Within Hours, We Learned of Three Oregon Brewery Closures

The Beervana Blog Facebook page lit up with chatter yesterday as we learned of two brewery closures: 22-year-old Portland veteran Alameda Brewhouse and 10-year-old Seven Brides In Silverton (35 miles south of Portland, in hop country). Today The New School also notes that Two Kilts in Sherwood (a Portland exurb) has also closed. 

While openings are always accompanied by a surfeit of information, closures usually happen in darkness. There are question marks about all three of these closures—to what extent the entire operations are being shut down, whether there’s a plan for reincarnation in the works—but in my experience that ambiguity usually reflects an owner’s reluctance to admit things are well and truly finished. 

Whatever the particulars of each case, these closures together signal something significant. We are entering a long-predicted phase of maturation in the beer industry. For over a decade, the craft beer segment was reliably growing at double digits. In 2006, there were just 1377 breweries in the US, and they were making about 3.4% of the beer. By the end of 2016, the last year of significant growth, there were 5,300 breweries, and the segment constituted around 15% of the volume (by that time, the Brewers Association were no longer capturing substantial volume in the segment by corporate-owned non-members). During that period, breweries began to settle into the working assumption that 10% growth was a stable, normal state of affairs.

There’s no reason to think craft beer isn’t healthy, but it’s no longer in a phase of expansion. And that means closures like the ones announced yesterday will become more frequent. Because new breweries continue to enter the market (there are now ~7,000), it makes it harder for older, less nimble companies to compete.

Since it opened, Seven Brides had consistency issues with its beer. Alameda was very slow to update its range of offerings and suffered the fall-off of interest any decades-old pub has in the churn of interesting new eateries. Two Kilts was located in a beer desert and may have gotten into financial difficulty.

Each story is different, but the challenges are similar. In the last three or four years, dozens of new breweries have opened in the Portland area and a number debuted at the top tier of quality, with focused, intentional concepts. Older brewpubs with stodgy, creaky menus (beer and food) may not be bad—but they’re also not exciting. (In fact there was an outpouring of love for Seven Brides and Alameda on their Facebook pages.) Places like the ones that closed therefore got lost in a sea of choice.

And this is exactly what we’d expect in a mature market. I predicted this moment five years ago:

A mature market, by contrast, is one that has reached a state of equilibrium. In beer terms, that would be a situation in which the number of barrels of capacity equal the number of barrels of demand. In order to grow, breweries would need to cannibalize each other. That sounds bad, but it happens to be the definition of a typical market.  Presumably, people would quit buying crap beer and buy more of the good stuff...

 [A]t some point, the market will hit equilibrium. For awhile, this will cause widespread gnashing of teeth and breweries used to amazing growth will feel like a collapse has arrived. Most craft brewers have never seen flat sales or a market that wasn't growing. It will be deeply unnerving.

That’s where we are now. Portland has scores of breweries around town, with more opening each year, and some are old and unchanging, below-average, or located badly. I haven’t been to Alameda in years, and I haven’t seen any reason to go back. The beer selection hasn’t been reinvented, and there are so many other new places vying for my attention. That’s just one person’s experience, but it’s not unusual. Is the average drinker going to choose Alameda over Wayfinder, Ruse, Little Beast or any of the newer, better, more interesting breweries that have opened recently? The answer is obvious, and acts as a klaxon warning that this little spurt of closures is probably only the beginning.