The Craft Beer Market Bubble

Thanks for pointing that out. I learned something today.

 

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.

 

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.

 

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 ......

 

I, for one, can't wait for to burst.

 

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.

 

The pumpkin craft beer market bubble busted. Im seeing so many left over sitting on shelves

 

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

 

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

 

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).

 

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).

 

Nothing there relates to a bubble in any way.

 

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?

 

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.

 

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.

 

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.

 

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.

 

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.

 

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

 

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.