Tuesday, January 25, 2011

Breaking Through, or Tipping Point or Whatever. . .

For quite some time, I've been thinking about my hometown, and about why San Diego has such a good beer scene compared to other cities in Southern California. I don't know the numbers for certain, but I would hardly be shocked to find out that San Diego County has more breweries than the rest of Southern California combined. Certainly, there are chains like Gordon Biersch that up the number of breweries everywhere, but San Diego has a surprising number of stand-alone breweries. Similarly, I have also been somewhat surprised by the number of farm-to-table restaurants that have popped up in San Diego over the past few years.

Both developments are not just beneficial to me, but also fascinating. As economic actors, restaurants and other food providers have to follow trends, but they also have opportunity costs and entry costs like any other business. As they are smaller businesses, they are more responsive to trends, but they are also responsive to market realities. For instance, as much as the San Diego market cries out for a New England-style seafood shack, there will never be one because San Diego does not have the same kind of seafood as New England. So, no fried clams for us.

That still doesn't describe why San Diego is such a big craft brewing town, or why so many restaurants are going farm-to-table. And here, I think there is another, less discussed factor - in both areas, there was a business that broke through to profitability and then created a bunch of imitators.

When I think about San Diego brewing, Stone Brewery really comes to mind as the first truly successful, stand-alone (not a brewpub) brewery. When Stone Brewing came into being, there were a number of breweries in San Diego, such as Karl Strauss, and Ballast Point, but Stone Brewing broke through first with Arrogant Bastard Ale. Beer snobs from San Diego to New York heard about Arrogant Bastard before learning about any other San Diego beer. More importantly, Stone Brewing made money, which in turn either convinced others to jump into the brewing arena, or convinced preexisting breweries to keep brewing. And as the marketplace deepened, and became more competitive, craft breweries in San Diego stopped trying to emulate Stone Brewing, but developed niches of their own. Hence, I can drink fabulous, locally produced beer.

With farm-to-table, the Linkery was the pioneer. Reading the owner's blog all these years, creating a restaurant that focused on local cuisine was a real challenge, because San Diego's food infrastructure was designed around the big restaurant supply chains like Sysco. In fact, at one point in time, the Linkery had to completely revamp its napkins because the restaurant supply company it worked with refused to launder its napkins without the Linkery buying some of its food. Moreover, the Linkery had to go out and find local producers of its meat, cheese and produce. All of which was exceptionally difficult. As it created the infrastructure, the Linkery enabled other restaurants to follow suit in the farm-to-table arena. Even if they didn't go all the way, restaurants could supplement their offerings by using the farm infrastructure the Linkery created.

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