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> Brewery Bubble?
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This crash was apparently not precipitated by overall economic conditions, for the Asian Financial Crisis was still months in the future, beginning in July 1997. The stock market was still booming. It seems, mostly, that the supply was overbuilt for the demand at the time.
The boom and bust cycle has played out in the U.S. wine industry several times. Oddly, the current craft brewing boom began coinciding with the economic meltdown of 2008. But it really got going in 2010 when things were recovering. I joked with a colleague in late 2009, when the economy was still reeling and our phone was already ringing off the hook, that "Everyone who lost their job is starting a brewery."
So, while there isn't much used equipment now and new manufacturers are booked up solid with orders, this will change. Crisis=Opportunity. The bargains are coming. Someday. Soon?"
I think it is all true depending on your LOCATION. I can't imagine starting a brewery in some place like San Diego.....there are already something like 40+ breweries and more in planning. Craft beer is here to stay without a doubt but at some point there WILL be a shakeout. I think at some point a lot of brewery owners will wake up and realize that they are barely making it AND they are working their butt off just to do that. You can do that for a few years but at some point..??
I worked for a software company before and during the dot-com era. I'm seeing a lot of similarities between conditions then and conditions within the craft brewing industry. The most troubling ones for me are a) the increased usage of "gimmicks" to sell beer, whether it be an innuendo-laden name, repulsive ingredients (bull testicles? really?) and above all else the fact that money-men are taking speculative leaps into the industry thinking they're going to make a fortune. This speculation is going to really start to be hurt the industry as a whole because once things start to collapse, there'll be a rush to the exits by many investors who are motivated by money instead of a love of craft beer, which will close down a lot of places. I don't look forward to the shakeout. But, it's definitely coming.
We're finally open and about to make first deliveries in the next week or two. We're only a 1.5 bbl brewery and set things up 100% as "if we lose every penny, will it be a real problem" and the answer for me and my two partners is, "no". We want to take things very slowly considering the bubble that I think is real as well. We are planning on managing any growth VERY carefully and I can't see us ever taking on any large amounts of debt to finance expansion. I believe that if you 1) make a good beer that people enjoy (we are intentionally making beers that we hope will appeal to the "average beer drinker" and 2) manage the debt side of the business very carefully... I think those things will go a long way towards insulating the brewery from the bubble fall out
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