A recent article on Brewbound reported 5 percent growth for independent brewers in the U.S. during the first half of 2018, based on data from the Brewers Association.
The Brewers Association reported there were 6,655 active breweries as of June 30, up from 5,562 a year ago.
We asked our team for their opinions on this industry growth.
What’s your take on the 5% growth midway through the year?
“Given the amount of new breweries entering the market, it makes perfect sense growth is only at 5%. You combine that with a fickle consumer base that demands variety, it all adds up in the end. Saturation.” — Dane Williams, Chief Jargon Officer (surprisingly not much jargon for this topic).
“5% is healthy, but it seems like a sign that supply and demand are just about at equilibrium. I dropped out of college so I can’t be sure of what that means but if I recall a few things it is that pricing may become a factor and some players may begin exiting the market, and not because they want to. In fact, the latter has begun to happen on a limited scale.” — Greg Parker, Chief Bosshole at Iron Horse Brewery
What does that mean for breweries of our size?
“Breweries our size will continue to sit around the high single digit, low double digit growth mark in their core markets. Once those breweries get outside of their ‘local markets’ is when you will see a weaker trend. IHB is lucky to have a flagship brand that sits within an under-indexed category and in turn it allows for us to focus on innovation.” — Dane
“The heavy shift to consumer purchases at breweries makes distribution even more difficult. We do a lot of distribution so we are going to need to be better than we have ever been to continue growth and remain sustainable.” — Greg
Any other thoughts?
“The number that is eye-opening to me is that there are an estimated 2,500 to 3,000 more breweries in planning. I don’t know what the conversion rate from ‘in-planning’ to ‘in-operation’ is but even a low number puts an enormous amount of breweries in operation in the states. When we bought Iron Horse in 2007 there were about 1,250 breweries operating in the states, if I recall correctly. Talk about a changing market. It doesn’t keep me up at night on a regular basis but I would be lying if I said I have never thought about that fact at 3:47 a.m. 11 days ago.” — Greg
For more opinions on the article listen to Episode 23 of Life Behind Beer. What do you think this growth means for the market?