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Old 08-28-2012, 12:03 AM   #1
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Default Brewery Bubble?

This is something that I have been thinking about over the last few months. With all the new breweries and all the breweries "in-planning" are we approaching a bubble? http://beeronomics.blogspot.com/2012...ry-bubble.html What is the future of so many small breweries?..Obviously they can't all grow bigger AND succeed.

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Old 08-28-2012, 12:22 AM   #2
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I believe so, 100%. Every Tom, Dick, and Harry homebrewer who can get financing now seems to be hell-bent on 'going pro'. I think a lot of this is driven by the current job market.

Realistically, how much 'beer money' is there to go around? I'd love to latch onto one or two 'locals' and support them, but 5,6,7? Not possible.

A good friend of mine just ditched his union job, moved to a farm in Mass, and is attempting to open a brewery using all his own hops. More power to him, but I'll keep my union job and hope for the best for him. The prospects don't look secure enough for me to even consider something like that.

I guess we'll just have to see how it plays out.

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Old 08-28-2012, 03:59 AM   #3
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I was in Denver a couple weeks ago and saw a billboard on the freeway from a bank advertising to finance your brewery. I'm serious.

That said, I'm not sure that we have hit the bubble -- yet. There's many states with antiquated brewing laws that in time will be overturned and create new markets for new breweries. The popularity of craft beer, generally, is very low compared to BMC and spirits so there's still a lot of room for growth. Obviously competition is going to get tight quicker in states that already have laws that have allowed growth and led to established breweries. So we might be 10-20 years out from a real tightening of the belt, assuming popular interest in craft brewing doesn't disappear as a whole.

The more likely scenarios in coming years are: one, the larger craft brewers will start getting more competitive for taps and shelf space as they compete for the non-local and non-BMC taps and shelf space; and two, in general people will be more discriminating about supporting breweries so that being local won't be enough to garner a certain amount of local business. You'll have to be local and good. Lots of mediocre and worse breweries and brewpubs will come and go.

So with that in mind, if I were inclined to start a brewery (and I am not) I would either get in now with the hope of building a base and working towards establishing myself locally and regionally with solid marketing or I would wait a few years until I had perfect recipes and knew I could make them perfect on a large set up by the time I could open my doors so I could wow people from day one and out compete the rest of the local market. The days of people just getting into the market with mediocre recipes and no real plan or experience and expecting consumers to finance their efforts to perfect the recipes are definitely numbered but there will always be beer geeks willing to show love to a new, respectable brewery.

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Old 08-28-2012, 05:25 AM   #4
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I can see small, local breweries "making it"...if you call working 10 hour days, 7 days a week "making it". I think it is comparable to owning any small business, but especially a restaurant. I can envision most towns having a brewery, just like most towns have an Italian restaurant or three. But that's the extent of it, there's little to no expansion beyond a "mom and pop" brewery that serves a very local market, much like a restaurant. The market will only bear so many regional and/or national craft breweries because of market saturation. I swear there has to be over 500 different IPA's at the national level. You have to produce something pretty damn special to be noticed outside of your local area. I was talking to some of the owners of my local brewery (15bbl). They have been open for just over a year and they do great local business. It's breaking into other markets that is almost impossible....like you said the fight for shelf/tap space is incredible and it is only getting worse.

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Old 08-28-2012, 06:59 PM   #5
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This isn't the first time this has happened... I recall that this same phenomena occurred back in the early to mid 1990s. Homebrewing had already taken off as the newest hobby of choice (which is around the time I got into the game), and the next logical step was for a bunch of people to turn "pro". It was about this time that I attended my first few beer fests, and met a lot of small brewers. Only a short five years later, many were never to be heard from again.

It's interesting to see many new breweries open, but bittersweet as I know a lot just won't make it. A lot of friends and business colleagues try to convince me to "take the plunge", so to speak, but I know better.

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