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Are There Too Many Craft Breweries?

If someone asked you "are there too many craft breweries in America," what would you say? Do you agree/disagree/don’t know?

I would probably ask, “Too many breweries for what?”

Too many breweries for any mortal to experience in a lifetime? Possibly. You could do it if you owned your own jet and had a stomach similar to Andre the Giant’s.

Too many breweries to be sustained economically in the long run? Absolutely not. Craft beer is often a job-creating, friendship-generating beacon of positivity.

Too many breweries for the good of all breweries? This is a definite yes.

Before I’m chased out of town with malting shovels and electrified hydrometers, I’d like to clarify that too many breweries isn’t a problem for the consumer, of course, nor is it one for all brewers. It’s just a fact that must be taken into consideration for those associated with the industry. Let’s look at the numbers.

By the Numbers

The Brewers Association estimates nearly 1,000 new breweries opened in 2017, for a total of 6,372 U.S. breweries. Out of those 6,300-plus craft breweries, more than 4,200 have opened in the past five years … and there are around 2,500 in the planning phase.

What that tells us right off the bat is that a very competitive marketplace is about to get far more competitive, simply from a numerical standpoint. There’s more beer occupying the same amount of space.

If you’re a brewery in planning, you’ve got to have a very solid plan, because this is the proverbial “bubble bursting” that is so often spoken of in hushed, fearful tones. However, doomsday imagery doesn’t really apply.

Fierce competition is starting to force out the weaker competitors, but at this stage, it’s not going to cause a catastrophic meltdown. This is now a proven industry with infrastructure it didn’t possess the last time a shake-out scenario took place in 1997. We’ve got college degrees for brewing, lobbying and legislation in place, and multiple layers of craft retail and tourism, among others.

Point being, craft is now a generational entity. The same could be said for the internet after the Dot-Com boom and bust. Good beer is here to stay, and now it’s just a matter of how things play out.

Using BA-defined terms, craft’s broad segments are regional breweries (defined as any craft brewer making between 15,000 and 6 million barrels annually), microbreweries (under 15,000 bbls) and brewpubs (more than 75 percent of beer sold on-site). Of these segments, about 200 are regional, 3,800 are microbrewers, and 2,250 are brewpubs.

The number of breweries that closed in 2016 was 97. Last year that number grew to 165, an increase of 70 percent. Brewpubs accounted for 64 closures last year, while microbreweries accounted for all 101 of the other closures; regional brewers saw no closures.



Craft brewers that have been able to squeeze into large outlets and sell en-masse (New Holland, Bell’s, New Belgium) will maintain their foothold just as surely as AB InBev’s craft acquisitions, like 10-Barrel and Goose Island.


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Comments

audittflyer's picture
Informative and provocative assessment of the beer industry and craft brew market space. The bottom-line IMHO are two key factors: the business smarts to run a business (assuming sufficient financial backing is in place) and having a quality product. I agree with the concept of being the best even if it is at the expense of being the best for one specific type of beer. I am located in the Philadelphia suburbs - an area rich in craft breweries and the shakeout has already begun. The strong will survive.
Editorial Dept.'s picture
Hi audittflyer, We appreciate your thoughts on the piece. Glad you enjoyed it!

Comments

audittflyer's picture
Informative and provocative assessment of the beer industry and craft brew market space. The bottom-line IMHO are two key factors: the business smarts to run a business (assuming sufficient financial backing is in place) and having a quality product. I agree with the concept of being the best even if it is at the expense of being the best for one specific type of beer. I am located in the Philadelphia suburbs - an area rich in craft breweries and the shakeout has already begun. The strong will survive.
Editorial Dept.'s picture
Hi audittflyer, We appreciate your thoughts on the piece. Glad you enjoyed it!

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