So. Many. Breweries.
By the end of 2014, BC will likely have 20 new breweries, and possibly more. Next year, we’re looking at between another 10 to 12, more than half of them in Vancouver.
That’s a lot of beer, and it’s led a lot of people to wonder if we’re now in the midst of a craft beer bubble.
And are we? The short answer: “No.” The long answer: “No, but…”
Here’s the thing: It’s not as though people are going to suddenly realize that craft beer’s a sham and switch en masse back to the macro brews. It’s like saying coffee drinkers are going to give up on JJ Bean and switch back to Folgers.
It’s quite the opposite, in fact. Craft beer accounts for about 20 per cent of the beer market right now, from 12.7 per cent in 2011. That means 80 per cent of beer drinkers in this province are not drinking craft beer – and that’s a lot of room for growth, especially compared to Oregon, where craft beer takes up 40 per cent of the market, and Washington, which is at 30 per cent.
But that doesn’t mean that every craft brewery that has opened up, or will open up, will survive the next five years. Chris Bjerrisgaard, executive director for Vancouver Craft Beer Week, and marketing manager for Parallel 49, says this is likely to happen because people who have no knowledge or passion for the craft, and only see dollar signs, are setting up shop.
“It’s like asking if we have a restaurant bubble,” he says. “Do we have too many restaurants? Well, no, but we have a certain consumer base that wants certain restaurants, and we want a certain consumer base that wants others. Do people get into restaurants and fail because they were shitty at it. Yes.”
Today, any brewery with a sound business plan has managed to make a go of it, regardless of quality. Not a single brewery that has opened since the recent boom began, back in 2012, has closed due to a lack of support.
But the expansion, particularly in Vancouver, isn’t sustainable. Ben Coli, founder and head brewer of Dageraad Brewing says there’s simply not enough room in the marketplace to accommodate this kind of growth.
“That growth is going to continue and we’ll continue to sell more beer, but this breakneck expansion is not sustainable in the long run,” he says.
The problem the industry is likely to face, he says, is not enough demand for the growing supply. While microbrewery sales have increased an impressive 37 per cent from 2013 to 2014, according to the Liquor Distribution Branch, the number of breweries have grown at least 28 per cent in that same period, from 60 in 2013 to the 77 now open at the time of writing this, and possibly by 33 per cent by year's end. Most of these breweries rely on their tasting rooms and have limited distribution. On top of that, several existing breweries have expanded capacity or built bigger facilities, including Central City Brewing and Steamworks Brewing.
“This doesn’t necessarily mean it’s a bubble,” Coli says. “It means things might get more competitive.”
Add to that the increase in distribution from breweries in Ontario and the US and Andrew Harris, co-owner of Portland Craft and Main Street Brewing (among others), and former president of Russell Brewing Co., says we actually do have the makings for a bubble.
“With the abundance of choice available in the craft beer market right now, people are going to choose great beer,” he says. “But if there’s a lot of great beer, they’re going to go for the least expensive great beer, and it’s going to perpetuate into a spiraling market down. That’s going to be the beginning of the bubble.”
He says the consumer ultimately wins in this scenario (great beer + aggressive pricing = happy beer drinkers!) but the downward pressure on beer prices could, as a reult, oust a lot of these breweries, many of which don’t make a lot of money to begin with and are spending money expanding.
But Ken Beattie’s not buying it. The BC Craft Beer Guild’s executive director sees two things: 1) That 80 per cent of people are not drinking craft beer and 2) a whole lot of opportunity as a result, particularly in the Fraser Valley and other areas outside Vancouver.
“You only have to look at Oregon,” he says. “Portland is the only major market in the US where the market share for craft beer – package and draft – is greater than the large breweries. It’s a city that’s less population that Vancouver.”
“When you think of how many people are in the Lower Mainland, how many people are interested in the shift away from foreign-owned breweries to something small, local and flavourful, no, I don’t think the supply is going to catch up to the demand,” he says. “I can’t see it.”
Update: I've edited a previous version of this story that erroniously reported the number of breweries having grown by 78 per cent.
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