The Beer Bubble Myth

Beer Smack by | Nov 2015 | Issue #106

This past September the Brewers Association announced that the number of active US breweries in its database had passed 4,000. It also predicted that the US will soon exceed the record of 4,131 breweries set in 1873. That’s a big number. And it’s sparked the whole “When will the beer bubble burst?” debate again with many questioning the sustainability of all of this growth. But let’s not forget: 1873 and 2015 are different times.

For starters, 1873 marked the beginning of the Long Depression of 1873–1879, a worldwide financial recession that greatly impacted the US. We had just experienced strong economic growth fueled by another industrial revolution and years of war, but the country’s population wasn’t increasing fast enough to consume the amount of goods being produced. On top of this, failing industries and financial institutions led to soaring unemployment rates and a subsequent rise in alcohol consumption, which then led to women’s temperance movements, followed by national prohibition and ultimately the end of brewing beer in the US for a while.

In 1870, when our population was 38,558,371, we had roughly 1 brewery for every 9,000 Americans. Today it’s about 1 brewery for every 80,000, based on a population of 318.9 million as of 2014. According to the Brewers Association, there are also “nearly 1,000 cities with a population of more than 10,000 that don’t have a local brewery yet, and numerous neighborhoods in larger cities without a local brewpub or taproom.” So clearly there’s still plenty of growing room for small breweries with a local business model.

That last part is key, and like most industries, we’ll continue to see closures and various forms of consolidation. But barring a major breakdown of the world’s financial institutions, a global shortage of raw materials, or alcohol being outlawed again, we think it’s safe to say that beer is here to stay. And for the foreseeable future, so is its continued growth.

Respect Beer.