The craft beer bubble is busting.

[swampbrewcrew]

I see posts all the time about this brewery or another closing down, and I’ve always chalked it up to market saturation. My local brewery in Jackson, MS has announced its closing. Lucky Town Brewing didn’t get beat by competing local breweries because there aren’t any. They lost the retail space needed to survive.

 

[day_trippr]

I'd be surprised if national statistics actually support the proposition.
Around here new craft-centric venues are still popping up.

Restaurants come and go, but nobody is claiming the restaurant business is on the wane...

Cheers!

 

[Jayjay1976]

Maybe your backwater, MS experience is atypical? Things are going well here in Chicago.

 

[DU99]

people will only buy a product they like and some places won't get off the backsides and promote there product

 

[RM-MN]

If you own a brewery but don't own the building it is in, you are at the mercy of the building's owner...and many of them have no mercy. If you do own the building but are not a really good manager, the brewery will close anyway.

 

[madscientist451]

The value consumers place on craft beer is a ridiculous illusion. Why does "craft beer" or beer in general, earn such a high markup over production costs?
Some breweries I've visited have pretty mediocre beer. Add to that the going rate of $5-$6 or more for a glass of beer and I wonder how some of them stay in business.
The answer is people like going out instead of drinking at home, so they are willing to fork over the cash for a brew that isn't as good as PBR.
At some point, Mega brewers will get tired of losing market share and will drop the retail 6 pack price of their IPAs and other "craft" brews, in order to put competitive pressure on the regional and local brewers. National brands like Sam Adams and SN will have no choice, either compete on price or lose sales volume. When all that happens, and the drinking public realizes that "craft beer" isn't worth $6 at the pub,
the bubble will burst. Its not happening any time soon. Mega brew is able to offer a good looking balance sheet to their investors for now, so they aren't changing anything.

 

[Homergah]

I don't see the above scenario as likely. I don't, nor do most people, visit a brewery while price shopping for beer. I go there for an experience that I'm willing to pay for. Part of that experience is a quality product. Many of these closures are due to a poor product. No matter what else happens in the business, to a reasonable degree, a brewery making great beer should be able to recover. When a brewery that's making a poor product closes, they always blame it on something other than themselves.

 

[HTH1975]

Here in the UK, craft breweries in North Yorkshire and the North-East (Newcastle) are thriving with new breweries opening regularly. I’m not seeing the plateau yet.

 

[Kirkwooder]

Here in Western NY craft breweries are still popping up all over the place. The one's that put out a quality product and provide a quality service will not only survive, but thrive. I am the perfect example of patron for the sustained prosperity of these places. I am as cheap as they come. I will gladly fork over $5-6 a pint for a quality craft beer rather than $4 for a BMC. I see the craft beer as a value added product. I enjoy it enough more to pony up the extra $$$. The other big factor here is that the Micro-brewery tasting rooms seem to attract a totally different crowd. While the bars still attract a dwindling number of rowdy 21-25 year old, loud, heavy drinking houligans, the micro's seem to attract a much more mature, and affluent crowd. Paying not just for the better beer, but also for the atmosphere of the micro.

5 years ago I asked the owner of the local bar to put in one of the local IPA's and was told that there was no way the bar would take out a BMC from one of their taps and replace it with a trendy IPA from some two bit brewery. Now that same bar, in order to compete with the several new and upcoming micro breweries tasting rooms, has several new taps with local craft beers flowing from them. The owner told me it was the best move he has ever made.

Meanwhile, two of the area micro breweries are closing, they made mediocre beers, at best, and did nothing to draw in the numbers that are needed to be profitable.

I see the bubble growing here in my area, and don't see it bursting any time soon. The economy is trending upward and people have more disposable cash to spend on entertaining themselves. More and more are spending it at micros.

 

[Moose_MI]

In little rural Berrien County, MI there are probably 15 (maybe a couple more) brew pubs. I only know of 1 that’s closed in the 10 years since it exploded around here

I wonder if one would be mine if that stupid Mr Beer kit hadn’t been such a massive failure for me in ‘95. I didn’t try again until 2013...!@#$$%

Definitely frequently get “meh” beer at many....a lot of really good beer for sure also...and some bad..especially for the first yr after they open.

I cant help wondering what’s going to happen when the economy starts pulling back a little and folks have less disposable income. $6 pints are a worthy indulgence and it’s cool to be seen at a micro as long as you got this months rent covered.

 

[kh54s10]

Things I note from this thread.

Losing retail space is not relevant to the state of the craft beer market.
I don't think there are many areas in the nation anywhere near saturation point of micro breweries.
A poorly run brewery will fail regardless of the market.
Complaining of $5 glasses of craft beer as opposed to $4.50 glasses of BMC. Doesn't make sense.
Some will call the craft beer mediocre compared to BMC. Maybe they don't like craft beers.
A brewery creating mediocre craft beers might fail, but again that doesn't say anything about the market for craft beers.

 

[Jayjay1976]

@swampbrewcrew you really should change the title of this thread, since your assertion is utter garbage.

 

[Soulshine2]

I see posts all the time about this brewery or another closing down, and I’ve always chalked it up to market saturation. My local brewery in Jackson, MS has announced its closing. Lucky Town Brewing didn’t get beat by competing local breweries because there aren’t any. They lost the retail space needed to survive.

I would find it hard for a brewery to remain open if they dont have a good food menu to shore it up. Maybe the rent/lease is too expensive. Maybe they clientelle isnt what it used to be. Local economy. Maybe the county alcohol tax or laws are hurting them in profits...who knows. Might be a simple case of the owners just arent into their business success as they once were.

 

[sborz22]

Look no further than the national statistics. The big guys are buying small craft breweries in an attempt to keep their market share by shifting their focus. The craft beer scene is not a bubble rather a shift in consumer demand.

 

[MaxStout]

There's always a thinning of the herd in any industry. Of the 120 or so breweries in Minnesota, a few have folded in recent years. There are lots of causes for those failures, none of which has anything to do with some "craft beer bubble bursting." Within any type of businesses, a certain percentage will fail. Breweries are not immune. Bad marketing, bad location, bad beer, bad food, too much nearby competition, financial issues, head brewer leaving, etc.

 

[Jag75]

Here in town we 1 micro brewery. We have a bar that's been running since the early 80's and we have a newer bar grill called the Bank. The micro brewery sales his beer for 6 -7$ a pint . The Bank has craft beer as well as Coors and bud. I've sat in the Micro Brewery and had lunch and a couple beers and seen people actually order a bud light bottle ! Now if your just want to hang with friends and get tossed up you dont want to spend 6 to 7 on a pint . A domestic 3-4$ beer is the go to . I'm not the type to get drunk and I cant stand Coors anymore (used to be my go to beer) before I was open to trying craft beer and never looked back . Just depends on the person I guess. I'm more then willing to pay anywhere from 5-7 $ for way better beer then to save a few bucks on the other stuff.

 

[Qhrumphf]

The ones who are starting to feel the squeeze are the larger regional and mostly-national breweries, the ones distroing across multiple states. At least in this region (mid-Atlantic) it's been slowing. Numbers are down for everyone. Particularly those at distro as the macros fight to retain shelf control while there's more breweries looking for a piece of the retail pie. While consumer demand is slowing faster than the industry growth.

So breweries who've invested a lot in growth to see that growth stagnate are in trouble.

Green Flash opened an east coast facility a few hours from here. The market turn not only closed their new one in VA, but closed them overall. Deschutes, from what I understand, has essentially permanently put on hold a second VA production facility and instead stuck with the little pilot brewpub they already built.

The really little guys who only have a taproom or maybe a couple draft lines in their town aren't going to feel it the same way.

Nor are the Stones, Sam Adams', Sierra Nevadas, New Belgiums.

 

[mashpaddled]

One brewery shutting down because the landlord didn't want to renew the contract says absolutely nothing about craft beer.

 

[FloppyKnockers]

Can't swing a dead cat without hitting a new micro/nano brewery in Portland.

 

[beernutz]

https://beerandbrewing.com/brewery-density-by-state/

I think there is still room for growth, particularly in the green states.

 

[Grateful Dan]

Here in Va the breweries are doing very well. The smaller ones are upgrading and some are even adding second locations. Most do not serve food so the food truck business is growing. Not every brewery here has great beer but the atmosphere is such a relief from the normal bar seen. It's so nice to go have a good beer and a good conversation instead of a bud/miller and a fight.

 

[bob1852]

Can't swing a dead cat without hitting a new micro/nano brewery in Portland.

Many are shutting down, too...

https://www.americancraftbeer.com/landmark-portland-breweries-and-pubs-that-closed-in-2018/

https://www.newschoolbeer.com/2017/12/rip-ten-oregon-breweries-closed-2017-sale.html

 

[kevin58]

One brewery shutting down because the landlord didn't want to renew the contract says absolutely nothing about craft beer.

Did the OP mean that the brewer lost his brewery space or that he couldn't get distributed into retail spaces? I read it the second way and that IS a hurdle for new brewers.

 

[kh54s10]

Did the OP mean that the brewer lost his brewery space or that he couldn't get distributed into retail spaces? I read it the second way and that IS a hurdle for new brewers.

Not all craft breweries even try to distribute. There are 2 in my town that only brew for consumption on premises. Don't know about one of them but the other will fill growlers. I don't know of any in the state that have closed down. Growth is much more likely here in FL.

 

[NewJersey]

The cradc beer market is weird. From my my observations if you become TOO popular it can hurt you $wise. If You're not putting out 2-3 new NEIPAS per week you might get left behind.
Every market is different. I keep seeing people in this thread complaining about $5/6 a PINT beer. Lol, where i live in northern New Jersey $7 is standard for craft and the size depends on the beer. (A ddh dipa will likely be 14oz maybe 10 or 12)
Craft beer in my observation is setup to eat the rich. (The more successful you become the less "hype" you are)
It's a tough business and i DO see many hipster kids rejecting craft altogether on social grounds.
Tough business for sure

 

[Shwagger]

I wont go to a brewery after I find out they serve beer in a stemmed glass of any kind.

I'm hoping to gather a following and spread my inclination

 

[Homergah]

I wont go to a brewery after I find out they serve beer in a stemmed glass of any kind.

I'm hoping to gather a following and spread my inclination

I'm hoping you get real disappointed.

 

[deadwolfbones]

I wonder if OP thinks the restaurant industry is dying because 70% of restaurants close within three years of opening.

https://yourbusiness.azcentral.com/average-life-span-restaurant-6024.html

 

[bleme]

I'm not seeing ANY decline here. New local breweries open every year and the price just keeps going up.

 

[Shwagger]

I'm hoping you get real disappointed.

Alright

 

[Rob2010SS]

OP hasn't responded since posting this. I'm calling "Troll"

 

[day_trippr]

Macro brewery plant?

 

[bleme]

The article makes it sound like the problem was financing the company with debt (like Toys R Us).

"Since inception we have been undercapitalized, as Lucky Town was created by just the four of us and we debt financed the entire operation," the post says. "Over the last few years, we have had a consistent string of issues that have made doing business increasingly difficult. After much deliberation, we have decided that it is time to let the dream go."

 

[wepeeler]

I've come to the conclusion that people just like beer. Great beer, good beer, mediocre beer, crappy beer. I think most people go to a brewery or brew pub for the experience of not drinking at home or a friend's house. It's a fun time, and there's often live music or trivia. I try to visit a few new breweries a month, and maybe I've become a beer snob, but there aren't many that I would line up to buy their beer. The average beer drinker, and I wouldn't group most experienced home brewers in that group, just wants a cold pint and options. I think we home brewers have a better palate and are more discerning about what we drink or consider "good beer". Heck, I don't make world class beer (that I know of...), but I, and a lot of my friends, prefer drinking it over most commercial beers. Of course, with obvious exceptions...

 

[jrgtr42]

Sounds like two different stories on why they closed. Or maybe it's all one and the same - they had rent at a certain price, and were making things work just barely. The landlord wanted to raise the rent, and with all the other obligations - loans, ingredients, insurance, salaries etc, the raise in rent put them into negative. (just a theory there.)
There are lots of issues that can come up when you are producing and intoxicating product - be it financing, legal, government related and so on, and all of them cost time, money and effort. Sounds like it all came to a head and they aren't able to deal with it anymore.

 

[Rob2010SS]

I've come to the conclusion that people just like beer. Great beer, good beer, mediocre beer, crappy beer. I think most people go to a brewery or brew pub for the experience of not drinking at home or a friend's house. It's a fun time, and there's often live music or trivia. I try to visit a few new breweries a month, and maybe I've become a beer snob, but there aren't many that I would line up to buy their beer. The average beer drinker, and I wouldn't group most experienced home brewers in that group, just wants a cold pint and options. I think we home brewers have a better palate and are more discerning about what we drink or consider "good beer". Heck, I don't make world class beer (that I know of...), but I, and a lot of my friends, prefer drinking it over most commercial beers. Of course, with obvious exceptions...

Well said! Couldn't have said it better myself.

I feel like this is on topic but maybe not. I thought about it after reading this post. There are lots of breweries out there putting out garbage beer and yet, TA-DA, they're still in business and succeeding. When I got my degree from Columbia College, my wife and I made a road trip and hit up a ton of breweries. One of them was absolutely raved about in Columbia and we were like, "We have to go here!" It got pretty good ratings on google...

I'm not a beer snob but this stuff was pretty bad. Everything tasted the same and quite honestly, a few offerings had what I believe to be oxidation problems. But yet, here they are, jam packed and getting an average of 4.8 on Google. My guess is the location and that it's a college town are the reasons they are succeeding.

It's breweries like this that make me think the exact opposite of the title of this thread. It's definitely not busting...

 

[Shwagger]

I've come to the conclusion that people just like beer. Great beer, good beer, mediocre beer, crappy beer. I think most people go to a brewery or brew pub for the experience of not drinking at home or a friend's house. It's a fun time, and there's often live music or trivia. I try to visit a few new breweries a month, and maybe I've become a beer snob, but there aren't many that I would line up to buy their beer. The average beer drinker, and I wouldn't group most experienced home brewers in that group, just wants a cold pint and options. I think we home brewers have a better palate and are more discerning about what we drink or consider "good beer". Heck, I don't make world class beer (that I know of...), but I, and a lot of my friends, prefer drinking it over most commercial beers. Of course, with obvious exceptions...

Agreed, sir. I like to try different beers, so I go to a brewery to try what's new. Luckily, most of the breweries here make new types all the time. And we have a ton of breweries.

We also have Gulp Coast which rewards you for visiting breweries. Shirts, cups, random items. So I try them all at least once.

And ask for my beer to be poured into a pint or nonick

 

[Qhrumphf]

Sounds like a lot of posters on this thread are using "number of breweries" as indicative of "health of craft market" which isn't necessarily the case. And others "number of breweries closing". Which also isn't the best metric.

 

[Moose_MI]

I wont go to a brewery after I find out they serve beer in a stemmed glass of any kind.

I'm hoping to gather a following and spread my inclination

I’m with you! Lead on my Caesar!

 

[Shwagger]