Too Many Breweries Or Plenty of Room for More?
by Tony Forder
With breweries still popping up like mushrooms in a cow-pooped meadow, some people are beginning to wonder how many is too many.
There are more breweries in the U.S. than at any other time in recorded history (way more in fact!). Until recently the high point for operating breweries (per the Brewers Association) was in 1873 with a total of 4,131. At that time the nation’s population was around 40 million, so about one brewery for every 10,000 people.
Today the population has grown 8-fold, but we don’t have 8 times the breweries (somewhere over 7,000) – that’s about a brewery for every 46,000 people. Some saturated areas like the greater Portland (OR) area have about 1 brewery for 17,000 (117 breweries, pop 2.2 mill) or San Diego County about the same (200 breweries pop 3.3 mill).
So you could say there’s plenty of room for more growth. On the other hand, things are a little different today than 150 years ago. While wine, and spirits and even cider have always been around people do have a few more alcoholic beverage choices these days – not to mention availability. A century and a half ago, the most available was local – which was why there were so many breweries. As in Europe, breweries brewed for the local people. Germany for example is often quoted (or misquoted) as having had a brewery in every town.
What we’re seeing today is a return to the local preference. People seem to be drawn to their local brewery. What’s different today is that people drink at the brewery. In times gone by you may have been able to buy beer from the brewery in whatever sort of container you brought, but generally you drank it at home. Or at a tavern. But the reputations of drinking establishments, bars and tavern were one of the factors that helped usher in Prohibition.
These small tasting room breweries (garage breweries) are currently riding the crest of the wave. They are new and the beer is fresh – perhaps sometimes a little too fresh. But, all waves break, and perhaps the first signs of this one hitting the shore may come from the ticker crowd. How long will the ticker crowd stand in line to purchase the newest weekly release of a slightly tweaked DDH (Double Dry Hopped) DIPA (Double IPA) – and pay $20 for a 16-oz 4-pack? A ticker by the way is someone who is apparently more interested in ticking off a beer (on Untappd) they haven’t had than sticking with something they like.
Direct sales of such New England IPA wonders are a boon for small brewers, but beware of the tickers – they are always on the move, they don’t come back. Also, there is still plenty of demand for craft beer as mainstream beer drinkers are still crossing over into the world of full-flavored beer. But eventually not everyone will stray from bland tasting industrial beer, and not everyone cares enough about taste to pay more for their suds.
Word on the release front is that the long lines are disappearing, which is actually welcome news to many brewers; they’re still selling out their new releases, albeit in a more orderly fashion. Most are pretty sure the New England (fruity hops) IPA style is here to stay and hop development is still front and center. Citra hops are easily found these days, Mosaic also in good supply. Galaxy, you’ll pay three times the price. As for the haze, well those oaty, wheaty, lactose brews – they really don’t have much of a shelf life, and may eventually lose popularity.
With hundreds more breweries anticipating openings this year competition will no doubt increase. Some are already predicting more closings in 2019 than openings. I’d say a lot depends on location. New Jersey for example just crested the 100 mark. With its population density, it would seem like the Garden State could handle another 100 – or at least 50. Likewise the boroughs of New York City which are experiencing a brewery boom.
Success depends on the goal of the brewery. The growth in craft is mostly at the lower end. Some small breweries say regional craft breweries have had their day. At the larger end, sales of Sam Adams, New Belgium and Sierra Nevada are pretty static. Mid-size breweries, which bulked up a few years ago due to unfettered demand are having a hard time keeping up and staff layoffs have not been uncommon. Small guys say the sweet spot is around 5,000 barrels. Beyond that, things get more complicated – more staff, more equipment.
So, if you’re still in the planning stages, the advice is to go slow. You can do a lot with a 7-bbl system and tanks. $250,000 should get you started. Make sure you know what you’re doing and pay attention to quality. Don’t get too reliant on high-priced new releases – which are currently a boon to nanobreweries – although that direct from consumer tasting room cash can be addictive. Fifty-fifty is a good balance – half the production in regular distribution and half in the tasting room.
Ultimately, consumers will make their choices on the quality of the beer, ambience of the location, and convenience.