Craft brews seen as new way to tap more tourists

DVEREL

July 1, 2013

While the popularity of ever-expanding North Bay breweries has now been well documented, the region is seeing an uptick in tourism related to craft beer, drawing visitors from afar and prompting new business to form around the sector, much like the wine industry in its infancy.

Last week, the Sonoma County Economic Development Board released a first-ever study of the craft brewing industry, finding that it contributed an estimated $123 million to the local economy in 2012 while directly supporting 500 jobs.

The study highlights a growing niche forming for a wide swath of businesses, particularly the tourism sector, as demand for artisan beer, ciders and liquors increases across both the country and the North Bay.

"It's definitely a draw" to the region, said Tim Zahner, chief marketing officer of Sonoma County Tourism, adding that the county is currently researching exactly how much of an impact it's having on lodging.

"We are in the middle of some visitor intercept research," he said. "While the numbers are not complete and only represent two months of data -- we're gathering data for a full-year -- I can say preliminary research on Sonoma County overnight visitors shows that about 2 percent of our visitors go to a brewery in Sonoma County during their stay.”

Sales of Sonoma County craft beer are growing by a rate of nearly triple the national average -- craft beer sales by volume increased 15 percent nationwide in 2012, while in Sonoma County, sales by volume rose 41 percent, according to the study, part of a broader effort by the EDB to gain economic insight and identify opportunities for growth for Sonoma County’s craft beer, cider and sprit industries.

As of February, there were 18 craft breweries in Sonoma County, eight of which opened in the last two years, according to the study. But it's not just Sonoma County, although the county is home to several well-established craft beer juggernauts: Petaluma's Lagunitas Brewing Company, Santa Rosa's Russian River Brewing Company, Third Street Aleworks, also in Santa Rosa, and Healdsburg's Bear Republic Brewing Company.

The momentum of craft beer extends throughout the Bay Area and California, prompting at least one local company seeking to capitalize on brewing interest.

Rohnert Park-based North Bay Brewery Tours was founded three years ago by two brothers and a friend, James and Ron Holt and Robert Watkins, home brewers themselves, at about the same time interest in Russian River Brewing Company's Pliny the Younger exploded nationwide.

The business model is straightforward: with deep knowledge of brewing and familiarity with the region, offer visitors a safe means of transportation to breweries while providing lessons on brewing.

"We've all been home brewing since we were old enough to drink beer," James Holt said. "We've been into the back-end of the beer scene forever. Naturally, we took a look at wine tours and realized a huge niche could be filled -- no one was serving the breweries. We were already familiar with the brewers. We got to talking and all the breweries were on board."

Mr. Holt said North Bay Brewery Tours started with one 14-passenger bus in 2011. Today, the startup is expanding its fleet to include two 14-passenger shuttle buses and two 20-passenger buses -- all with Kegerators on board -- reflecting the increased demand in beer-related visits.

The company is also expanding beyond the North Bay, offering trips to the greater Bay Area to other breweries or brew pubs.

"Probably at least once a week, we have a tour that requests we take them to San Francisco," Mr. Holt said, adding that he recently was able to quit his day job as an assistant helping special needs children to work full-time on North Bay Brewery Tours. "We're hoping to be a much bigger presence."

The county's beer, spirits and cider makers are poised to capitalize significantly on the growing national demand for local and artisanal goods, according to EDB study, which says the region's agricultural history has created a well-established appreciation of local goods.

“Consumers are recognizing the value of quality ingredients and care in the product,” said Ben Stone, executive director of the Sonoma County EDB. “That is what Sonoma County is about, the artisanal culture, and it is no surprise that craft beverages are a growing part of our economy.”

Lagunitas, the county's biggest brewer, has helped lead the charge of local breweries gaining national recognition. Already the sixth largest craft brewer in the country, Lagunitas saw year-over-year sales grow by 40 percent in 2012, reaching $60 million.

Another key piece of the local brewery scene Russian River Brewing Company, who's famed Pliny the Younger, a triple IPA released only once a year, has a cumulative economic impact on Sonoma County tourism to the tune of $2.35 million, according to the study.

For instance, in 2013, the release of Pliny the Younger drew 12,500 attendees over a two-week period. Of that total, 8,140 attendees, or 65 percent, were tourists from outside Sonoma County who traveled specifically to sample the IPA, which drew international interest in 2009 when it was rated "best beer in the world" by the popular website BeerAdvocate.com.

Direct spending related to Pliny the Younger totaled approximately $1.4 million, while indirect and induced impacts are estimated at $421,000 and $495,000, respectively, the study said.

Visitors came from at least 26 different states and five foreign countries for Pliny the Younger, according to the study.

Survey results from the EDB indicated that Pliny the Younger tourists spent a large portion of money at restaurants, other breweries and bars, over an average stay of 1.6 days, with 44 percent saying in local lodging and hotels.

Lagunitas, Russian River Brewing and Bear Republic might be the big name-draws for the North Bay, but with a bevy of new breweries hopping to tap into consumer demand, interest is likely to ferment even further, both Mr. Holt and Mr. Zahner said.

"In the craft beer community, right here is kind of the mecca," Mr. Holt said. "People come up specifically because they're interested in Lagunitas, Bear Rupublic or Third Street Aleworks, but now they're getting word about all the others."

Startups in the past year include St. Florian’s Brewery and Old Redwood Brewery in Windsor, 101 North, HenHouse Brewing and Petaluma Hills Brewing in Petaluma, and Beltane Brewing in Novato, as well as Hopmonk Taverns in Novato and Sebastopol.

But it's not just beer, as distilleries and cider makers similarly see an increase in demand. California Cider Company, which makes the popular Ace Cider, was founded in 1994 in Sebastopol. In the last two decades, it has grown to become the largest family owned cider in the United States, with sales increasing by 52 percent from the previous year, according to the study.

Nationwide, ciders makers have seen sales increase by 70 percent in 2012, after a 31 percent increase 2012.

While the growth of craft beverages has accelerated, the industry is faced with several unique challenges, the study found, with 72 percent of all respondents indicating that permitting and varying county and state regulations top all other concerns.

“It comes down to entrepreneurism. These businesses have identified their own niche in the market. Combine that with passion, and you have a recipe for job creation,” Mr. Stone said. “It’s the EDB’s goal with this study to identify impediments to growth and promote a healthy business environment.”

Craft beer will not supplant wine as the main draw to Sonoma County anytime soon, Mr. Zahner said, but it helps in offering a more diverse offering to wider range of potential visitors.

"As far as beer goes, it's been good. It's helped us promoted Sonoma County beyond wine," he said. "And it takes a lot of good beer to make wine."