Coming soon: 2000 New Breweries

Beer Thirty, Jacksonville, Florida

Craft fans crowd Beer Thirty, Jacksonville, Florida

Craft beer has arrived. It’s a thing. Has been for a while now. No news there. What is newsworthy is all the breweries still opening and in the planning stages. If you live in a U.S. city, I’ll bet you a dollar there’s a brewery or pub serving craft beer within three miles of your house. (Note: if you think there’s not one within that distance, send me your name and address via the “Contact Leslie” link above. If I can’t find one, I’ll snail mail you a crisp dollar bill.)

What’s more, if you’re in an urban area, I’ll predict (this one gets more time-consuming to prove, so no money on it), that within ten miles there’s a craft establishment less than a year old. According to the Brewers Association, the trade organization that keeps such stats, just over two craft breweries opened per day in 2015 and the pace has continued this year. And that’s actual breweries. Add in the number of pubs, taprooms, beer bars, call-them-whatever-you-want places that serve a decent craft selection and what’s happening is eye-opening.

Elkhorn Slough's 3 1/2-barrel system, Watsonville, California

Elkhorn Slough’s 3 1/2-barrel system, Watsonville, California

Here’s an example. I live in a little town on California’s Central Coast. In the last week and a half, I’ve visited three craft places in different towns within 45 miles of home, all of which opened within the last six months. One, with 24 beers on tap, calls itself a pour house and is located in a trendy remodeled old brick building. Another, a craft brewery with a 7-barrel system, is in a non-descript strip mall. The third, a nanobrewery with a 3 ½ barrel system, opened July 22 in an industrial warehouse park just off the highway. (By way of comparison, the new Blue Moon facility in Denver that I wrote about last week has a 20-barrel system.)

But even if you’ve got some money, plan well and play your cards right, opening a brewery or craft establishment still involves risks. Logically, with all the competition, standing out is only going to get harder.

East Cliff Brewing Co. in a Santa Cruz, California strip mall

East Cliff Brewing Co. in a Santa Cruz, California strip mall

Last week, Bart Watson, chief economist of the Brewers Association published an article on the BA website titled, “There Aren’t Enough Breweries!” Since Watson has a head for statistics like few other human beings–never mind his Ph.D.–the title got my attention.

In the first sentence, he admits the title is clickbait, but he goes on to make some great points and argue that brewery openings will continue for a while. It’s consumer-driven demand, with more and more buyers wanting the product. If it were speculation driven, we’d expect to see a bubble burst when production exceeded demand. There is no evidence of that at this time, but there is for the trend to gradually slow.

Watson predicts that, “As incremental growth slows, it becomes more likely that in order to grow volume you’ll have to take it from someone else.” This shouldn’t be a problem for breweries that only want to maintain their size, but for those looking to grow, things will get tougher.

Farmer's Union Pour House in downtown Salinas, California

The hip vibe at Farmer’s Union Pour House in downtown Salinas, California

Watson’s conclusion for new players: “That means entrants will need to focus more than ever on quality, innovation, and differentiation in order to realize those opportunities.”

Where I predict we’ll see a shakeout in the next five years or so will be at the nanobrewery level. Breweries with annual production in the several hundred-barrel range are a tough go financially. Typically, they’re newbies who ramp up production in the first years as quickly as possible. As soon as they earn enough to afford an additional fermenter, they already needed it last month. Ditto for the next brite tank, the larger brewing system, the taproom expansion, etc.

The second thing I anticipate is that it will get harder for smaller players to enter the market. Increasingly, new breweries will have to come to the game with more financial backing to make a go of it. With more dollars at stake and a progressively sophisticated craft beer public, higher quality and consistency from the get-go will matter more. Therefore, expectations of formal training for brewers will rise. Great homebrewers looking to open a nice little brewpub will get squeezed the hardest.

What does all this mean to the average Craft Beer Joe? At present, there have never been more new breweries or brewers, so go out and enjoy all the innovation and variety. In doing so, you support your local brewing scene. If you don’t do it now, you may not have so many opportunities in coming years.

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