Craft beer, liquor and cider production contributed about $123 million to the Sonoma County economy in 2012 and appears set to grow into a major element of the local economy, according to a new report by the county Economic Development Board.
"I think it is like asking in 1978, 'What about all these wineries,' ... It's kind of the dawn of a new sector and I think it's kind of cool for Sonoma County," said Ben Stone, the board's director.
The report identified 18 breweries, three distilleries, and four cideries in operation as of February of this year. More have opened, or have said they are close to opening, since then.
"We can't keep track of them," Stone said.
The beverage producers generated $122,807,840 in direct and indirect economic activity and supported 678 jobs: 499 directly in the companies and 179 in associated businesses, the report's authors estimated.
That is a relatively small portion of the $18 billion county economy, about a third of which is related in some way to the wine business by some estimates, but the numbers are growing rapidly.
Lagunitas Brewing in Petaluma, for example, has been experiencing explosive growth and now ranks as the nation's sixth-largest craft brewer. It alone accounted for 73 percent of all beer-related revenue in the county in 2012 with $60 million in sales, but owner Tony Magee says the company should top $100 million in 2013.
Richard Norgrove Sr., president and CEO of Bear Republic Brewing in Healdsburg and Cloverdale, said demand for beer is so great worldwide that he and his competitors are unable to fill it. He is finding the main limitation on growth is the ability to get their hands on raw materials: water, hops, grain, and yeast. Between demand and the growing wave of tourists visiting local breweries, he said, "I could easily see that economic impact doubling or tripling" in just a few years.
Sebastopol-based California Cider Company, producer of the Ace line and the nation's largest independent cidery, has experienced 40 percent annual growth for the last two years, owner Jeffrey House said.
"Cider is on fire," he said. "This is the summer of cider," with new producers opening and large operators such as Anheuser-Busch joining the market.
The report found that beer is an increasingly important draw for tourists coming to the county. As an example, it took a close look at the annual release of the "triple IPA" from Russian River Brewing, known as Pliny the Younger, one of the most sought-after limited-release beers in the country.
During the two weeks in February when the beer is available, according to a survey by the board, 12,500 beer lovers visited the downtown brew pub. Of those, 8,140, or 65 percent, were out-of-county tourists who came to the area specifically to try the beer.
The report estimated that the cumulative economic effect of Pliny the Younger, including direct sales and related spending by tourists, was nearly $2.4 million.
"We've certainly had the feeling that we were helping spur the local economy," said co-owner Natalie Cilurzo when told of the report's finding, but $2.4 million is rather impressive."
The brewery only produces about 60 barrels, or 1,860 gallons, of the beer every year. That means Pliny the Younger is worth about $160 per pint to Sonoma County's economy.
The report did identify some potential problems for the industry, including outdated regulations, particularly for distilleries, which are not allowed to host tasting rooms and sell directly to consumers like wineries and breweries do. It also found that the breweries on the smallest end, with revenue under $2 million, are having a hard time securing bank financing to expand.
Magee of Lagunitas said brewers also will be limited by the difficulty of disposing of nutrient-rich water left over from the brewing process since local municipal sewer systems are ill-equipped to handle it. Lagunitas trucks all of its heavy wastewater to a facility in Oakland, a process that smaller brewers might find difficult.
Despite the possible limitations, the report predicted that craft beverages will grow in economic importance, particularly since production jobs tend to be well paid and the craft industries are labor intensive, meaning more workers are required than in the heavily automated world of mass-market producers.
Anheuser-Busch, maker of Budweiser and other well-known brands, reports being able to produce 2,080 barrels, or 64,480 gallons, per year per employee. The four largest craft breweries in Sonoma County reported averaging just 626 barrels, or 19,406 gallons, per employee.
"While less efficient production is not normally economically desirable," the report concludes, "the ability of craft breweries to capitalize on surging demand for artisanal products is a boon to Sonoma County's economy."
The report is available at the board's website, edb.sonoma-county.org, and will be presented to the Board of Supervisors on Tuesday.
(You can reach Staff Writer Sean Scully at 521-5313 or sean.scully@pressdemocrat.com.)
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