Tough to sell craft beer in Carlsbad

Failed brewery’s owner blames city, Brewery Igniter

Rawley Macias has had to work hard for Rouleur’s tasting-room traffic.
  • Rawley Macias has had to work hard for Rouleur’s tasting-room traffic.

With a September 30, 2017, Facebook post, Carlsbad’s Wiseguy Brewing Co. announced its “Last waltz,” with a photo making it clear that the Saturday would be its last in business.

Brewery closures in San Diego County aren’t all that rare — nine have closed within the past two years — but the timing of Wiseguy’s closing is noteworthy: it opened its doors March 18, 2017. Its life as a working San Diego brewery lasted just over six months: 197 days.

Wiseguy and Rouleur bought in to H.G. Fenton’s turnkey breweries and had different levels of success.

Wiseguy and Rouleur bought in to H.G. Fenton’s turnkey breweries and had different levels of success.

Wiseguy was in business so briefly that members of the local beer media hadn’t yet made the trip to southeast Carlsbad to sample their beers. Six months is usually the time it takes a new brewery to iron out any wrinkles and streamline both its brewing and retail processes — to figure out how much beer needs to be made, which styles perform well with customers, and make adjustments to opening hours as needed.

“I wish the beer was the problem,” said brewery cofounder Brett Gent a few weeks after closing, “but the location was our downfall at the end of the day.”

However, while Gent’s brewery has closed, the location remains. It sits along El Camino Real, four miles inland from Interstate 5 via Palomar Airport Road, a four-iron shot from the east end of the McClellan-Palomar Airport. Wiseguy was part of the county’s growing population of turnkey brewhouses. Gent, who started Wiseguy with his father, Tom, didn’t own the equipment he brewed on. Instead, Wiseguy leased a fully built brewery space from a business called Brewery Igniter, started by local property management firm H.G. Fenton Company in 2015.

Facebook post announcing Wiseguy’s closure

Facebook post announcing Wiseguy’s closure

“Without Brewery Igniter,” the company’s website explains, “brewers have to finance expensive brewing equipment and bear significant construction costs, which means they carry significant debt for six months to a year before earning any revenue to pay it down.”

Brewery Igniter has built seven breweries for lease throughout the county, grouping distinct breweries in adjacent suites. Pure Project and Amplified Ale Works moved into the first pair in Miramar, while San Diego Brewing Company, Eppig Brewing, and Pariah Brewing Co. occupy the trio of spaces in North Park. Next door to Wiseguy, Rouleur Brewing Company took the second Carlsbad suite available. The brewhouses in Miramar and North Park have yet to lose a tenant, and in some cases its brewery occupants have found enough demand to maximize their brewing capacity.

That has not been the case in Carlsbad. When Wiseguy opened in March, an optimistic Gent told the Reader that Brewery Igniter’s turnkey model prompted him to move from his home in Costa Mesa to pursue his dream of starting a beer business. Between low startup costs and the evident success of other such San Diego startups, he said at the time, “That brought me down to Carlsbad.”

A few weeks after closing at the end of September, Gent was back living in Costa Mesa, left with a different view of the El Camino Real space. Via email, he called it a “terrible location” for a craft brewery. “The area we were in was a nice area,” he elaborated, “but more of a soccer mom type of community vs. a community of regular craft beer drinkers.”

Gent declined to say how much Wiseguy paid in monthly rent, but conversations with other Brewery Igniter tenants suggest the brewhouse spaces range from $4.50 to $7 per square foot. By comparison, commercial properties in high-foot-traffic areas such as North Park and downtown San Diego typically lease for around $3 per square foot. The higher cost of the Brewery Igniter spaces reflect the additional costs of purchasing and installing ten-barrel brewhouses, which start at about $200,000 for equipment.

During its six months in business, Wiseguy simply ran at too high a burn rate. “We had planned on our taproom doing a certain amount of sales each month to be able to start to hire employees to help us grow,” said Gent, “but it just never turned out that way.” So, with the help of an attorney, the Gents terminated their 12-month lease four months early, and negated years of planning by shutting their business down. “For this location at the current moment,” Gent added, “I believe the rent is definitely too high for a startup brewery.”

Gent is not alone in thinking this way, and Wiseguy has not been alone in trying to market this location. About the same time Wiseguy opened, Rawley Macias opened Rouleur Brewing in the Brewery Igniter suite next door to Wiseguy. The two businesses worked together to host a combined grand-opening party.

“Brett is right on many of those circumstances,” says Macias, who continues to serve beer from Rouleur’s business-park suite, though he doesn’t know how long he can continue to do so. “We’re really having to work for the amount of tasting-room traffic we get,” says Macias, who has been active promoting Rouleur on social media and enlisted a local PR agency to promote its opening but says it hasn’t been enough.

Like Gent, Macias only moved to San Diego within the past couple years and saw the turnkey brewery as a means of self-financing his business without accruing a lot of up-front debt. However, he agrees the high rent has proven untenable for a startup business at this location; he charges that his landlord oversold the location’s potential.

“I laid everything on the line for this brewery,” Macias says, “and a lot of that hung on what I was told by Brewery Igniter.”

Both Macias and Gent say the primary selling point pushed by Brewery Igniter agents was the traffic on El Camino Real. A traffic report conducted by the city of Carlsbad shows an average of more than 30,000 cars pass by the location on a daily basis.

“Part of our interest going into this location was we were told 30K cars drive by every day,” wrote Gent. Merely posting signs on El Camino Real would promote the breweries’ location to thousands of potential customers within the heavily trafficked business district. However, that plan, Gent added, “didn’t turn out in our favor at all.”

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is it? Burgeon just down the street, not on a major cross city street is flourishing. Beer quality, size of tap room, decor, quantity (and quality) can releases, as well as having a unique approach are larger factors than just "being in carlsbad"

Remember all the cigar shops? Everyone was getting into rolling their own boutique cigars with a cigar star-up on every corner. Now there seems to be boutique brewery on every corner. A few will be here but most will disappear. Boutique breweries are a fad just like boutique cigar stores were.

Th failure rate for small, startup businesses is very high, so high that it's a wonder anyone tries. So, this one isn't anything out of the ordinary. Then there is the number of these little breweries, many tucked away in hard-to-find-spots. The Vista Industrial Park has many of them, and even with directions can be a challenge to find. Just how big is the market for craft beer and for the products of micro-breweries?

I had no idea that the spot described had any breweries at all. So much of this is location, and if there's poor access and no visibility, it makes the chances of success very poor. A comment above referred to a lack of capital, and if that's the situation, it challenges even more.

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