Has brewing finally jumped the shark?

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alha

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I'm admittedly new to brewing (but have been interested in it for years), still working on getting everything together and set up, and also excited about doing so, as well as brewing beer! But I ran across something recently that had me thinking that maybe, just possibly, the end is nigh; I saw a boxed kit for home brewing at.... Target! Now, I've watched brewing and breweries popping onto the scene like popcorn over the last 5-6 years, and it has certainly gone mainstream, especially up here in MN, and probably all over from all I've read around here.

My question is, is this a bubble? A fad? I'm kinda of the opinion that it is, and I'm not sure long term that there will be sufficient demand for all the breweries opening up now. And that isn't because they aren't making good beer, from what I've seen, they are. Thinking back not that many years ago, Martinis were all the rage, were 'cool', and now they've sort of faded back to the background level that they were before the big surge of popularity. My gut feeling is that this is what's going to happen to craft beer in the not too distant future.

Am I off base on this? I honestly hope so, because this is actually fun, but so was investing in the stock market in the mid-late 1990's... We're standing in the dead center of Beer's new Golden Age, so maybe I have it completely wrong, but when I saw that box at Target, I sort of had that Ruh Roh feeling. Love to hear others opinions, especially those that have been around the block a few times, and have seen this rodeo before. Whatcha think?
 

GrogNerd

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I've seen Mr Beer kits at Wally World for a while now. Also seen kits at World Market

I'd say many of those who got Mr Beer or similar gifts for Christmas might try them once and move on, but there are millions of us out there, not quitting anytime soon

Homebrewing is here to stay

IMG_0546.jpg
 
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alha

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Hey, everyone - the day is here...alha started brewing. It's official that homebrewing is no longer cool. Time to melt down your kettles and give your burners to your cousin Enis to use for his annual frozen turkey fry.
LOL That isn't what I was saying.. hehe I was more thinking about it as a whole, not specifically home brewing, though they sort of got tangled up together in my 1st post. I know that homebrewing isn't going anywhere. I guess I am more thinking of the whole brewing scene, than those of us slaving away over hot kettles in the garage and in our basements. If you separate the home brewing from the craft beer craze, what's your thoughts on that?
 

unionrdr

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I think the number of smaller craft breweries will level out at some point. Market saturation ya know. But craft breweries & home breweries definitely walk hand in hand. One leads to the other, you might say. And with some 1.2 million home brewers in the US alone, it's definitely stimulated a surge in available grains, extracts, hops, & equipment. There are home brewers on here that eventually went pro. So one can lead to the other as well. So with one feeding off the other, I don't think either one will go anywhere anytime soon.
 

bransona

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As the market is saturated, the best will come to stand above their competitors. Thus, the market will even itself out to fit every locale. I live in a college town, however, so I think we can safely bet that our 4+ breweries get AMPLE business from students. I think this upswing in new breweries is just gonna be great for consumers, both now and later. Those homebrew kits haven't ruined us yet, so I can assure you they won't anytime soon :mug:
 

gometz

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I've seen kits sold at Bass Pro Shop, which makes no sense at all.

But as far as the craft beer upswing, my thinking has always been this: breweries will become like restaurants. The big boys will continue to dominate in sales numbers like fast food chains do. Larger craft breweries (Sam Adams, Sierra Nevada, Stone, etc) will have a large nation/international presence as well similar to Red Lobster, PF Changs, etc. Then there will be regional and local breweries just like you see a small restaurant around the corner from you that is family owned. Since the capital investment and operating costs are greater for a brewery compared to a restaurant, we aren't talking about 200 local breweries for a large metro area like Houston, but instead it could maintain 10 or so comfortably.

What we will see an end to is small breweries becoming national companies regularly. Those starting a brewery now should not aim to be the next Sierra Nevada or Ballast Point, they should aim to become a stable for their region at most. Unless you are lucky enough to have a large financial backer and a lot of connections such as Karbach here in Houston (make great beer, but you can tell that their owners had connections in distribution by the way they were able to grow so quickly).

Look at a place like Germany. I would assume there are approximately 1,300 breweries for about 80 million people. Compare that to about 1,600 breweries (not including brewpubs) in the USA for almost 300 million people. Many of the small breweries in Germany are dedicated to a small local region. I worked at one during college over the summer that really only served about a 30 mile radius (it is also the one my grandfather and great-grandfather worked at; Stolz in Isny).

Another way to put it is this: when someone starts a restaurant, they don't think they will become huge. They normally think that they will create a nice income for their family and enjoy their work. People used to (and still sometimes do) start breweries thinking they will own a big business eventually. That mindset will most likely change over time to fit more of the restaurant model.

The other side of your question is demand; will the demand for craft beer keep up? I would say somewhat. Already you are seeing the shift from IPA's to sours and saisons. Stone used to get by just by being the bitter bastard, but is now being forced to look at different styles. But that's the beauty, there are so many different styles that it will likely become a cycle of what is hot right now. On top of that, while IPA's are no longer the hottest thing right now, there is still a massive demand for them. They are now a staple, you can't have a brewery without an IPA in your line up. The overall demand will most likely stay stable (once it tops out, it is still growing now).

The analogy to martinis doesn't quite work either; people don't really go home and drink a martini, or make a martini to watch a game, they are more for going out and for more special occasions. Beer on the other hand is something people grab when they just want something good to drink, you keep a sixer in the fridge just in case (or in our case, a keg in the keezer and a few cases in the closet).

The total demand for beer rarely drops, and the demand for craft is still growing (you are also seeing the way the big boys are buying up craft breweries, they see the trend and want to profit off of it). To borrow from my grandfather "people will always drink beer"; if times are good, they want to celebrate, but even when times are bad, beer is still on the shopping list (just maybe not that $30 bomber of barrel aged sour saison).

Phew. Sorry. This is something I have spent too much time thinking about.

TL:DR - The market is changing; breweries will become more local and regional, but with the big boys still holding the majority of the volume. Demand will not drop, but instead it is diversifying.
 

JoshuaW

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There is a lot of growth for both homebrewing and craft beer still available. As technology improves, homebrewing could become more ubiquitous, allowing anyone who likes to cook to have some interest (and the ability) to brew at home with relative ease. Things like the PicoBrew readily accomplish this, though for a steep price.

On the craft beer side, the industry still only holds a small percentage of the beer market. A really, really small percentage. Craft only holds 11-12% of the total market. There is no reason to think we cant achieve something closer to 20-25% in the next five or so years. We are entering a golden age where some consumers never even start drinking bad beer! Heck, Im one of them. Sure, I drank macro beer at a few parties here and there, but I have never purchased a macro brew. This is more and more common, and it will be a growing phenomenon that will greatly increase craft's market share.
 
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alha

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Well, this is exactly what I was hoping for, a robust discussion with many great points being made by everyone. Keep it up, I like to hear others opinions!
 

betarhoalphadelta

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TL:DR - The market is changing; breweries will become more local and regional, but with the big boys still holding the majority of the volume. Demand will not drop, but instead it is diversifying.
I'm not going to quote the whole very long post, but you're spot on.

The one thing to add is that while there are ~3500 breweries in the country, there are >8000 wineries. What do *most* of both have in common? You've never heard of them.

I think the US can absolutely support >8000 breweries, when you include brewpubs. Wine has terroir to deal with in a way that beer doesn't. A winery in Montgomery, AL will be perceived differently than a winery in Napa, CA. That's not nearly true for beer, which opens up opportunities that are larger than wine can reasonably meet.

I can see a world as we transition into a more "locavore" mentality where there will be local neighborhood breweries that are primarily little lifestyle businesses for their owners, without plans to grow to national (or even statewide) distribution. The sort of a place that you pop in for a pint or two on Thursday coming home from work and to get your growlers filled for the weekend. Where the clientele is "regulars" rather than "beer geeks".

To OP's point, I think we have a contraction coming between today and the world I envision above, though. Long term, craft beer will win, but right now a lot of the demand is due to it being trendy. That will wane, but a large portion of those craft drinkers won't go back to BMC, and craft will grow again at a more sustainable pace.
 

Steelers77

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As someone in the home brewing industry I would say that home brewing is still going strong and as popular as ever. That being said, I've heard from some of my suppliers that the number of people entering the hobby has slowed a bit (from their perspective). Now that could be because people are finding starter kits at every big box retailer and we are just not seeing that initial purchase, or it could be because there is because less and less people are picking up brewing as a hobby. From my perspective I think it people buying the kits at the big box store, I say that because we get tons of people coming in looking for Mr.Beer ingredient kits and they tell us they got it one for Christmas.
I'm convinced brewing is not just a hobby but more of a life skill that people should posses, someone compared it to cooking and I see it the same way.
As for the glut of Breweries in the U.S. I think we as a society can support even more than we have now. I personally hope we go back to the time where every town has its own brewery or breweries and I think as my generation and generation behind mine get older and pass on the taste and the idea of "Local" to their children this will happen.
Finally, the big 3's only way to generate growth in the U.S is to buy Regional breweries, once they do so we as consumers should stop purchasing their beer. I don't mind if the owners want to cash out and get paid, I'm cool with that! But we should shop buying that brand of beer so it hurts the big 3, let them waste their money on acquisitions then let them loose it all by boycotting the brand.
 

gometz

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Good Points made, shortened for brevity
The only thing is that even these neighborhood breweries need to be big enough to sustain themselves. Restaurants can get away with relatively low material costs and capital investments. Brewing has very high capital and material costs. To profit off of brewing, a small brewery may need to be 4-5 BBL brewing 3 days a week. That is a minimum of 400 pints a day sold, which doesn't seem entirely unreasonable, but requires more customers to come by regularly than a restaurant would.
 

chudsonvt

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I live in Vermont. Currently, Vermont has the greatest ratio of breweries to people. (California has more breweries, but we have a little over 600,000 residents). Yet breweries are still opening up all the time. This can't be sustainable and we will see some breweries grow will other will fail.

However, there is no reason that the microbrewery cannot reach or even exceed a 25% market share. One of the major factors that I believe to be holding back a higher growth rate is the grossly close-minded population that grew up drinking the thin, light macrobrews of the past. My dad, for example won't drink anything other than Bud or Bud Light. However, the more accepted craft beer is, the more the younger generations will be exposed to it. They, in turn, will develop a taste for it rather than the just the light beers of the macros. This then can perpetuate further.

With that said, I see no bubble in any near future. If anything, an increase. However, the market may get more and more difficult to enter if the rate of new brewery market entrance exceeds the rate of market share growth. IE. supply and demand principles.
 

Hoppy2bmerry

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Well, friend, you have raised an interesting discussion. Those starter brew kits are everywhere especially around the holidays. I got my first 1 gallon beer kit on clearance at Williams Sonoma, and I see that Bed Bath and Beyond has Brew Demon (just thinking about that one) conical kit available. Now here I am on a forum learning from the experienced Brewers. I found a LHBS that is well stocked and open when they say they are, and I look for some things I want online.

My point is it doesn't matter where the first kit comes from, if the brew bug bites, we stay in, learn more and get more sophisticated equipment, or at least as sophisticated as we want.

There's a local market in my town that stocks an amazing variety of craft beer and most beer distributors will will a growler with craft brews or imports depending on the season.
In someways, I think the pricey coffee shop craze goes hand in hand. There is a whole generation or two that is willing to buy a $5 cup of coffee, and a $10 bomber of some dark hoppy beer from a brewer they never heard of. Will the bubble burst for craft beer? Maybe, certainly some less popular breweries or poorly managed ones will close, but the appetite for non-pedestrian beer will remain.

Okay, now I feel like I'm rambling... I should go sniff my airlocks now...:mug:
 

mtyquinn

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Craft beer isn't going anywhere. Yes, some of the breweries will close, and growth will slow, but good beer at a local level has returned to this country and I think will now be a big part of our landscape.
 

ArkotRamathorn

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I'm gonna use my home state Wisconsin and New Glarus as an example.

Little over 4 million people in Wisconsin and we have a ton of little breweries (I have 4 now in my home town of only 60,000 people). So far 2 of the breweries are doing fantastic and 2 of them are too new and we are only just finding out about them.

New Glarus sells ALLLLLLLLLL of their beer within Wisconsin. We drink alllllll of their beer without issue and they continue to expand their production. We drink all of that, and then we drink all of our local brands on top of that, then all of the BMC beer, and then some brandy old fashioned's.

I think when the "bubble" discussion comes up we *VASTLY* underestimate American's (Wisconsin's) ability to drink *A LOT*. I think that if it came to it, Wisconsin could easily float the entire craft beer business.
 

GilaMinumBeer

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Brewers Association reports 4,144 at last count, the most in the country since 1873

I think the interesting fact in the infographic at that link: 1 bbl per 4.7 persons in 1873, today it is 1 bbl per 14.

that would suggest the US could support >12,000 breweries
I don't think it could. Beer just isn't the staple it once was. And I don't think it ever will be again. Too many temperance opinions and citizen police to allow table beer to become standard fare for the entire family again.
 

Sailingeric

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I suspect 1 or 2 people out of a hundred stick with brewing who bought or got a Mr Beer kit because less than stellar beer due to not understanding the process and the fact the beer making can be up to a couple month process and people want instant gratification. Making beer is not like making a cake. :tank:
 
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alha

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Yes, the coffee shop analogy could apply, but I believe that ppl drink more coffee than beer. I did a quick search to find out, and came across an interesting article - http://marketrealist.com/2015/03/beer-losing-ground-wine-spirits/. It is just one article, but had a few informational graphics. I'm no industry pro, so I don't have any opinion on it, other than it seems that things could be slowing down? What do others take from it, or if it is even a valid article?
 

Turkeyshot

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I suspect 1 or 2 people out of a hundred stick with brewing who bought or got a Mr Beer kit because less than stellar beer due to not understanding the process and the fact the beer making can be up to a couple month process and people want instant gratification. Making beer is not like making a cake. :tank:
This I agree with completely!
 

Steelers77

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Well, friend, you have raised an interesting discussion. Those starter brew kits are everywhere especially around the holidays. I got my first 1 gallon beer kit on clearance at Williams Sonoma, and I see that Bed Bath and Beyond has Brew Demon (just thinking about that one) conical kit available. Now here I am on a forum learning from the experienced Brewers. I found a LHBS that is well stocked and open when they say they are, and I look for some things I want online.

My point is it doesn't matter where the first kit comes from, if the brew bug bites, we stay in, learn more and get more sophisticated equipment, or at least as sophisticated as we want.

There's a local market in my town that stocks an amazing variety of craft beer and most beer distributors will will a growler with craft brews or imports depending on the season.
In someways, I think the pricey coffee shop craze goes hand in hand. There is a whole generation or two that is willing to buy a $5 cup of coffee, and a $10 bomber of some dark hoppy beer from a brewer they never heard of. Will the bubble burst for craft beer? Maybe, certainly some less popular breweries or poorly managed ones will close, but the appetite for non-pedestrian beer will remain.

Okay, now I feel like I'm rambling... I should go sniff my airlocks now...:mug:
I agree it doesn't matter where the kit comes from I was just was just saying that the decline in starter kits sold my wholesaler could be because of the box stores selling starter kits. When Mr.Beer kit brewers come in we don't shoo them away we just tell them we don't carry Mr.Beer and suggest an alternative recipe and we actually direct them to the Mr.Beer forums to get recipes using the ingredients we supply.
 
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alha

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I'm gonna use my home state Wisconsin and New Glarus as an example.

Little over 4 million people in Wisconsin and we have a ton of little breweries (I have 4 now in my home town of only 60,000 people). So far 2 of the breweries are doing fantastic and 2 of them are too new and we are only just finding out about them.

New Glarus sells ALLLLLLLLLL of their beer within Wisconsin. We drink alllllll of their beer without issue and they continue to expand their production. We drink all of that, and then we drink all of our local brands on top of that, then all of the BMC beer, and then some brandy old fashioned's.

I think when the "bubble" discussion comes up we *VASTLY* underestimate American's (Wisconsin's) ability to drink *A LOT*. I think that if it came to it, Wisconsin could easily float the entire craft beer business.
Lol I know about New Glarus, a bar in the Twin Cities got themselves in trouble for bringing a couple kegs in from wisconni and someone snitched them out, and got them confiscated. I have to say, the liquor laws in this country are absolutely ridiculous, we're Still experiencing the hangover from that idiotic idea of Prohibition... almost 100 years later. Including that 3 tier distribution system. Horse and buggies were just leaving the scene nationwide when they put all these rules and regs into place. But I digress, this is a discussion for another thread someday.
 

Steelers77

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I suspect 1 or 2 people out of a hundred stick with brewing who bought or got a Mr Beer kit because less than stellar beer due to not understanding the process and the fact the beer making can be up to a couple month process and people want instant gratification. Making beer is not like making a cake. :tank:
Agreed,
We often suggest alternatives to the Mr. Beer recipe kits and get them brewing with extract w/grain. Also giving a sample of good home brewed beer always helps convince them good beer can be made.
 

Steelers77

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I'm gonna use my home state Wisconsin and New Glarus as an example.

Little over 4 million people in Wisconsin and we have a ton of little breweries (I have 4 now in my home town of only 60,000 people). So far 2 of the breweries are doing fantastic and 2 of them are too new and we are only just finding out about them.

New Glarus sells ALLLLLLLLLL of their beer within Wisconsin. We drink alllllll of their beer without issue and they continue to expand their production. We drink all of that, and then we drink all of our local brands on top of that, then all of the BMC beer, and then some brandy old fashioned's.

I think when the "bubble" discussion comes up we *VASTLY* underestimate American's (Wisconsin's) ability to drink *A LOT*. I think that if it came to it, Wisconsin could easily float the entire craft beer business.
Indeed! In 2014 New Glarus was the 19th largest craft brewery and they only sell in Wisconsin!
 

GilaMinumBeer

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Yes, the coffee shop analogy could apply, but I believe that ppl drink more coffee than beer. I did a quick search to find out, and came across an interesting article - http://marketrealist.com/2015/03/beer-losing-ground-wine-spirits/. It is just one article, but had a few informational graphics. I'm no industry pro, so I don't have any opinion on it, other than it seems that things could be slowing down? What do others take from it, or if it is even a valid article?
For me, simply by mention of "light beer category", it raises the question of what category is strong beer included? More specifically, does the infographic only include light beer in the beer category?

I am inclined to suspect yes. But only by a means of local market. Where I am at, strong beer is regulated like spirits and sold only in liquor stores. Light beer, however, can be sold just about anywhere soda is sold.
 

Rhetorik

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I'm HOPING some of the craft breweries in my area close... over a dozen have opened within the past couple years, and some of them make beer that is real ****e.
 

mongoose33

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Hey, everyone - the day is here...alha started brewing. It's official that homebrewing is no longer cool. Time to melt down your kettles and give your burners to your cousin Enis to use for his annual frozen turkey fry.
His name is Enos, not Enis. :)
 

mongoose33

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I think you're always going to have some breweries starting, some closing. We had a local guy who had his homebrew on tap here in town. He's out of business but not because of any bubble--rather, his beer was crappy. Way overcarbonated, and he's make bizarre flavors that you'd try once and say "never again." Like BBQ beer. Coconut beer, where the coconut just overwhelmed everything else. But did he have a good basic IPA, a good American Ale, a nice Stout, or anything else you'd have walked an extra block to drink?

No. I tried him twice, and twice was enough. He's now out of business. I think he was more into brewing to please his sense of creativity than he was to please his customers.

When I lived in NC there were these little hole-in-the-wall BBQ places that had no ambiance, looked like they hadn't had any maintenance done since the Great Recession, served with paper plates and plastic silverware. They did a land-office business not because of the above, but because they had a great product at a fair price--and people came from miles and miles just to get it.

IMO, quality will always win out unless there is unfair competition (i.e., a major brewer undercutting price so much that a craft brewery cannot compete).

Will the market become saturated? Maybe. But I don't see this as a bubble--craft brews have been around a long time, and while the Martini example is apt at one level, it was simply a restatement of an oldie but a goodie. Beer is beer. :)

My 2 cents.
 

dkennedy

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A lot of solid points made already, I'll try not to be redundant. Some of the things that I see in my travels around the US:
- The "bubble" perception is definitely wildly variable depending on where you are- in some areas, you can see some culling of the herd (it's not enough to be "craft", it needs to be good, or at least drinkable), in others they are just hitting their stride in adding new breweries. Some of this is related to regulation, I suspect...states which have only recently taken steps to encourage smaller breweries
- The point about wine having terroir, and beer not having that, is an area for expansion. Smaller-scale hops growers and maltsters, brewing with wild yeast, etc. could change the game to where beer has a local flavor that approaches the terroir that is perceived in wine. Ties in with...
- The Buy/Eat/Drink/Shop Local movement will help keep nanos and brewpubs relevant, and encourage the idea of the neighborhood brewery. Whether that gets to the point where the "big bad regional brewery" is seen as "un-Local" will be interesting to see- in effect, will Craft turn on itself (already happens, to some degree) to the point of implosion?
- To play at the regional / national level, I think that we're seeing more emphasis on the power of a Brand; it's not just about the product anymore (if it ever was, really). I think that the perception running a brewery has evolved further from this picture of brewing beer and cleaning kegs to being a competitive business that requires both hard work and business savvy to stay afloat...that savvy will make the difference between those successful and those who quietly close up shop. One spin on this that I'm seeing locally is the increase in contract brewing- build the brand, design and market the products, let someone else do the messy bits.

Rant over, my opinions only. Overall I think that there is growth left, but it will come in tandem with refinement of the brands who want to compete at the regional+ levels. Personally, I'm holding off on any Pro move until I can set up shop in a market that is under-supplied and has good potential for local sourcing of raw materials.
One thing is for sure- it's a great time to be a craft beer consumer!
DK
 

balrog

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I've seen kits sold at Bass Pro Shop, which makes no sense at all.
Growing up in the South, I seem to recall hunting and fishing were just another reason for drinking. I was never fond of being on the same lake, or in the same woods, as some of the folks I knew were screaming around at high speed or, heaven forbid, carrying loaded firearms while at different levels of altered influence.
 

GrogNerd

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whether there's a bubble going to burst, sooner or later, I see nothing but UPSIDE to all this, at least for beer-drinking Americans

more beer, better beer and more people drinking better beer
 

Spartan1979

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We've had three breweries close in St. Louis (they all moved to LA j/k) while more keep opening. For the most part, there wasn't any great sense of loss at the three.
 

GrogNerd

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We've had three breweries close in St. Louis (they all moved to LA j/k) while more keep opening. For the most part, there wasn't any great sense of loss at the three.
ok, that's a little funny

we've had 1 in our county close. blame is completely on the owner/brewer & it won't be missed at all.
 

mattdee1

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However, there is no reason that the microbrewery cannot reach or even exceed a 25% market share. One of the major factors that I believe to be holding back a higher growth rate is the grossly close-minded population that grew up drinking the thin, light macrobrews of the past. My dad, for example won't drink anything other than Bud or Bud Light. However, the more accepted craft beer is, the more the younger generations will be exposed to it. They, in turn, will develop a taste for it rather than the just the light beers of the macros. This then can perpetuate further.
This closed-mindedness is a huge hindrance to the growth potential of craft beer. In my experience, the sheer ignorance of BMC drinkers is dumbfounding. Lest I come across as an elitist d-bag, I include my former self in that lot. I was a late learner, but better late than never.

There are very few people in my inner circle who like anything aside from fizzy pee drinks, and when I try to get them to "explore" a bit, I get this palpable air of reluctance... almost like a "fear" of beers that have some color and aroma to them. That "barrier" of having millions of beer shoppers that are so absolutely sure that a beer tastes bad just because they've never heard of it is a significant problem for the craft industry.

With that said, I see no bubble in any near future. If anything, an increase. However, the market may get more and more difficult to enter if the rate of new brewery market entrance exceeds the rate of market share growth. IE. supply and demand principles.
Yeah, I'm no market expert, but I don't feel a bubble coming either. One thing with craft beer is that there is a greater tendency for people to build up mixer packs rather than buying large quantities of the same thing over and over again. This means that the "pie" is broken up into many more (albeit smaller) pieces, which allows more brands.
 

LostBoyScout

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My brother got one of those barrel style homebrew kits many years ago... they've been around a long time, I think you're just noticing this stuff more now that you're into it ;)
 

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