Author Topic: OK one more thread on the Brewery bubble  (Read 1364 times)

Offline euge

  • Official Poobah of No Life.
  • *
  • Posts: 7221
  • Estilo Casero
    • View Profile
Re: OK one more thread on the Brewery bubble
« Reply #15 on: December 04, 2013, 11:25:03 PM »
If it got to that point I'd be brewing something more efficient. Something that takes up less space and requires no refrigerator

+1 fire needed only...
The first principle is that you must not fool yourself, and you are the easiest person to fool. -Richard P. Feynman

Offline redbeerman

  • Senior Brewmaster
  • ******
  • Posts: 1713
  • On the banks of the mighty Susquehanna
    • View Profile
Re: OK one more thread on the Brewery bubble
« Reply #16 on: December 05, 2013, 05:33:32 AM »
I think it is more of a boom than a bubble, and booms are followed by busts. Sometimes I think some craft brewers have a lot of capacity dedicated to 6 packs that set on the shelf. The quality brewers can not make enough, and are constantly expanding, or building new breweries.

There are many that are getting into the business now that are not making good beer on a homebrew scale. I wish them good luck.

I agree.  I have had beers from small start up breweries that really had no redeeming qualities at all.  Insipid would be an apt description.
CH3CH2OH - Without it, life itself would be impossible.

[441, 112.1deg] AR

Jim

Offline denny

  • Administrator
  • I must live here
  • *****
  • Posts: 11654
  • Noti OR [1991.4, 287.6deg] AR
    • View Profile
    • Dennybrew
Re: OK one more thread on the Brewery bubble
« Reply #17 on: December 05, 2013, 09:28:05 AM »
Is it generally true that craft breweries are selling everything they brew, and that they are brewing at or near current capacity?

The ones I'm familiar with are.
Life begins at 60.....1.060, that is!

www.dennybrew.com

The best, sharpest, funniest, weirdest and most knowledgable minds in home brewing contribute on the AHA forum. - Alewyfe

Offline BrewingRover

  • Brewmaster
  • *****
  • Posts: 514
  • Brewing in Flossmoor, IL
    • View Profile
Re: OK one more thread on the Brewery bubble
« Reply #18 on: December 05, 2013, 07:43:09 PM »
that's an interesting statistic! is it broken down at all by new startups vs. established breweries?

Not on the website. I believe the BA publishes some more in-depth statistics for members' eyes only, but I'm too poor to join right now.

It's also worth noting that the actual *number* of closures per year is also dropping. I said something similar in a previous thread, but I expect that in the next few years the number of brewery closings will increase dramatically as the nano market shakes itself out. No one can operate at a loss forever.

I've been reading about a bunch of nano startups in Chicago and been wondering how much shelf space and/or taps they're going to be able to get. I think the big local liquor chain (Binny's) has been pretty good about carrying all the local stuff, but I'm not sure about the smaller stores. There's been a bunch of out of state breweries arriving, too, and shelf space isn't infinite. Great for me as a consumer, though. Surly just came back and Ballast Point arrived last summer.
It's such a fine line between stupid and clever.

Offline phunhog

  • Assistant Brewer
  • ***
  • Posts: 183
    • View Profile
Re: OK one more thread on the Brewery bubble
« Reply #19 on: December 05, 2013, 10:52:12 PM »
I think the bubble will not so much burst as slowly deflate.  What's going to happen in a few years when all these breweries realize that they are pretty much "as big as they are ever going to be"?  Long hours with low pay is great when you are starting out but how about 10 years into it?  At some point I think a lot of people are going to get sick of it and go into other careers.  Like someone said...shelf space isn't infinite and you can only sell so much out of your own taproom.  Plus a small brewery IS competing against the big craft brewers who have the infrastructure, marketing, and money to make/keep customers.

Offline yso191

  • Brewmaster
  • *****
  • Posts: 632
  • Yakima, WA
    • View Profile
Re: OK one more thread on the Brewery bubble
« Reply #20 on: December 05, 2013, 11:32:07 PM »
100% of the US market is on the shelves now.  No new shelf space needed.
Steve

Offline majorvices

  • Global Moderator
  • Official Poobah of No Life.
  • *****
  • Posts: 6306
  • Polka. If its too loud you're too young.
    • View Profile
    • Yellowhammer Brewing Company
Re: OK one more thread on the Brewery bubble
« Reply #21 on: December 06, 2013, 07:01:50 AM »
As was mentioned earlier, there is no way most of these nano and pico operations can last for long (no offense to anyone here that is running one of those). UNless you have a brew pub, I'm not sure how you can subsist on anything smaller than a 10 bbl system. I am filling 30 bbl tanks now and the amount of money I am making off a 30 bbl batch is not enough to make me or any of my partners rich by any means. I'm making about 1/3rd the salary I was when I left my job and working 2Xs as much. Granted, we are forced to go through a distributor which takes a nice, hefty cut and while we are permitted to have a tap room we can not sell growlers or other packages on premiss.

So in that case, I think there will be a bust eventually as many of the nanos and picos fail or simply get bored and quit. OTOH it's so easy to start a nano or pico now that I believe they will continue to pop up as other ones fail.

I'm sure there are exceptions across the nation but the picos and nanos operating locally are simply terrible. Most of these folks are people who got the idea to open a brewery before they learned how to brew or some of them obviously learned to brew and their friends and family told them how great their beer was and that they should open a brewery. What's amazing to me is, in some instances here in the south some of the latter are actually thriving because craft beer is so new here a lot of people think "that's just the way it is supposed to taste". But as people tastes evolve I think even these places will begin to fail.

FWIW I think there is money to be made in the brewery world and I think you can definitely support yourself and make a good living but it takes a lot of money and time and effort to get there and you have to be selling a lot of beer or have a very busy tap room or successful restaurant driven brew pub to get there.
Keith Y.
Self appointed "All Grain" section pruner

Offline thebigbaker

  • Brewmaster
  • *****
  • Posts: 702
  • Denver, CO
    • View Profile
Re: OK one more thread on the Brewery bubble
« Reply #22 on: December 06, 2013, 07:27:44 AM »
Keith, any change on the horizon for the laws in Alabama to allow you do sell more (growlers, six packs, etc...) out of your tasting room?  I live about 5 minutes from Dry Dock Brewing just outside of Denver and go by a couple times a month to get growler refills and the occasional bottle.  I wonder now how much this option helps a brewery to grow. 

When I was in B'ham early November (man I wish I could have made it up to Yellowhammer.  Definitely will plan that in for next yr's trip) we went to a few breweries in B'ham that each had just opened up in the last couple of years.  The market for craft brew is definitely there, but so far the quality of the beer wasn't quite there yet.  W/out naming names, most of the beer we had was average at best.  The one brewery that really stood out with good beers and great service was "Good People Brewing Co." 

Jeremy Baker

"An escalator can never break: it can only become stairs. You should never see an Escalator Temporarily Out Of Order sign, just Escalator Temporarily Stairs. Sorry for the convenience." - Mitch Hedberg

Offline alestateyall

  • Assistant Brewer
  • ***
  • Posts: 178
    • View Profile
Re: OK one more thread on the Brewery bubble
« Reply #23 on: December 06, 2013, 07:42:03 AM »

I'm sure there are exceptions across the nation but the picos and nanos operating locally are simply terrible. Most of these folks are people who got the idea to open a brewery before they learned how to brew or some of them obviously learned to brew and their friends and family told them how great their beer was and that they should open a brewery. What's amazing to me is, in some instances here in the south some of the latter are actually thriving because craft beer is so new here a lot of people think "that's just the way it is supposed to taste". But as people tastes evolve I think even these places will begin to fail.

This is my biggest problem with craft brew. These days it is so hard to tell if that $10-$20 six pack will be good or a waste of money.

I have an app on my phone to try to help but it seems like almost every beer has a rating of 3-3.5 out of 5. Only a few stand out with high or low ratings.


Offline MDixon

  • Senior Brewmaster
  • ******
  • Posts: 1008
    • View Profile
    • Mike's Homebrewing Page
Re: OK one more thread on the Brewery bubble
« Reply #24 on: December 06, 2013, 08:12:07 AM »
Here is what is going to happen. We are going to have a hop or grain shortage and breweries are going to close like crazy. We are now heading to 110 breweries in NC and it wasn't that long ago we had 40. Many of these are small and do not have contracts for their hops and grain so when the ingredients become scarce they will have little choice but to close up shop. It isn't like every farmer is going over to barley and hops to meet demand for the crops.

I love that we have so many new breweries and I hate that many of them are mediocre at best. We have one where I live which sells everything they make out of their current location. They are planning a large off-site expansion to distribute and have hired some new staff. If their beers do not improve they will fail. Currently their business is making bank, but when you have a good location and are the neighborhood bar/hangout you can get by with a mediocre product. Once you distribute and are on draft in new locations it is a different ballgame.

On the bright side NC is one thirsty state. Every brewery that opens seems to have no problems selling everything they make. At some point we will reach saturation and shelf space is already filled. Unless more draft accounts pop up or they grab them from breweries outside of NC the ability to sell the products will be limited to the tap room. I must say our laws regarding tap rooms are outstanding. I can remember when one of the first opened and it was opened two or three nights a week for two or three hours. Now that same one opens in the afternoon and stays open until late at night every day of the week. It's a beautiful thing!
It's not a popularity contest, it's beer!

Offline phunhog

  • Assistant Brewer
  • ***
  • Posts: 183
    • View Profile
Re: OK one more thread on the Brewery bubble
« Reply #25 on: December 06, 2013, 11:18:24 AM »
As was mentioned earlier, there is no way most of these nano and pico operations can last for long (no offense to anyone here that is running one of those). UNless you have a brew pub, I'm not sure how you can subsist on anything smaller than a 10 bbl system. I am filling 30 bbl tanks now and the amount of money I am making off a 30 bbl batch is not enough to make me or any of my partners rich by any means. I'm making about 1/3rd the salary I was when I left my job and working 2Xs as much. Granted, we are forced to go through a distributor which takes a nice, hefty cut and while we are permitted to have a tap room we can not sell growlers or other packages on premiss.

So in that case, I think there will be a bust eventually as many of the nanos and picos fail or simply get bored and quit. OTOH it's so easy to start a nano or pico now that I believe they will continue to pop up as other ones fail.

I'm sure there are exceptions across the nation but the picos and nanos operating locally are simply terrible. Most of these folks are people who got the idea to open a brewery before they learned how to brew or some of them obviously learned to brew and their friends and family told them how great their beer was and that they should open a brewery. What's amazing to me is, in some instances here in the south some of the latter are actually thriving because craft beer is so new here a lot of people think "that's just the way it is supposed to taste". But as people tastes evolve I think even these places will begin to fail.

FWIW I think there is money to be made in the brewery world and I think you can definitely support yourself and make a good living but it takes a lot of money and time and effort to get there and you have to be selling a lot of beer or have a very busy tap room or successful restaurant driven brew pub to get there.
Now everyone's situation is different but how long are you willing to keep making 1/3 less money and working 2x more?  At some point I think a lot of people are going to throw in the towel because there is no light at the end of the tunnel.   

Offline majorvices

  • Global Moderator
  • Official Poobah of No Life.
  • *****
  • Posts: 6306
  • Polka. If its too loud you're too young.
    • View Profile
    • Yellowhammer Brewing Company
Re: OK one more thread on the Brewery bubble
« Reply #26 on: December 06, 2013, 11:27:44 AM »
As was mentioned earlier, there is no way most of these nano and pico operations can last for long (no offense to anyone here that is running one of those). UNless you have a brew pub, I'm not sure how you can subsist on anything smaller than a 10 bbl system. I am filling 30 bbl tanks now and the amount of money I am making off a 30 bbl batch is not enough to make me or any of my partners rich by any means. I'm making about 1/3rd the salary I was when I left my job and working 2Xs as much. Granted, we are forced to go through a distributor which takes a nice, hefty cut and while we are permitted to have a tap room we can not sell growlers or other packages on premiss.

So in that case, I think there will be a bust eventually as many of the nanos and picos fail or simply get bored and quit. OTOH it's so easy to start a nano or pico now that I believe they will continue to pop up as other ones fail.

I'm sure there are exceptions across the nation but the picos and nanos operating locally are simply terrible. Most of these folks are people who got the idea to open a brewery before they learned how to brew or some of them obviously learned to brew and their friends and family told them how great their beer was and that they should open a brewery. What's amazing to me is, in some instances here in the south some of the latter are actually thriving because craft beer is so new here a lot of people think "that's just the way it is supposed to taste". But as people tastes evolve I think even these places will begin to fail.

FWIW I think there is money to be made in the brewery world and I think you can definitely support yourself and make a good living but it takes a lot of money and time and effort to get there and you have to be selling a lot of beer or have a very busy tap room or successful restaurant driven brew pub to get there.
Now everyone's situation is different but how long are you willing to keep making 1/3 less money and working 2x more?  At some point I think a lot of people are going to throw in the towel because there is no light at the end of the tunnel.

Well, I actually love what I do now as opposed to my old desk job. It's my own place, I'm my own boss, I have community respect from fellow business owners and a supportive wife. I'll continue to try to make it work as long as I possibly can and I think there is profit to be made. I've been doing this for over 3 years now and I honestly can't see doing anything else. That said, it is a huge commitment and certainly not for everyone, which is what I constantly warn everyone who says they want to open a brewery.

But money isn't everything. Being happy and satisfied in what you do with your time is worth a hell of a lot.
« Last Edit: December 06, 2013, 12:08:20 PM by majorvices »
Keith Y.
Self appointed "All Grain" section pruner

Offline majorvices

  • Global Moderator
  • Official Poobah of No Life.
  • *****
  • Posts: 6306
  • Polka. If its too loud you're too young.
    • View Profile
    • Yellowhammer Brewing Company
Re: OK one more thread on the Brewery bubble
« Reply #27 on: December 06, 2013, 11:31:14 AM »
Keith, any change on the horizon for the laws in Alabama to allow you do sell more (growlers, six packs, etc...) out of your tasting room?  I live about 5 minutes from Dry Dock Brewing just outside of Denver and go by a couple times a month to get growler refills and the occasional bottle.  I wonder now how much this option helps a brewery to grow. 

When I was in B'ham early November (man I wish I could have made it up to Yellowhammer.  Definitely will plan that in for next yr's trip) we went to a few breweries in B'ham that each had just opened up in the last couple of years.  The market for craft brew is definitely there, but so far the quality of the beer wasn't quite there yet.  W/out naming names, most of the beer we had was average at best.  The one brewery that really stood out with good beers and great service was "Good People Brewing Co."

We might get growler sales in the next year or so. The guild is actively pursuing it and we are getting little resistance from distributors so far.
Keith Y.
Self appointed "All Grain" section pruner

Offline brewbaker

  • 1st Kit
  • *
  • Posts: 8
    • View Profile
Re: OK one more thread on the Brewery bubble
« Reply #28 on: December 09, 2013, 01:19:09 PM »

I love that we have so many new breweries and I hate that many of them are mediocre at best. We have one where I live which sells everything they make out of their current location. They are planning a large off-site expansion to distribute and have hired some new staff. If their beers do not improve they will fail. Currently their business is making bank, but when you have a good location and are the neighborhood bar/hangout you can get by with a mediocre product. Once you distribute and are on draft in new locations it is a different ballgame.

This is happening all over. Up here in the Northeast there are several local mediocre brewpubs that are undergoing green field expansions for production only facilities. The thing is their beer is not that good, and when forced to compete on the larger scale to a larger audience, they will not do well. Or maybe they will. I wont be buying their stuff. In this time of hyper competition you gotta bring it if you want to stick around. It's easy to make one sale, it is not easy to build repeat customers.

On that note though, with any larger market you have breweries at all levels of skill and quality. However, this happens whenever competition grows and it is a good thing for business and for the consumer. We cant all be the best now can we?


On a side note, what drives me nuts (in a good way!) when buying beer is breweries and the wide variety of beers and beer styles. It is almost a double edged sword. Some breweries produce one or two good beers and a lot of less than good, while others produce great beer after great beer and occasionally something not so good. Furthermore, with all the options, half the time I am hesitant to buy anything that I am unsure about. There is just so much good beers out there, and also so much mediocre, and even some utter garbage, that I often spend a looong time debating what to buy at the beer store if I dont have a beer in mind already.

Offline micsager

  • Senior Brewmaster
  • ******
  • Posts: 1003
    • View Profile
Re: OK one more thread on the Brewery bubble
« Reply #29 on: December 09, 2013, 01:54:39 PM »
We are one of the nano or pico breweries being discussed here.  And I'll admit that not all of the beer we produce is terrific. (although our Christmas ale, WAS terrific) Yet it all sells.  Quicker than we can brew it. 

But we have the advantage of doing this as a hobby.  Both my wife and I have full time day jobs that pay the bills.  Brewing and selling our beer is something we just like doing.  We have a 1bbl brewhouse, with five, 1bbl fermenters.  And we package in Corny Kegs.  Brewing 1-2 times a week. 

We've committed to no debt or outside investors.  And if the brewery ever fails financially, we will have a pretty good home brew set-up again.  LOL

We also seem to have better distribution laws than many states.  We self-distribute all of our beer.  And IIRC, the limit is in the tens of thousands of barrels, so no worries there.