21 Jan Is the rise in breweries ultimately harmful to the industry?
For the second time in a year, Indiana lost another craft brewery this week when on Monday, rather unexpectedly, Martinsville’s Three Pints announced its closure effective immediately. This follows Avon’s Cutters Brewing, who closed up shop in March 2015. Cutters’ closing ultimately was tied to nearly $80,000 in sewage fees, while we know little to nothing of Three Pints’.
Still, this leads to some people asking, yet again, if the craft beer bubble is ready to pop.
Recently the Brewers Association announced that it now recognizes 4,144 breweries in America, the most ever in the history of, well, ever. In light of that, the Washington Post asked this week if this rapidly expanding market will ultimately doom itself. Market saturation, competition for shelf space, limited tap handles in area bars, all are real problems craft brewers face.
Increased pushback and buyouts from macro brewers is also a real threat. Our own Mathew Muncy documented recently on an incentive program AB InBev is offering to distributors if their products end up on more shelves, limiting even further the space available to your favorite brewers. And the buyouts, which seemed to be happening once a week at the end of 2015, are just the latest attack on the industry, no matter how you look at it.
Folks will look at the closures of Cutters and Three Pints and attribute that to the bubble. I can’t comment officially on what led to Three Pints shutting down, but Cutters abruptly closed after being hit with $77,000 in fines after not filing for a sewer permit or paying applicable fees. That’s not a bubble popping: that’s bad business practice.
I see the same thing happening with breweries opened by people who see getting into the craft beer game as a quick way to make a cheap buck. If the beer isn’t up to snuff, people won’t go there. Plain and simple. That’s not a bursting bubble: that’s the market deciding against your product.
As one brewery closes, that leaves a hole for another to open. And as more open, we’ll see more begin to differentiate in the products they offer. Look no further than this past weekend’s Flat12 5th anniversary celebration and the plethora of barrel-aged beers they produced. Or Deviate Brewing and the mad scientists making their Swiss Cocoa stouts and Miso Corny ales, or Upland adding cans to their lineup to satisfy more people. Or breweries opting to not distribute, telling you their beer is so good you’ll need to come to them. Because if it is that good, you will go to them.
Good breweries will continue to adapt to trends in the market as they always have, and breweries not in it for the right reasons will continue to have their time in the light made shorter and shorter.
That’s no bubble: that’s just how business works.