It helps that San Diego is home to the highest concentration of Millennials in the United States at 27.3%, according to the US Census Bureau's 2015 estimates. Millennials make up 41% of the weekly beer-drinking population; they account for the lion's share of weekly craft beer drinkers or 57% nationwide. According to a recent Nielsen study of craft beverage alcohol conducted on line by Harris Poll, 35% of drinking-aged adults indicate they are more inclined to try a beer or cocktail labeled as “craft.” That figure jumps to 46% for men in the 21-to-24 age bracket. Among those who partake on a weekly basis, Millennials taste an average of 5.1 different brands per month while 15% of those reportedly try more than ten brands per month.

Millennials also love to brand their own identity. The variety of flavors and types of beer the craft-beer industry produces allows them pick a certain beer whose flavors and character are “relatable.” Another interesting aspect is that the cost of beer of mass-produced beer isn't necessarily cheap or that much cheaper than craft beer. The differences in flavors, quality and culture are drastic, yet the delta in price is small, allowing consumers to justify spending that extra dollar or two on a craft six-pack that they truly enjoy.

Driven by foodie culture and the Millennial generation, the craft-brew industry has taken off in San Diego and is expected to continue to grow its fan base. As a result, the competition is getting fierce as the beer options in the city have surged, benefiting all craft-beer fans.

GlobeSt.com: Where does the industry stand now in terms of its economic importance to this market?

Campion: San Diego County, also known as the Craft Beer Capital of America, was home to 125 licensed craft breweries as of 2016—the most of any region in the United States. In 2017, the total is estimated to grow to 143. Note that this total only includes craft breweries producing fewer than 6 million barrels per year, as classified by the Brewers Association. Adding non-craft breweries, microbreweries, regional breweries, brewpubs, tasting rooms, restaurants and breweries-in-planning to the mix, and the total count of brew industry establishments catering to beer fans exceeds 200 as of mid-2017.

San Diego-based breweries and brewpubs generated more than $851million in sales and employs 4,512 workers, according to the NUS-IPR Craft Brewing Industry 2016 update report. Ballast Point, San Diego's largest brewery with sales of 375,000 barrels per year, has been in rapid expansion mode since it was acquired by Constellation Brands for $1 billion in 2015. MillerCoors acquired a controlling share of Saint Archer Brewery, marking the first local brewery acquisition by an international corporation. Adding high-volume non-craft breweries such as these, the industry provides well over 6,200 jobs. Ballast Point's sales reached 250,219 barrels, double compared to a prior year, with more than 50% of that credited to its line of Sculpin IPAs.

Beer-related tourism is an important part of San Diego County's tourism industry. America's Finest City is described as a “beer-city destination” and ranked as the 8th top beer destination in the US by Travelocity. Stone Brewing Co., located in “one of America's early craft-beer hubs,” ranked 22nd among 50 in travel-worthy breweries around the world by USA Today in 2017.
There are also more than 10 annual beer festivals held in San Diego, bringing tens of thousands of visitors each year. San Diego breweries took home 18 medals at the Great American Beer Festival in 2016, including five medals for Karl Strauss who was named “Best Midsized Brewery.”

GlobeSt.com: Where do you see this industry heading here?
Campion: The craft-brewing industry accounts for an estimated 1.1 million square feet countywide, with the heaviest footprints in North County and District 6 in Central County, also known as “Beeramar.” Most breweries are located in industrial and retail spaces—two property types that allow for both brewing and tasting. Low vacancies and limited availability of real estate and land ranked as some of the top impediments to future growth, among other concerns such as access to capital, distribution and water management, in the local industry survey.

The overall sales numbers have been increasing at a slower rate over the last two years, giving an impression that the industry's growth has decreased. However, sales of major breweries such as Ballast Point and Saint Archer Brewery are no longer counted in craft-brew total sales due to recent acquisitions and are included in the high-volume non-craft brewery total-sales category. Consequently, while craft beer growth may be tapering off as the market continues to mature, the overall beer industry remains sound and is expected to grow, most likely at a slower rate.

As more craft breweries are added resulting in even more saturated environment, it will become more difficult to operate profitably. The best breweries will prosper, and others lacking innovation will be forced to close their doors.

San Diego is still witnessing new craft breweries opening their doors. Small, popular craft breweries have the potential to be acquired by larger brands, expediting their production and sales exponentially, as seen in the Ballast Point acquisition by Constellation Brands.

Landlord HG Fenton has opened a dedicated warehouse space throughout San Diego called a Brewery Igniter—which it states is a brewery facility, with the equipment and space needed to launch a microbrewery, reducing startup cost and risk—giving brewers the ability to sell products in as little as two months. This compares to the traditional startup facility that would take at least nine months and $500,000 to lease space, purchase and install equipment and obtain all licenses before selling a single pint. This allows for aspiring brewers to test the waters and see if their beer is well liked by fellow San Diego residents. This greatly helps to lay the brickwork for brewers and gives them the opportunity to try brewing craft beer and commit to purchasing the equipment after they know if they can be profitable or not.

GlobeSt.com: What does it take to be successful in the craft-brewing industry, particularly in markets where competition is strong?

Campion: In a highly competitive environment, craft breweries that will continue to thrive in San Diego will need to focus on innovation: creating a beer that tastes great, is unique and providing a memorable experience, emphasizing exclusivity.

People need to connect with the beer. We have seen this at Ballast Point. The Sculpin IPA was one of the first of its kind, combining a heavy 7% IPA with fruits like apricots seamlessly to produce an IPA that is flavorful, easy to drink and still an award-winning IPA beer. As stated earlier, Millennials are San Diego's and the country's biggest craft-beer consumers. A brewery will be successful if it can create a unique niche and capitalize on the popularity and support of local residents. This leads to a unique social stature, creating buzz around a brewery and therefore introducing the exclusive feeling of being there.

On top of providing great beer, breweries need to focus on the experience in addition to the beer itself. Many breweries offer bar games such as Corn Hole, Giant Jenga and themed nights like trivia night to attract groups of friends. This allows consumers to stay longer than having a single beer and order multiple rounds for the duration that they are playing the games. A lot of smaller breweries do not offer food, but promote different popular food trucks daily, creating multiple vibes to allow their beers to compliment the variety of food specifically.

Lastly, local residents will keep coming back to the brewery if they are members. Brewery-specific memberships allow fans to receive special offers, grab seasonal brews and feel special knowing they have extra benefits that the general public does not. This also adds to the exclusivity of the brewery, and beer lovers and Millennials will want in. We have seen this with Northern California's Russian River Brewing Cos.'s Pliny the Elder, which is being sold in San Diego markets as one bottle per customer. The brewery sets this regulation and decides the price, decreasing supply, which inversely increases the demand.

Pushing the envelope is necessary when the market has become saturated. For example, Stone Brewery is planning on opening a craft-beer hotel in 2018. This project is proposing a $26-million, 100,000-square-foot, 99-room hotel in Escondido, according to cntraveler.com. This hotel will have three on-site bars, and guest will be handed complementary Stone beer upon check in. This also means that room services can consist of beer orders and growler refills for your room.

Also, craft brewers are catching up on the trend of catering to consumers who prefer active outdoor lifestyles. Many craft brewers are putting their beers in cans for the first time, making it portable and easy to use for people on hikes, picnics, festivals, etc. With continued evolutions such as the above, breweries are able to raise the ceiling, allowing for continued growth and exploring new avenues in a market that has become crowded, striving to find the next unique niche for beer lovers to stand behind and support.

SAN DIEGO—San Diego County, also known as the Craft Beer Capital of America, was home to 125 licensed craft breweries as of 2016—the most of any region in the US—and it's only growing, Cushman & Wakefield's director of research for the San Diego region Jolanta Campion tells GlobeSt.com. According to a recent report from the firm, the craft-brewing industry accounts for an estimated 1.1 million square feet countywide, with the heaviest footprints in North County and District 6 in Central County, also known as “Beeramar.” We spoke with Campion about the craft-brew industry here and its importance to the San Diego economy.

GlobeSt.com: Why has the craft-brew industry taken off in San Diego?

Campion: Two key factors have driven the growing popularity of craft brew industry: foodie culture and the Millennial generation. Foodies actually think about what they are eating, what they ate last night and what they are considering eating tomorrow. Foodies go to dinner and talk about the dinner they had last week and the dinner they are going to have next week, while they are taking pictures of the dinner they are having. The more bread they break together, the more they connect to each other.

Many Millennials happen to be foodies and value connections, sharing and caring. Millennials love to try new things, explore and socialize. Craft breweries are known for offering countless options of various beers emphasizing experimentation with flavors and styles in addition to great food and entertainment.

It helps that San Diego is home to the highest concentration of Millennials in the United States at 27.3%, according to the US Census Bureau's 2015 estimates. Millennials make up 41% of the weekly beer-drinking population; they account for the lion's share of weekly craft beer drinkers or 57% nationwide. According to a recent Nielsen study of craft beverage alcohol conducted on line by Harris Poll, 35% of drinking-aged adults indicate they are more inclined to try a beer or cocktail labeled as “craft.” That figure jumps to 46% for men in the 21-to-24 age bracket. Among those who partake on a weekly basis, Millennials taste an average of 5.1 different brands per month while 15% of those reportedly try more than ten brands per month.

Millennials also love to brand their own identity. The variety of flavors and types of beer the craft-beer industry produces allows them pick a certain beer whose flavors and character are “relatable.” Another interesting aspect is that the cost of beer of mass-produced beer isn't necessarily cheap or that much cheaper than craft beer. The differences in flavors, quality and culture are drastic, yet the delta in price is small, allowing consumers to justify spending that extra dollar or two on a craft six-pack that they truly enjoy.

Driven by foodie culture and the Millennial generation, the craft-brew industry has taken off in San Diego and is expected to continue to grow its fan base. As a result, the competition is getting fierce as the beer options in the city have surged, benefiting all craft-beer fans.

GlobeSt.com: Where does the industry stand now in terms of its economic importance to this market?

Campion: San Diego County, also known as the Craft Beer Capital of America, was home to 125 licensed craft breweries as of 2016—the most of any region in the United States. In 2017, the total is estimated to grow to 143. Note that this total only includes craft breweries producing fewer than 6 million barrels per year, as classified by the Brewers Association. Adding non-craft breweries, microbreweries, regional breweries, brewpubs, tasting rooms, restaurants and breweries-in-planning to the mix, and the total count of brew industry establishments catering to beer fans exceeds 200 as of mid-2017.

San Diego-based breweries and brewpubs generated more than $851million in sales and employs 4,512 workers, according to the NUS-IPR Craft Brewing Industry 2016 update report. Ballast Point, San Diego's largest brewery with sales of 375,000 barrels per year, has been in rapid expansion mode since it was acquired by Constellation Brands for $1 billion in 2015. MillerCoors acquired a controlling share of Saint Archer Brewery, marking the first local brewery acquisition by an international corporation. Adding high-volume non-craft breweries such as these, the industry provides well over 6,200 jobs. Ballast Point's sales reached 250,219 barrels, double compared to a prior year, with more than 50% of that credited to its line of Sculpin IPAs.

Beer-related tourism is an important part of San Diego County's tourism industry. America's Finest City is described as a “beer-city destination” and ranked as the 8th top beer destination in the US by Travelocity. Stone Brewing Co., located in “one of America's early craft-beer hubs,” ranked 22nd among 50 in travel-worthy breweries around the world by USA Today in 2017.
There are also more than 10 annual beer festivals held in San Diego, bringing tens of thousands of visitors each year. San Diego breweries took home 18 medals at the Great American Beer Festival in 2016, including five medals for Karl Strauss who was named “Best Midsized Brewery.”

GlobeSt.com: Where do you see this industry heading here?
Campion: The craft-brewing industry accounts for an estimated 1.1 million square feet countywide, with the heaviest footprints in North County and District 6 in Central County, also known as “Beeramar.” Most breweries are located in industrial and retail spaces—two property types that allow for both brewing and tasting. Low vacancies and limited availability of real estate and land ranked as some of the top impediments to future growth, among other concerns such as access to capital, distribution and water management, in the local industry survey.

The overall sales numbers have been increasing at a slower rate over the last two years, giving an impression that the industry's growth has decreased. However, sales of major breweries such as Ballast Point and Saint Archer Brewery are no longer counted in craft-brew total sales due to recent acquisitions and are included in the high-volume non-craft brewery total-sales category. Consequently, while craft beer growth may be tapering off as the market continues to mature, the overall beer industry remains sound and is expected to grow, most likely at a slower rate.

As more craft breweries are added resulting in even more saturated environment, it will become more difficult to operate profitably. The best breweries will prosper, and others lacking innovation will be forced to close their doors.

San Diego is still witnessing new craft breweries opening their doors. Small, popular craft breweries have the potential to be acquired by larger brands, expediting their production and sales exponentially, as seen in the Ballast Point acquisition by Constellation Brands.

Landlord HG Fenton has opened a dedicated warehouse space throughout San Diego called a Brewery Igniter—which it states is a brewery facility, with the equipment and space needed to launch a microbrewery, reducing startup cost and risk—giving brewers the ability to sell products in as little as two months. This compares to the traditional startup facility that would take at least nine months and $500,000 to lease space, purchase and install equipment and obtain all licenses before selling a single pint. This allows for aspiring brewers to test the waters and see if their beer is well liked by fellow San Diego residents. This greatly helps to lay the brickwork for brewers and gives them the opportunity to try brewing craft beer and commit to purchasing the equipment after they know if they can be profitable or not.

GlobeSt.com: What does it take to be successful in the craft-brewing industry, particularly in markets where competition is strong?

Campion: In a highly competitive environment, craft breweries that will continue to thrive in San Diego will need to focus on innovation: creating a beer that tastes great, is unique and providing a memorable experience, emphasizing exclusivity.

People need to connect with the beer. We have seen this at Ballast Point. The Sculpin IPA was one of the first of its kind, combining a heavy 7% IPA with fruits like apricots seamlessly to produce an IPA that is flavorful, easy to drink and still an award-winning IPA beer. As stated earlier, Millennials are San Diego's and the country's biggest craft-beer consumers. A brewery will be successful if it can create a unique niche and capitalize on the popularity and support of local residents. This leads to a unique social stature, creating buzz around a brewery and therefore introducing the exclusive feeling of being there.

On top of providing great beer, breweries need to focus on the experience in addition to the beer itself. Many breweries offer bar games such as Corn Hole, Giant Jenga and themed nights like trivia night to attract groups of friends. This allows consumers to stay longer than having a single beer and order multiple rounds for the duration that they are playing the games. A lot of smaller breweries do not offer food, but promote different popular food trucks daily, creating multiple vibes to allow their beers to compliment the variety of food specifically.

Lastly, local residents will keep coming back to the brewery if they are members. Brewery-specific memberships allow fans to receive special offers, grab seasonal brews and feel special knowing they have extra benefits that the general public does not. This also adds to the exclusivity of the brewery, and beer lovers and Millennials will want in. We have seen this with Northern California's Russian River Brewing Cos.'s Pliny the Elder, which is being sold in San Diego markets as one bottle per customer. The brewery sets this regulation and decides the price, decreasing supply, which inversely increases the demand.

Pushing the envelope is necessary when the market has become saturated. For example, Stone Brewery is planning on opening a craft-beer hotel in 2018. This project is proposing a $26-million, 100,000-square-foot, 99-room hotel in Escondido, according to cntraveler.com. This hotel will have three on-site bars, and guest will be handed complementary Stone beer upon check in. This also means that room services can consist of beer orders and growler refills for your room.

Also, craft brewers are catching up on the trend of catering to consumers who prefer active outdoor lifestyles. Many craft brewers are putting their beers in cans for the first time, making it portable and easy to use for people on hikes, picnics, festivals, etc. With continued evolutions such as the above, breweries are able to raise the ceiling, allowing for continued growth and exploring new avenues in a market that has become crowded, striving to find the next unique niche for beer lovers to stand behind and support.