On Thursday October 13, Escondido-based Stone Brewing laid off approximately 5 percent of its work force. San Diego's largest brewery by sales volume, the company counted roughly 1200 employees on payroll prior to the layoffs, and though it declined to give an actual number of people let go, it appears to be at least 60 people, with some outlets suggesting the number is higher and includes longtime employees.
Stone celebrated its 20th anniversary in business this year, opening new brewing facilities in both Berlin, Germany and Richmond, Virginia, and announcing a new brewpub to open in Napa, California. It also announced the creation of the True Craft fund, designed to invest in the expansion of smaller breweries. At the end of August the company hired a new CEO to replace outgoing CEO and cofounder Greg Koch.
Dominic Engels had been president of juice company POM Wonderful prior to taking the new role at Stone. In a press statement regarding the layoffs, Engels said, "Due to an unforeseen slowdown in our consistent growth and changes in the craft beer landscape, we have had to make the difficult decision to restructure our staff."
He went on to attribute the slowdown to market forces impacting the craft beer market from both above and below. "The larger independent craft segment has developed tremendous pressures," he said, "specifically, the onset of greater pressures from Big Beer as a result of their acquisition strategies, and the further proliferation of small, hyper-local breweries has slowed growth."
Responding to a question as to whether the layoffs reflect an end to Stone's increasing production, Greg Koch — now speaking for Stone under the title executive chairman — said, “Stone is projecting increases in production next year, albeit more modest increases than we’ve experienced in the past."
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In other words, the layoffs reflect a decline in domestic growth rather than a decline in actual sales or production. And the decline in growth is being attributed to increased competition from craft companies that sell to large corporations — such as Ballast Point being purchased by Constellation Brands last year — and to the increase of small craft breweries in the U.S. absorbing market share. The number of craft breweries within the U.S. has more than doubled in the past five years, exceeding 4000 at the end of 2015. In San Diego alone, nearly 90 new breweries have opened since 2011.
Engels added that, "This reduction was not a reflection of the work [these employees] did, but a careful decision made to ensure that our company will remain competitive and profitable." He stressed that, despite the workforce reduction, "Stone remains one of the largest — if not the largest — employers in the craft brewing segment," and that, "no additional layoffs are expected within Stone’s foreseeable future."