Market saturation?

[Grinnan5150]

I read that there are over 2,300 craft breweries in the US right now and another 1,500 in planning. If someone was thinking of too going pro at what point do you start getting concerned that the market for craft beer is over saturated? I would think that people will start having to come up with new styles or different takes on styles to stay competitive and get your name out there.

When I go to Binny's to try something new I am always bombarded by tons of brands with the same styles. This is more o a half drunk rambling but has anyone else had that concern?

 

[eltorrente]

The more the merrier.

Even when trying the same styles, the beers always taste different. Every brewery is different, and everyone has a different take on a given beer style, and of course some just brew better than others. There's always room IMO.

 

[IL1kebeer]

I read that there are over 2,300 craft breweries in the US right now and another 1,500 in planning. If someone was thinking of too going pro at what point do you start getting concerned that the market for craft beer is over saturated? I would think that people will start having to come up with new styles or different takes on styles to stay competitive and get your name out there.

When I go to Binny's to try something new I am always bombarded by tons of brands with the same styles. This is more o a half drunk rambling but has anyone else had that concern?

I agree. The market is saturated. I don't even bother trying most of the new breweries out there because IMO the tried and true craft breweries keep coming out with good stuff. When I say tried and true I'm talking about Stone, Firestone, Sierra Nevada, DFH, Russian River.... you can see where I'm going with this. If want a different IPA then I'll brew it myself. I'm using IPA as an example because every brewery and their mom's are coming out with IPAs. The amount of IPAs on the shelves right now is overwhelming and I'll put my money on it that these new craft breweries aren't going to be around for long. There actually was an article about this very subject in the summer issue if Draft magazine. In the article Greg Koch, co-founder of Stone, agrees that the market is saturated and that most of the young breweries wont make it (paraphrased). His opinion is shared by others in the industry as well, per this article.

Bottom line for me, if I'm going to pay $7-$30 for a bottle, I'm going for the tried and true breweries unless something has had a lot of exceptional reviews or has won awards. Flame me for being old school but that's how I roll.

 

[eltorrente]

... I'm talking about Stone, Firestone, Sierra Nevada, DFH, Russian River....

I just discovered Firestone a few months ago. My local store started getting their Union Jack IPA, so I tried it out and I LOVE it. Excellent, excellent IPA.

This is why I don't think the market is over-saturated, actually. I thought I knew most of the "tried and true" or "go-to" breweries, but depending on where you live, or what stores you go to - you may not know about them. Plus there's just not enough room in a given store.

For all I knew, or cared, if I heard about Firestone brewery - I couldn't have cared less - but wow that Union Jack is great. I always look forward to finding more breweries that I haven't tried out yet.

 

[45thparallelhopper]

I too dream of going pro, but the growth of craft breweries is so explosive, I fear there won't enough room at the table. But as a lover of all beer, I agree with the more the merrier. Luckily for me, in in driving distance of 6 craft breweries including Shorts and North Peak(amazing IPAs). They do say that variety is the spice of life

 

[mattd2]

I read that there are over 2,300 craft breweries in the US right now and another 1,500 in planning. If someone was thinking of too going pro at what point do you start getting concerned that the market for craft beer is over saturated? I would think that people will start having to come up with new styles or different takes on styles to stay competitive and get your name out there.

When I go to Binny's to try something new I am always bombarded by tons of brands with the same styles. This is more o a half drunk rambling but has anyone else had that concern?

I would say about 13 years ago
But honestly like any business you need a point of difference to succeed. Not everyone can be SA, DFH but you should be able to survive if you plan is to provide for the local population.

 

[day_trippr]

Not to worry. The way the world is heading, everyone is going to be drinking a lot more

Cheers!

 

[daksin]

We have as many breweries now as the year before prohibition, but we have a LOT more drinkers. Like, three TIMES as many drinkers. With the absurd market share of of the BMCs, there's a long way to go before the small brewers are stealing customers from each other instead of from the big boys.

 

[Phunhog]

It's not there yet but you can't expect craft sales to keep going through the roof at the same rate as the last few years. If for no other reason than price point. You aren't going to convince the guy who buys his beer in a "suitcase" to spend twice as much on half as much beer. The unlimited choices are great for drinkers but much, much harder on the breweries trying to make a buck and having to fight for tap/shelf space.
So where does that leave the breweries, especially the newer ones. You might make enough to survive but the chance of actually growing your business into something more is relatively small. I compare it to the restaurant industry. You might have a very successful small restaurant in your local town. That's great but what are the chances that they can actually grow/expand into other markets? Slim. So they are left running a great restaurant but with no real chance of getting bigger. So "it is what it is". The same holds true for small breweries. I just wonder how many people are willing to bust their arse for 30K profit year after year?

 

[bob1852]

Breweries/distributors need to be better about selling single bottles or bombers.

Look at the wine market. Tons of options for each style, but not many are trying new things by buying a sixer or case.

 

[mattd2]

I compare it to the restaurant industry. You might have a very successful small restaurant in your local town. That's great but what are the chances that they can actually grow/expand into other markets? Slim. So they are left running a great restaurant but with no real chance of getting bigger. So "it is what it is". The same holds true for small breweries. I just wonder how many people are willing to bust their arse for 30K profit year after year?

Great analogy there - if you want to start a brewery make sure it is because you love brewing beer and hard work for little finacial reward, not because you want to be the next Jim, Greg or Sam.

 

[scottland]

I just discovered Firestone a few months ago. My local store started getting their Union Jack IPA, so I tried it out and I LOVE it. Excellent, excellent IPA.

This is why I don't think the market is over-saturated, actually. I thought I knew most of the "tried and true" or "go-to" breweries, but depending on where you live, or what stores you go to - you may not know about them. Plus there's just not enough room in a given store.

For all I knew, or cared, if I heard about Firestone brewery - I couldn't have cared less - but wow that Union Jack is great. I always look forward to finding more breweries that I haven't tried out yet.

Firestone isn't an up-and-coming brewery though. Union Jack was voted the best IPA in the country two years in a row at GABF. Double Jack was voted best DIPA in the country, and Jesus, Firestone won best mid-sized brewery in the country 4 out of 5 years in a row.

I'd call them a little more than tried and true.

But yes, the market is saturated. The bubble simply hasn't popped yet. As someone who drinks his fair share of craft beer, there's simply too many brands and beers to keep up with, and much excellent beer for established breweries.

Amazing beer will always prevail, but the big breweries had years and years where they could get away with being less than perfect. 'Great was good enough.' Today you need to stumble across an untapped market, you need to make amazing beer, and you definitely need some luck (and/or connections).

 

[PintoBean]

I think certain markets are saturated, but not all. For example, Chicago, per capita, has very few breweries. San Diego has a 1/10 the population as the Chicago area and probably 3x the number of breweries.

Personally, I'm always looking for something "new". I still buy stuff from the "tried-and-true" brewers, but prefer trying new stuff from little local guys.

 

[DrunkleJon]

In my opinion the mediocre ones will fail while the ones who have good product and business practices (build fan base, spread controllably) will survive. That is the beauty of capitalism, if people like what you are selling you will make sales. The business practices bit is the important part. If you start brewing and all of a sudden are nationally distributed and an unknown, unless your distributer markes the heck out of you would womeone (other than the adventureous) really pick up the bottle/a 6 and give it a try? Yes many of us would, but if at least your name is familiar joe beer-drinker is more likely to pick up the bottle.

just my 2 cents.

 

[JR_Brewer]

We have as many breweries now as the year before prohibition, but we have a LOT more drinkers. Like, three TIMES as many drinkers. With the absurd market share of of the BMCs, there's a long way to go before the small brewers are stealing customers from each other instead of from the big boys.

This is a great point. I think craft beer will slowly erode the BMC marketshare, so IMHO, there is still room for craft brewers... BUT,

...When a local/craft brewer started up 10-15 years ago it was a novelty in most parts of the country. I believe part of their draw was that were an alternative to BMC, and some were given the benefit of the doubt while they went through growing pains. However, the novelty has worn off, and if the product is not competative immediately, it won't stay around long.

 

[ktblunden]

I see craft beer becoming more local. We're actually seeing something very similar to the atmosphere prior to prohibition. Before there were efficient methods of refrigeration and transportation every single town had at least one brewery that essentially supplied the town. After prohibition, improvements in packaging, transportation, and refrigeration gave rise to the distribution model of relatively few breweries supplying the entire country. Now, you're starting to see small breweries pop up all over the place serving direct to their customers.

I'm not saying distribution is going away, far from it. But I see a lot of successful brewpubs that make most of their money serving over their own counter. If laws continue to relax and allow self-distribution in more states I think the "drinking local" movement will continue to gain momentum.

 

[vindee]

Take a look at the wine industry. Same thing.
Is it saturated? Yes.
Is there still a market for it? You better believe there is.
There is always room for variety.

 

[ShootsNRoots]

The market where I live is just incredibly saturated with beer. There's such a glut of the stuff that it get's really difficult to find the good examples anymore. Take a look at the Walmart specialty beer stand... it doesn't seem to empty very quick. Even the guys at the local liquor stores say there's just too much beer labeled as "craft" and they don't move but a few brands.

You better be good at marketing your beer (some would say even more so than actually making a good beer), if you want to have minimal success in this market.

Small breweries may succeed in local markets, and that's good for a certain level of income, but taking the business to the next level will be difficult because the mid and large size brewery markets are also saturated.

To be honest, I don't bother sampling most of the small craft beers, I can simply brew my own of the same style at home and be happy.

Also, most of the rage about the mid-size guys like Sierra-Nevada, Firestone, etc... seems to be just that. Probably some of the worst beer I've had is the Sierra Nevada Pale Ale. It had a nasty bite to it and was barely drinkable. Even some of the New Glarus beers suffer from inconsistency like that. Ever had a very thin tasting Spotted Cow?

I got into homebrewing for a lot of reasons, but one of them was to become proficient at making my own beer and leave the industry behind.

At any rate, the bubble will burst, it's just a matter of time, unless of course there's a bunch of small breweries happy to exist in a very localized markets perhaps turning a profit of <30K a year.

 

[NewJersey]

i feel that if new breweries don't all expect to get as big as stone/sierra they can get by.
if i ever opened a brewery i would be ok with catering to my region and being in a lot of local bars.
do you get insanely rich this way? no, but i honestly do not need that in my life.
i could see a ton of breweries this size all succeeding.
greed seems to make all people who open breweries all want to turn into budweiser.
for instance, how big will be enough for sam, stone, sierra, dfh??
i don't see them stopping until they are simply the new bud.
too bad
i drink beers from everywhere, but love to drink local when possible.
cheers all

 

[Xpertskir]

There will always be a shortage of good beer being made, no matter how many breweries are out there.

I wouldn't give my money to at least 75% of the 2300 breweries.

 

[Homercidal]

Breweries are getting by with the market they have. Craft beer is growing like crazy still. As more people adjust their tastes towards craft beer, the market share of ALL craft breweries will grow.

I think that some areas have plenty of choices, but there are lots of smaller market areas that can support the growing number of craft beer enthusiasts. Some larger cities can still make money even though they have a lot of breweries. Just think, there are lots of bars. Lots of people drinking beer. Some of those people will quit going to the bar, and will choose instead to go to a brewery. Not all of the breweries will adapt a bottling system and distribute.

 

[NickTheGreat]

There was a rush of wineries in my state 10 years ago or so. Still some opening, but it's slowed and a number of the hopefully worse ones closed down.

Now there's been dozens of this little craft breweries pop up in the last year or so. My prediction is we'll see the same. More will open, and the crappy ones will shut their doors.

Which as a beer drinker is good. Competition increases the quality of the beer.

 

[Nightshade]

I think that some areas have plenty of choices, but there are lots of smaller market areas that can support the growing number of craft beer enthusiasts. Some larger cities can still make money even though they have a lot of breweries. Just think, there are lots of bars. Lots of people drinking beer. Some of those people will quit going to the bar, and will choose instead to go to a brewery. Not all of the breweries will adapt a bottling system and distribute.

Absolutely agree

You can take San Diego as a good example of market tolerance with it's booming micro breweries popping up everywhere with no sign of slowing. Of course a million people drink a lot of beer.

Smaller areas in various parts of the country can bear a few new ones as well. Up where my dad lived in White Sulphur Springs, MT there were 4 bars always busy but a low population until you count surrounding area. This would be a good spot for a small brewery as the next closest one is Helena and something like 100 miles or so away.

As said, not every brewer or brewery is looking to become the next Sam Adams, you can make a very comfortable living without ever gaining that much market share.

 

[the_trout]

I think the restaurant analogy is apt. If your plan is to work long and hard, make a great product to service the local community and make enough money to get by there is still plenty of opportunity. If you think your going to be some big national brand and get rich via your own sales or a major corporate buy out your too late and the odds were exceptionally slim even if you got into this 20 years ago.

 

[billl]

Saturated? Not even close. Depending on what you consider "craft", it is still only 6ish% of the total beer market.

And I really don't understand the posters saying they don't bother to even try new beer. Seriously? What have you got to lose? You might be missing out on your new favorite brew.

 

[gometz]

I would LOVE to open a brewery, but I agree, overall the market is too competitive and becoming saturated. Everyone keeps saying breweries don't want to get as big as SA, SN or Stone, but a lot of them hope to do so and will overreach. Eventually the mid-size breweries will begin undercutting the small breweries as well if their market share falls, and that is when the bloodletting will truly begin.


Markets: Depending on location is it a big difference. Houston has maybe 5 breweries off the top of my head compared to the Austin area 7-10 with a much larger population. Now of course the Austin population is likely more beer friendly, but try going to a St. Arnold's brewery day and see how packed it is every weekend.

In the greater Austin area there are so many now that some are really starting to fade away. Jester King has done a great job being unique and I think they have a very good chance of survival. Real Ale in Blanco caught on in the area with their Firemen's 4 and makes some great beers too. Others like Independence and Austin Beerworks are not so good.

And of the 5 Houston breweries I think No Label and Buffalo Bayou will not make it.

 

[eltorrente]

I don't know, I just don't see it as being much of an issue.

Every region has breweries that cater mostly to that region. Local brew pubs and small breweries are able to get fresh beer to customers. As long as they can make a decent living, they are successful.

I would never want to discourage anyone from starting a brewery or brew pub. People love craft beer, and tend to support their local breweries. If those breweries put out great beer, and you know it's gonna be fresh - then they will sell. I'd much rather have a fresh, local, well-brewed IPA than an old(ish) award winning IPA anyday.

A local store carries Sculpin, but it's always several months old so there's no sense paying the extra money for it.

 

[NewJersey]

i get excited when i hear about a good restaurant that alwo brews on premise. they don't need to spread out and takeover the US beer market to turn a profit.
one good example in nj is trappe rock (sp?) they have 8 of their own beers on tap and that's it for beer.
percentage wise you can't beat the prfit margin of selling your own beer over the bar pint by pint.