The Craft Beer Market Bubble

Discussion in 'Beer News & Releases' started by kudos, Dec 15, 2013.

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  1. kudos

    kudos Initiate (0) Aug 16, 2013 Florida

    Naerhu, target88, VonZipper and 7 others like this.
  2. JohnPecod

    JohnPecod Initiate (0) Apr 11, 2009 California

    Great stuff. Thanks for sharing.
  3. NHcraftbeer

    NHcraftbeer Initiate (0) Mar 15, 2011 New Hampshire

    "Cans of Heady Topper fresh off the production line" uh huh, the image shows fresh cans for heady topper, unfilled and topless in the image. People that do not know about beer should not write about it IMO
    chugalug06, Stugotzo and cavedave like this.
  4. azorie

    azorie Champion (884) Mar 18, 2006 Florida

    Great story and I said this is something I think will happen 5 years ago. Its like the stock market though NO ONE can time it. we know history repeats. the question always not IF but when and how much.

    Most everyone is always in denial about a bubble before it happens, and after it passes everyone then wakes up and says yea it happened. My locals were none to 6 now (in 3 to 4 years) and more planned. It will never last. In fact folks like me are already nearly priced out of many beers and differently priced out at bars/pubs/micro tasting rooms.

    Big boys will survive, the market WILL shake out. You can quote me, lol.
    Mersh, ToriBug13, alucard6679 and 4 others like this.
  5. bsjapost

    bsjapost Initiate (0) Dec 14, 2013 Virginia

    This will shake the tree and only the strongest fruit will survive.
    MaxOhle, jcos, scotti561 and 2 others like this.
  6. BrettHead

    BrettHead Zealot (504) Sep 18, 2010 Nebraska

    Oh good, another "bubble" thread.

    I'll leave it to someone else with more time to explain why there is no bubble à la tulipomania.
  7. maxcoinage

    maxcoinage Zealot (570) Apr 6, 2012 Illinois

    Good read, lot's of interesting points. Took me a while to get through it all, but was worth it.

    This is so true.....

    jcos, ToriBug13, azorie and 2 others like this.
  8. Blueribbon666

    Blueribbon666 Zealot (513) Jul 4, 2008 Ohio

    Bring it on. Lived through the "microbrewery" bubble burst & as most have already said the average to mediocre brewers will fall leaving the cream of the crop. Don't let the door hit ya on the way out.
    TickleMeTony likes this.
  9. hopfenunmaltz

    hopfenunmaltz Meyvn (1,479) Jun 8, 2005 Michigan

    Not bubble but a boom and boom are followed by busts. I don't see a collapse like one does with a bubble. I do see a lot of small systems for sale in the near future, after the dreamy eyed owners/brewers realize the ratio of earnings to work is low. Large established breweries with good product will continue to grow, even if the craft growth is stagnant - happened last time.
    king75, Mersh, StubFaceJoe and 7 others like this.
  10. herrburgess

    herrburgess Meyvn (1,113) Nov 4, 2009 South Carolina

    Gonna be a LOT of 1-5 BBL systems available for cheap in the next few years!
    azorie and Stugotzo like this.
  11. scotorum

    scotorum Poo-Bah (1,634) May 28, 2013 Massachusetts

    Yes a lot tucked into this very long article, but I also agree with NHcraftbeer above that the author does not seem to have been that well schooled in craft beer himself before doing the interviews for this article. If it was a typo for Widmer when a "Wiemer Brothers" craft brewery was mentioned, any knowledgeable writer or editor would have caught it before posting or publication. And mentioning New Belgium right after Boston Beer and Sierra Nevada as one of the "few big players" who "dominate" the craft beer market - well maybe in Colorado, possibly even on the West Coast they do, but Fat Tire & Co. are not very common in my area, and in fact totally absent in all but the most well-stocked stores. Meanwhile ubiquitous Founders and Dogfish Head are nowhere to be found in the article.

    Also, the lead in about bumper to bumper traffic in downtown Waterbury Vermont on a recent Monday morning seems rather bogus, since the retail store closed a couple of months ago, was about a mile north of the town, and out of staters would likely exit I-89 north on 100 to the cannery, rather than south into town. Anyone who has been up there when there was any such rush is welcome to correct me.

    My biggest quibble is the overblown alarmist headline, suggesting a coming "collapse," when the article mainly has a few brewers predicting a natural competitive shakeout of lesser players. The big news in the article for me at least were the further details about the Heady Topper retail store closing and problems finding a new location which I had not seen mentioned in other interviews or on the Alchemist website.
    kojevergas likes this.
  12. spicoli00

    spicoli00 Defender (618) Jul 6, 2005 Indiana

    In general, new businesses have a high failure rate.
  13. DoubleJ

    DoubleJ Poo-Bah (5,482) Oct 13, 2007 Wisconsin

    Speculation, and nothing more. Meanwhile, why aren't I hearing about the increased sales of smartphones bringing us into the middle of a smartphone bubble?
  14. tinypyramids

    tinypyramids Initiate (0) Jul 19, 2012 Illinois

    because smartphones are a completely different product and a completely different market outlook. there are over 2000 breweries in the USA, and probably less than 50 smartphone makers. the barrier to starting up a brewery is extremely low for an individual compared to starting up a smartphone manufacturing business, meaning brewing is more likely to produce opportunists looking to cash in on a perceived trend.
    azorie, fugazidps and fernz18 like this.
  15. Norica

    Norica Aspirant (223) Feb 2, 2006 Massachusetts

    New Belgium is not common here because they don't distribute (yet) to MA, even to the biggest liquor stores. There is no lack of credibility by the author for him to state they are one of the "few big players" who dominate the craft beer market.
    JohnfromPurdue and azorie like this.
  16. kylelenk

    kylelenk Initiate (0) Apr 17, 2012 Michigan

    Is this serious?

    Smartphones are a transformative and new industry. That would be equivalent to asking why increased sales of toilets occurred after modern plumbing and water infrastructure access became more prevalent.
  17. AugiePrimrose

    AugiePrimrose Initiate (0) Nov 19, 2009 Illinois

    To expand on this...Here is a great interactive map that shows the size, location, etc...of the nations 50 largest craft breweries. New Belgium, at well over 700k barrels brews around 3.5 times the amount of Founders and DFH combined. And New Belgium is about to open a 2nd east coast brewery.
  18. phillybeer7779

    phillybeer7779 Initiate (0) May 31, 2010 Pennsylvania

    LOL at people making fun of the author for not being knowledgeable about craft beer while not realizing the New Belgium is the third biggest craft brewery in the country.
  19. tkdchampxi

    tkdchampxi Meyvn (1,058) Oct 19, 2010 New Jersey

    I agree that there was no bumper to bumper traffic when I went to Alchemist to buy a case of HT on a Monday morning about a month back - this was the day before HT announced it would be doing Growler fills, and a short time before HT announced it was closing its retail shop.

    I wonder if the bumper to bumper traffic is a reference to the Monday after Alchemist announced it would be closing its retail shop.
    scotorum likes this.
  20. scotorum

    scotorum Poo-Bah (1,634) May 28, 2013 Massachusetts

    OK thanks for the beer distribution lesson. Clearly I live in an unusual part of the USA where New Belgium is absent (and I can't receive beer in the mail). I have only had Fat Tire and Trippel myself, and on reviewing my records, I bought both in Maryland. I'll go wash the egg off my face now...
  21. scotorum

    scotorum Poo-Bah (1,634) May 28, 2013 Massachusetts

    Thanks for pointing that out. I learned something today. :slight_smile:
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  22. scotorum

    scotorum Poo-Bah (1,634) May 28, 2013 Massachusetts

    Exactly. My only sad defense is that where I live, for whatever reasons New Belgium products are not in attendance. So to me they seem like an almost non-existent player. Clearly I deserve to be laughed at for so believing. Please excuse my provinciality.
  23. DoubleJ

    DoubleJ Poo-Bah (5,482) Oct 13, 2007 Wisconsin

    What I was implying was the notion of increased
    beer sales and makers = bubble, and why many other industries (smartphones, refrigerators, luxury cars) aren't viewed as such whenever there's an increase in sales.
  24. BodiesLexus

    BodiesLexus Disciple (317) Feb 23, 2011 New York

    Awesome article. Good to make the distinction between "boom" and "bubble". Fair to say craft, as a broad category, has been booming for going on 20 years (with ups and downs along the way), and that the most recent 3-year period, roughly, is unmistakably a bubble on the production side. My town had zero active brewpubs 4 years ago -- it now has 5 with one other that I am aware of intending to open soon.

    On that comparison to smartphones, compare the recent declines of players like RIM and Palm ......
  25. fernz18

    fernz18 Initiate (0) Feb 6, 2009 California

    I, for one, can't wait for to burst.
    chickencoop likes this.
  26. Spider889

    Spider889 Savant (997) Mar 24, 2010 Ohio

    All I know is that there is not enough room at most retailers to carry every brand available in my market. I also see "larger" brands at every retailer that tend to sit and age (a lot of Belgian stuff at first glance). This means that some brands will get pushed out when new brands come in. It also means that for whatever reason, other brands ain't going anywhere. Thus if a brewery doesn't meet one of the following criteria, they're in for trouble in the long term:
    -Brands stay new/relevant
    -Brands are top sellers
    -Unique/Category setters
    -Brewery has influence with or because of their distributor
    -Product is consistently in stock (won't get replaced on the shelf because it's on backorder)

    Brewpubs will be much less susceptible to a "bubble" than production breweries. Smaller breweries with less influence, footprint, and economy of scale will also be facing harder times regardless of quality. *See the mad grab the regional breweries are making for market share/production capacity ahead of projected growth figures of the last couple years. I see securing positioning more as an investment/hedge against a market contraction more than growth for growth's sake.
  27. basickness

    basickness Aspirant (222) Apr 20, 2013 Pennsylvania

    The pumpkin craft beer market bubble busted. Im seeing so many left over sitting on shelves
    A_Frayed_Knot, Norica and Spider889 like this.
  28. basickness

    basickness Aspirant (222) Apr 20, 2013 Pennsylvania

    Beyond that, I hope it never busts. I need more barrel aged reasonably priced good beer in my life. If you're a hipster who likes to only like things nobody else likes, time for a new hobby
    HattedClassic and craigo19 like this.
  29. fernz18

    fernz18 Initiate (0) Feb 6, 2009 California

    The "we all help each other out" ethos in the craft beer universe is long gone.
  30. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    1000 breweries could close and that wouldnt signal a bubble IF the total volume of craft stays the same or continues up (and the price level holds).
    CBlack85, VonZipper and TongoRad like this.
  31. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    Craft beer is also transformative.

    I bet craft beer is still being made at levels higher than today after smartphones are long gone and a thing of the past. I can already see what may replace them...things like Google Glasses (although Im waiting for google contacts).
  32. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    Nothing there relates to a bubble in any way.
  33. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    How is the last 3 years a bubble on the production side?

    Do you think craft share of the market is going to fall below 2010 level?
  34. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    Due to smaller breweries growing out of the need for them?

    As recently as 2011 I was hearing people say that nanobreweries (not brewpubs) couldnt be profitable. You couldnt cash flow from a 5 BBL system into a larger one.

    And based on financial numbers from the BA 2009 survey, this was true. Breweries under 1k bbl per year didnt make money. They were lucky to break even.

    But that has changed, the 2011 survey (released earlier this year) paints a different picture. Nanos can make money. They do it via retail sales. By the drink and growler fills and etc.

    Honestly, we are a long way from saturated. The beer wars of the 80s destroyed the US beer industries power law distribution. Its still filling back in.
    dexterk1 likes this.
  35. victory4me

    victory4me Devotee (479) Oct 16, 2004 Pennsylvania

    That's what you took from the article? That the person who authored the article doesn't know what they're talking about because the person who wrote the captions made a rather innocent error.

    Further, the article really wasn't about beer. It was about business. Beer could be replaced by almost any other thriving industry in the article and the premise would still be the same.
    whatname likes this.
  36. victory4me

    victory4me Devotee (479) Oct 16, 2004 Pennsylvania

    They are viewed as such. You don't read the business section much do you? You can find an article almost every single day discussing a boom/bust cycle in almost any given industry.
  37. DoubleJ

    DoubleJ Poo-Bah (5,482) Oct 13, 2007 Wisconsin

    I appreciate the note, however I wasn't talking about boom/bust cycles. Boom/bust is not the same as a bubble. The beer equivalent would be saying that a dunkel lager is the same as a stout.
  38. marquis

    marquis Crusader (794) Nov 20, 2005 United Kingdom (England)

    How can a section of the brewing industry which only accounts for one pint out of every 15 be construed as a bubble? Many breweries of course will fail and not always because of the quality of the product.However good you are at brewing it's your business skills which make or break the enterprise.Somebody mentioned there being 2000 breweries but the UK has well over 1000 for a sixth of the population and a thirtieth of the area.Germany has a similar number so 2000 can hardly be an unsustainable number.
    Naerhu, CBlack85, StubFaceJoe and 4 others like this.
  39. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    Everything you said is absolutely correct. Considering how often I disagree with you, just wanted to point that out.
    scotorum likes this.
  40. HRamz3

    HRamz3 Initiate (0) Feb 9, 2010 Pitcairn

    Exactly. The number of breweries is a virtually useless statistic. There could 10K breweries RI, if they are all 1BRL, there will still be a shortage.
    kojevergas likes this.
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