The Coming Carnage

A postscript to yesterday’s news. This morning contained yet another closure announcement: Bent Shovel, a brewery in Oregon City, is closing their taproom. (Turns our the brewery is healthy and growing and the closure is related to traffic, so that’s good.) I also just learned that CA-based Bear Republic announced closure of their brewpub In Healdsburg this week.

Get used to it.

The first small breweries were formed 40 years ago. That generation is still around; Ken Grossman is still very much involved in Sierra Nevada; Jim Koch is at Boston Beer. Some of the first generation have retired or passed on (RIP Bert Grant), but we remain in the lifetime of that first generation. Spitballing based on available statistics, there are 1300-1400 breweries in the US twenty years or older. There are around 3,500 that are five years or older. (The first great brewery recession basically stopped brewery openings, and only a couple hundred opened between 1999-2009.) A lot of older and aging breweries are scattered across the country.

According to the Bureau of Labor Statistics. half of businesses are gone within five years. A third are gone within two years. The odds of making it 20 years? Just 20%. Breweries have been insulated from this because, during that forty-year span, they were busily backfilling a hole created in the previous forty years. There was room in the market for several thousand breweries. So even though over 5,000 breweries opened in the past decade, bringing the total to around 8,000, only a thousand or so have exited the market.

Even if the survival rates of breweries could continue to beat the odds, there’s a demographic disaster that will unfold beginning in twenty years, as this current, giant crop of new breweries ages and the founders retire. And because this trend is cumulative, each decade going forward will naturally see more closures than past decades. In ten years, all existing breweries will be 10-50 years old; in twenty years they’ll be 20-60 years old, and so on. Take Portland’s recent brewery and brewery-owned pub closures: of the seven, the youngest were nine years old, and three were over thirty. They all had different reasons for closing, but that’s part of the point—the longer a company has been around, the more likely it is that something will force it to close. And there are now over 8,000 breweries, any of which might at any moment encounter one of those reasons.

One final note. This current crop of breweries has thrived on being new in a moment when the market rewards novelty. That is … not sustainable. A lot of yesterday’s commentary about Lompoc (including mine) revolved around how the brewery seems old-school, as if that’s an inherent trait. Of course it’s not, and once, Lompoc was seen as a young, exciting brewery. There’s a reason it grew to five locations.

Or take Ninkasi Brewing, now a mere dozen years old. It once defined the cutting edge in Oregon. This isn’t an exaggeration—for a few years in the late aughts, it was the hottest brewery, the one exciting drinkers and causing competitors to respond. Yet twelve years is a lifetime in tastes, and now Eugene’s finest is now considered fatherly. It may be admired, but it’s been a long time since it was the source of the new beer driving the market.

Every brewery that was once an emblem of a shining new future—Widmer, Hair of the Dog, Ninkasi, Boneyard (to cite local examples)—has seen trends move on without them. Great Notion and Ruse are the current trendsetters, but time continues to march. We have absolutely no experience of what happens when four thousand breweries immediately become “old school” before our eyes. Given the pace of trends, that will happen in about five years. It will be an extremely interesting moment in the 45-year age of American craft brewing, and quite possibly not a happy one.