Brewing trouble?

One of Soda Bar owner Adam Cook’s bartenders faced a bit of a dilemma a couple of weeks ago. The City Heights bar was hosting a party, and among the list of beers requested was the popular British ale Newcastle. But Cook had recently made the decision to pull Newcastle from Soda Bar’s taps. So the bartender suggested the guests try Downtown Brown, an ale similar to Newcastle that’s produced by Lost Coast, a Northern California micro brewery that’s been around for 20 years.

“And they’re like, ‘Oh, this is better,’” Cook said. “And they ordered three or four the whole night and didn’t complain about it.”

Cook’s a fan of craft beers, and he’s included several among the 20 handles each at Soda Bar and North Park’s Bluefoot, which he also owns. But he’s a businessman, too. For every customer who’s fine with, say, Downtown Brown instead of Newcastle, another customer might choose to go elsewhere. The decision to replace Newcastle—and a handful of other bigger-name beers—probably wouldn’t have happened, Cook said, if he didn’t feel like he had to do it.
Until about a year ago, there were three major beer distributors in San Diego County: Mesa, Crest and Anheuser Busch. Mesa, which distributed Miller beers, and Crest, which handled the Coors line, were homegrown businesses. Mesa, especially, had close ties to the community. The company’s owner, Ron Fowler, grew it into the ninth largest beer distributor in the nation. Fowler was a founding member of the San Diego International Sports Council, started a college scholarship for San Diego high-school students and owned the San Diego Sockers. In 2005, San Diego State University gave him an honorary doctorate for his service to the community.

Then, in March 2008, Fowler sold Mesa to Reyes Holdings, an international wholesale food and beverage distributor. Based outside of Chicago, Reyes Holdings made its fortune distributing for McDonalds and last year ranked No. 26 in Forbes magazine’s list of the largest private companies in the U.S.

“They came in as a stronghold,” Cook said of Reyes. For starters, Cook was told that deliveries would be scaled back from two days to one. Other bar owners CityBeat talked to for this story said that after Reyes purchased Mesa, the company’s customer service, especially in dealing with smaller bars, dropped off.

On June 14, Reyes Holdings announced that Mesa and Crest were merging into Crest LLC. Shortly after, Cook got a call from a new sales rep telling him to choose between Tuesday and Friday for delivery of all his Miller and Coors products.

“You just physically can’t take X-number of barrels and boxes on one given day that you used to get in two days,” Cook said. The storage room was so packed, his staff was climbing over kegs to get to basic supplies.

Steven Sourapas, CEO of Crest LLC, said in an e-mail to CityBeat that the company was working to consolidate deliveries to “reduce roadway congestion and carbon emissions in San Diego.”

Cook said he was told that the single-day delivery was something the company was trying out—it’s the same thing he’d been told shortly after Reyes Holdings bought Mesa. Later, he was told that a computer glitch was to blame and he’d be getting his second delivery day back after July 4.

Meanwhile, Cook has been switching out some of his taps, replacing a few Coors and Miller products with beers from smaller breweries, like Lost Coast, and smaller distributors, like Wine Warehouse. He put up signs in Soda Bar and Bluefoot explaining to customers why their favorite brand-name beer might no longer be on tap and urging them to try a craft beer instead.

“In nearly four years of owning bars, I’ve never played hardball,” he said.

CityBeat spoke with several bar owners about the merger. Some had no complaints, saying they preferred dealing with one distributor instead of two. But the majority, like Cook, felt that a little too much Reyes was being injected into Crest.

“Crest used to have a really awesome personal touch,” said Sean Cute, owner of Hillcrest bar Ruby Room. But the Crest employees he’d gotten to know—the sales reps and delivery drivers—were laid off in the merger.

“People I thought wouldn’t go anywhere, those guys all got kicked to the side,” he said.

Though the Mesa-Crest merger follows the same storyline as many corporate mergers—layoffs, policy changes, some glitches that need to be ironed out—the difference is that this is San Diego, where craft beers have become something of an institution. Fifteen locally produced beers made it into Beer Advocate magazine’s 2009 list of “Top Beers on the Planet,” and there’s an increasing number of bar and restaurant owners who’ll go out of their way to support smaller brewers because they know that a good line-up of craft beers is a customer draw.

Small brewers reward that loyalty. Stone Brewing CEO Greg Koch, for instance, personally delivered a keg of vanilla porter to the Downtown bistro Neighborhood on Friday afternoon, a score that Neighborhood posted on the social networking site Twitter. Ruby Room’s Cute said he carries Tailgate beer not just because it’s a good product that’s been racking up awards but because he’s impressed by 23-year-old owner Wesley Keegan, who’s both brewer and delivery driver; and Marshall Stanton, co-owner of East Village’s El Dorado, said he’s found that the smaller guys offer better prices, tend to be more nimble when it comes to delivery and more attentive to customer needs.

The merger “is a good thing for smaller, more local brewers and smaller distributors,” said Kerry First, general manager of Moondoggies in Pacific Beach. Unable to get in touch with her Crest sales rep after the merger, First started meeting with reps from the smaller companies.

Mike Hinkley, CEO of Green Flash, one of two local breweries distributed by Crest, said that what folks are seeing is simply what happens “with a change in operations of this scale.”

“It is inevitable that there will be transition difficulties,” he said.

As for Cook, he said that if he gets his second delivery day back, he’ll probably switch some of his taps back to the bigger-name beers—“if the customers tell us they want them back up,” he said.

But, he added, “we hopefully helped out some small businesses. If they can benefit from what’s happened, that’s great.”

Write to kellyd@sdcitybeat.com and editor@sdcitybeat.com.