German winter barley and rapeseed yields should be about 10 percent higher than last year, based on harvest results, farm lobby Deutscher Bauernverband said.In the past couple days, BeerPulse alerted me to these stories:
- Mexican Craft Beer Scene Booming.
- A story on the first nonprofit pub--here in Oregon (natch)
- Craft beer may be booming, but consolidation is, too: so far this year, there have been 45 acquisitions.
- Anchor's growing, a second brewery is "inevitable." (Most interesting fact: it only produced 104,000 barrels last year. I thought it was much bigger.
____________
In other news, the Brewers Association released half-yearly numbers, and I am no longer sanguine about the rate of new brewery openings.
The U.S. now boasts 2,126 breweries—an increase of 350 additional breweries since June 2011. The BA also tracks breweries in planning as an indicator of potential new entrants into the craft category, and lists 1,252 breweries in planning today compared to 725 a year ago. Additionally, the count of craft brewers was at 2,075 as of June 30, 2012 showing that 97 percent of U.S. brewers are craft brewers.They include this graph, and the near-vertical line on the right-hand side looks a whole lot like the beginnings of a bubble. (For an unsettling comparison, have a look here.)
It may warrant a bit more blogging once I digest the numbers a bit.
It may be as simple as a gain loss equation.
ReplyDeleteIf there is a net gain by producing an in-house beer within a local niche market, this will likely not be a bubble.
If there is a net loss by producing in-house as opposed to purchasing larger domestic beers from a distributor, then this is likely a bubble which the market will correct.
Economies of scale factor in, but often large oligopolies are not able to compete on small scales quickly - as the market is literally TOO small for a reasonable business case or justifiable ROI (i.e. independent brewers are not driving Bentleys just yet).
Combined with perception of craft beer as a superior good (even as far as a 'Veblen good', a strategy which Rogue seems to embrace), this (growth of breweries) may simply be a part of the market that has become open due to deregulation and small scale competitive advantage.
However, I will not be surprised if the strategy of the major players continues to be identifying those niche market players which have grown substantially enough to meet certain criteria, and then (often creatively and not directly) purchase controlling interest in the brewer. This may happen generationally (Rogue for example might be poachable if Jack passes on) or out of financial necessity to grow (there is a great example of this in the midwest, but the name is escaping me at the moment).
It occurs to me that I should explain a bit RE my Rogue comment, as I work right next to the brewery, and like the folks involved - and 'poachable' sound like I view them poorly.
ReplyDeleteJack Joyce is a heck of an Entrepreneur. And sometimes an ass. But he shoots straight, and doesn't mince words. More importantly, he doesn't care about making Rogue into the biggest company in the world. Read this great interview here:
http://www.oregonbusiness.com/articles/20/252
But, Brett Joyce (Jack's son) is now the President, and Brett has a different background - and different ambitions (i.e. Jack has said all he really wanted to do was own his own bar).
Brett's old man will likely keep the Rogue 'value set' the same until he is not longer around - and maybe by that time, Brett will have fully 'drunk the coolaid'. But, I am guessing 'no' - Rogue is growing like gangbusters, and Jack's way will eventually be unsustainable - the business will need a more structured backend. Brett knows how to do this (frankly, so does Jack, he just really doesn't want to), and once that happens, likely, that structure could come most easily in the form of a partnership with a larger brewer.
I honestly don't know enough of Brett enough to tell - and frankly, nether choice he will make will be wrong - he could keep it in house, or he could partner; but Rogue will change... even if only on the inside.
Like you, I am quite interested in this information. I'll have to take a deeper look at the numbers and totally disregard what the Brewers Association says about them. My immediate response is that the line at the right is too steep. Whether it's a bubble or a barrage balloon, I'm not sure. As we both know, the planned breweries stat means nothing. Many of these places may take years to open...or may never open. The meaningful number is how many new breweries opened...350 since June 2011. That is a scary number; how scary depends on where the bulk of those breweries opened. To the Bat Cave...
ReplyDeleteTo counter your housing market crash comparison...there are things growing out there with a lot less creativity then the fun loving brewing community. http://www.excelhero.com/blog/images/excelhero_walmart_growth.gif
ReplyDeleteAnd that stops in 2006. If we're lucky in a few years they'll start attaching them to our houses.
I think I will have to wait and see what the Beeronomist has to say. He should be chiming in anytime now.
ReplyDeleteTo chime in a bit about Mexico - distributors there are owned by the major brewers, which equals little to no access to market for Mexican craft beer. I know there are legitimate cases of concern about the 3-tier system but without it American craft beer would be in the same boat and there wouldn't have been the jump from 89 to 2126 breweries.
ReplyDelete