Interesting story in the Contra Costa mostly about small breweries in the San Francisco Bay Area.

The headline: “Craft brewers hit bottleneck: Costs cap output, stifle growth for smaller businesses.” Kind of the other side of the feel-good stories craft beer has enjoyed of late.

Although the sector still is growing by volume, the pace and optimism has moderated a great deal, and quite a few breweries had to close. The segment has yet to capture 4 percent of the market, and many small breweries have hit a growth ceiling. Nowhere is this more visible than in the greater Bay Area, where nearly every brewery is a microbrewery.

Reporter Marton Dunai does an excellent job of explaining the challenges that face a really small breweries. These are brewers who make excellent beers, ones that we’ll miss if they close.

Do they really have to grow bigger to survive? Can they afford to stay small if we pay more for their beer? Is the answer revamping the three-tier distribution system?

Rhetorical questions all. Something for you to chat about with a friend over a pint.

Last year I wrote a business story talking to breweries about growing (in this case hung on the 15,000-barrel mark). I asked them about key barriers along the way. Each brewer had a different answer. This is what Sam Calagione of Dogfish Head Brewery wrote in an e-mail:

“I think there is was some psychological barrier at 10,000 but (from a five-figure to a six-figure number!) To be honest, our time between 2,000 and 5,000 was the scariest for me in the history of our company. That was the era when we weren’t even profitable and I was taking the cash from my pub to pay my bill at the brewery every month. … I don’t miss that era. I didn’t even look at our barrelage back then―I just looked at our bank balance and hoped there was enough for payroll every time I looked.”

Posted: January 16th, 2007 under Beer culture, What should you pay?.