The booming growth of the American craft brewing industry is drawing to a close, with the number of openings decreasing to only +5% during the first half of 2017, whereas the corresponding numbers for 2016 and 2015 were +8% and +16%. This reflects the fact that many craft breweries increasingly facing financial difficulties. The number of insolvencies has reached an alarming rate.
At the beginning of August, four craft breweries closed their doors within two weeks, two of them in the Sacramento area. The city, 90 miles north-east of San Francisco, California, seems typical for the current situation of the American craft beer industry.
Rubicon Brewing, the longest-running brewery in the Sacramento Area since 1987, announced its closure as soon as beer runs out this month, shortly ahead its 30th anniversary this November. Rubicon owner Glynn Phillips said “the extensive opening of breweries throughout Sacramento has been a challenge for us.” And he explained in detail: “When I bought this place in 2005 there were five breweries in town. Now I think (…) it’s close to 80.”Four years ago, Phillips even expanded the business into West Sacramento, with a new brewing facility and tasting room, a step, he most probably regrets today.
The other brewery in the Sacramento area, which already closed at the beginning of August, is American River Brewing fromRancho Cordova, about 15 miles east of Sacramento. In contrast to Rubicon, American River opened its brewery and taproom just two years ago but sold only 1,295 barrels in 2016 (-2% in 2016) in contrast to the 4,800 barrels (+8%) of Rubicon.
Other breweries in the area are doing better. Five-year-old Track 7 Brewing already has two breweries and is in talks with the city of Roseville to open a new tap room there. Equally Bike Dog Brewing and Burning Barrel Brewery plan to open new locations in Sacramento.
Bart Watson, chief economist of Brewers Association (BA) explained the situation: “The beer world is highly competitive and there is certainly a mixed bag in terms of performance. Some breweries are continuing to grow, whereas others are having to evolve their position and nurture new opportunities to ensure they keep pace.” Looking at the overall growth of the industry he elaborated: “The growth pace for small and independent brewers has stabilised at a rate that still reflects progress but in a more mature market. Although more difficult to realise, growth still exists.”
According to latest figures released by BA there are now 5,562 breweries operating in the United States as of 30 June, which is an increase of 906 on June last year. There are also 2,739 more breweries in the planning stage with some of them most likely never to start production given the competitive environment of the whole industry.
As already reported earlier, sales of craft beer in the US are decreasing lately. Quarterly beer sales and volumes both dropped, by 0.7% and 1.5%, respectively in the last quarter to June 17th (inside.beer, 8.7.2017).