Special Sections » The Beer Issue

The Suds Runneth Over

A crowded craft beer industry strives to reach a new audience.

by

1 comment

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.


Beer Needs a Bigger Pie

Last August, the Brewers Association released its first diversity study, which confirmed what most people inside and outside the industry might have guessed: The craft beer industry isn't very diverse.

"The data show that similar to craft consumers, brewery employees are disproportionately white relative to both the general U.S. population and where breweries are located," Watson wrote in the report. "Brewers and owners are even more likely to be white than brewery employees overall."

According to the data, more than 88 percent of brewery owners in the survey were white, compared with 3.7 percent American Indian or Alaskan Natives, 2.4 percent non-white Hispanics, 1.9 percent Asians, 1 percent African-Americans, and 2.7 percent other or declined to state. Some 89 percent of brewers were white, as opposed to 4 percent Hispanics, 3 percent Natives, 0.6 percent Asians and African-Americans, and 2.9 percent other or declined to state. Production managers also skewed heavily white, at nearly 88 percent, compared with 4.9 percent Hispanics, 2 percent Natives, 1.5 percent Asians, 0.4 percent Blacks, and 3.2 percent who declined to answer.

Women didn't fare much better in the brew house. More than 92 percent of brewers, 91 percent of production managers and 86 percent of production staff were men. The split was less drastic in non-service managers and staff, at 62 percent. Service staff manager jobs were almost evenly split between men and women.

Dr. J. Jackson Beckham, the Brewers Association's first 'diversity ambassador,' described the challenge succinctly: "We need a bigger pie."

Beckham sees diversity as an economic opportunity for breweries, as well as for people who are underrepresented in the industry's workforce. "Craft beer is a nearly $80 billion industry, when you add in allied trades and the supply chain," Beckham said. "We have an industry that can provide meaningful economic and educational development opportunities for all sorts of people in all parts of the country. Eighty-five percent of Americans live within 10 miles of a craft brewery."

The jobs aren't just in the brewery. "Breweries also need accountants, marketing assistants, finance people, microbiologists, HR professionals, people who can do safety auditing," Beckham said. "These are professional organizations that have many, many roles. That's the piece that I'm really invested in and communicating about. It's not just about making beer and putting it in a can."

Diversity is first and foremost good for business, contends Beckham. "On a basic level, you're going to bring in more fans, and that's going to affect your bottom line," she said.

Diversity also can have an impact on how craft addresses future challenges. "The value of a nimble team with different types of thinkers and doers is really going to be poised to innovate," she said. "With more than 8,000 breweries in the country, differentiation is going to be how organizations find success. You're not going to do a lot of innovation coming from a group-think pattern."

Beckham stressed that diversity, equity, and inclusivity is a long-term commitment. "This is a process that's going to take a lot of time to execute intelligently and the right way," she said.

"At times you really want to be able to say, 'Look at this really rapid radical change.' But that's not how it's going to come. In five or 10 years, we'll be able to look back and go, 'Wow, we're in a vastly different place than we were then.' We'll be able to see the impact that we're making and that will be a great day."


Craft Beer with a Conscience

For many craft breweries, navigating diversity and inclusion issues will be a new experience. Not so at Temescal Brewing in Oakland, where owner Sam Gilbert has been a staunch proponent of diversity since he opened the brewery three-and-a-half years ago. "We've always had a goal of welcoming into craft beer people and communities that have been excluded from it," Gilbert said. Temescal has a production brewery in Jack London Square and a smaller brewery and taproom in the Temescal neighborhood.

"There's always been a certain amount of exclusivity in craft beer along the lines of race and gender," he said. "But more than that, as part of being a tight subculture, it's always had a certain exclusivity to it and it has often felt inaccessible to outsiders. We find ourselves constantly pushing to not just be welcoming but to actively seek out people who might find something they care about or love that we offer."

The effort to embrace customers of all genders and ethnicities begins with hiring practices. "We want to go about hiring in a way that puts some inherent value on diversity, inequity and inclusion, but also looking at our tactics to make sure that we're not unconsciously or accidentally excluding certain populations from our hiring pool," Gilbert said. "We also want to make sure that people from very different backgrounds feel welcome here and that they are part of the team and their perspectives and work styles are valued and fostered."

Gilbert believes that having a diverse staff leads naturally to more diverse customers. "The No. 1 way to have somebody feel welcome coming into a business is if they see people who look like them working at that business," he said. "If you're a person of color and you come into a business and the staff does not include anyone of color, it's likely that the customers are not like you, either. It doesn't mean that there's not a lot that the business is doing to make you feel welcome, but it's an uphill battle from there."

Collaborating with the local community on projects exposes Temescal to different perspectives that it otherwise might miss. For Beer Week, for instance, Temescal is hosting a fair that showcases artists and food businesses that are run by women of color.

"The whole idea of the fair is to create space for local women of color who are making amazing art and amazing food, and, of course, pairing that with beer and celebrating those scenes," he said. "If we weren't going about these events partnering with other stakeholders who are involved in the planning and marketing, it just falls flat. Even if your intentions are right, it's really easy to be tone-deaf and not achieve what you're going for because you don't have perspectives from the community you're trying to serve who are informing your plan."


Beer-Adjacent Activities

Expanding to a broader, more diverse audience also implies that beer doesn't always need to be the sole or even primary focus. "Beer is meant to be enjoyed with company, music, and food," he said. "I love people who care deeply enough about beer that it will be the center of an experience, but ultimately, me and my staff are passionate about a lot of other things in life, too, and it turns out that beer happens to go along with them very well. We tend to be more promiscuous in how we market our beer and build partnerships with people who are doing beer-adjacent stuff."

"One thing we tried to do this year was to put Temescal into some of our favorite cocktail bars in the Bay Area because we love that scene and we think that a lot of people going to cocktail bars might also want to grab a pils," Gilbert said. "We'd much rather be a part of all of that rather than dominate your world with 100 percent all beer all the time."

Temescal also loves to pair beer with pizza. "Especially over the past year, we've found strong partnerships with some of our favorite pizza places around the Bay Area, like Pizzeria Delfina, Square Pie Guys and Lucia's Pizzeria. We love to offer pilsners to these places because pizzas and pilsners are a divine combination," he said. For Beer Week, Temescal is holding an event at the brewery called Pils, Pils, Pizza, Pils and is featuring its pilsners at pizzerias around the Bay Area.

Gilman Brewing owner Sean Wells loves craft beer, but he and his partners, fellow veterinarian Tim Sellmeyer and musician John Schuman, who's the general manager, are not as fond of the craft beer "scene."

"We wanted a place that wasn't snobby and pretentious, where if you asked a question about a beer you'd get a stare from some dick with a beard and flannel on," Wells said. "Instead of not having a place we wanted to go to nearby, why not create a place we actually wanted to go to?" The partners ended up literally building it themselves.

Fueled by its 25-barrel brewing system, Gilman Brewing has a production brewery/taproom in Berkeley and a taproom/restaurant in Daly City, with another taproom scheduled to open this year in Pleasanton. Gilman also distributes canned beer throughout Northern California. Wells said the cans aren't a big money maker, but they help familiarize people with Gilman's brand beyond its taprooms.

Gilman's hazy, juicy IPAs and its Belgian and French-style saisons made with real fruit are easy-sipping beers that are soft on the palate, with more complexity than you might expect. "Our goal is to have fancy, good beer be completely approachable and unpretentious," Wells said. "It goes back to the whole reason we started in the first place."

The brewery's beers are also very food-friendly, and they pair especially well with the cuisine at the Daly City location. Like the beer, the kitchen, led by Chef Kurt Steeber, formerly of Zuni Café, is high-end without being pretentious. One standout is the hand-made, thin crust pizza cooked to order in a wood-fired oven. Pairing a six-glass tasting flight of Gilman's hazy IPAs and fruited saisons with Steeber's wild mushroom pizza in a lovely pub is a nice way to spend an afternoon in Daly City.

Like Fieldwork and Alvarado Street, Gilman is following a hub-and-spoke business model, with a production brewery across the street from the former Pyramid Alehouse as the hub and taprooms as the spokes. A lot rides on the critical decision of where to put the spokes.

One strategy in a competitive beer market might be, if the people aren't coming to the beer, take the beer to the people. Daly City, population 107,000, has never had so much as a mediocre beer scene. Prior to Gilman, Buffalo Wild Wings in the Serramonte Shopping Center was one of the better options.

Gilman DC opened last fall in the bottom floor of an office building near Daly City BART, opposite the Century 20 multiplex. It's an odd spot, but it somehow works and it already seems like it belongs.

With an outstanding kitchen, a sports bar ambience and high tables that seem to make the room more intimate, Gilman DC inspires the kind of "experiential drinking" that economist Watson touted, with people "not just going to a bar and drinking, but going somewhere and doing something, and having a couple of beers when they do."

And with Gilman, it happens in such an unpretentious way, you hardly notice what a good time you're having.

Comments

Showing 1-1 of 1

 

Add a comment

Anonymous and pseudonymous comments will be removed.