Houston Brewery Bubble

Discussion in 'Southwest' started by Smokingtony, Mar 19, 2016.

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  1. Smokingtony

    Smokingtony Initiate (0) Nov 14, 2014 Texas

    Within the past month or so, 4 Houston breweries (11 below, 8th wonder, Spindletap and Buffalo bayou) have all began distributing cans. I am curious if anyone thinks that we we will be seeing some Houston breweries fold in the near future or will we continue to see more breweries open and expand without any casualties in the market?
     
    tx_beer_man likes this.
  2. thirdeye11

    thirdeye11 Initiate (0) Feb 3, 2009 Texas

    There can be casualties with or without a lot of competition. Poor marketing practices, not understanding your target market, or simply creating a product that's not considered desirable or of quality can all lead to business closure. That being said, Texas (ESPECIALLY Houston) is very far away from a bubble. Look to states like Oregon, Colorado, or Vermont for states that support high amounts of breweries per capita. Texas currently ranks 44th out of all 50 states in terms of breweries per capita. Statistics taken from here:

    https://www.brewersassociation.org/statistics/by-state/?state=TX

    Cheers,
    Chad

    PS: Why do people feel like we're approaching a bubble? I see this question asked a lot, but it makes very little sense to me since Texas is behind many other states in terms of production per capita.
     
  3. aschwab

    aschwab Initiate (0) Mar 3, 2009 Texas

    No. Just no.

    I wrote this some time ago:

    http://www.craftbeeraustin.com/is-the-craft-beer-bubble-about-to-burst-in-texas/

    The main thing to take form this is:

    Our of those 4 major cities in TX, Houston is the furthest from it and pretty much every city can support many many more.
     
  4. Smokingtony

    Smokingtony Initiate (0) Nov 14, 2014 Texas

    I think the concern has more to do with the speed of growth and the opinion that many of the new breweries are not up to par, in terms of quality, with many of the readily available craft breweries from out of state.
     
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  5. aschwab

    aschwab Initiate (0) Mar 3, 2009 Texas

    The ones that aren't making good beer will fail, just like restaurants who make bad food won't survive. That has nothing to do with bubbles, just normal business.

    Even then, we still are not seeing breweries who do make bad beer closing because people still buy it, which makes me think that we are even further from it since there still is a demand for lower end beer.
     
  6. donspublic

    donspublic Poo-Bah (1,993) Aug 4, 2014 Texas
    Society Trader

    I think 11 below (which was quick out of the gate) and 8th Wonder will do ok. In the case of 11 below, they dialed in on 3 beers, which I think are all great beers for their style. They pretty much did nothing else until they released Negative Space, and the Stout sitting in barrels. 8th Wonder has been nailing it for the longest time. I think when those cans of Rocket Fuel start flying thru the mail it is going to get some respect outside of the Houston market. Buffalo Bayou has been canning for a while, maybe now you're just seeing them. Spindle tap, well know nothing about them, but I think they are going to be at WF in Champions within the next month so will try them then.
     
  7. blastoderm55

    blastoderm55 Disciple (327) Jun 7, 2013 Texas

    The breweries that do fold will be due to poor product, not because of market saturation. The one that closed last year comes to mind. Fort Bend, if I am not mistaken.
     
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  8. champ103

    champ103 Poo-Bah (4,903) Sep 3, 2007 Texas
    Society

    I agree that we are not in a bubble, and breweries and businesses of all kinds succeed or fail on a number of reasons. Not all of which have to do with the quality of the product. Which I have said before. Many close within 4 years anyway, so if we start seeing more newer breweries close within the 2-4 year mark is that a bubble or just what happens with some newer businesses?

    On a side note, I knew Spindletap has a lot of backing, but I did not thing they would be canning this fast.
     
  9. Dogleg

    Dogleg Initiate (0) Apr 4, 2014 Pennsylvania

    The more pressing issue is hop contracts. Not sure if the breweries down there are having the same problems as up here, but the "sexy" hops (citra, galaxy, mosaic) are wait listed until 2018 and Nelson is 2021.
     
  10. Dicers

    Dicers Poo-Bah (1,754) Sep 2, 2012 Colorado
    Fest Crew Society Trader

    11 Below spent a long time developing their stuff before opening their doors and then a decent amount of time dialing it in before they ever canned those 3 core beers. They aren't designed to wow you with earth shattering anything but are all very solid representations of their style and easy drinking beers.

    8th Wonder and Buff Bayou both already have very strong followings and have been in the market for a while on draught and popular growler fill stations. 8th wonder's biggest hit will be the cost on Rocket Fuel, but I don't think it will be too much of a hindrance.

    Spindletap is the only one of the 4 that I think may have acted too quickly to package, but just like others have mentioned the market is smart and will respond accordingly if their beer isn't up to par. The 2 year mark is the big one for most breweries if they make it that far their likelihood of failure drops dramatically.
     
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  11. donspublic

    donspublic Poo-Bah (1,993) Aug 4, 2014 Texas
    Society Trader

    Well said above, but what I quoted is what gets me. I have seen this around Houston for roughly $10 - $14 per four pack, so I think they are recouping their cost on it. Wondering why there is such a discrepancy.
     
  12. Smokingtony

    Smokingtony Initiate (0) Nov 14, 2014 Texas

    It is my understanding that Brash will also be canning soon. I think, at the very least, the surge in local products will face the reality of shelf space which will either lead to local breweries reducing their portfolio or out of market beers being cut out. Something has to give.
     
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  13. Clarkson

    Clarkson Initiate (0) Feb 26, 2013 Texas

    I believe people think we are approaching a bubble because it seems like every week a new brewery is canning their core lineup and we still see finite shelf and tap wall space.

    When will New Brewery X's blonde ale be taken off the shelf to make room for New Brewery Y's hefe when all I'm looking for is a fresh Local IPA?

    Lots of new breweries with lots of new packaging, but I go into a bar close to me with almost 100 craft taps and a ton of people are drinking Coors Light.

    I hope there is not a bubble and want to see things expand even more, but I hope some of these new ones fighting for market share step up their game thinking that the newness will eventually wear off and they need to produce a good product.
     
  14. greenspointexas

    greenspointexas Meyvn (1,047) Jan 16, 2011 Texas


    Wut? Spindletaps beer is light years more drinkablethan 11 Below's "beer"
     
  15. Texasfan549

    Texasfan549 Poo-Bah (2,832) Feb 26, 2011 Texas
    Society Trader

    I'll say this. 11 Below makes better beer than Spindletap.
     
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  16. awinkro

    awinkro Initiate (0) Oct 15, 2008 Texas

    I'd say we are far from a bubble, as @thirdeye11 pointed out, our population can easily sustain more breweries. Houston consumers are gradually becoming educated regarded what is "quality," but a majority of craft beer consumers are still drinking everything new and "new to them." Once they realized what's good and what's not, I believe we'll start to see some breweries closing. Though, new breweries will continue to open up.

    I believe the age of the regional craft brewer is fading, breweries production +15k barrels. I still don't understand why brewpubs haven't kicked off yet, but I still believe they will. With the restaurant scene as strong as it is here, brewpubs would flourish...again keeping in mind quality.

    Houston is still a BMC town, where as craft is just below 7% of the beer consumed, and St. Arnold isn't even 1%. So no...there isn't a bubble. Consumers just need to be educated on what's available to them and what is regarded as quality.
     
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  17. pwsoldier

    pwsoldier Devotee (452) Apr 26, 2007 Minnesota

    From what I understand, the latter is already taking place in several on-premise accounts in Austin.
     
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