Have We Reached Peak Breweries?
This morning, the Brewers Association released their annual statistics on the previous year. Their topline number was 5% growth for "craft" beer, but this is now meaningless given the number of ostensibly craft breweries excluded from the calculation. (The number including Lagunitas, ABI's High End brands, CBA, NAB, Blue Moon, et. al. would probably reflect even stronger growth.) What I found more interesting was the total number of breweries now operating in the US: over 6,300. Compare that with the numbers from five years ago (2,475) and ten years ago (1,511) and you see some pretty staggering growth. Or, put visually:
The brewery growth comes at a time when total beer volume declined by 2.5 million barrels (about 1%). Brewery closings ticked up a bit in 2017 to 165 from 96, though that's still a tiny fraction compared to openings. (There were 47 closings five years ago.) The total numbers aren't necessarily a warning sign, though; there are 9,100 wineries, and I don't know that anyone's panicking about that. The vast majority of American breweries produce less than 1,000 barrels, and only a tiny amount produce more than 50,000, so the barrelage of these breweries is easy enough for a 196-million-barrel country to absorb.
The warning sign for me is in the distribution of these breweries. Only 2,252 are brewpubs; nearly four thousand are "micro" breweries. (Yes, it's weird that the organization still uses that term.) In this case it refers to a brewery making less than 15,000 barrels that sells 75% of its beer offsite. The problem with these 3,800 packaging micros is not that they produce too much beer--even if they all averaged 5,000 barrels, it would be just 10% of the overall market--but that it's hard to imagine them all getting to market.
How do you put the 25,000 beers they can or bottle (as a wild-ass guess based on 7 SKUs per brewery) into the bottleneck of retail stores? How do the three or four distributors in each city meaningfully represent these products to retailers? Brewpubs can flourish by attracting customers in a small footprint around the brewery, without bottlenecks. But the ability for small packaging breweries to put their beer in the hands of customers has to be reaching a terminal point.
As a consumer, I can tell you that it feels like there are too many breweries to keep track of. Here in Portland, there's this long list of breweries that float at the periphery of my knowledge--Back Pedal, Funhouse, Gateway, Grixen, Leikam, Mad Cow, Second Profession--along with others I just haven't managed to get to yet (Labrewatory, the new Modern Times). And every time I do manage to tick one of these off my list, it means not going to one of the several dozen other breweries I might have gone to instead. There's a way in which it's overwhelming and exhausting to try to keep up--and embarrassing to acknowledge when I haven't. I used to relish a new brewery opening; now they largely fill me with dread. I write about beer for a living, so there's a bit more at stake--but I have to assume these feelings aren't unique.
Every year, the Brewers Association touts the growth in breweries as a great sign. I'm not sure their membership will feel delight in learning that nearly a thousand breweries opened last year. There's a point at which the structure of the market is not prepared to handle all the beers on offer. I wonder if in a few years we'll look back and see that we hit that point in 2017.