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11/13/2018

Breaking Down Big Volume, Impact of San Diego Brewers; Optimism Still Way High

More color and a lot more confidence included in full economic impact report on San Diego County craft brewers, released this week by CSU San Marcos and San Diego Brewers Guild. Recall, 130+ county craft brewers (excluding those acquired by larger brewers) contributed total of $1.1 bil in economic output last yr on $807 mil in gross revs and 1.1 mil bbls of beer produced (see Oct 12 issue). By May 1 of this yr, 148 brewing cos operated 178 brewing locations in SD County, report notes. That’s about 1/6 of the 900 breweries or so across Calif (during similar period). And TTB counted 1100 active brewery licenses in the state by end of 2017, report notes, up from less than 500 as recently as 2012.

The 1.1 mil bbls produced by county craft brewers represented a little over 1/3 of the 3.29 mil bbls produced by all Calif craft brewers, according to report (again, not including about 1.5 mil bbls report estimates was produced in state at acquired brewers Lagunitas, Ballast Point, Golden Road, Saint Archer & 10 Barrel, which has brewpub in SD). Calif craft total basically flat, down about 10K bbls or 0.3% in 2017, but down from closer to 4 mil bbls in 2015, according to report (reflecting shift of Sierra Nevada and Lagunitas production out of state). Of that 1.1 mil bbls, top SD craft brewer Stone sold almost 400K bbls last yr, or over a third of the total. Another 400K bbls or so of SD indie craft volume in next 10 players, from Karl Strauss at over 80K bbls, Green Flash at over 70K and Modern Times at 50K down to Belching Beaver, Mission and Port/Lost Abbey at 14-15K bbls each, based on Brewers Assn stats. Last 350K bbls in 2017 from remaining brewers producing avg of about 2500 bbls, we estimate.

2500+ Brewery Jobs Along “Hops Highway,” 1/3 of Direct $$ Output; $4.45/Bbl in Donations  San Diego County may be a hotbed of craft brewers within US and Calif, but certain areas of the county also home to higher density of brewers than others. One of those is so-called “Hops Highway” along Rte 78 corridor thru Carlsbad, Escondido, Oceanside, San Marcos and Vista. Group of breweries there represented 2,526 direct brewery jobs, over half of 4,571 jobs across county. SD County has population of something like 3.34 mil. So report suggests 14 brewery jobs for every 10,000 residents. But in those 5 cities, with total population about 641K, that’s more like 4 brewery jobs for every 1,000 residents. Breweries along the “Hops Highway” also responsible for over $299 mil in direct economic output, over 1/3 of total. Notably: biggest craft brewer (and employer) Stone based in Escondido. At same time, SD brewers also made equivalent of $4.9 mil in philanthropic donations, recall. That’s about $4.45/bbl, according to report, or 1.35% of gross revs to 200+ SD non-profits and 500 across CA. Almost half of those charities focused on “Youth/Education” (27%) and “Environment/Community” (22%). Another 21% of organizations supported by SD brewers focus on “Medical/Health” issues.

Irrational Exuberance? High Levels of Confidence Among Survey Respondents: All See Growth  Some of most remarkable stats in report are survey responses to separate CSUSM & SD Biz Journal project called Craft Brewer Business Confidence Index. Started in 2015, survey asks craft brewers about confidence in growth over next 12 mos. And despite continued increases in competition, confidence expressed by respondents remains incredibly high. Index at 93 (with 50 as mid-pt) this spring, up a pt from last fall, down a pt from last spring. Even more notable: every single one of responding breweries expects to grow production volume in next yr. Just 4% said they expect to produce 1-5% more in next 12 mos, while 22% expect 6-10% growth. Almost a third of respondents anticipate growth in the teens, while 13% think they’ll be up by 50% or more. Wow. Note, of course, that these stats are simply among an unknown group of respondents, which may have also self-selected (that is, more pessimistic brewers might not have submitted responses at all).

That ain’t the only measure these brewers are optimistic about either. About 2/3 of these brewers expect to hire 1-5 employees, while another quarter think they’ll hire 6 or more folks in the next yr. Over 90% see increases in distribution in their future (tho, at the scale many of these brewers work, that increase likely more about sales to other parts of the county or SoCal, rather than eyeing big distribution expansion). Finally about half of these brewers expects either no change or 1-5% increases in capital expenditures, suggesting modest, if any, expansion plans for many brewers. But another 22% see 6-10% increases to capex, while closer to 30% see even larger increases coming over the next 12 mos.

Publishing Info

  • Year: 2018
  • Volume: 9
  • Issue #: 103
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 2019 Beer Marketer's Insights Seminar

★ANNOUNCING★
The 2019 Beer Insights Seminar will be held in New York City, on Sunday evening, November 17th to Monday, November 18th at Convene.