A tale of two breweries: Petaluma neighbors redefine the meaning of craft beer

PETALUMA — The name “Lagunitas” is on the tip of everyone’s tongues. In September, it was announced that Heineken had purchased 50 percent of the Bay Area brewing company. The deal, reached at a rumored $1 billion, is chalked up as one of the most significant in the American craft beer industry to date.

Petaluma Hills’ brewhouse and taproom on N. McDowell Avenue. (Photo: Petaluma Hills Brewing)

The Brewers Association, a not-for-profit trade association, defines craft brewing as “small, independent and traditional.” By this yardstick, Lagunitas can no longer be considered a true craft brewery. But this apparent incongruity — a company that considers itself unchanged even as it stretches out to occupy shelf space around the world — points to an evolving definition of craft brewing, one that seems to now focus on aesthetics rather than a strict style of operation.

The epitome of craft brewing

The contradiction is all the more striking when you juxtapose Lagunitas with one of its closest neighbors: Petaluma Hills Brewing Company. While Lagunitas’ Petaluma Beer Sanctuary often overflows with patrons eager to score a pint of the good stuff, an unassuming building located directly across the street serves an equally fine product, and yet sees many quieter evenings. A craft brewery by almost every standard, Petaluma Hills is small-scale, independently owned, and largely traditional in method.

After being told his beer was good enough to sell, owner and founder JJ Jay decided to do just that. A former Dreamworks Animation employee, he’s been brewing in his Petaluma space for about two years now, although his experience goes back to his experiments with homemade extract brews in the ‘90s. In fact, the homebrew kit his wife bought him still sits against the back wall of the brewery, behind the larger tanks he uses for commercial brewing and rents out to fellow North Bay brewing company HenHouse. For now, Petaluma Hills’ distribution is limited to northern California and one bar in L.A. “My plans are always driven by the demand on the beer,” Jay admits, but “it’s tough to keep a business stagnant and succeed.”

Outgrowing its roots

On the other side of North McDowell Boulevard, Lagunitas’ origins also ring familiar to any craft beer aficionado. The brewery proudly proclaims to have started on a kitchen stove in 1993. But fast-forward 22 years and the story is quite different. Since outgrowing its west Marin County roots, Lagunitas has opened spaces in both Petaluma and Chicago, and a new southern California brewery in Azusa is also in the works. Founder Tony Magee convinced Heineken to partner with his company as a means of taking his brews to Mexico and other “interesting parts of the world.” Lagunitas, already available in six countries — as opposed to the counties where you can find Petaluma Hills — is well on its way toward becoming a global powerhouse.

Lagunitas’ complex in Petaluma. (Photo: Lagunitas Brewing)

In terms of scale, the Brewer’s Association draws the craft beer line at an annual production of 6 million barrels, or roughly 3 percent of U.S. beer production. Lagunitas is nowhere near that limit at the moment, but Magee’s reference to Budweiser’s brewing capacity for scale implies the scope of Lagunitas’ vision. Magee hopes to grow from producing 160,000 to 600,000 barrels annually, but notes that the company’s potential is increasing as quickly as its production, saying, “What is possible for the business to grow into is changing.”

Redefining the rules

Petaluma Hills’ Jay says that traditional brewing trumps size in terms of defining a craft brewery. By Brewers Association guidelines, “traditional” means brewing that derives its flavor from “traditional or innovative brewing ingredients and their fermentation,” a fairly vague standard with which both Lagunitas and Petaluma Hills comply. However, Jay suggests that quality also has to take precedence over cost.

“In craft beer, you accept that you’re gonna make a slightly more expensive product, but because the quality is there,” he explains. The very term “craft brewing” implies that a certain love is poured into the product. Part of the reason Magee pursued Heineken is the bigger company’s emphasis on quality, even as they distribute on a huge scale. Quality, it seems, has begun to usurp traditionalism as a central factor in defining craft breweries.

Part of Petaluma Hills’ lineup of beers. (Photo: Petaluma Hills Brewing)

Nowadays, untraditional ingredients don’t necessarily disqualify a beer as a craft one either. Jay himself is currently working on a recipe that includes dates. The beer, Dated 1858, is named for the year Petaluma incorporated. Like almost every beer Petaluma Hills makes, it’s named after the local community. The owner’s favorite is his full-mouthed Porterluma, for example, while the Pumpkin Patch Traffic Jam Ale is sure to elicit a knowing chuckle from any North Bay resident.

Jay was hesitant to brand the brewery so heavily on its hometown, but as he points out, “Lagunitas doesn’t brand anything about themselves as Petaluma.” Although Lagunitas certainly gives back to the community, frequently participating in fundraising events for schools and other local causes (ties they plan to maintain), they refrain from community-centric branding, an adept tactic that has allowed them to market themselves globally.

Lagunitas’ helter-skelter aesthetic belies their business prowess. A Lagunitas press release, which locates the company in “Petafukinluma, Calif.”, says the Heineken partnership will “allow Lagunitas to export the exciting vibe of American craft beer globally.” Savvy decisions like retaining autonomy in their brewing practices (Magee “art directs” recipes, in addition to designing the labels and writing the company’s offbeat copy) will allow them to grow as a craft brewery without sacrificing their cheeky style or quality.

“This is a partnership in the truest sense of the word,” says Lagunitas’ Karen Hamilton. “Heineken has a great deal of respect for what Lagunitas has accomplished so far and the partnership is all about our global expansion!” The Dutch company Heineken, which claims to be “the world’s most international brewer,” is essentially there to help Lagunitas expand their points of distribution, while allowing them to continue brewing in true craft style.

The fact that another alcohol entity holds such a major share in the company is troubling for many craft beer fans, as the Brewer’s Association cites this as a no-no in terms of labeling a craft brewery. At 50 percent, the corporate ownership in Lagunitas is twice the limit for a true craft company. But according to Hamilton, “The future will not be like the past.”

Perhaps we’re about to see a real shake-up in the meaning of craft brewing.