The Craft Beer Boom Has Gone Flat

Rob, thanks for sharing your thoughts here.

At the last Philly Beer Week I was able to have a long conversation with the owner of a Retail Beer Distributor not to far from where I live; I have purchased cases of beer from him in the past. I asked him how his business was going and the conversation later turned to freshness of product on retailer's shelves. He shared with me his thoughts that in present day Pennsylvania there are too many retailer's and that a consolidation is needed to best serve the present day craft beer customer base.

Based upon this conversation and what you have expressed in your post I am of the opinion that having more retailers is not necessarily a good thing from an availability of fresh product perspective. Needless to say but this is for the case of distributed craft beer.

In my area it seems that a new small, local brewery is opening up ever few weeks. There is plenty of fresh beer to be purchased (both on-premise and for take away) at those businesses.

Cheers!

 

Yeah, I know... I was just tweaking you!

 

Will do!

Yup, this is what I suspect. Tracking the growth of craft beer based on IRI/Neilson data is becoming essentially useless...and I'll assume (big assumption considering I don't have data) that until we actually see a fair amount of breweries closing, that the craft segment of the market overall is still doing well.

 

What is your metric for "fair amount"?

“The pressure is also resulting in some increased closures. 97 craft brewers shut down last year, up from 78 in 2015 and 75 the year before.”

Cheers!

 

The thing is almost all the beer in VT is awesome. And of high quality for the most part. Alchemist 4/16 oz packs are $12.50 , sip of sunshine too I think. Ever hear of Hill Farmstead? Fiddlehead, Foam brewers, Burlington and so on. Most of my friends from MA bring stuff back from their mt bike trips. And MA has world class stuff as well.

 

More than 90% of the time I buy local exclusively. I mean it's fresher and we have so many good breweries in NC. And every city has decent/good breweries at this point. There really is no reason to buy anything else unless its exported from EU.

 

When there's 5500 currently, with another 2700 in planning, 97 would not be a "fair amount" in my opinion.

And considering the number of total breweries jumped from 3780 in 2014 to 4548 in 2015 to 5301 in 2016, I kind of shrug at the number closing going from 75 to 78 to 97. The percentage of the total closing has remained the same.

Probably not a fair comparison, but the percentage of restaurants closing per year is staggering compared to that number.

This link from CNBC (probably not the best resource to be honest, but still) is quoted as saying, "Around 60 percent of new restaurants fail within the first year. And nearly 80 percent shutter before their fifth anniversary."

https://www.cnbc.com/2016/01/20/heres-the-real-reason-why-most-restaurants-fail.html

 

Maybe a secondary query you can pose to Bart Watson is whether he finds the increase in number of closures over the past three years to be concerning.

Cheers!

 

Great time to be a local brewer, not a good time to be a brewer who has scaled and is relying on ever increasing distro area hoping for minimal competition.

 

The BA will get production numbers from members, based on the taxed volumes in barrels. The Brewers have to keep those records for the TTB.

 

Jeff, is providing that data to the Brewers Association done on a voluntary basis? If so, would you have any idea on the percentage of compliance?

Cheers!

 

All brewer's or just those who are members of the BA?

 

I did some number crunching.

Data source: https://www.brewersassociation.org/statistics/number-of-breweries/

Considering what the BA identifies as "Microbreweries" and "Brewpubs":

Numbers are for
2012 2013 2014 2015 2016
Closings as a % of openings:
10.2% 12.8% 8.5% 9.2% 11.6%
Closings as a % of Total:
2.0% 2.4% 2.1% 1.8% 1.9%


For Microbreweries only:
Closings as a % of openings:
5.5% 10.3% 6.6% 6.2% 8.7%
Closings as a % of Total:
1.7% 2.7% 2.0% 1.5% 1.7%


For Brewpubs only:
Closings as a % of openings:
24.6% 19.0% 13.3% 17.0% 19.2%
Closings as a % of Total:
2.4% 2.2% 2.2% 2.3% 2.3%

 

Helpful. Thanks for taking the time to do that.

 

@JackHorzempa I've e-mailed Bart Watson about each of these questions, in short:

1) Do the numbers in the article reflect on-premise sales, or simply IRI/Nielson data?

2) Is he concerned with the number of closings, specifically when compared to the number of breweries that have opened in the past few years?

I'll keep you guys posted as to his response.

 

I wonder similar things about all of the new small. local breweries opening in my area (Southeastern PA). I suppose we will both know more in a few years how many of these new breweries survive. Maybe this influx of new small, local breweries have the ability to expand the present day craft beer market? Maybe they can generate increased excitement and can maintain that excitement over a period of several years?

Cheers!

 

Based on my own experiences lately visiting multiple breweries in MA/VT/NH/ME over the last few months, I think many of these places are thriving based on on-premise sales.

The clientele at these breweries tend to be more family oriented/older (mid to late 30s, 40s, 50s...). They can bring their kids, their dogs, there's food trucks, events, bands...etc.

These are likely people who otherwise wouldn't be frequenting a normal bar. And just like people have their favorite bars, they have their favorite breweries, but they'll also spread the love around and try different ones.

Will these people eventually get sick of going to breweries? Maybe. But I haven't noticed very many that weren't busy on weekends, not yet anyhow.

 

Unfortunately that is the best I can report anecdotally. The challenge is that businesses like this tend to have to make money over a longer duration than 2-3 days (depending on their financial/capital situation).

One small, locals brewery near me, Tired Hands, is able to obtain good revenue in the middle of the week (typically a Wednesday) with sales from their weekly can releases; both sales of the cans themselves (at high prices) but from increased visitations to the two brewpubs due to these weekly events.

I am not aware that any of the new small, local breweries have anything similar to boost their revenue in the manner that Tired Hands does.

In the absence of more detailed data the best that any of us can do is speculate here.

Cheers!

 

I have an honest question though- is "line hype" slowing down or increasing? #linelife