Too Many Breweries? - Bubble Will Burst

Breweries that won't survive the bubble; Ones that make solid to tasty beer but are selling it mostly through >$7+ bombers. They are surviving right now due to the ticker mentality and newness of their brand, not many people are putting these types of breweries in their everyday/repeat purchase category.

Breweries that will survive; If you do one of the following- make decent beer and put them in 6 packs, or get a strong local draft presence, or you have a great pub attached to your brewhouse, or you make phenomenal beer and you can repeat sell it in the $10 bomber range and people will pay it.

 

I know Rhodey is a small state, but you think its mere 10 breweries = over saturation?

 

I feel like there are WAY to many breweries. Its grown beyond a hobby, and beyond a love of the craft. Half of the new beers I try nowadays SUCK because of these people opening breweries because its the thing to do. Really? From one batch of homebrew to Commercial? STOP OPENING BREWERIES AND LEAVE ROOM FOR FOLKS WHO KNOW WHAT THEY ARE DOING.

Who are the ones who know what their doing? GREAT craft breweries that have been around for years. Aspiring homebrewers who have put ALL of their time into learning and experimenting so that someday they can open a brewery, that releases GREAT beer. My point is, Way too many breweries are opening with Low quality beer and the bubble will burst soon. Just my 2 cents on the subject

 

I think it's dangerous to compare the British brewing scene with the American one. For British real ale producers the local pub is still king. They produce cask conditioned beers that are designed to be consumed within a short distance from the brewery, and as such they operate on limited production capacities and the business model is not geared towards a constant need to increase production.

Many American breweries on the other hand see vanguard breweries such as Stone and New Belgium as their ideal production model. They invest heavily at an early stage in growing their capacity, distribution, and range of styles produced, and if this far-flung continuing increase in craft beer consumption in general and of their own brand in particular doesn't pan out, they see a negative return on investment. I see cities such as Portland as being some of the few that haven't bought into this bigger-is-better mentality, and have by and large kept production and consumption local, as being some of the few that will be truly sustainable.

The good news is that like others have said, I think that in general the good breweries will weather any contractions or plateaus in the craft beer movement, while the more mediocre will flounder and in general we'll be better off for that. That said, we'll probably all see some favorites go, and we'll see some really shitty ones survive, just because they have more business-savy, better distribution, etc.

 

Around 1900 there were 3000 lambic breweries in Brussels.
This was just one part of the country & one type of beer.

Even now still the amount of breweries that the States have now is nothing compared to what once existed in the old world. Even now still, the amount of breweries in the States is very small compared to what you have in Germany, UK, Belgium, Denmark etc. there is a lot of growing, with local brewpubs, smaller productions and people doing brewing as hobby instead of a fulltime job & people getting used to the idea of getting a local beer instead of a big brand at a bar, the amount of breweries in the USA could easily increase many, many times over.

 

I think you make good points. As a teacher/Historian, facts are facts, only the popular and strong will survive. That is why I am shocked when I see tons of breweries popping up that have either weak craft beer or not even 1 good beer. How can they survive vs the big craft brew monsters that have national influence? If you want to get into this business you better have a mighty good product. We have tons of cheap, bad, mass-produced beer, so why on Earth go cheap on the ingredients or not be innovative?

 

I don't think that number carries much weight. A place like Bend, OR, which is just about the same population as you stated, will have 20 breweries by the end of 2013, including one of the top 10 biggest craft breweries barrelage wise in the country. And every single one of them is killing it as far as business goes. Not one is struggling right now. It's crazy

I think you are right in a sense. We are seeing a little bit of a resurgence of the mentality of of the 90's where it was the thing to do to open a brewery, because you could make money at it. All those breweries closed, and some that didn't deserve too, because the bubble burst. But for as many breweries that are opening with people who have only ever homebrewed or really aren't in it for the right reason, there are the same amount that are being opened with people who do know what they are doing, and can and will make a great product. Eventually there will be a bubble burst, and some good breweries will go down along with the leagues of the bad, but it's probably going to be a good while, and at the end of it there will still probably be multiple breweries in a lot of towns. It's not going to be the 90's where people tried craft and then went back to macro. They are going to realize the good craft and stick with the good craft. Thats just my .02

 

can there really be a bubble right now? craft brews are $$$, and our economy still isn't the best. In several years, i bet there will be a larger craft tbeer market, not a smaller. As for the # of breweries, it's similar to the # of italian restaurants in the ny metro area. Always in excess... always fierce competition, and only the best survive.
I don't think a bubble will "pop"... I just think as many breweries will close as will open in the long term.

 

I think that in certain regions the markets are becoming saturated, but the US as a whole still has a lot of room for new breweries. Down here in Florida we are seeing more beer bars and breweries, and although I don't have financial numbers to support this, I really feel that there is room.

 

I keep seeing this question/prediction but it keeps not happening. I think we will see plenty of breweries come and go, but I don't think that will take the form of a bubble pop. I think craft's marketshare will continue to creep up, particularly as the economy improves, new standout players will emerge and join the ranks of the bigger names, and in the background, tons of smaller breweries will be going in and out of business like in most industries.

 

I don't know- if some bars around here would drop the 7-8 total crap tap lines, there's a shot.

Grey Sail rocks it. Foolproof IPA is good- we'll see. Haven't had The Bucket yet.

Revival ain't going anywhere either.

 

And on a larger note about the RI beer scene- can we get some god-damn growler law revisions? Seriously.

 

IMHO there will be an inevitable shakeout just like any other industry. However, I do not see a huge consolidation of power to save on back-office process, etc.. The whole intrigue of craft is the huge variety. It is not simply a matter of 3 players jockeying for the #1 spot. If it was, Sam Adams, Sierra Nevada and New Belgium might be the only companies left standing. I don't see this happening. However, I can't imagine that the current torrid pace of openings is sustainable. The cream will rise to the top. Also, their is the whole local thing going on. If your home market can support you alone and then you start to distribute beyond your hometown, you can probably make it work. However, you better be reinvesting yourself frequently and always bringing something new to the table.

 

We have 6 times the population now than we had in 1887. Seems to me like we have room for more.

 

I think what we're likely to see as more and more breweries hit the scene is some of the breweries/pubs that have been around for a while but have gotten by with mediocre product will fade out. Competition is becoming more fierce, and the consumers palate is evolving. I think across the industry there has mostly been little attention paid to atmosphere and service as well, so I would imagine places that offer the whole package will see larger numbers of patronage and those that are doing the minimum will suffer and/or fade out.

 

Huh? Where are you getting that statistic? I'm skeptical.

 

"Bubble" indicates an unsustainable increase with little underlying increase in value, typically driven by investment, followed by a contraction. Think:

• Tulip bubble: people investing in tulip bulbs for resale (not personal use)
• Internet startups ~2000: stock-market driven investment in companies with no underlying value
• Real estate bubble late 2000's: can argue the causes, but a big driver was certainly the huge demand for mortgage backed securities (investments); underlying real estate values didn't change much

I see breweries as a different animal. These are not investments, but new businesses. They are not being over-valued by any market, simply selling products. Certainly there will be a saturation point in specific regions, at which point adding new breweries is a zero-sum game. However I think it's unlikely that there would be the "contraction" phase of a the typical bubble burst, rather an equilibrium reached.
How much longer it takes to reach that equilibrium is the real question...the potential customer base (all beer drinkers) in the USA is much, much larger than the current base (craft beer aficionados).

 

You could say the same thing about bars but you'd be wrong on both counts. The more people that start brewery's the better it's keeps the well established brewery's from getting lazy.

 

I feel like Bill Murray in Groundhog Day.