The effects of the pandemic on San Diego’s craft brewers were evident in the San Diego Brewers Guild’s (SDBG) 2021 economic impact report released last month, which showed beer production and economic output declines and employment cuts.
Created in partnership with the California State University San Marcos (CSUSM), the report analyzes 2020 data from San Diego craft breweries, using the Brewers Association’s (BA’s) definition of craft (must produce fewer than 6 million barrels annually, and be less than 25% owned by a beverage alcohol industry member who is not a craft brewer themselves).
“2020 was a very atypical year for the global economy, and our brewery members along with the craft brewing community at large were able to quickly pivot their production, selling, and distribution tactics and become more resilient,” Paige McWey Acers, SDBG executive director, said in the report. “We’re now starting to see an uptick in sales, events, hiring staff, and more patron visits for local beer manufacturers in San Diego County. This report, created by CSUSM, is helping provide an insightful analysis into the decrease in jobs and production during 2020 as well as the opportunities that are ahead in rebuilding and growing our local craft beer industry.”
California’s 995 craft breweries produced an estimated 3.36 million barrels of beer in 2020 – the most beer production for a state in the U.S., according to SDGB, citing data from the BA. That amount of beer is an average of 3.6 gallons per adult in the state, and is a -11% decline in beer production compared to 2019 (nearly 3.79 million barrels).
In 2020, 158 independent craft breweries operated in San Diego County. Those breweries produced an estimated 772,204 barrels of beer – an -11% decline in production compared to 2019 (867,180 barrels), mirroring statewide declines. The guild noted that those production estimates may include beer produced outside of the county, as breweries with multiple facilities do not always report separate production data by location.
The report estimated the local economic impact of beer produced in the county to be between $290-$360 million dollars, down from the last reported impact of $480-$590 million in 2018 (a report for 2019 data was not published due to the COVID-19 pandemic). Originally, the guild reported that San Diego craft breweries contributed $1.2 billion to the local economy in 2018, but amended that number in the latest report, citing “over-inflated revenue-per-barrel estimates for some large segments of the local craft brewing industry” at the time of the original report.
San Diego craft brewers supported 4,039 jobs in 2020, according to data from IMPLAN, an economic impact analysis software firm. An estimated 3,600 of those jobs were provided directly from breweries – a -24% decrease from the 4,708 direct jobs reported in 2018. The combined labor income was estimated to supply $60.4 million to the local economy, more than $31 million of which was from direct brewery jobs.
The San Diego guild pointed to several examples of employee cuts and adjustments by local breweries that were made in response to the COVID-19 pandemic in 2020, including The Lost Abbey and Port Brewing, which furloughed 34 employees for at least two months. The guild cited Adam Martinez, director of media and marketing for The Lost Abbey, who they spoke with in October 2021.
“According to Martinez, as employees returned to work, the brewery then faced the additional problems of employees re-evaluating continuing to work in an industry that requires such close contact with other people, given the communicability of COVID-19, as well as the issue of employees ‘wearing more hats’ and taking on more responsibilities than they had prior to the pandemic,” the guild continued. “Additionally, some employees took on the role of delivering beer directly to consumers, as The Lost Abbey chose to pivot to a beer delivery service to supplement the loss of revenue.”
The two breweries produced 8,441 barrels in 2020, a -24% decrease from 2019, according to the BA.
In its report, the guild also detailed results of two 2021 surveys of local brewers detailing their predictions for the local industry in 2022. Both of those surveys showed overall optimism for the industry to recover in 2022.
In partnership with the San Diego Business Journal, CSUSM conducts a bi-annual craft beer confidence index survey, which measures local brewers confidence in industry business improvements, including employment, revenue and distribution. For the overall confidence index, the survey defines an index reading below 50 to be a lack of confidence, and a reading above 50 to be optimistic.
Index readings fluctuated between 87 and 94 prior to fall 2020 when the survey returned an index reading of 63 – the lowest reading since the survey began in 2015. However, by spring 2021, the reading increased to 90.68.
Of the 34 respondents surveyed, 35.29% expect beer business (including revenue, sales and employment) to return to pre-pandemic levels in the next 6-12 months, while the same percentage expect the return to happen in one to two years. More than one in 10 respondents (11.76%) said the change will happen in six months or less, while 8.82% said their beer business will never be the same. The same percentage of respondents (8.82%) said their business had grown since the pandemic.
The majority of respondents (94.12%) expect beer revenue to increase for their breweries in 2022, although slightly less (82.35%) said they expect their profits to increase. The discrepancy is likely due in-part to an increase in raw materials cost. More than three quarters of respondents (76.47%) reported an expected increase in the cost of raw materials in 2022, while 17.65% said costs will remain the same, and 5.88% said they are unsure. None of the respondents expect costs to decrease.
The California Craft Brewers Association also conducted a survey of San Diego guild members during fall 2021 asking for their predictions of the next 6-12 months. Of the 31 respondents, 24 said they anticipate an increase in production, while six said production will remain the same, and one said they expect a decrease. Similarly, 24 said they expect employment to increase in the next 6-12 months, while eight said it will remain the same.
There was slightly less optimism for distribution increases, as 18 of the 31 members surveyed said they expect distribution increases, while 10 said it will remain the same, and three said their distribution will decline.