The Craft Beer "Bubble" Is Not a Thing; Move Along

Categories: Beer Beer Beer

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Doug Fairall

The end is nigh for craft beer! There are too many breweries saturating the market!

From the Consumerist to the Examiner to the Philadelphia Inquirer and all manner of publications in between, writers have been heralding the existence of a "craft beer bubble" in both shock and speculation.

These rumors have been bubbling under the surface, with very few willing to go on record to say these things, but when they do, it sparks waves of controversy. Take Greg Koch of Stone Brewing in California. He spoke with Business Insider about what the craft market has done to consumers. "We are giving the consumer a dizzying array of choices, which range from super-high quality to rather mediocre stuff," Koch told the paper. "You can expect that consumer fatigue will show up again, just like it did in 1996. It's like a school of fish. It will turn, but you don't know when."

They claim that this bubble exists because there are just too many craft breweries opening and the market can't support them. I say this is bollocks.

The number of breweries in 2012 grew to its highest number since 1887. That might seem problematic on the surface, but what needs to be understood is that during the 1890 census, the United States population was determined to be 62,979,766. In 2010, that number became 308,745,538. So there are roughly the same number of breweries for a population that is now five times as large. Still a lot of room to grow.

Another facet posited by this idea of market saturation is that there will be no more room in stores for the growing number of breweries. That may very well be true to a point. However, not every beer could or should be on every grocery store or convenience store shelf. Some will be available only in a small area around the brewery, others in larger swaths of territory.

Take wine, for instance, which has its fair share of product that's available in certain high-end wine shops, big-box liquor stores, and inexpensive bodegas. Is there concern for a wine bubble? Not particularly.

Beer ingredients may go up in price, and that may reduce the number of get-rich-quick operations (or those thinking that they can... craft brewing is not easy money no matter how good the market is). But this is a force that affects every part of the industry, including macrobrewers.

At the end of the day, craft breweries will survive if they have a couple of key points down: They make good beer, and they have local support. If they can do that, then they are on pretty good footings.

Are there ups and downs to the markets? Sure. But to call any market growth, no matter how good it is, a "bubble" is just fear-mongering. South Florida especially has no fear of saturation to come anytime soon. Until that happens, and I hope it does one day, I'll be waiting with breathless anticipation for each and every new brewery that opens its doors.

Oh, and this will probably be my one and only article on the topic of "the bubble." I'll leave that "issue" to others.

Doug Fairall is a craft beer blogger who focuses on Florida beers and has been a homebrewer since 2010. For beer things in your Twitter feed, follow him @DougFairall and find the latest beer pics on Instagram.





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19 comments
icculus17
icculus17 topcommenter

wouldn't the number of people drinking beer need to increase as well? Otherwise who is drinking all of this beer?  The number of people switching from mainstream macrobrews to microbrews is very small.  



I have tasted a lot of new beers on the market that really shouldn't be on the market at all.  Just make one good beer before you decide to open a brewery and start bottling.  I don't see why a decent regional brew should cost more than $5 at bar, or $8-9 for a 6pack.  When prices go up, sales will go down.

frankd4
frankd4 topcommenter

.....................a "bubble" is created when irrational things are occuring on a large scale throughout the economics of the product which can ultimately lead to a massive and immediate "correction" - novelty products with long shelf lives don't have to succumb to steep price declines, and indeed, the price may rise if production of a specific beer is no longer produced - a crash may send every consumer out paying double just to stock up as supplies last - like we do with toilet paper on occassion

frankd4
frankd4 topcommenter

.....................wine is not comparative in that it cannot be "locally produced" just anywhere and most wine consumers know the process requires specific locations and specific grapes to yield what they are specifically looking for - craft brewers can just make stuff up batch by batch and experiment with different ingredients - in wine you had better know what you're doing = period = or you may lose an entire seasons harvest

frankd4
frankd4 topcommenter

..........as long as the cost to produce 16 oz is around twelve cents ( $.12) and the retail price hovers around $5 there is plenty of potential profitability - same as in PIZZA whereas there are actually 8,ooo + / - artisanal craft "pizzerias" through-out america

frankd4
frankd4 topcommenter

.....................as a cigar smoker i can tell you there are thousands of sticks on the market, all coming and going, and as an agricultural product in the luxury category (no one needs beer or cigars as a recommended daily requirement (except the germans who DO indeed count beer as a basic food group) this is a good thing for todays consumers who have the attention span of a gnat

michealkbutler
michealkbutler


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beerhere2010
beerhere2010

re: #craftbeer 'bubble'..."bollocks"; I'll second that, Dougie.


Thanks for getting into 'ink' a critical point; US pop then and now (1887 & 2012) and the (proper) suggestion to 'do the math' and extrapolate the numbers as a percentage of population.  The numbers the Brewers Assn supplies show that we FINALLY got to the same number of brewers (~ 1800) in 2012 but to get to the same number as a percentage of population we'd have to be at 9000 + so...


'bollocks' it is, officially.  LOTS of room to grow.  ESPECIALLY when you take into consideration:  a) 1887 was basically per-refrigeration; eg warm #beer territory   b) Victorian America frowned on women in bars, hell they didn't even have the right to vote!   c) racial divide was firmly in place and surely acted to suppress access and imbibing by minorities.  d)  no supermarkets or convenience stores (that refrigeration thing again) served to limit numbers of and volumes from the brewers that did exist so...


there.  Look for 10,000 + TTB licensed brewers by 2030 w/ MEGABEERCOs being reduced to less than 50% US market share.  Na Zdravi!  ADKBREWCO

frankd4
frankd4 topcommenter

@beerhere2010

...............................i'm not sure what all those %'s and number you recite mean but the american consumer is very open to identifying products that are individual in nature and speak to who that person is and craft beers do that

so as long as toooty-fruity craft beers are produced someone will buy them just because they identify with toooty-fruity stuff

remember, we are a nation that thinks mcDONALDs sells "hamburgers" and most of us don't ever sit down and use a fork and knife anymore so craft brewers can use "reclaimed" wastewater and it would sell here - that i am 100% sure of = period

beerhere2010
beerhere2010

@frankd4     you be 'frank', i'll be honest. 


those 'numbers' are math and irrespective of whether the brewers are brewing 'manly' (read #fizzyellowbeer by the MEGABEERCOs corporations in Belgium and UK/SA) or 'toooty-fruity' (sic) #craftbeer;brewed by local folk they:


a) are empirical  

b) show a path and tell a story (the rest of the story, ala Paul Harvey? > YOY 2x digit growth in sales and volume for #craftbeer thru the heart of the (not so) GR8 Recession, 7y & counting) & 

c) are accurate and undeniable.  kinda like climate change (for everyone except the most rabid of ideologues or dim of wit). 


as for folks that can't 'process' math / numbers?  i'll let Robert A. Heinlein's character in Time Enough for Love; Lazarus Long, address that:


"Anyone who cannot cope with mathematics is not fully human.  At best he is a tolerable subhuman who has learned to wear shoes, bathe, & not make messes in the house." LL


Apparently, he left out being able to use eating utensils for good reason (talk about your foreshadowing from 1973).

frankd4
frankd4 topcommenter

@beerhere2010 @frankd4


well apparently you never heard the saying "LIES, DAMN LIES and STATISTICs"


i agree on all counts that math is a basis of analysis however subject to interpretation and any interpretation for ANY given set of numbers is arguable and debated and at best leads to a probability of a future event


what is the probability of the sun rising tomorrow ?


.................IF you know math as you say you do you will realize it is NOT 100%


................AND in the event the sun does NOT rise i would dare to say indeed NONE of YOUR math analysis on craft beers future will hold as relevant = period



beerhere2010
beerhere2010

@frankd4 @beerhere2010 Not only am I familiar w/ the phrase, I know that as applied, it's taken out of context of the full phrasing to support your specious rejection of Doug's premise and my supportive 'math'. 


In the interest of FULL disclosure and re-making the argument the full phrasing is >  'After all, facts are facts, and although we may quote one to another with a chuckle the words of the Wise Statesman, "Lies - damn lies - and statistics," still there are some easy figures the simplest must understand, and the astutest cannot wriggle out of.’


So...


a) the sun NEVER rises, it 'appears' to rise, as the Earth spins 1000 mph counter-clockwise; so...there's that  - and -  


b) facts are facts, the numbers ARE the numbers; the projections, well, they're mine.  and, I'll stick w/ 10,000 + brewer's licenses and AB InBev & SAB Miller-Coors @ < 50% market share by 2030.  

frankd4
frankd4 topcommenter

@beerhere2010 @frankd4


as to part a) above i didn't want to get into the same "problem" galileo had but as we depart from the cone of habitability it becomes moot


as to part b) we are ALL entitled to our own facts however it is not that craft brewing is anything new and in fact it goes back some nine thousand years plus and even today in GERMANY each region has it's own and sometimes multiples and it wasn't too long ago we here in american had many many regional breweries that were consolidated over the years into the four major producers today which can deliver the cheapest product to market = period


i think what you are missing is that "quality" does not by itself provide market domination just like there are hamburgers from McDonalds and hamburgers from Peter Lugers


study the wine industry and see why many many local quality products cannot achieve economy of scale without consolidation at the distribution level (and they simply cannot "move" burgundy to new jersey geographically to grow grapes)


once german beer manufacture left milwaukee it was game over

beerhere2010
beerhere2010

@frankd4 @beerhere2010 what's w/ the trash food fixation?  americans treating treating their bodies like garbage dumps instead of temples doesn't relate here.

and

hell no; "...we are ALL entitled to our own facts".  not.  while we're entitled to our opinions, there are 'a' set of facts and those facts are the 7 yrs of double digit #craftbeer sales and volume growth.  

it's NOT about 'domination' it's about fresh and local and the death by a thousand cuts that MEGABEERCO is suffering at the hands of the little guys.

stay tuned/hang on, non-believer;  sharp learning curve up ahead.

frankd4
frankd4 topcommenter

@beerhere2010 @frankd4


if you say so meanwhile i'll stick with the olde german stuff because of their national PURITY LAWs or the irish stuff called guiness because they've been at it for a long time


so unless your craft industry is going to use melted antarctic iceberg water there is nothing really to see here

beerhere2010
beerhere2010

@frankd4 @beerhere2010 funny you mention the water...

my 'backyard' (N NY's #Adirondacks) oozes ~ 10 TRILLION gal/yr of pure soft wild Blue Gold, a portion of which is leftover ice age glacial water w/ the same profile as the water pulled out of the aquifers under Pilsen, Cz for Pilsner Urquell. Arguably the best pilsner #beer in the world.

stay 'tuned'

Na Zdravi!!

ADKBREWCO

frankd4
frankd4 topcommenter

@beerhere2010 @frankd4


ohterwise i'm not so sure GE hasn't dumped wastes throughout upstate and into the HUDSON so your stash may not be UNtainted as you think - otherwise acid rain seeps into any local groundwater - nothing is as pure as two thousand year old artic or polar ice which was not sublect to the same pollutions elsewhere

frankd4
frankd4 topcommenter

@beerhere2010 @frankd4


well kiss that goodbye with FRACKing


germany meanwhile has absolutely prohibited such extration for the reason that it may somehow get into the water so they are not taking ANY chances

beerhere2010
beerhere2010

@frankd4 @beerhere2010 a) no nGas in the #ADKs  b) wouldn't matter if there was, the Adirondacks has been 'forever wild' protected by Article XIV of the NYS constitution since 1894 and closely governed under the APA's incredibly restrictive  management and use rules since 1972 so...that's why the five major watersheds of the ADKs are pumping out 10 trillion gal/yr of pure soft water, and will continue to do so.


Downstream, outside the 'Blue Line' of the ADKs, the Hudson and to a lesser degree the Mohawk that flows into the Hudson have had their 'challenges' in the past and act as repositories for treated waste, yes.  Just like every other major river system in the US.  The difference here is that we don't 'stick a straw' in those rivers to pull our drinking water out, like the S, SE, MidWest.  BIG dif.  


The ADKs is the only constitutionally-protected watershed(s) in the world and #craftbeer brewers are catching on; stay 'tuned'.  Na Zdravi!

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