Will Poor Quality Burst the Craft Beer Bubble?

There has been some news making the rounds out of the Craft Brewers Conference happening this week. It 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 a 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.

beer bubble

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 one brewery that is producing barely drinkable swill. In my experience here no one is willing to tell that one bad brewer that they’re producing bad beer. That gets into a whole separate topic of most beer enthusiasts being reluctant to criticize the inferior product. But the thing is that without proper criticism this brewer is likely to continue making a bad 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 as it did from the 1930s – 1980s? 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, fierce 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 be solved or slowed by craft beer enthusiasts but the poor product can. If there is a brewery in your town churning out bad beer, it’s time to stop giving them a 3-star 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.