As of May 2013, there are 2,514 breweries in the US with an additional 1,559 currently in planning, and I personally don’t believe the market can sustain them all.
Now before the nasty-grams start coming in, let me explain myself. The craft beer market is clearly expanding fast. Craft sales have increased 15.4% in volume YTD, so the US beer consumer is definitely drinking much more craft beer. This isn’t the issue in my opinion, as I think craft beer will continue to steal market share from the big boys. So what is the issue? Well, there’s a few.
First, while it looks like the market definitely has room to grow, I’m not sure there’s room for as many brands. Every brewery thinks they have their own creative spin, but at the end of the day, most have very similar product lines. I know this isn’t an issue in some lesser saturated markets, but in the big cities it certainly is. The sheer number of beers in the aisle is getting ridiculous (I’m looking at you Total Wine & More). Even as someone who drinks his fair share of craft beer and stays pretty abreast with what’s going on in the craft beer world, there are just too many breweries to even remotely keep up with. Hell there’s even a handful of local breweries I’ve yet to try; these are the beers made in my backyard, let alone ones from across the country. There just aren’t enough new things being done, and I hate being different merely to be different (I’m looking at you Rogue, and your bacon donut beer.) For me there’s already too many similar beers on the shelf. Truthfully, how many different ways can you make a Pale Ale?
That issue is compounded by the higher prices of craft beer. Craft beer is getting more expensive, and that’s not necessarily a bad thing. What was $5.99-6.99 for a six pack, is becoming $7.99-9.99. Breweries are selling more hoppy beers than ever, cost of goods has gone up, and let’s face it, it’s a premium product. I’m perfectly ok paying an extra $0.50/bottle for a great beer, but it makes me more hesitant to try a new brand that might suck. A lot of new start up breweries make beer that is just ‘ok’. I don’t want to waste the money, or the calories on beer that is just ‘ok’. Life is way too short.
That issue is compounded by the current trend of breweries moving more of their brands into higher-margin packaging. I’m seeing more and more beers that are exclusively sold in 22oz bombers for 6.99-11.99. That is crazy talk. Deschutes Fresh-Squeezed IPA is a great example. It was a new seasonal release, and it was fantastic. It was also 6.99 for a 22oz bottle, and I’m sorry Deschutes, but I’m not very inclined to spend $0.39/oz for a beer, when I’m used to 6-pack pricing at $0.12/oz. I know there are more costs associated with seasonal and special release beers, but 3x the cost for a 6% ABV beer? No.
That issue is compounded by the fact that IPAs are still the fastest growing segment in the craft market. This is an issue because hoppy beers don’t have a long shelf life. When the local bottle shop has 100 different IPAs, even a good selling brand can sit way too long. So there I am, having to check the dates on every flipping bottle because at least half are well over the recommended drink by date.
That issue is compounded by the fact there are still a ton of breweries that don’t put ‘Bottled-on’ dates on their bottles. This to me is absurd. I’m not going to play Russian roulette with a $9 DIPA bomber when I have no clue how long that beer has been sitting on the shelf. Dust on the bottle? Forget about it. Now this may sound snobbish, or ridiculous to some, but I’ve bought way too many heavily oxidized, old IPAs that I can only wonder what they were supposed to taste like.
And that brings us right back to the start, as it’s compounded by the fact there are 2,514 breweries in the US, with 1,559 more on the way.
So even though I feel the craft market will continue to grow, and grow well, I wonder how sustainable new brewery growth is. I can tell you it’s not a market I’d be ready to risk my entire future in. I’ve heard a number of people say that beer will just become more local. Shit, I try to drink local, but even at that, with over 20 local breweries, it might be 3-6 months before I drink the same local beer.
Amazing beer will always win it’s place in the market, and I’m sure that more than a few of those 1,559 new breweries will make some awesome beers. The problem is, hundreds won’t. They might make good beer, they might even make great beer, but when someone else is making amazing beer for the same price, it’ll be hard to keep the lights on.
Which brings me to my last point. I get asked often, just as many of us homebrewers get asked: Why don’t you open a brewery? My answer lately has been “Because there are 2,500 breweries in the US with 1,500 more on the way. That’s probably already too many, and they all have a head-start on me.”