Beer

The future of California craft brewing is small. What does it mean for Sacramento?

Bahn mi sandwiches prepared by founder Cong Nguyen’s parents and murals of apes aren’t the only things that make King Cong Brewing unique among its Sacramento peers. To hear Nguyen tell it, King Cong is a welcome oasis on Del Paso Boulevard in old North Sacramento’s “craft brewing desert.”

There’s housemade pizzas, drinking games and live music in sight of a 15-barrel brewhouse that should churn out 6,000 to 9,000 gallons of beer this year. Beers with names such as “Gorilla Pale Ale“ and “Jungle Trap IPA” are sold mostly in downtown Sacramento bars, but can be found as far away as ... El Dorado Hills.

This is what today’s craft beer industry looks like. As demand for hyper-local beverages rises and small breweries pop up in nearly every city, the national beer production growth rate has slowed to where it was in 2008. New craft breweries increasingly function more as glorified taprooms than Sierra Nevada wannabees, while well-established brewers are seeing a production slide.

“I think it’s just going to get more and more localized to the point where every neighborhood has their own brewery,” said Russian River Brewing Co. sales representative Bobby Myers. “The only way it really makes sense to start a brewery with a business plan is if you plan on pretty much selling it all through your own bar.”

Bart Watson, chief economist for the national Brewers Association, said breweries that can’t consistently produce high-quality beer will be squeezed out as the market gets more competitive. Beyond that barrier of entry, it’ll be increasingly important for microbreweries to offer comforts beyond your basic bar — a trend already visible in some of the Sacramento craft beer scene’s most recent additions.

Urban Roots Brewing and Smokehouse, which opened this spring, focused on its barbecue and Belgian ales. Darkheart Brewing is expected to open its pirate-themed brewery before the end of the year on Auburn Boulevard. Dueling Dogs Brewing Co. began serving homemade mead, wine, cider and soda as well as beer on the owners’ 10-acre farm in Lincoln this year.

“I think it’s important to do something differently, to stand out,” Watson said. “If you’re doing the same thing someone else is doing, they’ve probably been doing it longer or have more money for distribution.”

The Brewers Association defines craft breweries as at least 75 percent owned by a company that produces about 180 million gallons or less per year. They still produce less beer consumed stateside than imported brews, not to mention mass-produced American beers such as Blue Moon and Natural Light. Craft beer comprised 12.67 percent of all sales, according to the Brewers Association.

As of June 30, there were 6,655 active breweries in the U.S., up from 5,562 last year for an annual growth rate of 19.7 percent. What craft breweries lack in volume, they make up in prevalence. California Craft Brewers Association data show the state’s total has risen from 313 breweries in 2012 to more than 900 as of December 2017. Sacramento, Yolo, Placer and El Dorado counties now count 84 breweries across their 5,300 square miles and 2.3 million people.

Some of the Sacramento-area’s largest breweries — Knee Deep, Sudwerk and Track 7, to name three — have invested in additional production space in recent years.

Some of Northern California’s relative craft beer dinosaurs have been battered by the changing market. Beer output at Anchor Brewing — which bills itself as “America’s first craft brewery” even after being purchased by Sapporo last year — made nearly 5 million gallons of beer in 2014. Anchor sank to about 3.4 million gallons of production in 2017, a drop of about 32 percent.

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Bear Republic consistently ramped up production from 564,318 gallons to 2.3 million gallons between 2008 and 2013, but has plateaued in years since. The 22-year-old Healdsburg brewery hasn’t been immune to consumers’ consolidating definition of “local,” said Laine Ruona, who worked for Bear Republic in the Sacramento area before recently taking a job with Almanac.

“We even see it for Bear Republic. Racer 5 (IPA) used to be everywhere, but now it’s like ‘Oh, you guys are all the way in Sonoma County,’” he said. “That’s definitely going to get more tough for breweries outside coming in, wedging their way into that local sector.”

There seems to still be room to grow in Sacramento’s brewing scene. The breweries here aren’t large. The Sacramento area’s largest brewery, Knee Deep, is just the 30th largest brewery in the state, producing about 588,000 gallons of beer in 2017. Only four breweries in the area make more than 100,000 gallons a year — a pittance relative to Sierra Nevada’s annual output of 27 million gallons.

Sacramento’s start-up breweries are still dreaming big — kind of. Nguyen has plans. He’s building out his brewing area as King Cong’s first year in business draws to a close and wants to eventually pump out up to 60,000 gallons annually, assuming the demand is there.

“I do see the trend that breweries are opening as neighborhood breweries, but I think that if your quality really shines, you can grow out of where you are,” Nguyen said. “A lot of people are becoming more sensitive to their palate and have a better understanding of beer, so they’re being more selective.”

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