Could a Drought End California’s Craft Beer Dominance?

Pedestrians walk by the Bear Republic Brewery in Healdsburg, California. Sonoma County breweries Lagunitas and Bear Republic rely on water from the Russian River and are worried that the low water levels will force them to seek water from other sources.
Pedestrians walk by the Bear Republic Brewery in Healdsburg, California. Sonoma County breweries Lagunitas and Bear Republic rely on water from the Russian River and are worried that the low water levels will force them to seek water from other sources. Justin Sullivan / Getty Images

In 2015, Bear Republic Brewing is cutting off Massachusetts. The decision comes as the California-based craft brewery, best known for its Racer 5 IPA, struggles to satisfy surging demand amid a historic drought. In announcing the news, CEO Richard Norgrove noted that pulling out of Massachusetts would help the company adjust to "California's dwindling water supply."

In the past year and half, Bear Republic, located about 90 miles north of San Francisco in drought-stricken Cloverdale, has pulled out of 19 different territories and invested nearly half a million dollars through a public-private partnership with the city government in two new wells. "Those two wells came online in July and we have yet to see a drop from them," says Norgrove.

Bear Republic isn't alone. A growing number of Californian brewers are modifying business plans, overhauling production processes, and trying to squeeze the most from every drop of water as the drought enters its fourth year. Approximately 60 percent of California is now experiencing "exceptional drought," the most severe classification, and 2014 is poised to unseat 2013 as the driest year on record.

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None of that bodes wells for water-intensive brewers. On average, it takes four gallons of water to brew one gallon of beer, and that ratio could be as high as seven to one. Then there's the water needed for day-to-day operations and sanitation, not to mention spillage along the production line. Add in the water consumed by hops and barley crops (most commonly grown out of state in the pacific northwest and upper Midwest, respectively), and you have a good idea of why brewers are worried.

Despite the desiccation, California's craft beer scene is booming and has earned a reputation among discerning drinkers across the country. Between San Diego and Eureka, there are nearly 500 operations churning out potent porters and astounding ales, generating roughly $5.5 billion in economic activity. Brands like Lagunitas and Anchor Brewing are national staples nowadays, while smaller shops like Stone and 21st Amendment are appearing on a growing number of beer lists.

Norgrove says Bear Republic was growing 30 to 40 percent a year; even with the drought and reduced distribution he projects 12 to 15 percent growth in 2015. Such growth requires loads of water, however. The brewery used 8 million gallons in 2013. To keep up with demand, Bear Republic will need 17.5 million gallons of water per year by the end of 2016.

"California is never going to run out of water, but it is going to run out of cheap water," says Tom McCormick, executive director of the California Craft Brewers Association. Over the past decade, Californian brewers have faced a plethora of challenges, from a shortage of hops to a shortage of glass for bottling. Very few people paid attention to how the industry grew in the face of these struggles, but the drought has drawn an exceptional amount of public interest, McCormick says.

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While brewing is water intensive, it's important to put in perspective how much California's craft brewers consume as a whole. To this end McCormick points to a presentation from November's California Craft Beer Conference by Jeffrey Mount, senior fellow at the Public Policy Institute of California, who estimated that in 4.4 hours, metropolitan Los Angeles uses the same amount of water as the entire Californian craft brewing industry uses in an entire year. (These numbers haven't been peer-reviewed and should be considered back-of-the-envelope calculations, McCormick notes.)

"We have for decades paid close attention to water usage, and we have taken many steps to reduce consumption. We've done everything from automating brewing and cleaning processes to the $3 fixes of making sure there's a nozzle on every hose," says Cheri Chastain, sustainability manager at Sierra Nevada. The iconic-IPA brewer is based in Chico, which is fortunate to rely on groundwater (rather than surface water, which depends on rain and snow) and hasn't been as hard hit by the drought. Still, water scarcity played a significant role in the company's decision to open its second brewery in North Carolina. "Shipping beer from the west coast to the east is expensive and environmentally damaging, and water availability and water quality are incredibly important," Chastain says. "Building a brewery on the east coast made the most sense."

Economies of scale also play a big role in water consumption — the bigger brewers that push a million barrels a year can come in below that 4:1 water-to-beer ratio somewhat easily. For a brewpub whose output is significantly less, the ratio can tip 7:1. Not every brewery has the resources or need to expand with an east coast facility, but they're all investing in water-saving measures.

Lagunitas, whose notable offerings include Brown Shugga and Lagunitas Sucks, is investing in a water treatment and re-use project that will "polish all liquid waste to the point where we can re-use it on site for different cleaning/non-product processes," according to company spokeswoman Noelle Haley. When all is said and done, Lagunitas is hoping to go from using four gallons of water per gallon of beer to two and a quarter gallons of water.

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"Obviously this drought has been a wakeup call for our industry and we want to look at long-term ways to mitigate future droughts," McCormick, the industry rep, says. "If we have another dry winter, the whole state is going to be in a lot more trouble. We're all crossing our fingers and toes in hopes that we'll have a big winter."

Unfortunately the National Oceanic and Atmospheric Administration says "complete drought recovery in California this winter is highly unlikely," and that it expects the drought to "persist or intensify" throughout parts of the state during 2015.

The pessimist in Norgrove, CEO of Bear Republic, says it's likely the brewery won't ship to Massachusetts at all in 2015, maybe longer. If, however, the winter is wet and the tiny city of Cloverdale bounces back, the Bear Republic ban could be short lived. "We shall return," he says.

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