The past year has seen an explosive growth of new breweries and taprooms. Consider the Jack London Square neighborhood, where in the past year Original Pattern Brewing Co., Oakland United Beerworks, and Tiger's Taproom have joined a market already crowded with Temescal Brewing, Federation Brewing, Independent Brewing, Old Kan Beer & Co., Beer Revolution and the Crooked City Cider Taphouse.
Although the Jack London District may feature the East Bay's densest assortment of beer-related businesses, its recent proliferation is by no means unique. The San Diego brewery Modern Times just opened an Oakland taproom near Valdez Triangle. Alameda gained two places to drink in 2018, with a large new brewery from Almanac and The Rake taproom affiliated with Admiral Maltings. Ghost Town Brewing opened a brewery on Adeline St. in West Oakland in 2018, and Bierhaus brought a beer-themed German Restaurant to Temescal from Mountain View. Other entrants to the market in recent years have included Roses Taproom, Novel Brewing Co., Arthur Mac's Tap and Snack, Pacific Standard, McBears's Social Club in El Cerrito, and many others, even as larger breweries such as 21st Amendment, Drake's, Fieldwork and others have also expanded.
Nielsen-Harris On Demand has concluded that around 40 percent of Americans drink craft beer, although it generously defines a craft beer drinker as someone who does so just "several times a year." In Contra Costa and Alameda counties, that would mean about 800,000 beer-age drinkers within range of the 22 breweries from Richmond to Alameda Island, not counting the hundreds or possibly thousands of East Bay taprooms and restaurants that also serve craft beer. Can those several-times-a-year drinkers support all these new entrants? Is there room for more? Or have we reached peak beer?
Competition has become fiercer than ever in the Bay Area, where simply making great beer amounts to table stakes these days. "I've noticed in the past two years that the quality of beer available across the board in the Bay Area has shot up," said Sam Gilbert, owner of Temescal Brewing. "That increase in beer quality is really exciting, but it creates a new vector around competition in that quality itself is not enough to differentiate yourself in our market and win over loyal customers because there are so many people making great beer."
Even amidst this explosion in beer-focused businesses, it's been three years since the craft beer industry posted double-digit growth. Brewers Association Economist Bart Watson expects more of the same. Craft beer growth is only expected to keep pace with the gross domestic product, he predicts, at about 4 percent a year.
After a prolonged boom, the tapering of craft beer's growth is a natural deceleration in a market that's coming of age, Watson explained. "A mature market segment means one that's still growing, but growing at a slower rate," he said. "It's not like demand is going away, but it's not that explosion that we saw a few years ago where huge chunks of the population were discovering craft brewing and getting into it for the first time."
Happily for all the new beer-focused businesses in the East Bay, the most promising area for growth of consumption remains America's 7,000-plus local microbreweries and brewpubs. "A lot of the new breweries aren't focused as heavily on growth," Watson said. "They're focused on building a sustainable business that they can make a living from. Generally, it means a more competitive market environment where brewers have to be a little more thoughtful about all sorts of business decisions around location, business models, what beers they're brewing and how they present themselves to the marketplace so they can stand out."
"We're continuing to see more opportunities on the local level, particularly on the service side — that experiential side," Watson said. Most Americans are more interested in "experiential" drinking, he said. "Not just going to a bar and drinking, but going somewhere and doing something, and having a couple of beers when they do."
Creating the kinds of experiences that might attract new local customers will test the industry's well-known penchant for innovation. We've already seen it in brewing. "When craft brewers have done things that are new and different, we've seen some real growth," Watson said. "A good example is the hazy, juicy IPAs that really didn't exist before and brought some new consumers into craft because they have the hop flavors but at lower bitterness. There have been some signs that there's a different demographic drinking them."
But can the legendary craft beer ingenuity extend beyond the brewery? If the industry wants to grow, it can no longer cling to the business-as-usual mantra of, "If I brew it, they will drink."
"Craft has slowed and it will continue to have slow growth if it continues to focus on the market that it's had historically," Watson said. "It's a bit like 'back to the future' for craft," Watson added. "Brewers in the 1980s worked hard to build their market. They were convincing people who didn't drink their beer to drink their beer. And we're back to that point. It's a time for craft to do some more market building and engage with more diverse audiences. Diversity is a part of it."
Although craft breweries are growing in the East Bay, creating a sustainable business from them isn't a foregone conclusion. To survive, they'll have to expand their customer base to include more women and people of color, and find a way to separate themselves from the competition.