Hermosa Brewing Company makes good beer, just not in Hermosa. Could the city someday host a new brewery?

 

The history of craft beer is being written, and then erased, every day, in multi-colored chalk. Like a Pittsburgh Steelers pennant or a rainbow flag, chalkboards have become a decoration that tells unfamiliar customers what kind of place they are entering. For a craft brewery, in which limited quantity and, for some styles, just-brewed freshness is highly prized, the fusty scratch-and-erase of the chalkboard sends the message that product availability changes so frequently as to make printed menus impractical.

The east wall of the Hermosa Brewing Company is one giant chalkboard, with cutaways for tap fixtures and a door to the kitchen. A Robi Hutas panorama on the wall facing 14th Street is the only real visual competition in the place, which is outfitted in spare black and white. Individualized tap handles are replaced with uniform black rectangles, like bars of a very dark chocolate. The effect is to discourage someone from picking a beer merely by its totem. (This too is a subtle nod to flux: who has time to unscrew a handle when there is so much swapping of kegs?) Instead, the eye migrates to the chalkboard, with its categories and alcohol-by-volume.

“This feels a lot like a taproom. I didn’t want it to feel like a restaurant that has craft beer. We are a taproom that has good food,” said brewery co-founder Dave Davis

Customers have picked up on the aesthetic. Since the place opened last month, Davis said newcomers often walk in and, as they sip their beer, crane their neck toward the kitchen, in search of brewing equipment in the tightly packed corner lot.

They will have to stretch pretty far. Despite the name, the suds of the Hermosa Brewing Co. are not made in Hermosa Beach, or even in the South Bay. Davis and co-founder Jorge Delgado are “gypsy brewers,” who make their beer at facilities elsewhere in the region.

Davis and Delgado, both South Bay residents, say that not owning industrial brewing equipment has not diminished the quality of their offering, and initial reviews of both the beer and the food have been highly positive. Their journey reveals some of the many complications and peculiarities of craft brewing as a business and highlights regulatory issues that cities in the South Bay, and the rest of the country, may encounter as customer habits and preferences shift.

“We’re hands on. We’re brewers. We just want to bring beer to the places people live,” Davis said.

‘Intemperance and disorderly marketing’

Google “Tom Bates” and you are most likely to find two things:  In 2002, as the mayor of the city of Berkeley, he pilfered hundreds of copies of The Daily Californian, the independent student newspaper of UC Berkeley, after the publication endorsed his opponent Shirley Dean in the mayoral race; and 20 years prior, Bates, then a state legislator representing the East Bay, introduced AB 3610.

At the time, California had “tied house” laws prohibiting brewers from selling directly to the public. AB 3610 lifted this prohibition if a restaurant were also included on the premises.

“In the early 1960s, I spent time in Germany as an officer in the U.S. Army. When I got home, I realized you couldn’t get a good beer in the United States. When a group of entrepreneurs and beer enthusiasts approach me about changing state law to provide a market for smaller, craft breweries, I jumped at the opportunity. I am amazed to see the wonderful legacy of this legislation,” Bates said in 2007, prior to a ceremony honoring the bill’s 25th anniversary. (He survived the newspaper incident, and served as Berkeley’s mayor through 2016.)

Prior to AB 3610, California was one of 49 U.S. states that prohibited breweries from selling directly to customers. And as with so many other trends, the rest of the nation followed California.

But other aspects of “tied house” legislation persist, many of which were ironically intended to prevent domination by large alcohol manufacturers.

In the years leading up to Prohibition, many urban taverns had contractual associations with breweries. After Prohibition ended following the passage of the 21st Amendment, legislators decided to create legal boundaries separating the manufacturing, distribution, and sale of alcohol. The idea was to prevent powerful brewers and distillers from saturating neighborhoods in beer and booze. A 1971 California Supreme Court decision upholding the separation characterized the laws as seeking to “forestall the generation of such evils as intemperance and disorderly marketing conditions” that supposedly inspired the country’s 13-year alcohol ban.

Historians debate the extent to which Prohibition was actually motivated by concern over public drunkenness — as opposed to, say, hostility toward tippling immigrants  — but the post-Prohibition separation was definitely not successful in curtailing the reach of large breweries. In the 19th century, there were upwards of 4,000 breweries in the United States. Limitations in refrigeration and transportation technology meant that almost all of them were “craft” long before the term was applied to beer. About 700 returned after Prohibition. In the years before AB 3610, there were only 40 total breweries left in the country.

Today, craft beer represents a far larger and growing share of the overall beer market. Nationally, craft beer constitutes 12.3 percent of the beer market by volume, and almost 22 percent of sales, according to the Brewers Association, a national trade organization. And while nationally sales of beer are flat overall, craft beer grew by 6.2 percent in 2016. In California, the embrace has been even more dramatic: 92 percent of the state’s residents live within 10 miles of a brewery, according to the California Craft Brewers Association.

Gypsy soul

Davis and Delgado entered this market years ago as fans of beer. Their early experiments in home brewing began with a conversation among Davis, Delgado and their spouses. They liked to get together and have a few beers, but Delgado’s wife was not a fan of IPAs, especially the aggressively hopped, higher-alcohol variety that has become known as the “West Coast” style, which often dominates taproom offerings.

“She’d want to leave as soon as we got together,” Davis said with a laugh.

With this in mind, Davis and Delgado decided to tackle the pilsner, a segment of the suds market that has been historically neglected by craft brewers. It was not a simple starting place because the easy-to-drink lagers are often bedeviling to brew. But they learned more and more about the brewing process and developed about 30 recipes over the course of several years. It eventually became an “expensive hobby,” and they wanted to see how their brews stood up to the test of commerce.

Today, the Hermosa Avenue taproom offers a range of styles, including both the easier drinking and the double IPA variety. When curious customers start looking for the fermentation tanks, Davis or Delgado unspool the story about gypsy brewing.

They rely on two facilities, one in Carlsbad, the other in Westlake Village. Both breweries, Davis said, have been open less than a year and have excess capacity. They settled on the breweries after an exhaustive search.

“Is there a supply chain for people like us who want to do five or six barrels at a time? I can’t just look in a directory, I’ve got to build the relationships. Do we have like minds in our approach to beer? Do we have like minds about the brewing process?” Davis said.

Jessica Jones, a Manhattan Beach native, and Mira Costa alumnus, spent a decade in the craft beer industry, working for Firestone Walk and Ninkasi. She said that relying on equipment owned by other brewers developed something a bad reputation during the craft beer boom and that there are some in the industry who view the term “gypsy” as merely a hip rebranding of the more corporate-sounding “contract” brewing.

But Jones, who now lives in Oregon and runs a farm-to-jar honey business, said there is a big difference between contract brewers who send out a recipe and await the kegs, and the gypsies who are involved in the brewing process. The former are essentially purchasing finished beer, she said, while the latter are sharing only equipment. And as long as the equipment is taken care of and all of the brewers are attentive, sharing can provide economic advantages without compromising quality, especially in regions where the rush of recent years has created excess brewing capacity.

“It makes sense. A medium to large craft brewing operation will run six or seven days per week. But a smaller operation might only brew a couple days a week,” she said.

Davis said he and Delgado are constantly traveling to the breweries to monitor and tweak the process. Along with assuring quality, it represents the reason he got into brewing in the first place.

“I’m not interested in sending a recipe off to some place and waiting for kegs to show up,” he said.

Brewed in Hermosa

The banner at the top of the website for the Dudes’ Brewing Co. features a classic Hermosa Beach sunset, with waves crashing on the shore and the fading light split among the Hermosa pier’s characteristic triple pilings. But click on “locations,” and Hermosa is nowhere to be found. The brewery is based in Torrance and has three other taprooms throughout Southern California. A fifth, in Santa Monica, is expected soon.

The image of Hermosa is a legacy of the brewery’s roots, and part of an earlier attempt to get craft beer into the South Bay. The South Bay in recent years has become one of the centers of craft brewing in Southern California, but the charge has been not been led by Hermosa. Hop Saint and King Harbor Brewing Co. have taken up residence in Redondo Beach. Breweries like Dudes, Strand, Monkish, Smog City, and Absolution have all set up shop in Torrance. And the El Segundo Brewing Co. has begun to rack up awards north of Rosecrans.

This was not the case a generation earlier. Hermosa was among the first places in the state to take advantage of the new opportunities in craft brewing created by AB 3610. In the summer of 1993, Hamilton Gregg Brewworks opened on 11th Street near the Strand, in the former Gas Company building, which now houses a private equity and real estate investment firm. News accounts at the time described it as among the first places in the nation where customers could brew their own beer. Brewski’s, a brewpub on Pier Avenue, where Mediterraneo now sits, opened in the mid-‘90s.

Jeff Parker, a co-founder of Dudes’, worked at both places. In 2010, he sought to open a brewery at 618 Cypress Avenue. The Hermosa native sought to brew about 3,000 barrels per year and sell it wholesale.

“It’s my dream to open a brewery in Hermosa. I want to get my foot in the door, and eventually open up a plant. But I can put on my label ‘Brewed in Hermosa Beach,’” he told the City Council.

The dream, though, went nowhere. Microbreweries did not appear anywhere in the city’s code at the time, and council members voted 3-2 to send the proposal to the Planning Commission, citing concerns about impacts on nearby residents. Then Councilmember Kit Bobko characterized the decision as short-sighted and said that it was emblematic of both an anti-business attitude and a reflexive fear of anything having to do with alcohol.

“I know that all of you know that as soon as we send him to the Planning Commission we are sentencing him to a slow and lingering death,” Bobko said.

Dudes’ set its sights on Torrance. Today the only functioning brewery in Hermosa is Abigaile on Manhattan Avenue, which began life as Einstein’s in the same ‘90s brewpub wave that Brewski’s rode.

“Brewpubs” exist in a different segment of California law than microbreweries. Under California Alcoholic Beverage Control regulations, a brewpub must brew more than 100 but fewer than 5,000 barrels of beer per year. Well-regarded breweries quickly grow north of this limitation: 2016 projections for El Segundo, Strand and Dudes were 6,000, 7,000 and 10,000 barrels, respectively; all three are classified as “small beer manufacturers.” And critically, under the law, brewpubs have a “privilege” to brew beer, not a license, and are not authorized to sell their products for consumption off the premises.

The result is that it can be harder to attract talented brewers to brewpubs. Craft beer connoisseurship is easy to mock, but the dedication of so-called beer geeks does make things easier to quantify. On Beer Advocate, one of the largest craft beer websites, El Segundo, Smog City and Monkish all have more than 2,200 ratings. The Brewery at Abigaile has 65.

Accessory to production

Hermosa Beach Councilmember Hany Fangary first met Davis and Delgado at an iconic South Bay event: the annual Hey Turkey Day celebration, held each year the night before Thanksgiving. In 2016, the event took place at the Hermosa Design warehouse on Cypress Avenue, the very building that Parker had proposed for Dudes.

Hey, Turkey was one of several events, along with Leadership Hermosa’s Market 90254 and the Manhattan Beach Education Foundation’s Wine Auction, that Davis and Delgado used to stir an interest in their product before establishing a physical operation. They had coffee with Fangary and asked questions about applying. They, too, initially sought to begin with a brewery on Cypress.

Following the defeat of Parker’s proposal, the city updated its zoning code to account for microbreweries. Annual capacity is limited to 4,000 barrels. “Retails sales of any type,” on or off premises, are prohibited. And they are allowed only in light manufacturing areas, a designation that applies almost exclusively to the area surrounding Cypress.

Today, the Hermosa Design building that hosted the Hey Turkey event is home to Resin art gallery, part of the ongoing evolution of the light-industrial district. Last summer, during discussions over updates to the city’s General Plan, councilmembers focused on zoning in the area. They ultimately voted to leave it unchanged but probed the meaning of retail “accessory” to primary production, which is currently allowed. Several council members asked about the possibility of a microbrewery selling its products for off-site consumption. Councilmember Jeff Duclos, the only member of the council who was present for the vote on the Dudes’ proposal, asked about a tasting room.

“The concept of someone being able to sell what they’re making there, that’s what we’re talking about,” said environmental analyst Leeanne Singleton, cracking a smile at the introduction of a potential controversy. “The specifics of that we’d get into in the zoning.”

It is not clear how even off-site sales would be consistent with the code’s flat prohibition for microbreweries. In an interview, Singleton said the city was in the midst of reconciling the zoning code and the General Plan, a process that would likely take upwards of a year.

“Some stuff may come up quicker, other things may take longer. For example, parking requirements. That’s something we’re working on but will require quite a bit of community engagement. Other things will be a bit more straightforward,” she said.

Meanwhile, Davis abandoned the permanent facility plan. He estimated that it would require an outlay of as much as $1 million in the first year and that there was not enough certainty to make the investment.

“The city was very encouraging, but it would have been a risk to try and get the Conditional Use Permit. We could spend nine months waiting just to find that we did not get one,” Davis said.

Davis and Delgado continue to stand by the quality of their product and are currently in the process of vetting a third source for their beer. But they recognize that not owning their equipment leaves them at the mercy of other brewers: an increase in demand for their host could block out time and space they relied on.

There are also benefits that come with being able to sell beer right where it is brewed. According to Bart Watson, chief economist for the Brewers Association, off-premise craft beer consumption declined 2 percent in 2017, and drafts, typically a stand-in for on-premise sales, registered their highest market share in 20 years. A New York Times story last year on gypsy brewers said that since 2010, on-premise sales for breweries have increased by 500 percent, and noted that many were now investing in production facilities.

Davis and Delgado’s plan is to use the Hermosa storefront to build an audience before investing in a plant.

“The traditional method is to find a cheap warehouse and start an operation. If all goes well, your taproom will get you a limited distribution deal, then eventually into retail. We decided to put the puzzle together differently,” Davis said.

Their “ultimate wish” he said, would be to build a production facility in downtown Hermosa, combining the accessibility of a downtown area with the lure and proximity of a production facility. It’s a combination that is common in other states and even in other parts of California like San Diego. Hermosa Beach and much of Los Angeles County, Davis said, still have some catching up to do.

“No matter how good your beer is, you still have to get people there,” he said.

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