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The Session #67: The answer is 2,620

The SessionFor The Session #67, host Derrick Peterman has asked us to predict how many American breweries will be operating in 2017 (presumably at this time of the year).

2,620.

I used a proprietary formula, but you don’t care about the details anyway. I find it amusing that the figure happens to land smack dab in the middle of what one book reports as the number of operating breweries in the United States in 1879 and what was published in another.

History of the Brewing Industry and Brewing Science in America has a list of the number of breweries in operation for each year from 1863 through 1920. This is the source used most often when comparisons are made between the number of breweries now and in the past, and where the peak of 4,131 is reported (1873). By 1879, the number was shrinking, to 2,719.

Beer, Its History and Its Economic Value as a National Beverage provides a look at only two years, 1878 and 1879 (it was published in 1880), but in more depth. It lists every brewery in operation and, in most cases, how much it brewed. There are 2,520 breweries on the list.

Makes me go hmmmm and reaffirms my thought there are better things to focus on than the number of breweries. Stuff like access, diversity, quality. The numbers in Beer, Its History don’t really address such matters, but they do illustrate how much more local/regional beer once was.

George Ehret’s Hell Gate Brewery was the biggest brewery in the country, selling 180,152 barrels (about 1.5% of U.S. production). Only seven breweries sold more than 100,000 (31-gallon) barrels. In 2011, more than 30 did. Of course, the U.S. is a little bigger today.

In 1879, 150 breweries sold more than 15,000 barrels, but in 2011 only a little over 100.

Two hundred and seventeen breweries sold between 5,000 and 15,000 then, compared to 71 in 2011. Seems to be room for growth there. Or are the bigger breweries squeezing them on one side, the smaller ones on the other?

This sort of data mining tells us little about the future. Maybe Amazon is a better indicator. I see that a book titled, A Brewer’s Guide to Opening a Nano Brewery: Your $10,000 Brewery Consultant for $15 (Volume 1) is selling pretty well (better than mine). Are the people who buy it like arm-chair travelers, content to read and dream?

Or what will happen when dreams meet reality?

Oscar Blues founder Dale Katechis addressed that in an online interview last week:

“To me, it’s overwhelming to see how many people are getting into the segment. I can’t even keep track of even the ones in Colorado alone that are opening. It’s a little scary because I guess we’ve learned a little bit along the way and we’ve learned that draft beer doesn’t make you any money. The entire industry knows that. Then I hear of a guy that is a home brewer and is going to cash in his 401k and open a little craft brewery and start delivering kegs around town. Well, it’s not my place to call him and say, ‘you’re crazy,’ but there is going to be some fallout.”

Before 2017, after 2017, or at all?

18 Responses to The Session #67: The answer is 2,620

  1. Alan September 7, 2012 at 8:43 am #

    Oh frig. In both senses.

  2. Bryan September 7, 2012 at 9:36 am #

    The research on this blows me away. Kudos. Is this 1880 book in your own library? I picked up a book on beer from 1934 and laughed at how applicable much of the terminology and method still is today. Then again, 1880 was very different than 1934.

  3. Stan Hieronymus September 7, 2012 at 10:11 am #

    Thanks, Bryan. I have the reprints of the two books I mentioned, both from Beerbooks.com. Carl Miller has reprints of many useful/interesting books. Fun reading and information you won’t find elsewhere – even with all the stuff now available in Google books.

  4. Jeff Alworth September 7, 2012 at 10:19 am #

    Speaking of fallout, that drop in six years between 1873 (4131) and 1879 (2719) is pretty staggering. There will be, at some point in the future (though maybe not in a five-year horizon), a substantial spate of consolidation as the current generation sells out their small breweries or just closes them altogether.

    Prediction: in twenty years there will be about 1,500 breweries in the US, but the craft segment will be at least three times as big as it is now.

  5. Alan September 7, 2012 at 12:01 pm #

    Wouldn’t that drop be tied to the final wholesale shift into the consumption of lager? Could well be the sweet spot when a technological advance and industrial scale met a shift in consumer preferences leading to the final collapse of old scale ale breweries as much as consolidation. An idea. But, speaking of facts and stats, interesting that t he brewery collapse occurred in a decade when US population grew by an insane 28% from 38 to 49 million.

  6. Stan Hieronymus September 7, 2012 at 12:13 pm #

    I have always questioned that peak (I thought here, but perhaps it was something in print or a comment at another a blog). Look at the surrounding years:

    1871 3147
    1872 3475
    1873 4131
    1874 3283
    1875 2783
    1876 3282

  7. Alan September 7, 2012 at 12:33 pm #

    OK, so that is weird. What is the basis for the data? Were there door to door statisticians fanned out across the USA who knocked on doors? ’75 compared to ’73 represents 50% variance within a far more consistent pattern.

  8. Stan Hieronymus September 7, 2012 at 2:28 pm #

    “The number of breweries in operation in a number of cases had to be calculated from the reported revenue from brewers’ special taxes which were $25 for production below 500 barrels a year and $50 for production of 500 barrels a year or more, until 1866, when the taxes were increased to $50 and $100 respectively.”

  9. Jeff Alworth September 7, 2012 at 4:09 pm #

    Hmm. Sounds like maybe a reporting error or perhaps a year in which they did the accounting differently? It’s just barely plausible that breweries jumped 650 in one year and fell 850 the next year, though, given the trend line.

    • Stan Hieronymus September 7, 2012 at 5:10 pm #

      If you have a little time on your hands you could go through American Breweries II and write down every brewery open in 1871, 1872, 1873 and so on.

  10. Bill Miller September 7, 2012 at 5:28 pm #

    It should be mentioned that one of the greatest depressions in U.S. history occured in 1873.

  11. Jon Jefferson September 7, 2012 at 9:24 pm #

    I think your quote from Dale Katechis, speaks volumes for the trends we are seeing lately. It is not uncommon for this to happen but it does seem to be happening a bit more than it has in the past. Do you think that starting a brewery is the new mid life crises? Instead of buying a cool ‘vette to show how young you are, it’s now time to invest in a mashtun and throw a bunch of money away?

  12. Stan Hieronymus September 8, 2012 at 6:56 am #

    Jon – your question made me think of a conversation I had with Brock Wagner for a story that appeared in All About Beer magazine 10 years ago:

    “I’m amazed when guys 50 years old tell me, ‘I want to retire, this is going to be my retirement business,’ ” said Brock Wagner, owner of Saint Arnold Brewing Co. in Houston. “The first thing I do it try to talk them out of it, and not because I’m trying to discourage potential competition but because I don’t think they know what they are getting into.”

    Curiously, I know homebrewers with nicer brewing systems than some nanos. Rather than trying to justify spending the money with the idea it will turn into a business they recognize it is a hobby, something they literally could not afford to pursue professionally.

  13. Steven Prochaska September 8, 2012 at 7:26 am #

    I seems to me that we have a long way to go still. If the population of the US was approx 50 million in 1880 ( accurate census numbers or not) and there were about 2500-3500 breweries operating at that time, then it can be extrapolated that we have lots of possible capacity for additional breweries now that we have a population of 300+ million.

  14. Stan Hieronymus September 8, 2012 at 9:54 am #

    Steve – A lot of room, yes. But then the largest brewery sold 1.5% of beer made. When you have a brewery selling almost 50% that reduces the size of the field rather quickly.

  15. Jeff Alworth September 10, 2012 at 11:06 am #

    Stan, I think I’ll leave that to someone else (writing down 4000 brewery names).

  16. Bill September 13, 2012 at 2:50 pm #

    An exception to “Draft beer doesn’t make you any money” would be Vermont’s Switchback Brewing. Draft-only, and celebrating their tenth anniversary.

  17. Stan Hieronymus September 13, 2012 at 5:11 pm #

    Bill – I’m sure there are many more examples. For starters, depends on how far from you door you want to sell beer.

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