The 2019 "Beer Bubble" Outlook: Likely. Or Not

The 2019 "Beer Bubble" Outlook: Likely. Or Not

2019 "Warnings"

Some beer fans will continue to watch out for the craft beer "bubble" to burst. I can't say a I blame them, especially when there's an obvious sign, when a local favorite suddenly closes its doors. Latest figures, from 2017, by the Brewers Association show there are 6,372 brewers in the United States. Just during 2017, 995 brewpubs and microbreweries opened. And 165 closed down. That proportion of openings to closings has remained about the same for the past few years.

But there are some new circumstances in place at this moment that may make it harder for a beer maker. First is the government shutdown, which means that brewers will be unable to get new beers formulation and labels approved by the Alcohol and Tobacco Tax and Trade Bureau (TTB). Now some may say that's good thing if it forces brewers to stick with their existing flagships instead of rushing out another hazy chocolate cake infused IPA. But on the other hand, that could leave a lot of brewers with several barrels of stock, or new beer in production, they can't sell, which would blow a hole in their cash flow. It also means that new breweries can't get their Brewer's Notice, which they need before they can get their state brewer's license. And existing brewers planning to expand their brewing facilities won't be able to get their plans reviewed.

A second worry is the bankruptcy of some of the industry's main equipment makers. Diversified Metal Engineering and Newlands Systems merged in Canada a few years ago. In December, the merged DME went into receivership, revealing that they owed $13.5million to their creditors, clients and employees. Their list of unsecured creditors includes Moody Tongue, Hop Butcher for the World, Pig Minds Brewing, plus several Chicago manufacturing vendors. To be sure, some of the monies owed may be for small things like maintenance equipment or parts. And some could be for whole brewhouses. This follows on the heels of bankruptcies for SysTech Stainless Works of Ohio, and the 2017 closure of Portland Oregon's Metal Craft. That's more stainless orders that have been bought and paid for and that may never be received or refunded.

Hidden amongst these possible dangers are the usual business killers like csh flow, a failed inspection that forces a business to close for a few days, personal issues, and more. I have no doubt we will see a few more local brewers close their doors or sell off their lines. Do I know which ones? No idea. It's the the usual ebb and flow of small business. But I still do not see a meltdown, so long as people are now used to the idea of patronizing their local tap house. And as long as small towns are actively recruiting brewers to fill empty storefronts on their Main Streets.

Filed under: Beer News

Tags: Craft Beer Bubble

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