Post boom, Santa Cruz County craft breweries defy bust with new recipes for success

In the early 2010s, craft beer mania hit American culture like a tidal wave over a desert, seeping into a landscape previously populated by lagers and light beers made by Anheuser-Busch and MillerCoors (both of which now fall under the umbrella of mega-conglomerate AB InBev). Between 2010 and 2020, the number of craft breweries in the country soared from around 1,750 to almost 9,000. Within a few years, customers went from not knowing how to pronounce IPA – short for India pale ale, a bitter, hop-forward ale relatively new at the time – to demanding it so fervently that it became the most popular beer style at most craft breweries. 

In recent years, the industry has plateaued, and a slew of brewery closures caused some media outlets to claim that the boom has busted. But the truth, in Santa Cruz County as well as nationally, is more nuanced. 

Despite the headlines, the number of craft breweries is still growing nationally, just more slowly than the gold rush years in the early 2010s. And while the industry has lost several big names, like San Francisco centenarian Anchor Brewing, the rate of closures is still relatively low – just 3% in 2022, according to Brewers Association, an organization that tracks industry data. The leveling off represents a “more mature market” – not a death knell – and suggests that consumers still have a demand for craft beer and continue to support existing local breweries. 

That seems to be the case in Santa Cruz County’s beer industry, too. Over the past 10 years, around a half-dozen breweries closed their doors, including 9-year-old New Bohemia Brewing Co. in Pleasure Point earlier this year, but even more opened, keeping the total number hovering around 15, where it currently stands. More than half of the breweries currently operating were established five or more years ago, and several, including Santa Cruz Mountain Brewing and Discretion Brewing, have celebrated a decade or more in business. Others have expanded to multiple locations. Capitola-based Sante Adairius Rustic Ales has two taprooms in the county, and a third in Oakland. Humble Sea Brewing Company opened its first taproom in 2016 and now has six locations throughout the San Francisco Bay Area. 

New breweries are still breaking ground, too. In the past year, Watsonville Public House and Live Oak’s Balefire Brewing Company have opened their doors. In 2022, two Bay Area breweries, Laughing Monk Brewing (previously Faultline Brewing) and Gilman Brewing Co., established satellite locations in Scotts Valley and Santa Cruz, respectively, suggesting that those companies recognize a thirsty consumer base within the county. 

Nevertheless, the landscape is different than it was five years ago. Eleven-year-old Discretion, 9-year-old Humble Sea and 8-year-old Shanty Shack Brewing in Santa Cruz – one of the smallest breweries by production in the county – say that consumer preferences have changed, and being able to respond to those demands while staying true to each brewery’s ethos is the key to succeeding in today’s market. 

New preferences push brewing industry in new directions

Customers’ tastes have matured, says Frank Scott Krueger, co-owner of Humble Sea Brewing. In the early days of the boom, new beer drinkers craved assertively flavored beers like IPAs because they were the furthest thing away from the traditional American light lagers, he says. 

“Now it’s way more nuanced. The palate have been refined, and the beer has needed to be refined as well,” says Krueger. Customers are also choosing beers that complement social situations like hanging out and eating. As a result, Humble Sea is selling more lager and lighter beer styles than ever before. 

“When we started, we really wanted to focus on our lagers, but the drinker at the time wanted IPAs. They wanted all the flavor that could possibly be put in their mouth,” says Krueger. “In the early days, our production was over 90% hoppy beer. And nowadays, it’s probably 70% hoppy beer and 30% lager.” 

In that time, Humble Sea Brewing has grown from a single brewery and taproom on Swift Street in Santa Cruz’s Westside neighborhood to six locations spanning from the Santa Cruz Wharf to San Francisco’s Pier 39. Krueger credits hardworking staff members like Nate Chesser, head of brewing operations, with skillfully navigating production, which allows the brewery to operate efficiently and grow beyond Santa Cruz County, even in the face of rising costs of ingredients like grain and materials like cans.

New alternatives to craft beer like canned cocktails and hard seltzers and kombuchas have influenced the craft beer industry, and taken a bite of sales. Younger generations are drinking less alcohol in general. Both of these trends have inspired breweries to diversify their beverages options beyond their own beers in order to satisfy whoever walks through the door. 

Customers also want a different kind of experience from a neighborhood brewery, Shanty Shack Brewing co-owner Nathan Van Zandt says. “Breweries are more like entertainment venues these days. When people go out now, they want the whole package. They want bomb food, they want a show, and they want good drinks,” he says. “We need to keep our music going or else we’ll die. We’re just not busy enough without it.”

Shanty Shack hosts live music four days a week using an entertainment permit at its taproom in the Harvey West area of Santa Cruz, and lures customers in with art nights and trivia on other days. But the outdoor area where the bands play and people dance was constructed under a temporary permit given to food business during the pandemic, and converting these structures into permanent fixtures has proved a complicated process. Van Zandt dreads a future where the city will make him tear it down. 

“We need these spaces. These are vital to our business now,” he says. 

As one of the smallest breweries by output in the county, Shanty Shack is extremely sensitive to industry changes, and can’t scale production up to lower costs. But its smaller batch size allows it to brew more experimental beers, like a grassy and crisp jalapeño-flavored beer and kettle sours with different fruits, and allows it to adapt quickly to changing trends and tastes. “As people scale up, then you just have to do the hits. And if you make a beer that nobody wants to drink, you have way too much of it,” Van Zandt says. “We’re small and nimble.”

“We support the community, and the community has continued to support us.”

At a recent Craft Brewers Conference in Indianapolis, Discretion Brewing’s owners, Kathleen and Rob Genco, said the tone had shifted from previous years. “It used to be like a party. Now there’s a lot of graphs that show things going down or leveling out. It’s definitely a different time,” says Kathleen Genco. 

Despite that, since it opened in 2013, Discretion has scaled its production from around 250 barrels per year to more than 4,000 in 2023 (a barrel is equal to 31 gallons or two full-size kegs), and expanded its footprint off of 41st Avenue in Soquel from 2,000 to 9,000 square feet. The brewery has “several hundred” tap handles throughout Santa Cruz, Santa Clara and Monterey counties, but doesn’t plan on expanding much further in order to maintain the quality of its product, the Gencos say.

The Gencos feel that it’s not just the consistency of its beer or its customer service that has allowed their business to grow; Discretion’s community involvement is key to the brewery’s endurance. It supported around 80 organizations in 2023 with beer donations, often pouring it at events for free. Over the years, it has partnered with nonprofit organizations to create specialty beers, with a portion of sales benefiting that nonprofit, like the Woodland Critters beer series, now in its ninth iteration, which supports the Land Trust of Santa Cruz County. 

“We support the community, and the community has certainly continued to support us. I think that’s related. It isn’t just making good beer or having the coolest beer of the week,” says Rob Genco. 

That sense of community is something that is currently lacking within the local beer industry itself, the Gencos say. Over the years, there have been attempts to codify a local brewers guild, but efforts haven’t been consistent. In the mid-2010s, Emily Thomas at Santa Cruz Mountain Brewing organized several annual beer events, like the Twisted Tasting, last held in 2019, which rallied local brewers together. But since Thomas and co-owner Chad Brill sold Santa Cruz Mountain Brewing earlier this year and Thomas moved out of the area, the local beer industry has lost that focal point. 

“The Twisted Tasting was, I feel, a brewer community event that was really important to all of us. That was really something that brought us all together,” says Kathleen Genco. 

Despite the industry’s challenges, new breweries are still opening up. Leslie Buchanan opened Balefire Brewing in Live Oak in October, with her husband, Matt, and business partners Nate and Stephanie Murphy. People are still thirsty for craft beer, she says. After nine months, the brewery is doing much better than they thought it would at this point. 

“We figured for the first two years we would be struggling to stay in the black, and that’s not been the case,” says Buchanan. “We have a community that really wants a social gathering place. They want the neighborhood pub, and that’s what we want to be.”

They’re leaning into the community pub vibe by brewing beers with lower alcohol, and including a wide variety of less-trendy styles like red ale, amber ale and Irish stout to suit a variety of tastes. Balefire also pours traditional hand-pulled English ales through a cask system installed during the location’s early days as East Cliff Brewing Company, which gives the beer a smooth texture. Cask ales were a hard sell 10 years ago, but now customers are more adventurous, she says. 

“I’ve been surprised by how many young people in their early 20s are going for that cask-pulled ale. With the changing landscape of craft brewing, our beer drinkers are getting more sophisticated way sooner,” says Buchanan. 

Ultimately, she says that despite the industry’s changes over the past decade, the formula to attract and keep customers is the same. “If you make a good beer, and you have a place that welcomes people in and really values their customers, there’s going to be a market for you,” says Buchanan. “People want options, and I think that’s great. But beer has been around for how many thousands of years? I think we’re gonna stick around for a couple thousand more.”

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