Will Poor Quality Burst the Craft Beer Bubble?

There has been some news making the rounds on the wires out of the Craft Brewers Conference happening this week. Seems Brewers Association Director Paul Gatza let this quote slip out:

“We hate to see this segment being brought down with people having bad experiences in their glass when they’re trying craft beer. They’re maybe less likely to try something new in the future if they are having a bad experience from the last brewery they tried.”

There should be concern about less skilled brewers opening breweries and making poor product. To be quite honest there is one brewery here in Cincinnati that justifies these concerns quite well. My buddy Rick Armon from the Ohio Beer Blog did a great job covering that here. However, that’s not really what I want to talk about here. What I want to talk about is the always impending fear of the “Craft Beer Bubble” bursting.

I am going to make an assumption that most decent sized towns are like Cincinnati. With many acceptable brewers, 2 or 3 highly exceptional ones, and 1 brewery that is producing barely drinkable swill. In my experience here no one is willing to tell that 1 bad brewer that they’re producing bad beer. That gets into a whole separate topic of most beer enthusiasts being reluctant to criticize poor product. But the thing is that without proper criticism this brewer is likely to continue making poor product.

Without a course correction this bad brewer will lose market share to the better brewers, though the natural progress of economic evolution. Eventually this bad brewer will likely go under and get out of the brewing game. I believe that this is going to begin happening across the nation over the course of 2014. I fear that many been enthusiasts, media outlets, and bloggers like myself will view this as a bursting of the craft beer bubble.

Craft Beer Bubble

This graph is from 2011 the number of breweries is now well over 2,700.

Looking at the chart above it seems clear that there is a bubble, or at least a rapid increase in the total number of breweries in America. The real question that everyone seems to want to know is that a limit? Is there a point where this bubble is going to burst? Will it just slowly decrease over decades like it did from the 30s – 80s? Most importantly when will this bubble burst or recede?

While I believe the number of breweries will continue to increase and the market of craft beer drinkers will increase it is going to come at some cost. Many breweries are going to go under whether it’s from bad product, tough competition, poor financial management, or partners splitting up and going separate ways. None of these things mean that the bubble is popping, it’s simply market correction and bad decision making.

Improper financial planning or disagreements between founders can’t really be solved or slowed by craft beer enthusiasts but poor product can. If there is a brewery in your town churning out bad beer it’s time to stop giving them a 3 rating on untappd or telling them, or your friends, that the beer is OK. Speak up and say what specifically you don’t like about it. No one can fix a problem they don’t know exists.

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11 Comments

Filed under Beer, Opinion

11 Responses to Will Poor Quality Burst the Craft Beer Bubble?

  1. Love this post Tom! I’m hoping the bubble is still far off, and that drinking local will become the mainstream. After all, craft beer holds such a small market share there is room for more. I would love to see the yellow fizzy mass produced beer simply go away but we all know that probably won’t ever happen.

    With the expansion into the international markets, American craft breweries still have a lot of growth potential. I believe the stuff we call craft today, may be more mainstream down the road. Chicken little will always say the sky is falling, but we can live in the moment and hope the great breweries continue to grow, and the bad breweries go away.

  2. Poor brewers will go out of business will good ones will prosper. Here in Cincy I am happy about the new brewery’s opening around here.

  3. I think you’re spot on with your analysis. It’s not such a bad thing for consumers if the best breweries prosper and the weak ones don’t.

  4. mouldsbeerblog

    I think in the future it will be much more critical to assess bubbles in terms of specific locals. The bubble is currently way different for San Diego or Denver than it is for say where I am, NJ.

    With that said, approaching a brewer and telling them that their beer could be better, or is off in some way, is no easy task. Especially if you do not know the brewer well. Its akin to going to a restaurant and telling the cook the chicken or fish was not cooked properly. Not saying that it shouldn’t be done, but when done, it should be done with care.

    Great post, Tom!

  5. Cjnt

    I didn’t think Bad Tom was that bad…ouch!

    • Tom Aguero

      This wasn’t specifically directed at Bad Tom and “barely drinkable swill” was more hyperbole than much of anything else. Not that I’m defending Bad Tom, I’ve had Addlehead two or three times hoping it’ll improve but it has yet to be enjoyable to me.

  6. One of the problems I’ve seen locally is the one “bad” place whose beer I just don’t care for is wildly popular. The beer is perfectly adequate, but teeters toward the question of “what does this add to the local beer scene?” It’s drinkable, but nothing to get excited about in any way – for me.

    It’s a hot place to go in a popular part of town, so I imagine they are more than thriving.

  7. When Moerlein has 1% of the Cincinnati beer market I don’t think we’re anywhere near a bubble yet.

  8. What people refer to as a “bubble” is just the way things work. That’s just the way of the marketplace. If bad breweries go out of business, good riddance. It frees up shiny, new brewery equipment to be purchased by either new or currently existing better breweries.

    Consumers are always better served by having more options. It helps keep established breweries from sitting back and being lazy and making crappy/boring beer. Any brewery who makes a big fuss about a “craft beer bubble” just doesn’t want the competition.

  9. Pingback: Know Your Local Brewery: Bad Tom Smith Brewing

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