Thoughts About the Craft Beer Bubble & Rapid Expansion

Over the past few weeks I have seen a number of different articles on various beer news websites discussing the craft beer bubble that is believed to be currently happening. Multiple influential figures in the craft beer industry feel that the intensely high increase of craft breweries popping up all over the country over the past few years could make this bubble pop. It all leads to asking whether this extreme growth is truly sustainable and what will the future be.

Taste in America has been changing gradually and people tend to be more open to trying new things. This change in taste has been especially true about beer. I’ve been able to find more stores selling craft beer, more craft beer on tap in bars across the country, and even more product placement in television. There’s no denying America’s new found interest. But even with this new found interest – How far can it actually go? I’d love for fizzy yellow water to be taken off tap in bars and a good craft beer put on, but it’s pretty unlikely that will happen any time soon.

In a perfect world, craft beer would have as much shelf space and acceptance to the general public as the big companies, but we all know that’s never going to happen. Although people are more open to change, old habits will die hard with most. Craft breweries work hard in order to get their beers on the shelves. They need to prove that there is a large enough interest in their beer and that it’s interesting/unique enough to knock another beer off the shelf. This has been a difficult task over the years, but it has obviously been done. However, with the sudden surge in new breweries, it’s doubtful that each new player will have the same opportunity and chance for shelf space as their older siblings.

The argument of shelf space which was once a battle against the giants of the beer industry could very well change into a battle between craft brewers. Established larger craft breweries that already have a cult following may find themselves stuck in the middle of a tug-of-war – competing with the large macro giants on one side and smaller newbie breweries on the other. This won’t be a problem in certain markets that in the infancy of the craft beer change. However, for markets that are already saturated with a large distribution base of different brands, adding new ones may be difficult for stores. Although the craft industry is a friendly one for the most part, there’s no doubt that things may change when new breweries try to get themselves into consumer hands.

Jim Koch from the Sam Adams brewery has recently made comments on the current bubble and the need for young craft breweries to offer something new that contributes to the craft beer industry in order to survive. The brewing veteran has a very good point. As the industry expands, it appears that there has been a surge of West Coast Style IPAs and high ABV Barrel Aged Imperial Stouts. How many of these two styles of beer can the market bear? When done well, these are some great beers and will typically take off depending on their quality or the amount of hype behind them (hype is a whole other topic). But when not done well, they just litter the shelves collecting dust, contributing little to no value. This is especially true in overcrowded market segments where the choices are much larger.

I feel that as the choices become larger and the market becomes more saturated, those breweries not offering something truly unique or of quality will tend to die out. It will be somewhat of a beer Natural Selection where only the strong will survive. This will also inspire those stronger breweries to continue to strive to make better beer and further push innovation and challenge the taste of the consumer. It sounds terrible to want to have a new place go out of business, but it may be for the best. If someone interested in trying craft beer has their first beer and it’s something mediocre, they may be turned off and go right back to drinking crap.

I guess we’ll see what happens over the new few years. Although I hope for the best for everyone, I will expect to see a lot of brewing equipment on Craig’s list within the next few years – and hopefully those who purchase it second hand will have better luck than the previous owners.

Please feel free to post your thoughts and opinions.

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About Erik

I started this blog in 2011 to share my experiences traveling across the country visiting different bars, breweries and other beer related places. Check out the blog if you would like to read about some awesome places visited and beers I've tried.
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One Response to Thoughts About the Craft Beer Bubble & Rapid Expansion

  1. Gene S says:

    I think the entire concept is rather foolish, especially from someone like Jim Koch. He doesn’t grasp what a “bubble” truly is – it’s when something is being traded/bought/sold for a value far higher than it’s worth. That’s absolutely ludicrous here. There’s nothing to “pop”. What WILL happen is that the growth seen over the past decade or so will slow – there’s no room for that kind of sustained expansion without something else coming in to change the playing field. Yes, it will be harder to enter the field without an answer to this, but that’s not how Koch & co are portraying the situation.

    Consider a relatively straightforward example, like the dot-com bubble. You don’t have investors throwing that kind of money on breweries hoping that they’ll be the “next big thing”. The vast majority of breweries are self-starters and take out their own loans as necessary. No one is (or will be, I’d bet) day trading on breweries. Their stocks will not inflate, venture capitalists will not descend here. “Bubble” has become a buzz term in the modern vernacular and it’s used as a sort of fear-mongering. The same has been thrown about in the realm of esports (which is another incredibly quickly growing business) without an understanding of what feeds a “bubble”.

    Now that being said, what I *am* concerned with is how the big boys will continue to try and impose various regulations to restrict entry into the marketplace for new breweries. Lobbying will continue and nonsensical rules will fall out of it – they may range from direct limitations to fees that the big companies can afford, but the little guys cannot. That will be the biggest challenge moving forward.

    TLDR – this level of growth is unsustainable without a game-changer, but there will not be any collapsing (e.g. “the pop”)

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