Firewheel in Rowlett Closing

I somehow received a bottle of this and it's sitting in my "cellar". Maybe I'll bring it to the unsuspecting at the next bottle share.

 

I did say I have no empathy for them, due to their bullshit with the gofundme, but I wouldn't say I exactly said anything positive about TBB...

 

9. Our beer generally sucks.

 

Think they need to take the hint that their brewery really isn't up to par...sad to admit but when you know you're going down, no reason to take everyone else there with you.

 

Some of the people who start these breweries remind me of those idiots on the bar and restaurant rescue shows who get into their business because "I always dreamed of doing this," or "I thought it would be fun" when they've never worked in the business or anything like it.

 

What percentage of craft breweries do you think have started "with experience in the business?" I would guess it's <1%. I mean, MAYBE it's 2% at the most, but no way is it more. The most successful craft breweries were the first movers (Sierra Nevada, Shiner, New Belgium) and none of those guys had experience in the business because it didn't really exist before that.

 

You may be right about that last statement, but craft has been around for awhile now and the standards have now been set pretty high. Unfortunately, a number of new breweries, without experience in the game, fail to take notice of this.

 

I'm not sure about that. We have over 4,000 breweries operating in the US right now, with over 1,500 more in planning. This has happened in such a short period of time too. It's hard to have any set 'standards' when things are expanding at the rate they are. When you say standards, what exactly do you mean? If we're talking about business in general, sure. Have a target market, have a competent team, have a message that resonates with an audience, conduct ethical/sound business practices and earn a profit. That's been the case for a very long time in any business.

With craft beer only having an 11% market share in the US, drinkers are still widely figuring out what they want to drink. Only a very few enthusiast customers (if it follows the wine industry, it's about 25% of craft beer drinkers) are truly educated about what the product is supposed to taste like, and can detect imperfections/flaws. With craft beer so young an industry, you can still produce a subpar product and remain in business since even the majority of craft beer drinkers aren't necessarily educated in what's great and what's just average. Also, the market is not yet saturated with brands since most economic models have shown that the US can support 10,000+ breweries without a bubble bursting. We are still in the expansion phase, and have not quite yet hit maturity. I don't think we will for several more years. Decline is long ways off.

Cheers,
Chad

 

Disagree with the decline being a 'long' ways off. I think the bubble is here. The economic models are simply projections, projections aren't worth shit. I spent years doing research at one of the best institutions in the country (see my avatar if you have any questions as to where), have the degrees to prove it. Anyone can manipulate statistics to show whatever they want (or the people who gave them the money), it really is that simple. I know, I've seen it firsthand.

Even though the projections say we "can support" X number of breweries, doesn't mean we will financially. Example, look at how may breweries are looking to crowd funding in order to be able to 'grow' because they produce a 'subpar product' in Texas alone. If your economics are not allowing you to have money to grow, don't ask for a handout, produce a better product that will produce the revenue required. But, if people are dumb enough to give away their hard earned money for nothing, I guess yay Capitalism?

I believe it boils down to this: if you make a quality product people will buy it, if not, people won't. Simple as that. We are going to see a lot of nice brewing equipment for sale over the next year as shit breweries (i.e., breweries solely dependent upon the whole buy local bullshit) close. Just my $.02.

 

I won't debate with someone who claims to be an expert on research, because you've already made up your mind no matter what anyone says. Regardless, I have yet to see any beer industry experts agree with your assertion that the bubble is already here.

Which breweries are using Crowdfunding to stay alive? The only one I can think of is Texas Big Beer. The answer on why doesn't really even need to be said since it's obvious.

Intrinsic used crowdfunding for start up capital. Grapevine ran a charity campaign, but they certainly didn't have to in order to stay afloat.

 

Deep Ellum has also asked for free help (money) in order to file a lawsuit against TABC.

I've spoken with 'beer industry experts' while having beer at their breweries, and most of them said the same thing; no one is going to ever say publicly that their industry is near a bubble, they simply told me, they believe that within a year there will be some very nice brewing equipment available for really cheap. I inferred from their implication, this means yes, the bubble is here and breweries that are not cutting the mustard will start closing as a result.

 

The craft beer scene is not new, however it is a much newer scene here in Texas than, let's say Chicago. To illustrate what I meant when I said standards have been set high, go check out Solemn Oath's website, Pipeworks Twitter account, or of course FFF's Instgram. Those breweries are doing more than just putting out beer; they're building a culture around their artwork, beer names, events, etc. To be a world-class brewery you have to have all these things, not just beer. In my humble opinion, the Texas scene might very well go that same way, to where just brewing beer won't be enough to keep a consumer loyal.

 

I've been hearing about this "bubble" for years now. And still only 5 have shut down this year.

Yet, all I see with an exception of a few, are expansions. Doesn't seem like anyone is struggling yet. There will be some shutting down at a larger number in some of the other (more established) states. Texas has a long way to go before that happens. And, hell, more are opening as pretty much bars/taprooms as opposed to distributing breweries. No one blinks an eye at a bar opening, which is essentially what a lot of new ones will become.

 

I meant to mention the DEBC one, but I still fail to see what that has to do with staying afloat. There are few breweries killing it as much as DEBC is right now. If consumers are willing to spend their money on something, whether I personally agree with that method of fundraising or not is irrelevant. It just shouldn't be tied to a state of alarm with regard to the craft beer industry.

While I don't disagree that there will be some closings, a few businesses closing is NOT a bubble. A bubble in economic terms is a series of rapid expansion, followed by a contraction of the industry in total. We have seen double digit growth of the craft beer industry every single year, and 2015 is proving to show similar numbers. Until there's some evidence that craft beer is headed the other direction, I simply can't agree that a bubble has arrived.

Craft brewery closings is only alarming to people right now because so few have. We have been on the upslope with tons of new breweries opening, consumers choosing craft beer, and we're slowly starting to see consumers become more educated as to what beer is and should be. Poorly run businesses, regardless of industry cycle, will always end up closing. When you consider that 80% of businesses close within 3-4 years of opening, craft breweries are FAR more successful than that right now due to the state of the industry. That's really what I meant earlier when I said you could run a subpar brewery for at least a little while.

 

Fair enough. To @aschwab's point, if more breweries do end up opening up at bars/taprooms such as On-Rotation in Dallas, this may very well prove to be a more successful business model. But then, are they more so brewpubs/brewbars as opposed to the traditional brewery?

 

Just curious, who is doing these economic models? Are these published somewhere?

 

The Brewer's Association. They're all public information. There have been more than one and they've been independently sanctioned.

 

I think the long term success for most breweries lies in the brewpub model, and serving their local communities. It would be very tough to open a brewery like a Dogfish Head or New Belgium today.

 

I think before a bubble hits, we will just see a increased barrier to entry. I can't think of a single established brewery that has folded. I think it will become more difficult to slap together a brewery without more serious background work financially (either for investors, to access capital or for self-funded start ups to take the dive) and that this will lead to more new brewpubs than breweries that are more focused on distribution.