No Country For Old Breweries
The Brewers Association have released their annual cheery holiday-season roundup of good news for the beer industry. Sales up! Brewery numbers up! Jobs up! But a closer look at some of these positives reveal an unmentioned, alarming conflict—especially for older, established breweries (my bolds):
“The Brewers Association’s mid-year survey measured 5 percent growth by volume, and although there have been signs of slightly slower growth in the second half of the year.”
“The number of breweries in the United States hit yet another all-time high in 2018, eclipsing 7,000 at the end of October. Although the final numbers are still being compiled, there will potentially be 1,000 openings in 2018 ... on pace for a 20% increase over 2017.”
Hmm. My back-of-the-envelope math tells me that the number of new entrants seems to be far outpacing the number of new beers being sold. That can’t be good. And sure enough, for older breweries and especially larger ones, it’s bad news indeed. Crunching numbers for the half-yearly report in July, BA economist Bart Watson found this growth pattern among breweries:
Digging into Oregon data, senior state economist Josh Lehner surfaced a highly relevant, extraordinary trend that helps illuminate this situation:
“Start-up breweries, defined here as those that didn’t exist before 2005, now produce more beer made in Oregon and sold in Oregon than the older breweries combined.... The 5 largest breweries in Oregon made 40% of the beer last year. The 20 largest made 75% of the beer. One-third of the start-up production last year can be tied directly to 10 Barrel, Hop Valley, and Ninkasi. That said, if you take those three breweries out of the start-up numbers, the remaining start-up breweries in Oregon would still produce as much as the state’s legacy breweries.”
He’s an economist, so of course there’s this nice attached graph to illustrate things.
We will soon turn the page on 2018, and it was by any objective measure a mixed picture. The market is tightening, beer continues to contract overall, and some big breweries are seeing huge declines. It’s certainly not the apocalypse, and fire is not yet falling from blackened skies. But for an increasing number of large breweries, it’s starting to feel that way.