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North Bay Business Journal

Monday, April 22, 2013, 6:55 am

Region sees increase in craft breweries

Startups such as 101 North grow along with established brands

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    Sonoma County has recently seen a sharp increase in craft beer makers opening alongside well-established producers, helping a region synonymous with wine tap more into a business with brewing demand across California.

    Petaluma's 101 North Brewing Co.

    Petaluma’s 101 North Brewing recently increased capacity and inked a deal with Morris Distributing. (image credit: Eric Gneckow)

    In recent months, a number of startup breweries have emerged while the big three — Lagunitas Brewing, Russian River Brewing and Bear Republic — mull over plans to expand or increase capacity.

    Startups in the past year include St. Florian’s Brewery and Old Redwood Brewery in Windsor, HenHouse Brewing and Petaluma Hills Brewing in Petaluma, and Beltane Brewing in Novato. That’s in addition to at least 15 others that have opened across the North Bay in recent years and Ukiah’s Mendocino Brewing, a publicly owned company started in 1983 and now the nation’s 34th largest beer company.

    Perhaps the largest of the recent entrants in the local beer market is 101 North Brewing Co. It started operations in Petaluma roughly two years ago but recently began picking up steam with its signature Heroine IPA.

    The brewery officially opened to the public and for distribution about seven months ago in a warehouse at 1304 Scott St. in Petaluma. It’s just blocks away from Lagunitas, which earlier this month was ranked by the Colorado-based Brewers Association as the nation’s sixth-largest craft brewery and 13th-largest beer company overall based on 2012 sales. Craft breweries make less than 6 million barrels annually.

    101 North Brewing brewmaster Joel Johnson helps an employee brew a test batch of red ale. (image credit: Eric Gneckow)

    A recently installed fermentation tank will enable 101 North to increase production significantly, according to Brewmaster Joel Johnson, who previously developed award-winning suds for Bear Republic, which has breweries in Healdsburg and Cloverdale and is ranked as the country’s 34th-largest craft brewery.

    “We’ve been opened for seven months, and it looks like we’re on track to do 1,000 barrels in our first year,” Mr. Johnson said. “We were producing about half of that just three months ago.”

    With the new tank, Mr. Johnson projects the brewery will be able to increase production to 3,500 barrels per year, which would put it at No. 6 on the Business Journals list of local breweries.

    “We’re basically Lagunitas in our early stages,” said John Brainin, a co-owner at 101 North, referring to its neighbor’s humble beginnings in West Marin that eventually saw it move to Petaluma to become one of the nation’s largest craft brewers. Mr. Brainin said Lagunitas has been supportive of it and other local breweries, and there’s more revelry than rivalry among the burgeoning bevy of North Bay brewers.

    In addition to increasing capacity, 101 North has increased its visibility throughout the Bay Area, inking a distribution deal with Petaluma-based Morris Distributing, Mr. Brainin said. And the brewery recently became clients of accounting firm Burr Pilger Mayer, which also counts Lagunitas as a client.

    ‘Good time to be a brewer’

    The growth for 101 North, along with the spate of new breweries, reflects increased interest and demand in high-quality local beers across California and the U.S. The Bay Area has recently become a breeding ground for breweries, particularly in San Francisco and Oakland.

    “It’s just a good time to be a brewer,” said Tony Magee, founder and chief executive officer of Lagunitas. “All of the brewers around are growing and adding capacity. It’s an interesting time.”

    The brewery rose three spots on the 2012 craft brewers list by the Brewers Association, a national trade group that represents small and independent brewers. Last year, Lagunitas brewed 265,420 barrels of beer — or roughly 8.2 million gallons, according to Mr. Magee. That’s up from 2011, when it brewed 162,420 barrels, or a little more than 5 million gallons.

    Lagunitas is building a $15 million, 3,000-square-foot Chicago plant that will be able to produce more than 430,000 barrels a year — about 13.3 million gallons, Mr. Magee said. Completion is expected in October or November. By the time it opens, Lagunitas will have some 350 employees, up from 260 currently and just 70 employees three years ago.

    Santa Rosa’s Russian River Brewing, whose famed Pliny the Elder and Pliny the Younger IPAs have earned international accolades, has publicly discussed plans to expand to meet demand. It recently had to pull distribution out of Washington in order to keep pace with consumer thirst here in the North Bay and Oregon.

    And Bear Republic similarly has enjoyed national success with its Racer 5 IPA.

    Beer’s economic impact

    The Sonoma County Economic Development Board is gauging the economic impact of the local beer sector, spurred largely by the recent surge in popularity of Russian River Brewing and the national success of both Lagunitas and Bear Republic. A complete study is expected soon.

    A 2012 study by the National Beer Wholesalers Association and the Beer Institute estimates the beer industry contributes about $34.2 billion a year to the California economy, while creating more than 240,000 jobs that amount to $11.1 billion in wages. For craft brews, the economic impact on the state was figured to be about $3 billion a year, based on 2.2 million barrels produced from 243 breweries, according to a study last year by the California Craft Brewers Association and the University of California, Berkeley.

    According to the Brewers Association, craft breweries in 2012 saw a 15 percent increase in volume and a 17 percent increase in dollar value, representing a total barrel increase of nearly 1.8 million. By comparison, the overall U.S. beer market — a $99 billion industry — grew by 1 percent, according to the trade group.

    Brewing tourism

    Kevin Sprenger, co-owner of Sprengers Tap Room in Santa Rosa, said the recent widespread recognition of Russian River Brewing and others is indeed a key driver in the growth of craft brewers. Mr. Sprenger has expansion plans of his own that involve exclusive red ale by 101 North. It should be ready by August, along with a beer garden in Calistoga next spring — all of which reflects a heightened focus on craft brews.

    “I think the popularity of Russian River and Bear Republic and Lagunitas really helped,” he said. “They are giving tours specifically for beer.”

    A decades-old friendship that started in Sonoma County high schools laid the foundation for what is now a close business relationship between Sprengers and 101 North. Mr. Sprenger said his tap room provided the capital to purchase the 90-barrel fermentation tank that will be used at 101 North. Heroine IPA has been the tap room’s best seller since it began offering last August, he said.

    Beer would have a long way to go to supplant the economic impact and tourism of the region’s wine industry, but beer is increasingly drawing a distinct demographic from around the state. 

    “It’s not the same demographic, but they are starting to cross,” Mr. Sprenger said. “I’m finding more groups that are wine tasting during the day and want a beer in the evening, which is something we’re definitely going to try to take advantage of in Calistoga.”

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    Comments

    2 Comments

    1. April 23, 2013, 1:49 am

      by Ron Holt

      Speaking of Brewing Tourism, North Bay Brewery Tours (owned by myself and my partners, James and Rob) is the only North Bay based tour company that specializes in beer tourism. We’ve been doing it for 2+ years now and our mission is to promote the local craft beer community / provide safe transportation. Hop on one of our guided tours if you’re interested in learning more!


    2. August 4, 2014, 5:02 pm

      by Chrissi Clay

      Brewery Tourism!! Brew Brothers Brewery Tours is another great resource for visiting your brewery destinations. We too promote local craft breweries and are dedicated to bringing new customers to our local Sonoma county breweries safe and sound. Give us a call or visit the website for more information.


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