Wednesday, September 30, 2015

U.S. now has over 4,000 breweries. How many is too many?

According to the Brewer's Association, the trade group that represents craft beer, there are now over 4,000 breweries in the United States. That's approaching the high of 4,131 the U.S.boasted in 1873, before the Temperance Movement, and later Prohibition, and then after THAT the big corporate brewers, laid waste to beer brewing in America.

That's pretty remarkable, when you consider that within our lifetime (or at least within my lifetime) there were as few as 89 breweries operating in the United States. There are now more than that in the Portland metro area alone!

Chart courtesy of Somethingsbrewing.com

Of course, many of us remember the craft beer boom of the 1990s. It was a glorious time. It was a time when Samuel Adams, Brooklyn, Sierra Nevada and others were just starting to make waves. Between 1986 and 1995, craft beer grew at rate of up to 75 percent a year. That growth dwarfed even today's beer explosion. Sure, I had to drive 30 minutes to get to the only decent beer store in the area, but the fact that decent beer even existed was a revolution.

In 1997, that growth hit a wall. Between 1997 and 2003, craft beer barely budged. Some years, there was no growth at all. It began to slowly tick upwards after that, but didn't begin to surge again until 2010, when the craft beer segment began experiencing double-digit growth that continues to today.

But can it last? Is there a so-called "bubble" that is threatening to burst, leaving hundreds of broken breweries in its wake?

It's a question that many people have been asking the last several years.

Breweries in planning, circa 2011

Despite my misgivings about the quality of many of the newest breweries, I don't think so. At least not any time soon.

Breweries like Stone, New Belgium, Dogfish Head, and Lagunitas are petty big fish, but only in a small pond. They seem big to craft beer nerds, but in truth they border on being nobodies. Really influential nobodies, to be sure, but hardly the giants we often think they are. As Dogfish Head's Sam Calagione recently pointed out, "I guess we are somewhere around one tenth of one percent of the US beer industry."

And these are the BIG craft breweries. Most are reeeaally damn tiny. That 4,000 figure includes nano breweries operating out of garages and barns, small brewpubs that make just enough beer to supply their restaurant, and so on. They serve very local, very small customer bases, just like breweries did over 100 years ago.

As the Brewer's Association points out:

Most of the new entrants continue to be small and local, operating in neighborhoods or towns. What it means to be a brewery is shifting, back toward an era when breweries were largely local, and operated as a neighborhood bar or restaurant

How many neighborhoods in the country could still stand to gain from a high-quality brewpub or micro taproom? While a return to the per capita ratio of 1873 seems unlikely (that would mean more than 30,000 breweries), the resurgence of American brewing is far from over.

That's not to say we're not feeling the squeeze. Talk to the person who runs your local beer shop and they'll probably tell you that there just isn't enough shelf space for all the new beers coming out. I have a solid half-dozen really good beer stores within five minutes or so of my house, and between the six of them they still can't maintain a selection of all the beers supposedly available in our area.

Photo courtesy of a really stupid column.

There is a lot of competition in the craft beer world. There will only be more. A lot of beers will get squeezed off the shelves. One bar owner told Draft Magazine in 2013:

“Frankly, I’m pretty convinced that the market [here] won’t support all of these breweries ... From talking to all of the bar owners in the market, we all have that opinion. There are a few breweries right now that none of us, meaning respected beer bars, support regularly. They sort of get ‘pity handles’ because we’re all on the same team.”

But there is room to grow, especially in areas not yet served by several good local/regional breweries, and even when that growth begins to slow -- and it inevitably will -- it's hard to envision a collapse. Today's beer drinker has been exposed to better beers right from the start. Sure, they will often still buy a cheap 30-pack of something because college + spending money don't usually go together, but from a taste perspective they have different expectations than people from my father and grandfather's generation.

Sure, my shop of choice doesn't stock half of what I want to drink because there is literally too much great beer out there for them to stock, but for the moment all that means is that every good beer shop is unique, with a selection not duplicated by the shop down the road. It makes every store you visit a beer adventure.

And that's hardly a bad thing. It means demand is still huge.

More importantly, people are still demanding good beer made nearby. As long as that demand remains -- and I don't see it waning any time soon -- we'll continue to see craft beer grow.

The sky is not falling. The good stuff is here to stay. Sure, make no mistake, there is NOT much room for competition in the upper echelon of the craft beer world. They're already starting to step on one anothers toes. There is room for only so many Founders and Bell's and Samuel Adams to go around.

The small, uber local guys are another story.

Four thousand breweries is a lot ... but we'll get to 5,000. Bet on it.

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