Runaway Growth and the Craft Beer Bubble

At some point, you start wondering when the next shoe will drop. The hypercompetitive craft beer industry, which had experienced dynamic, runaway growth for nearly a decade, is clearly entering a contraction phase. The bubble may not be bursting, but it is under intense pressure.

Signs of a slowdown began to appear a year ago, with the closures of Lompoc's Hedge House and Widmer's Gasthaus pub. Months later, General Distributing sold to Columbia, a move precipitated largely by perceived instability and a lack of confidence in where the market was headed.

More recently, we've seen additional evidence of turmoil. Lompoc Tavern closed. Seven Brides closed its pub in Silverton. Two Kilts closed in Sherwood. Then Alameda Brewing closed. Yesterday, Portland Brewing announced the abrupt closure of its underperforming pub in northwest Portland.

Alongside all this, we learned this past Friday that Brian Butenschoen is out as executive director of the Oregon Brewers Guild. Butenschoen had served as the leader of that organization since 2005. As of this moment, neither Butenschoen nor anyone at the Guild has explained what happened, beyond the typical canned statement saying they agreed to go their separate ways.

Forget Butenschoen for a minute. That situation may or may not be related to the big picture. When I was interviewed for what became PDX Brew City in 2014, I was asked if I thought there was a bubble forming in craft beer. Of course there was a bubble forming, I said. Whenever I've watched that film as part of an audience, I've heard smug laughter behind that comment.

But it was clear to me at the time that the brewery count was growing faster than demand at virtually every level. There were about 2000 craft-centric breweries in the United States in 2011. By the end of 2013, 2,420. By the end of 2015, 4,544. By the end of 2017, 6,266. By the end of this year, we'll have about 7,000, with 9,000 more in planning. These are crazy numbers.

Portland and Oregon brewery numbers essentially mirrored what was happening nationally. Oregon had 124 breweries in 2011, according the Brewers Association. By 2013, we had 181. By 2015, 228. By the end of 2017, 266. Portland stayed in step. It had about 40 breweries in 2011. Today, the city is home to 77, with 117 in the metro area, according to Oregon Brewers Guild stats.

My assumption back in 2014 was that the insane growth would compromise the entire industry. There's only so much shelf space and so many tap handles to chase. I always figured intense competition would create chaos and price wars that would affect everyone.

Some of that has happened or is happening. But the larger emerging theme is that older breweries and those that have quality issues or poor management or a lack of innovation are struggling or failing. Making good beer is definitely a requirement in the current marketplace, but not the only one.

When I said a bubble was forming, a friend suggested the result would be different than I imagined. He said places that make bad or mediocre beer would be driven out and replaced by those that make good beer. He was right, of course, though I still contend good beer isn't the only thing you need.

Getting back to Butenschoen's situation, he had been director of the Guild for 13 years. That's an eternity. He rode the wave of craft beer's golden age, a time when the industry could seemingly do no wrong. But things have flipped and the industry now faces a new set of challenges.

There are more than 250 breweries in Oregon today, most of them small. The Guild is tasked with serving the needs of the many, as opposed to the needs of the huge and the few. That means collaborating and cooperating with all kinds of operatives across a wide spectrum.

"It's a new world we're experiencing right now in beer," says a reliable industry source. "Everybody knows it. Oregon needs effective leadership if we're going to stay strong in craft. Maybe the Guild felt Brian wasn't the right guy to lead it through the emerging challenges."

Regardless of what's going at the Guild, the industry definitely needs strong leadership to help it navigate the turbulent waters ahead. The era of runaway growth is closing, to be replaced by a period of consolidation and contraction. At least for now.

The Power or Zwickelmania

Oregon's 4th annual Zwickelmania is in the books and I think it's safe to say the event's appeal was unsurpassed. Beer fans flocked to breweries around the state to celebrate the good health of the craft beer scene. I made four stops on my Saturday travels and each destination was buzzing.

The growing success of this event brings up a couple of questions. First, who came up with the idea in the first place and what's it all about? Second, and perhaps more importantly, what's a zwickel?

As the above poster indicates, Zwickelmania is the invention of the Oregon Brewers Guild. The mission of the Guild is to promote craft beer throughout the state. Zwickelmania does that by opening breweries statewide for tours and tastings. Did I mention this is a free event? Alrighty then.

Mike Wright manned the bar at The Commons

Moving on the the question of the zwickel. We owe a lot to the Germans when it comes to brewing and bier. The term Zwickelbier once described unfinished beer taken from a barrel via a special siphon called a Zwickelhahn. So there's your zwickel reference. Today, Zwickelbier is commercially available in Germany. There's further explanation here.

And so, Zwickelmania features breweries showing people around and often providing beer samples directly out of fermentation tanks or barrels.Along the way, beer fans have the chance to rub elbows with brewers and other beer industry folks. Win vs win! There's a lengthy list of breweries and what they were doing here.

They were tasting 3-day-old Flemish Kiss from the tank

I want to mention the tour aspect. There was a line out the door at Widmer, so I didn't stop there. It's on my list of places to tour and I'll get to it. But let's face it, the vast majority of Oregon breweries are small enough that a tour basically amounts to entering the brewhouse. A few descriptive words later and you get it.

Such is certainly the case at The Commons Brewery. It was my main stop on Saturday. This place is quite small. The brewery and tasting room are mashed together. An official tour isn't really needed. Anyway, Mike Wright was toiling away at the bar while the other guys poured fresh beer tasters. The space was crowded, but the ambiance was buzzing and pleasant. I suspect that was a common theme.

Hats off to the Oregon Brewers Guild and all the breweries who participate in Zwickelmania. What a great promotional gig! I suppose the biggest downside to this event is there will surely be calls to expand it. I'm not sure that can or will happen, but it's a nice example of what success can do. I suspect all states where craft beer is flowing have or soon will have a version of Zwickelmania.

Lost Weekend at BBC11

First off, the title is a little misleading. The just-completed Beer Bloggers Conference in Portland was definitely worthwhile and not a lost weekend. Well, a few people (no names) may have overindulged. What are you gonna do when you're in Beervana? So many beers to taste, so little time.

Kickoff
There was much to like about the Conference. For instance, one of the first things I saw when I arrived on Friday was a line of people who were, yeah-huh, tasting beers. What better way to kick off a beer conference than by getting people lubed up before they even walk into the room? Thanks to Widmer, Sierra Nevada and Pyramid for providing some nice brews.

Icebreakers

The opening segment by Julie Herz took us through some great information on the state of an industry that is growing at, frankly speaking, an alarming rate. The stats essentially suggest that craft beer is bursting at the seams all over the country. Portland may have the most breweries in the world and the most vibrant beer culture (apologies to Asheville and brewgasm), but the concept of craft beer is taking hold everywhere. It's quite a time to be writing about (and drinking) craft beer.

John and Fred Show
Possibly the highlight of the weekend was the Friday Keynote of Fred Eckhardt and John Foyston. If you don't know, Eckhardt is a onetime Marine and the dean of American beer writers. He has written several books and numerous articles on beer and has been an influential force on the Portland craft beer scene from day 1. Foyston has been writing about beer for The Oregonian since, well, forever.

Foyston served up the questions and Eckhardt provided the answers. It was like Ed McMahon and Johnny Carson, with a bit of audience participation. A couple of examples:

The John and Fred Show

Fred: “People ask me, Fred, what’s your favorite beer? And you know what I say? The beer in my hand.”
Audience member: “What’s your second favorite beer?”
Fred: “I think that’d be the next beer in my glass. Especially if it’s free beer.”

John: Do you have a blog?
Eckhardt: I probably should write a blog. But I'm just too lazy.

It just doesn't get much better. Two local legends on the stage clowning around while providing great insights into the state of craft beer today for writers from all over. Thanks to both of these great guys.

Brooklyn Brewing? Seriously?
The team of Erica Shea and Steven Valand gave an interesting presentation on what they are doing with their brewing supply business in New York. Yep, you heard that right. Even in New York, interest in craft beer and brewing is growing. I recently read that they are starting to grow hops again in rural New York. This was once a very productive hop growing region and they apparently hope it will be again.What's driving it? Demand for hops among craft brewers and homebrewers in the Northeast. Go figure.

Beer Making in New York

These guys talked about all kinds of things they are doing to increase interest in beer and homebrewing. They also mentioned using some strange ingredients (lobster?) to brew and, not so surprisingly, some odd results. But they have great passion for what they are doing and what they are doing is spreading the gospel of craft beer to an urban audience that hasn't always been in the loop. Big kudos!

Hops in the Field
Our Friday afternoon excursion took us to the Goschie farm near Silverton for a tour of their hop production facility, followed by dinner. This would normally be a fairly short trip, but all bets are off when you hit rush hour traffic out of Portland. On a Friday. The trip took well over two hours. Fortunately, folks from the Oregon Brewers Guild (Ninkasi, Widmer, Oakshire, etc.) were aboard the buses handing out tasty beers. Their coolers were well-stocked, thankfully.

Serious hop farming

I grew hops at home as part of my homebrewing phase a few years ago. Seeing hops on a production scale is a different story. These things are growing on trellises that must be 30 feet tall. They are in harvest mode for some of the varietals grown at Goschie. We got to see the entire process. It's fascinating to see hop vines brought in on one end, cones separated, piled up to dry (takes 8-12 hours, apparently) and then eventually baled. Pretty amazing to finally see how it's actually done.

Hop drying in motion

Oh, kudos to the Oregon Brewers Guild and Gayle Goschie for hosting the trip. Dinner was great, as were the beers they had available there for all of us to quaff. I think a good time was had by all...maybe too good. I know the brewdad (Mike Besser) and a few others were passed out on the ride back to Portland. Long day, but a fun one.

For the Love of Beer
We listened to several informative presentations on Saturday, but I want to move on to what was billed as the marque event of the weekend, For the Love of Beer. The movie was served up at the Bagdad, following a terrific dinner at Bridgeport (thanks again to the Oregon Brewers Guild and to the folks at Bridgeport).

I wrote about the movie in an earlier post, so I'll summarize here. Although brewing was for many centuries handled by women in the home, it became the domain of men with the coming of the industrial revolution. Today, women are slowly working their way into beer-related careers. The movie focused on the stories of several women, particularly Sarah Pederson (Saraveza) and Tonya Cornett of Bend Brewing.

It's a good movie. Hearing the stories of these women and seeing the passion they have for what they do was inspirational. They have made significant contributions to the craft beer movement in Oregon. Here's where I was disappointed: Although a number of women are featured in cameo roles, really only two of them get attention in the film. I wanted to hear more from Lisa Morrison, more from Chris Crabb, more from the others. Again, it's a totally worthwhile film. It just felt incomplete to me.

It's a Wrap
Sunday came and went like a flash. For better or worse, the good folks at Oakshire Brewing in Eugene provided some morning wake-up nectar in the form of Line Dry Rye. Thanks for that! We enjoyed some great presentations from eight bloggers and I'll have more to say about some of them in due time. It was fun meeting so many people who are enthusiastic about beer. A lot of ideas were shared around. I hope to do it again.