San Diego The sale of San Diego-based Green Flash Brewing Co. may have come as a surprise to local craft beer consumers, but industry experts say it holds lessons for other brewers in understanding market forces and the complexities of expansion.
Following multiple years of 30 percent growth, Green Flash was sold to an investor group in early April after it discontinued East Coast distribution and closed its Virginia Beach facility. The sale also included its sister company, Alpine Beer Co.. In a statement, Green Flash indicated it was downsizing due to complications in bicoastal operations.
The region’s craft beer industry growth is still robust despite increased competition in the market. San Diego based breweries and brewpubs generated sales of $726.6 million, $734.7 million and $851 million in 2014, 2015 and 2016 respectively, according to the National University System Institute for Policy Research’s (NUSIPR) San Diego Craft Brewing Industry 2016 update.
Recipe for Success
Vince Vasquez, an independent industry analyst affiliated with National University, said the sale shows the industry what can and can’t work in terms of expansion. For some San Diego breweries, the key for expansion success is knowing your audience, finding a way to make product fresh, and not making more than what is demanded.
Vasquez said the Green Flash sale is not indicative of a larger trend but he believes that because of the increased competitiveness of the industry, breweries need to adopt more calculated strategies for expansion.
For example, introducing beers relevant to consumers is important for those breweries wishing to expand. The West Coast style and hazy IPAs that Green Flash championed didn’t sit well with East Coast audiences, Vasquez said.
“Really the relevance of that kind of style of beer, for what it’s worth, is relegated to Southern California,” said Vasquez.
He also believes the price point of Green Flash beers and the fact there is less consumption of craft beer in other states might have also contributed to the company’s consolidation and sale.
Green Flash did not name the investor group in a news release. However, according to a California Department of Alcoholic Beverage Control filing, WC IPA LLC is named as the owner of Alpine Beer’s license. Green Flash founder Mike Hinkley is named vice president of WC IPA LLC on this license. Richard Alan Lobo is named as president.
With 40 percent to 45 percent of San Diego’s beer market dominated by craft, the demand remains great but still crowded, according to Vasquez. In order to succeed, he suggests brewers focus on tasting room experiences that are close by to where people live.