Longtime favorite California brewers report rare production drop as beer industry cools

The state of California’s 2018 beer production data show stalwarts of the industry made less beer last year for the first time since at least 2006.

Many of California’s iconic breweries are struggling. Bear Republic, Stone and Lagunitas all reported production drops in 2018. Dating back to 2008, none of those breweries had a year where they made less beer than the year before.

With about 1,000 breweries squeezed into the state, and with production going up nearly every year for more than a decade, it was bound to happen eventually.

No brewery felt the crunch more than Bear Republic, based in Cloverdale, which saw its production drop 15 percent from 2017 to 2018, according to data provided by the state. Stone dropped 9.2 percent while Lagunitas dropped 2.4 percent. Both breweries have out-of-state facilities where they can make beer, but that has been true in prior years, when the California breweries still reported growth.

The commonality is Bear Republic, Lagunitas and Stone send beer all over the country in a market where drinkers are saying with their pocketbooks that they prefer a local brewer.

“Breweries with the broadest distribution generally are facing the most headwinds,” said Bart Watson, an economist with the national Brewers Association. “In an era where local is a big part of the demand equation for many beer lovers, it’s harder to be relevant the further away from home you go. California breweries do this about as well as anyone, but you can only beat the odds so long. Regional craft brewers face challenges both from local nimble competitors, and from the acquired offerings of the world’s largest brewers, which they can scale up and then push through their distribution networks.”

Bear Republic, Lagunitas and Stone are among the largest craft breweries in the state. All of them started in the mid-1990s and all of them make good beer. But it’s not like the world has decided to go back to drinking Budweiser. Craft beer sales were up 4 percent while production including Bud Lite and other macro beers dropped 1 percent, according to the Brewers Association. The beer industry accounted for over $9 billion in economic activity in California in 2018, according to the association.

This story was originally published October 24, 2019 at 11:41 AM.