Can there be too many breweries?

Today we find ourselves in a brewing boom in the United States. The Bohemian has only been around for about 10 years (founded in and opened our doors in 2001) and we still feel like a new coming to this industry among others like Sierra Nevada who have hit 30 this past year. Now, we're not owned by deep pockets or some midwest corporation so our growth has been steady but humble all done with our own capital. No investors or outside partners. Just a mom & pop shop. Literally. The popularity of consumers switching from macro beers to craft beers is refreshing. But with this turn in popularity you start seeing dollar signs in peoples eyes. We find our selves in a funny situation asking the question; "Can there be too many breweries?"

Don't get us wrong. Competition is always good for business. And the more craft the merrier is what we like to say. As long as someone is drinking quality over quantity we're on the right track. Right? Today I read a press release by the Brewer's Association (below) and found an alarming number of breweries being planned for production. What does this mean? Is this sustainable? Is this the beer equivalent of the yogurt craze in the 90's and now the similar craze with frozen yogurt and berries? Will be be doomed to the same fate as wine? Is it a fad? Will big beer die? Will craft come out on top?

Realistically there are only so many beer drinkers out there. You can get new drinkers simply with the coming of age. With craft it's more like growing up and enjoying a beer rather than getting plowed off of beer. You also loose them due to age, diet and other personal reasons. Craft has been converting people to purchase a quality 6 pack over a cheap 12 pack. Drinking beer instead of wine with a meal. But what happens if you have too many choices (gulp - did I really say that?).

For the off premiss side of things think of it this way. I always equate craft beer to dairy or specifically milk. Sure beer won't go bad as fast as milk but it does have a limited shelf life and limited shelf space. If you go to a c-store you see maybe 7 or 10 brands of milk (in urban areas) including Soy. But typically you see 4 at the most. Now milk is something a lot of people drink. Babies all the way to the Elderly. The age window for a beer drinker is arguable much smaller. They also drink a lot more and more often. But yet you don't see 155 types of milk at the store. What happens with you get too many beer options? Sure, the bad beer will get weeded out eventually but after causing how much damage? But what happens to the large craft players do they feel the pinch as the macro breweries do right now? What about the small regional craft breweries? What about all breweries? Does everyone simply throw away half of their product because it expires on the shelf due to too many options and product not moving?

The future looks to hold a lot of beer. Hopefully good, no - great beer. Until then we watch the growth with optimism and caution.

BA release below:

BREWERS ASSOCIATION REPORTS 2011 MID-YEAR GROWTH FOR U.S. CRAFT BREWERS

Dollar growth up 15% in first six months of 2011; U.S. sees rapid growth in breweries in planning

Boulder, CO • August 8, 2011 - The Brewers Association, the trade association representing the majority of U.S. brewing companies, has released strong mid-year numbers for America's small and independent craft brewers¹. Dollar sales were up 15 percent in the first half of 2011, excluding brewers who left the craft segment in 2010². Volume of craft brewed beer sold grew 14 percent for the first six months in 2011, compared to 9 percent growth in the first half of 2010.

Barrels sold by craft brewers for the first half of the year are an estimated 5.1 million barrels. Despite many challenges, the mid-year numbers show signs of continued growth for craft breweries. The industry currently provides an estimated 100,000 jobs, contributing significantly to the U.S. economy.

"Craft brewers continue to innovate and brew beers of excellent quality," noted Paul Gatza, director of the Brewers Association. "America's beer drinkers are rapidly switching to craft because of the variety of flavors they are discovering. And they are connecting with small and independent craft brewers as companies they choose to support."

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The U.S. now boasts 1,790 breweries—an increase of 165 additional breweries since June 2010. The Brewers Association also tracks breweries in planning as an indicator of potential new entrants into the craft category, and lists 725 breweries in planning today compared to 389 a year ago. Additionally, the count of craft brewers was at 1,740 as of June 30, 2011.

"There is a growing interest in establishing new breweries," Gatza added. "It seems like every day we are hearing about a brewery in planning. Will they all make it? No, but many will if they produce high-quality, interesting craft beers and can get them to market through self-distribution and beer wholesalers and beer retailers."

¹ The definition of a craft brewer as stated by the Brewers Association: An American craft brewer is small, independent, and traditional. Small: Annual production of beer less than 6 million barrels. Beer production is attributed to a brewer according to the rules of alternating proprietorships. Flavored malt beverages are not considered beer for purposes of this definition. Independent: Less than 25% of the craft brewery is owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member who is not themselves a craft brewer. Traditional: A brewer who has either an all malt flagship (the beer which represents the greatest volume among that brewers brands) or has at least 50% of its volume in either all malt beers or in beers which use adjuncts to enhance rather than lighten flavor.

² Three former craft brewing companies left the segment in the second half of 2010 when transitions led them to no longer meet the Brewers Association's definition of independence.

Contact

Paul Gatza, Director
paul@brewersassociation.org, 303.447.0816 x122

Julia Herz, Craft Beer Program Director
julia@brewersassociation.org, 303.447.0816 x113

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The Brewers Association is the not-for-profit trade association dedicated to small and independent American brewers, their craft beers and the community of brewing enthusiasts. The Brewers Association (BA) represents more than 70 percent of the brewing industry, and its members make more than 99 percent of the beer brewed in the U.S. The BA organizes events including the World Beer Cup®, Great American Beer Festival®, Craft Brewers Conference and BrewExpo America®, SAVOR: An American Craft Beer & Food Experience and American Craft Beer Week. The BA publishes The New Brewermagazine and its Brewers Publications division is the largest publisher of contemporary and relevant brewing literature for today's craft brewers and homebrewers.

Beer lovers are invited to learn more about the dynamic world of craft beer at CraftBeer.com and about homebrewing via the BA's American Homebrewers Association. Follow us on Twitter.