Too Many Beers?
Submitted by Richard Reilly

The number of breweries across the nation took a massive leap, going from 1,500 a
decade ago to about 7,500 now. With more options, habits shifted, and a fickle, younger
generation of craft enthusiasts grew up with little brand loyalty. Instead of grabbing the
same old favorites, the craft consumer now is likely to cruise the beer aisle looking for a
new release or belly up to the nearby taproom for something fresh they’ve never tried –
then take a growler or a crowler to go.

Add in external factors analysts say could be cutting into beer consumption -- like legal
marijuana and reports of Millennials and Gen Z drinking less and preferring wine and
liquor to beer -- and the craft-beer industry has a problem, observers say.
The increased competition is roiling a once-steady landscape and claiming victims. In the
past year,

The breweries most in jeopardy tend to be older, larger and with wide wholesale
distribution. In contrast, the model for success -- though in more modest terms -- are
smaller operations that self-distribute or have moderate distribution with multiple avenues
to sell their beer.

“We live in an age of promiscuity,” says Sam Holloway, a brewery consultant and
University of Portland entrepreneurship professor. “For consumers, there’s never been a
better time to be a beer drinker. But for a brewer, the old model of best practices doesn’t
apply anymore. You look at the top 50 (in the U.S.), they’re struggling. These are really
good entrepreneurs, really smart people doing everything right, and the industry

With so many breweries, there’s not enough market, enough consumer purchase to
sustain them all.the key is trying to stay fresh and continue to brew world-class beers, but
even that doesn’t guarantee success anymore.There’s just too many choices.

Beyond the sheer number of breweries, another phenomenon is complicating the lives of
brewers: fickle customers. They want what’s new and something they’ve never had
before. They will stand in line for hours for a new release from a brewery that has all the
buzz. And brand loyalty? Nope. There’s no allegiance to flagship beers or breweries

Consumers’ desires for something ever-new creates an unintended consequence, says
Ben Edmunds, brewmaster at Northeast Portland’s Breakside Brewery: "Beer quality
suffers. Whether you call it customer promiscuity or lack of loyalty, that absolutely
impacts how we compete,” he said. “It means there are less-refined beers on the market.
Brewers lament that. Because I’d love the chance to remake a lot of beers, but
consumers are interested in getting something different.

So if a brewery is built on big revenue from out-of-state sales, it could be overleveraged
and in trouble. Some are looking toward alternatives to their traditional approaches.
Widmer, for example, is beginning to brew hard spritzers. Ninkasi Brewing, the 35th
largest craft brewer in the nation but who saw declines last year, has launched a seltzer
line as well as created “cooperatives partnerships” with other breweries.

Deschutes, which distributes in about 30 states and Canada, in 2016 announced it would
build a production brewery in Virginia to better serve the East Coast. But since then, the
10th biggest craft brewery in the nation has seen negative growth and, as a result, put
the expansion plans on hold.

Distribution is and continues to be the most pressing issue facing the industry. Access to
market is becoming more and more difficult, especially for smaller breweries and laws that
make it difficult or impossible for brewers to switch distributors make it even tougher.

For craft beer consumers this is indeed a golden age but breweries might just see it a bit
differently. - SPECIAL REPORT
Is the beer market saturated?
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