The Capital of Craft: Innovating New Ways to Promote the San Diego Craft Beer Industry

The birth of the craft beer community in San Diego is a study in comradery, collaboration, innovation, and personality. The facets of this tightly knit industry, from its chance beginnings to its remarkably powerful presence today, weave a unique thread that can be tied to its success. Success, however, is nothing without its challenges. In 2015 the San Diego Craft Beer industry generated approximately $851M in gross annual sales, which was an increase of over $120M from the previous year. There were 114 operating breweries in 2015 yielding over 4,500 industry jobs. Over $198M were spent on beer with $117M of that being spent away from home (Appendix B, Figure 7) On average, each San Diego beer drinker spent $175 on beer in 2016 (Appendix B, Figure 11).1 There are a total of 80 cities that comprise San Diego County with an average tax rate of 8.03%. California is the 23rd least expensive in beer excise tax at $0.20 per gallon. Excise tax is the tax paid by the manufacturer of the beer. In San Diego County, approximately $9M was collected in excise tax alone. This report describes the past and current state of the growing craft beer industry in San Diego and dissects its successes and misses. The analysis addresses the fundamental nature of this success by utilizing business model tools (e.g. Porter’s Diamond Model and Five Forces of Competition) and community trends. This report lends its community information and perspective with interviews conducted with local beer professionals. Conclusions will allow us to project the future state of this industry and recommend innovations that will further focus national attention on San Diego County. We describe San Diego as a well-supported beer county that has all the facets that the industry needs, which explains why it can support the large number of breweries in the area. This analysis of the San Diego craft beer scene describes steps that can be taken to elevate the area’s notoriety beyond the realm of California. The report recommends several ideas that should steer more attention to the craft beer industry in San Diego, one of which is that the area be viewed as less of a large expansive area of beer and more in terms of pockets or neighborhoods of beer. A visitor could consider this area like the London Pub Scene, where everyone has a local beer bar to gather at. This aim will allow someone to live like a local beer enthusiast no matter where they are from. Beer is a beautiful thing alone but the industry is only as strong as its enthusiastic customers. The report analyzes every detail of the supporting industries in the county to make recommendations for this large enterprise. It is only when the environment is fully understood that the craft industry can explain why this industry is locally sustainable and how it can continue to prosper.