The Craft Beer Roller Coaster

Stop the roller coaster—some of us need to get off. For brewers and craft beer enthusiasts alike, the past year has been one of the wildest in the history of the beer business. In a time when nearly every other industry, save for oil barons, is drowning in declining sales, craft brewers continue to maneuver smoothly through rough seas. In its now semi-annual fist pump, the Brewers Association recently announced yet another term of double-digit volume and dollar sales growth for craft brewers.

In addition to rising sales, new breweries continue to open every week, with many more in the planning stages.

Keen industry observers can be forgiven for feeling that they have seen this newsreel before. While many craft beer fans, and even many brewers, may be too young to remember, hardened veterans have to be flashing back to the Gold Rush of the mid-’90s. In 1993, 461 breweries operated in the United States. Three years later, that numbered had nearly tripled. Then 1998 sobered everyone up.

After experiencing several continuous years of double-digit sales growth, including 51 percent in 1995, the craft crush suddenly flatlined. Brewery openings stagnated and then declined following a high of more than 1,600 craft brewers in 1998. The unqualified and inexperienced bankers, lawyers, rocket scientists and amateur homebrewers who entered the craft beer business with dollar signs in their eyes swallowed their losses, cooled their brew kettles and left the business. From that point forward, craft brewers realized how serious the beer business could be.

After more than a decade of sometimes slow yet steady growth, the craft beer engine is again gaining steam. Consider this fact: Between July and the middle of August of this year, the industry averaged more than one new brewery opening every day in the United States. An extraordinary 165 breweries have opened since June 2010, ballooning the number to nearly 1,800, the highest in the modern American brewing era.

Even more incredible is this number: There are 725 breweries in the planning stages.

The positive news has come at such a fast and furious pace, with daily mainstream media praise, that my cynical side starts to grumble. While the news seems too good to be true, it’s unclear whether this pace of growth can be sustained. The volume increases alone will be difficult to maintain, if only due to the high cost of stainless steel necessary to keep up with fermentation demands.

Moreover, it’s crazy that the number of breweries in development today dwarfs the total number of craft breweries in existence in the first 20 years of the craft beer evolution. While excitement, even giddiness, among craft breweries is understandable, is the American beer marketplace robust enough to sustain 2,000—let alone 2,500—breweries and their attendant brands?

Clearly, distributors keep taking on new brands, if only to lock them up from competitors. But we’ve also seen major craft players pull back and concentrate on their local markets. Can scrappy nanos and new craft operations compete with these refocused hometown heroes? All the while, Blue Moon by Molson Coors and Shock Top by Anheuser-Busch InBev continue to rack up massive sales.

These are good times for craft brewers, to be sure. But history should caution and guide those who now seek to enter this already crowded and competitive marketplace. The next few years will tell whether craft brewers follow the course set in the ’90s, when an intense rager led to a several-years-long hangover, or whether we’ve entered a new golden era of brewing. Either way, it’s gonna be a hell of a show. ■