state, Firestone Walker Brewing Co., which puts out more than 300,000 barrels of beer annually all over the country. He forecasted even more accelerated and extraordinary growth. “There will be 10,000 breweries in this country” in the near future, he predicted—which means the industry boom isn’t even at the halfway point.
The industry’s roar has caught its corporate beer overlords’ full attention.
In the past year and a half, Anheuser-Busch InBev—the gatekeeper of dozens of popular mainstream beer brands, from Budweiser to Corona to Stella Artois—has fast-tracked the gobbling-up of smaller craft and independent breweries, doubling its portfolio by acquiring new ones such as Golden Road Brewing, which was founded in 2011. And now, going forward, they’re putting the craft community in the crosshairs big time. In fact, the Budweiser-owned Golden Road is scheduled to open a brewpub in the heart of Midtown, inside the old laundromat at L and 19th streets.
Why is Bud getting crafty? Sales of traditional corporate beer—Miller, Coors Light, Heineken—are trending downward, while craft is surging into double digits, up nearly 13 percent in 2015, according to the national Brewers Association.
Craft beer now makes up more than 20 percent of the $106 billion in annual national beer sales—and this booming market is gnawing at the bottom line of so-called Big Beer.
AB InBev isn’t the only corporate behemoth snatching up independent breweries. In the past couple years, MillerCoors paid an estimated $35 million to acquire Saint Archer Brewing Co., a San Diego-based craft outfit; the Heineken Co. bought half of nearby Lagunitas Brewing Co. for $500 million; and Constellation Brands, which brews Modelo, acquired Ballast Point Brewing Co. for a $1 billion.
And the monster is eating itself, too. AB InBev forked over more than $100 billion to gobble up its foremost competitor, SABMiller—which owns Miller and Fosters and even bottles Coca-Cola—in an acquisition that the Department of Justice antitrust officials finally (perhaps inconceivably) approved last summer. Now, AB InBev controls more than 30 percent of the global beer market.
Perhaps it’s no surprise that the craft-beer industry is wary of this mutating beast. McCormick was candid about the corporate beer menace. He’s worried about more mergers and acquisitions, and how the big guys could squeeze indie brewers. He’s also anxious about this new AB InBev animal’s infinite coffers, and possible future spending on lobbying to damage smaller craft producers.
“If you were to ask me the greatest threat to our industry now, that is far and away it,” he said of macro beer. “And it is clear now what their strategy is: If you can’t beat them, buy them.”
He’s correct that AB InBev will surely be guzzling up more small breweries. It held a major sales and marketing convention this January in Dallas, and much of the strategizing was about craft-beer expansion: rolling out Golden Road Brewing’s best-selling beer, Wolf Pup Session IPA, into nearly three dozen markets. And, invariably, purchasing more craft breweries and pimping-out their best-sellers./p>
I concur with McCormick that Budweiser’s so-called evil empire is a meaningful danger to independent beer. But I’d also wager that the No. 1 threat to Sacramento’s newfound craft-beer industry is self-chosen:
Sacramento has too many breweries—and a lot of the beer isn’t very good.The No. 1 threat to Sacramento beer
I don’t make that statement lightly. There are real people behind these 74 local breweries. But good people don’t equal good beer. And it’s time for some real talk.
Ryan Graham is co-owner of Track 7 Brewing Co., one of the first of these new-wave local spots, and that opened in 2011. His brewery is arguably the leader of the pack in Sacramento. He’s also the only local brewer to sit on the CCBA board. During a recent chat, he too reasoned that inferior beer is the biggest menace to Sacramento’s beer scene success.
“Quality is paramount. And we have brewers in Sacramento who are putting out infected, just fundamentally bad-quality beer. And that’s a problem,” he said.
“It’s not enough to be local. Local works for a very narrow window of your beer-making life.”
Graham wasn’t lobbing bombs, or breaking some kind of industry code of silence. Plenty of local beer insiders talk smack about Sacramento breweries. By comparison, Graham was diplomatic, if candid.
Why so much inferior beer in town? Perhaps because the barrier to entry is lower in Sacramento than, say, the Bay Area, where it costs more to start up a brewery, partly because property values and rents are significantly higher.
Either way, we’re beginning to see casualties, what with the recent closures of Dragas Brewing (in Rocklin, which shuttered last month after just two years) and Roseville Brewing Co. (which opened in 2012 and closed in January).
Part of the problem is that beer is sexy, and so many people—from amateur homebrewers to investors with some commas in the bank account—want in on the boom.
Just ask Rohit Nayyar, owner of one of the premier retail stores in the region, RoCo Wine & Spirits in West Sacramento. “Everybody wants to be a brewer,” he told SN&R during a recent chat. “Everybody wants to be part of this.”
He says folks come into his store every day and ask about opening a bottle shop, or for tips on growing hops (Nayyar also has 20 acres of hop land near Yuba City). But the reality on the frontlines at his store and many others is that “a lot—a lot—of beers are failing,” he said.
“National brands are failing,” he told SN&R. “There are so many people who get into the industry and don’t know what they’re doing. And in Sacramento, it grew too fast. Everybody wants to be in it.”
Again, this isn’t a bombshell. His words echo numerous conversations among industry folks and casual beer consumers.
Even Karen Powell at Moonraker hears it. “I think there are a lot of people who walk into a successful brewery and have a misconception that, ’Oh, I’m going to start a brewery,’” she explained. “I have people come in here all the time and say, ’I’m going to open a brewery.’ We just wonder if the market can sustain that. I don’t know. I don’t think anyone knows.
“But we’re going to find out.”Best beer in Sacramento history
Let’s not resign ourselves to a fatalistic discussion of local craft beer’s shortcomings. Instead, let’s explore a fascinating paradox: Lots of local beer may suck—but this is also a tremendous moment to be a brew drinker in the 916.
“I don’t think the Sacramento beer consumer has had better local beer at any time than now,” is how Graham with Track 7 put it.
I second that. From Berryessa Brewing Co. to Mraz Brewing Co., Bike Dog Brewing Co. to Auburn Alehouse, there’s no shortage of quality brewers constantly surprising with new offerings.
Graham says innovation is key.
“The good breweries, the ones that are going to be able to stand the test of time, are going to be able to reinvent themselves over the next 10 years,” Graham said.
Even Powell, at 9-month-old Moonraker, said that adapting is something her leadership team discusses on the regular. When her brewery was blowing up and winning all those awards—BTW, it just topped the most overhyped and heralded beer on the planet, Pliny the Younger, at the largest IPA festival in Northern California earlier this month—she, her husband and brewers Zack Frasher (formerly of Knee Deep Brewing Co., Mraz Brewing Co.) and Kyle Leddy (American River Brewing Co., Black Diamond Brewing Co.) held a powwow to figure out what the hell they were going to do on the heels of all this newfound demand.
“The challenges are trying to find that balance, where you can keep the consumer happy” despite lines out the front door, she said. Nothing is worse than waiting in a queue for 30 minutes—and then the brewery running out of the beer you wanted.
Graham said he loves the fact that beer drinkers are more discerning than ever. “Sacramento consumers have gotten way more savvy than when we opened the door five years ago,” he said. In fact, he doesn’t think Track 7 would’ve been successful if they did today what they did when they opened.
The good news is that beer drinkers are a forgiving bunch. Consider one of the most exciting breweries around, New Glory Craft Brewery. When New Glory opened in 2014, its brew was unremarkable, even kind of a dud. But after a while cans of Extra Pale, a hoppy beer with a unique, dry finish, caught my eye. And in the past year, New Glory hopped on the can-release train, producing 16-ounce four-packs from its facility off Power Inn Road—and selling out in a matter of hours.
Now, New Glory brews some of the best beer in California.
“People are crazy about the cans. Everybody’s going for the cans,” Nayyar said of can sales at his shop.
He described it as a blessing and a curse: There are limited quantities of these cans, which are produced by a mobile “Can Van” company that visits each individual brewhouse, and Nayyar can’t keep them in stock more than a few hours at a time. Consumers want these canned beers by Track 7, Fieldwork, Alvarado Street, Temescal Beer, Moonraker and New Glory—now.
“Business is definitely booming, there’s no doubt about that,” Nayyar said. “But it’s definitely unexpected.”
There’s that word again. And that’s my whole point. Phenomenons such as Moonraker will turn heads, but the everyday ebb, flow and tsunami of the beer scene should no longer astonish. We may all agree that we don’t know where the industry is headed. But we shouldn’t be so naive as to pretend that it won’t involve all sorts of drama, from Olympus honors and sellout can releases to additional brewery closures and even some juicy front-page scandals.
I like to imagine Sacramento’s beer future like the one described by McCormick this past summer, a place where mainstream offerings such as Bud and Coors Light might someday disappear completely.
“I think industrial lagers will eventually go away, because it’s a really uninteresting product,” he wagered.
He also described how the industry was kick-started by artist-scientist types, the Sierra Nevadas of the world, people who founded breweries upon a culture of helping and innovation. And this is a beer world that I hope shakes out over the coming decade.
“They don’t get in it to make money,” McCormick said. “They don’t get in it because their parents expect them to be brewers like a doctor or dentist.
“They get in it for the love of brewing.”