A Craft Brewing Bubble?

In the mid-eighties, when I became addicted to caffeine, I realized there were these places you could go to get insanely strong coffee. Mostly, restaurants and coffee shops served Boyd's or Farmers Brothers, which was brewed to the color and viscosity of weak Red Rose tea. Over the next ten years, I spent a lot of my mind-space strategizing so that the demons of my addictions wouldn't be left to these puny distillates. Small towns were murder, as were many relatives' homes. Then, magically, espresso stands became ubiquitous. And then they became annoying. There were too damn many of them. I recall standing on the street somewhere in Portland and realizing that all four corners were occupied by coffee shops (probably two were Starbucks). Of course, then came the shakeout.

I mention this history because a couple of days ago I stumbled across the news that we're in the midst of the greatest boom in brewery building in--well, maybe in forever, but certainly in the last 140 years. Searching through the Brewers Association's list of breweries, I counted 505 breweries listed as "planned." BA currently lists 1599 craft breweries, which means this represents an increase of nearly a third (32%). And, even if a certain percentage of these fail to materialize, it almost certainly understates matters because the BA can't possibly track all of them. My instinctive reaction: uh oh.

The numbers are a bit staggering. Fourteen states will have increased their number of breweries by 50% or more since '08 (the last time the BA compiled state-by-state totals); five states will more than double their totals. California plans for 65 new breweries, Texas 33, Washingon and Colorado 29. Every state but one has at least one new brewery in the works (poor Delaware). Surely we're headed for a train wreck, right?

But then I looked more closely at the numbers and did a little thinking. Maybe this isn't so many after all.

The number of breweries is not evenly distributed across the country. In Oregon, where you'd say the market is still very healthy, we have a brewery for every 40,000 people. Now, we have a more rabid beer culture, so this may not be typical. Let's take Wisconsin instead, where the density is a brewery for every 85,000 people. Using that level as a benchmark, the US would have 3,500 breweries--more than twice as many as we have now, and way, way over the total we'll see even after this boom.

So, if the market is healthy and growing to fill demand, we'd expect to see more growth in regions that have low brewery density. And indeed, that's exactly what's happening:

Here's a couple other metrics to consider. People buy roughly 210 million barrels of beer in the US every year. Of that, just 10 million are craft-brewed. Most of these new breweries will hope to sell modest amounts of beer (like all craft breweries)--say a couple thousand barrels. At that rate, the entire new batch of breweries would add only a million barrels of production to the US total--point four percent of America's annual production. The last fact? After a drop-off a few years ago, there are still 11,000 Starbucks in the US.

I guess a few more breweries won't hurt.