California's governor just signed a bill that relaxes regulations on San Diego's brewery tasting rooms. Will this change the brew landscape in San Diego?

California just passed Assembly Bill 1014, which exempts brewery tasting rooms from potentially costly food facility requirements. How will this affect the local beer scene in San Diego?

GUESTS

Mike Hess, Owner, Hess Brewing

Steve Wagner, President and Brewmaster, Stone Brewing Co.,

President, California Small Brewers Association (CSBA)

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Transcript Disclaimer This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

FUDGE: I'm Tom Fudge, you're listening to Midday Edition on KPBS. Breweries aren't just places where you make beer. At least that's not all that San Diego brewers imagine them to be. The local beer lobby found a solution along with the help of assemblyman Nathan fletcher. This year the legislature passed AB1014 which makes it easier to have a brewery tasting room. We're going to wrap up this midday today by talking about the way the San Diego beer industry has been growing and changing. Joining me in studio to talk about that are Mike Hess. Mike is the owner of Hess brewing company. And Mike, thank you.



HESS: Thank you.



FUDGE: Also joining me is Steve Wagner, he's president of the California small brewers' association, and he's president and cofounder of Stone Brewing Company. Thanks to you.

WAGNER: Thanks for having us.



FUDGE: And listeners, of course accident if you want to talk beer, the number to call is 1-888-895-5727. 1-888-895-KPBS. Well, Mike, you were one of the forces behind this bill. Can you tell us why you pursued it?



HESS: Sure, we pursued it buzz of the need to get the legislation written. We tried to open up the tasting room a little over a year ago and ran into all the obstacles with the department of health. And for a small business owner, and from the scale and size of our operation, we're the smallest production brewery here in San Diego. We needed to have a tasting room in order to make the business viable. And the financial burden that the department of health of placing on us, would have precluded us from being able to open at all.



FUDGE: When you talk with people about a tasting room, it may seem like it's not a big deal. You come by the brewery and you may want a little taste of beer. But you seem it say, Mike, that this is a money making operation; it's important to your business.



HESS: That's right. And that's in fact the only way that we sell the beer we produce at Hess is through the tasting room. Selling of keg sales to on premise sites and accounts like that just doesn't make sense for the size of our operation. So we needed to have the tasting room to make the business work.

FUDGE: I don't know if I'm going to get in trouble saying this, but is a tastes room like a bar?



HESS: It is similar to a bar, but there are a new caveats. We don't have any chairs. So you can't sit down. Can't have any table cams. So out goes the pool and the darts. But other than that, it's similar.



FUDGE: But with Hess Brewing Company, that's where you sell your beer.



HESS: That's right. 100% of our sales may be with just a couple of kegs exceptions, we've sold all the beer that we've made at the tasting room.



FUDGE: Steve, let me go to you, what do you think about this new law, and what do you think about tasting rooms?



WAGNER: I think it's like Mike said, tasting rooms are extremely important for small brewers starting out. That is how people get to sample their beer, buy it, take it home, try it, and develop a taste for it. So it's really a crucial part of growing a small business. And this bill actually gave the small brewers equivalent rights to what we wine makers have enjoyed for 16 to 17†years now.



FUDGE: It's possible that people outside the beer industry didn't really understand what a tasting room was, but as you said that this has been the case for wine tasting rooms for a long time, that they were considered to be important, that they didn't need to be subject to all the regulations and so Mike, is that the way you got this through the legislature? Hey, it's just like a wine tasting room.



HESS: That was definitely the premise for our argument. So when we went to the department of health, essentially, and showed them our plans to comply with their standards and essentially the guy said you're still not there yet. And I could tell just from the requirements this was going to be a 20 to $25,000 modification, I said either that guy is wrong and we're going to be okay or that guy's right, and we're not going to do this business. And I told the guy at the meeting, I said I don't think anybody else in town is meeting these requirements. And that's when they went out, and shut down all the tasting rooms in San Diego. What came out of that, the good thing that came out of that, was that Tommy Arthur on his blog mentioned that the wine industry had the exception that we were looking for. And so I took that and ran with it, called Nathan Fletcher's office, and got the process under way.



FUDGE: All right. So in the end, was this fairly noncontroversial with the state?



HESS: As I understand it, that it went through a unanimously, and without any much pushback. Small exceptions.



WAGNER: Assembly Wes Chesboro who's a Democrat as well coauthored the bill. So there was bipartisan support for it.



FUDGE: Bipartisan support for beer. We're talking about beer during this last part of midday, if you want to talk about really any subject relates to local brewing here in San Diego, give us a call at 1-888-895-5727. Steve, your company is not a small brewer. Well, are if you compare it to some companies, I guess you are small.

WAGNER: Sure.



FUDGE: But compared to small companies in San Diego, you're pretty big. But does the tasting room issue also affect you?



WAGNER: Well, you know, the interesting thing about this issue is that when we started Stone 15†years ago, we opened our tasting room and we didn't have any issues with the health department. We understood that they had no jurisdiction over us, really. That was our understanding of the situation, that we were regulated by the ABC, the California alcoholic beverage control and the ATF at that time. So we went through our licensing with them, and everything was fine. And this is only recently come on the radar that the health department is, I think as San Diego breweries in general have come under the radar in general, that's a good thing and a bad thing.



FUDGE: You had the advantage of being small enough that nobody was paying attention to you.

WAGNER: That could be. For one reason or another, they didn't pay attention to us about that. Then when we moved into our new brewery five years ago, our restaurant was part it. And with restaurant, there's a health concern that you want those things regulated because food is a different thing. Beer, because of the low alcohol content, because of the low PH, pathogens can't live in beer. They're not going to cause somebody to get sick.



FUDGE: How many breweries are in San Diego?



WAGNER: Oh, gosh. I think there's over 30 now.



HESS: There's about 37.



WAGNER: That's today, check again tomorrow.



FUDGE: My colleague here told me that San Diego took home 17 meddles at the 2010 great American brew festival. Who can put that into context for me? First of all, 17 medals, was that a lot?



WAGNER: That was a lot. That was for San Diego alone, right? Which was more than most states took home. There's only a couple states that took him more than that.



FUDGE: I've heard from many people that San Diego has really become a center for microbrewing. Mike, why is that? What is it about San Diego? Does it just so happen that there are a lot of people who live here who are really into beer?



HESS: Well, that's certainly the case. And there's a lot of great breweries here. And I think that's kind of fed on each other. The tourism industry coming to San Diego for craft beer causes other great brewers to want to live and work here in San Diego and make and produce a product that's world class and that's what we're seeing.



FUDGE: I've heard San Diego referred to as a beer destination. Am now, a beer destination, does that mean that tourists come here?



HESS: Absolutely.



FUDGE: Just to drink the beer.

WAGNER: Yeah.



HESS: Absolutely. There's at least two companies in town that do beer tours of the breweries. . That's their sole business, they drive people around and take them on brew pee tours.

FUDGE: Two companies that just do that. That's fascinating. I'd like to take a call here. Let's take a call from Josh who is in Jamul, and Jamul might be a beer capital as well. I don't know. Josh, go ahead.



NEW SPEAKER: I certainly enjoy it. It gets warm out here. I want to say thanks to all the local craft brewers. San Diego is in fact in my opinion a world mecca for fine craft ales. I've travelled all over the world and all over the states, and I keep coming back to San Diego as one of the best places for beer there is, especially our quote unquote west coast IPAs. I'm a hop head and you guys keep me very happy. So thank you.

WAGNER: All right. You're welcome.



NEW SPEAKER: One quick question regarding the tasting rooming. I know that Ballast Point has recently opened up a distillery, and I'm wondering because it's spirits if it's at all affected by the tasting room kind of laws or if you could even speak to that since they're not on today. And then lastly, it's more of a plug/question. And that's as an avid outdoor recreationalist, we would love to take your products into multiple environments but some of which glass is not appropriate. And there's a lot of breweries, especially in river communities, Idaho, Montana, Wyoming, that are starting to explore canning. And they basically have been very pleasantly surprised. They can't keep the things on the shelf. And they're trying to dispel the myth of good beer is only found in 22†bottles. I was wondering if you could speak it that as well.



FUDGE: All right! Good questions. He raises the issue of canning. Who has an opinion on that? Let's see. Mike.



HESS: Yeah, either one of us. We're -- our plans are to be the first San Diego craft brewer to go to cans. So we've been actively working on that. We may get beat out. But if not first, we'll be second. We definitely agree with the caller that canning is where it should be because of those reasons. The outdoor packaging, etc. And Colorado and other big states also can their products.



FUDGE: Steve Wagner, what do you think about canned beer?

WAGNER: I think cans are good for a number of reasons. You can take them other place, but also the environmental carbon footprint reasons. They're a lot lighter than shipping glass all over the place. At stone, we're very conscious of our environmental footprint. So I would never say that we'll never do cans. I think it'll be in our future at some time.



FUDGE: Beer drinkers and wine drinkers I guess all have their prejudices. There's some wine drinkers that think that a bottle has to have a cork in it as opposed to a screw top. Are there beer drinkers who insist that beer just doesn't taste good if it's in a can?



WAGNER: I think there are beer drinkers who will only drink beer with a cork in it as well.

FUDGE: I haven't met any of them.



WAGNER: I know a lot of them. But I think it's a perception that's changing as well. And I think the glass bottle has always been sort of a sign of a certain quality. But in fact I think the beer out of a can can be just good.

HESS: And I think it depends a lot on what state and where you're coming at it from, if you look again in Colorado, there's 24, 25 breweries that can their beers, more and more coming online every day. And the fact that nobody here in San Diego does I think is maybe just more of a testament to the fact that everybody already owns a bottling line. And one of the things that we have as a new start up, we're not going to have that capital sunk into the bottling line. We're going to go to the can.

FUDGE: Johnny, go ahead, you're on midday.



NEW SPEAKER: I just wanted to comment on Stone ten years ago, when they were in the old port building, that was the basis of getting to know real beer. Just being able to go in there and taste a full flavored beer and get to know the founders and the makers of the beer at Stone being able to talk to them about it. Without that, it's just another bottle on a shelf. Also a question, what are plans for Stone to do more getting across the globe? I know you're going to Germany, and I've heard things about Northpark filling station. Anything on that?



WAGNER: Well, this is Steven again. I haven't heard anything about the Northpark filling station. So I need to find out more about that.



FUDGE: That's news to you?



WAGNER: Yeah. But we are trying to establish a brewery in Europe. There's a lot of interest in American craft beers over there. We do a limited amount of export, but rather than ship our beers halfway around the world, which is not a great way to do it, both for freshness and for the environment, we would like to establish a small brewery over there and start producing beer there to serve European markets.

FUDGE: When I was a high school kid, I was an exchange student in Germany, and at the end of our senior year, I travelled around with a bunch of American kids, and we visited a brewery in Germany, and they had a tasting room, and we all got to go to the tasting am radio, and we had quite a bit. As a matter of fact, the guy who ran the place said that's okay, we need empty kegs. So keep going. So that was a lot of fun. But opening a brewery in Europe, I mean, kind of the land of beer? That's -- you think you can make that a going concern?



WAGNER: We think we can. Germany, for instance, that Johnny mentioned, it's the land of beer. But it's -- permanently, I like German beers a lot, but they are very much the same throughout Germany. They make certain styles of beer, and they're very good at it. But people are interested in a little more variety these days.



FUDGE: Before we run out of time, one thing I always like to ask when I talk with beer peer people is what are the trends? Mike, what are some of the kind kinds of beers that are popular? Are there any new ones on the horizon? Looking at San Diego?



HESS: Well, that's a good question. Probably Steve is better equipped to answer that since he's got many more years experience in the industry. But for us, we're always experimenting with styles. I think one thing about Hess brew is we're not style specific. We're a style bending brewery, and we push the limits out on the beers we do make. So we're still experimenting with the hobby beers. We make an 11.3% imperial San Diego pale, and it's one of our most popular beers. We sell a ton of it. It's definitely an interesting industry for sure.



FUDGE: Steve? Any last word from you?



WAGNER: Let's see, trends? I think the future is extremely rosy for craft beer right now, even with all these new breweries starting up, we're still barely over five% of the domestic beer market. A lot of people think we could get to 10% very quickly the way things are going. So I think it's -- I welcome all the new brewers coming in, all the new beer styles, and I think that's an important part of craft beer, the variety and the important and the selection.

FUDGE: Steve Wagner is president of the California small brewers association. He is with Stone Brewing Company. Mike Hess is owner of Hess brewing company. Thanks very much to them.

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