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America now has more breweries than ever. And that might be a problem

America now has more breweries than ever. And that might be a problem


Source: The Washington Post

By Fritz Hahn

January 18


It was a startling announcement: As of Dec. 1, 2015, the Brewers Association had counted 4,144 breweries in the United States, the most ever operating simultaneously in the history of the country. According to historians, the previous high-water mark of 4,131 was set in 1873.


The new number includes giant Budweiser, artisan Dogfish Head and your neighborhood brewpub. Although beer industry observers have known this day was coming, the pace of growth was explosive: At the end of 2011, there were 2,033 breweries, or fewer than half as many as now. In 2005, there were only 1,447. And 25 years ago? The Brewers Association, a trade group for small and independent breweries, logged a mere 284 in 1990.


So this is a golden age for beer lovers. It is easier than ever to find a great IPA (the most popular craft beer style in America), stout or session ale at a bar or liquor store. Previously ignored styles such as gose and Berliner weisse have become trendy, while brewers have a free hand to experiment with Belgian IPAs or saisons packed with unusual herbs.


On the other hand, the expanding market – at least two breweries open every day – has created a new set of problems for brewers. New arrivals, riding the craft beer wave, are finding it difficult to stand out. And it’s not as if bars have doubled the number of their taps in the past five years. So not only do the new breweries need to squeeze past their rivals even to make it in front of consumers, but they might need to convince bars that they’re more deserving of a chance than better-known beers from Lagunitas or Great Lakes.


Graham MacDonald, the co-founder of Washington’s new Handsome Beer, estimates that his beers have been sold at around 140 bars, restaurants and stores in the District and Maryland since last fall. Even so, he describes the process of getting into those establishments as “a bit of a challenge.”


“There’s been a huge influx of breweries who’ve come to market in the last year,” he says. “Only two or three years ago .?.?. it was easy to go in and say, ‘Here’s a new IPA, here’s a new pale ale, here’s a new stout.’ But now it’s not just the other new guys who are making the same thing; it’s all the other established breweries.”


The sentiment is the same on the other side of the bar. “Picking the draft list has become exponentially harder than it was two or three years ago,” says Jace Gonnerman, beer director for the District’s Meridian Pint, Brookland Pint and Smoke and Barrel. “You have to balance styles, but how many spots do I have for national breweries? What local breweries do I want to focus on?


“Every time a local brewery opens making really, really high-quality beer, it pushes a national brewery off. We keep a good mix of national breweries on, because people are looking for that. But you have to say no to people way more than you say yes.”


Even when they are given a chance, some small brewers have expressed frustration with the way beer bars order products. Instead of buying three kegs of a new beer and running through them all, as it might have done when local beers were a novelty, a bar tends to buy a keg and, once it’s empty, fill the draft line with a competitor’s product, and then another one, and so on, before rotating back to the first brewery’s beer weeks or months later.


Dave Delaplaine of Roofers Union in Adams Morgan, which regularly swaps beers on and off 16 of its 22 draft lines, defends the practice. “That’s what the culture of the beer world is: In order to have really fun beers, these crazy one-offs, you have to change a lot,” he says. “Breweries are approaching it as an art and want to try new things. I’d take that any day: That’s what got people to try their beer in the first place.”


When brewer Jason zumBrunnen and his partners began planning Ratio Beerworks in Denver’s River North district, they knew what they were up against. “I think we’ve had 10 breweries open in the neighborhood since 2010,” zumBrunnen says. “Colorado is the forefront of craft beer in general. Making great beer is just the barrier to entry. Five years before us, opening a brewery was a very cool thing to do. The difference now is the amount of brands. There’s a finite number of tap handles at Falling Rock or Euclid Hall,” two Denver beer bars known for outstanding craft selections.


Ratio’s business plan didn’t rely on getting beer bars to put their French-style saison and Scotch ale on tap. Instead, it called for 90 percent of all sales to take place onsite. The brewery built a modern-industrial taproom that encouraged lingering, and it made deals with local music promoters to host acoustic performances and meet-and-greets with bands. For outside the brewery, Ratio made arrangements with a handful of modern restaurants and beer bars, “not necessarily the fastest-moving accounts,” zumBrunnen says, “but establishing the kinds of place we wanted to be in,” so that customers at those places think, ‘Oh, I’ve heard of them, I’ll go check out the taproom.’ “


RAR Brewing, which opened as a brewpub in Cambridge, Md., in the summer of 2013, took the opposite approach. It began distributing its beers around the Eastern Shore and eventually in the District and Baltimore last fall, and the citrusy Nanticoke Nectar IPA became a hit. “Nectar sold so well that [bars] believe in us,” says co-founder Chris Brohawn, “and that gets our foot in the door” when they’re trying to get bars to carry a saison or a seasonal beer. About 85 percent of the beer RAR makes leaves the premises.


Still, with an increasing number of local breweries fighting for the same oxygen, Brohawn knows buzz can be fleeting. This year, RAR plans to stay in the spotlight by releasing limited-edition beers in cans at its brewpub “monthly, if not bi-weekly,” Brohawn says. RAR has experimented with placing local radio and print ads, but he says the social-media buzz surrounding a beer release “increases the word-of-mouth tenfold.”


Many in the beer industry pin their hopes for small breweries on localization: the idea that consumers would rather drink beers made down the road than across the country. Lary Hoffman, who co-owns Galaxy Hut in Arlington and Spacebar in Falls Church with his wife, Erica, prefers to stock most of the taps with Virginia breweries, such as Blue Mountain, Champion and Three Notch’d. “You can get any style of beer locally now, and the quality is on par with the best beer in the world, so why not seek out the regional option?” he asks. A handful of national brands, including Bell’s and Avery, show up on the 28 taps at Galaxy Hut and the 24 at Spacebar, but they’re the exception. Customers would be angry “if our draft lineup looked like a Safeway shelf,” Hoffman says.


In national surveys conducted by the Brewers Association, 67 percent of craft beer drinkers said it was important to them that their beer be locally made, while 61 percent said it was important that the brewery was independent. Meanwhile, the craft category is growing faster than the total beer market, and in 2014 reached a double-digit (11 percent) share of the marketplace by volume.


Those trends aren’t lost on Terry Haley, vice president for marketing at World of Beer, which has 77 craft-focused locations along the Eastern Seaboard and throughout the South. Haley says his company tries to make sure local and craft regional beers are well represented among the roughly 50 taps found at each tavern, even though “there’s definitely a point of emphasis to have what we call ‘craft’ beers across the major styles: Stone, Lagunitas; here in Tampa, Cigar City’s Jai Alai [IPA]. You have to have some of these standbys.”


Of the 50 drafts at World of Beer in Arlington last week, 12 were from the DMV. They included 3 Stars, Parkway, Oliver and Escutcheon, as well as the more widely distributed Devils Backbone and Flying Dog. Other World of Beer locations had a similar ratio: 14 of 46 drafts in Atlanta came from Georgia; Louisville’s 50 taps included 11 Kentucky or Indiana beers.


Brewers Association economist Bart Watson called the number of brewery openings “pretty incredible,” but he points out that America isn’t exactly saturated with beer makers: In a 2014 article, he noted that the United States has fewer breweries per capita than the United Kingdom, Germany or Latvia. Last summer, after the number of breweries hit 4,000, Watson calculated that “there are also nearly 1,000 cities with a population of more than 10,000 that don’t have a local brewery yet, and numerous neighborhoods in larger cities without a local brewpub or taproom.”


Other markets are hyper-competitive. Mike Sardina, president of the San Diego Brewers Guild, says that while there are at least 100 breweries in the county, there are also plenty of bars that will give a shot to newcomers. “But the beer has to be killer from a quality perspective, and the angle has to be that it’s not just another pale ale,” he says. “These bars support San Diego craft beer to a degree that they’ll bring in any new beer, but if it’s not up to par, it’s tough to get a second chance.”


That law-of-the-jungle competitiveness will guide whether or not new breweries make it, says Scot Blair, owner of San Diego’s Hamilton’s Tavern, a fixture on national “Best Beer Bar” lists, and the Monkey Paw and South Park breweries, both of which have been honored at the Great American Beer Festival. “Local doesn’t mean better,” he says. “The emphasis has to be on making good beer. We have maybe 110 breweries in San Diego. We were better when we had less breweries, because we were focused more on quality. It’s like real estate. Everybody jumps on when it’s a bubble.”