Layoffs Hit Craft Brewer, as Big Beer, Big Money, Overcapacity Rattle American Craft Beer Market

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Share on RedditPrint this pageEmail this to someone

The American Beer War Turns Sour

American craft brewers have been the most spectacular economic success story since the Financial Crisis. Forget the slow-growth or sinking-into-quagmire stories typical in many other sectors. American craft brewers have become a global phenomenon, largely due to their excellent brewskis and astute marketing.

Yet total beer sales in the US have been declining for years, as major brands have been losing ground. In 2015, despite population growth, beer sales edged down another 0.2% to 196.7 million barrels, according to the Brewers Association, even as craft brewers have booked double-digit sales gains year after year, including 12.8% in 2015.

But here’s the problem with craft brewers: Everyone is now doing it. The Big Money is piling in. Private Equity firms and the largest multinational brewing conglomerates in the world are buying out craft brewers and funding new ones.

And this is what happened: As the Financial Crisis wound down in 2011, there were fewer than 2,000 craft brewers in the US, ranging from tiny brewpubs to large craft brewers, such as Sierra Nevada. Then all heck broke loose. QE unleashed the Big Money. By the end of 2015, the number of craft brewers had more than doubled to 4,249. This year as of June, according to Beer Insight, there were already 4,656. By now, they’re about 4,800. And additional 2,000+ are planned:


Remember: Total beer sales in the US are still declining! Every barrel of beer sold in the US comes out of someone else’s hide. So it’s getting tough out there.

There have always been brewers and brewpubs that didn’t make it and shut down, while the successful ones picked up momentum and grew and grew. But now, one of the best known brands with enormous momentum, Stone Brewing Co., founded in 1996, and by 2015 the 10th largest craft brewer among this ocean of craft brewers, announced layoffs.

The company, based in San Diego County, CA, has been a huge success story. With 325,000 barrels of beer sales in 2015, it is the third largest brewer in California, after Sierra Nevada and Lagunitas – in which Heineken International, the world’s third-largest brewing conglomerate, took a 50% stake a year ago [read… Buyout Binge in American Craft Brew Revolution Gets Personal].

Stone Brewing opened a brewery in Germany, “Stone Berlin,” where utterly bewildered locals are discovering to their greatest surprise a superb Yankee Bier. The company is opening a brewery in Richmond, Virginia, where potable water is more plentiful than in Southern California. It’s planning to open another location in Napa, California. This brewer rocks!

But premonitions already surfaced this month when co-founder Greg Koch said in an interview that “commodity breweries” were undercutting Stone and other craft brewers by offering kegs to retail accounts at “predatory” prices. And he admitted that growth projections for 2016 have been revised lower several times this year.

In August, he’d been replaced by Dominic Engels as CEO.

After laid-off employees began posting their stories on Facebook, Engels released a statement on Thursday afternoon, according to Draft, confirming that the company would lay off “approximately 5%” of its 1,200 employees. So that might be 60 people.

But that number may be larger. Former Stone brewmaster Mitch Steele lamented on Facebook: “Feeling shocked and incredibly sad for many of my friends at Stone Brewing Co. How did it come to this?” He figured “75+ layoffs.”

In the statement, which Draft published in full, the company explained:

Due to an unforeseen slowdown in our consistent growth and changes in the craft beer landscape, we have had to make the difficult decision to restructure our staff….

[T]he larger independent craft segment has developed tremendous pressures. Specifically, the onset of greater pressures from Big Beer as a result of their acquisition strategies, and the further proliferation of small, hyper-local breweries has slowed growth.

With business and the market now less predictable, we must restructure to preserve a healthy future for our company. Even given this unfortunate circumstance, we will continue to be fiercely independent and, importantly, Stone remains one of the largest – if not the largest – employers in the craft brewing segment.

And “in summary,” the company wanted to “emphasize” among other things: “A recent decline in domestic growth for the category and for Stone has forced us to restructure in order to preserve our independence in an increasingly competitive category.”

Harsh words for an industry that knew only unlimited possibilities.

“Given the strength of Stone’s brands and how successful they’ve been,” Bart Watson, chief economist of the Brewers Association, told the Los Angeles Times, “it shows there are challenges that every craft brewery faces.”

It doesn’t take a genius to figure it out. With total beer sales in the US declining for years, craft brewers have to take sales away from Big Beer. But Big Beer has seen the writing on the wall and is muscling into the space with a series of acquisitions of brewers that they’re then corporatizing with access to their distribution channels. Private equity firms have piled in too. With gold-rush mentality, new brewers get funded on a daily basis.

This creates overcapacity. It doesn’t just wreak havoc in the Chinese steel industry or the global container shipping industry. It hits everywhere where Big Money, having become reckless after years of central-bank QE and zero-interest-rate policies, suddenly piles in to make a buck.

So let’s blame the Millennials. They did it! Read…  These Debt & Rent Slaves Get Blamed for the Lousy Economy

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Share on RedditPrint this pageEmail this to someone

  75 comments for “Layoffs Hit Craft Brewer, as Big Beer, Big Money, Overcapacity Rattle American Craft Beer Market

  1. william
    October 14, 2016 at 8:16 pm

    New Belgium, Harpoon, Left Hand, and a few other breweries are employee-owned. They’re still businesses that could experience layoffs. But it’ll be interesting to see how they perform over time.

  2. Bookdoc
    October 14, 2016 at 9:09 pm

    Some of the new beers I have tried have been, to my palate, terrible. Craft beers are not only hitting oversaturation, but the trend has led to more apathy towards all the beer fuss among the public. Sooner or later a new popular beverage will arise and the best selling craft beers among the general public will survive the switch. If the economic crisis explodes (or when), people will go back to cheaper beer anyway. However, ther will always be beer!

  3. Jarrow
    October 14, 2016 at 9:18 pm

    Not sure what the formal definition for a craft beer is. Small
    brews or expensive brews or time of brewing or what?

    Love these ‘active yeast culture beers’ but they have a noted side effect- one can blow up like a puffer fish due to the high carbon dioxide and yeasts (which seems to produce a histamine like flush and ‘beer bloat’ in many.)

    If you’ve had the above problems then I would suggest apple cider beers. They’re low in carbon dioxide (the commercial brewers actually pump in carbon dioxide or chemicals which produce it to put more ‘air’ in the can.)

    Cider beers are low cal, low yeast and high alcohol (5%) and tasty! And you won’t look like you’ve just fought a boxing match after having one!

    • Mingo
      October 15, 2016 at 3:47 am

      What’s a cider beer? Beer is beer cider is cider. One is made with barley malt one is made from apple’s.

    • kitten lopez
      October 15, 2016 at 9:57 am

      do they taste like snakebites? (beer mixed with hard cider) if so…that sounds really GOOD.

    • Bobby
      October 16, 2016 at 9:06 am

      Thanks, I will give apple cider beer a second try!

  4. wichitachuck
    October 14, 2016 at 9:53 pm

    I homebrew, I have my costs down to about 40 cents a bottle ehh nice to go out every now and then but, 5-6 bucks a glass at the brew pub not happening.

    • kitten lopez
      October 15, 2016 at 9:58 am

      your garage is where it’s happenin’, then. that is so COOL. so REAL. so HOW IT OUGHTA’ BE.

    • Dan Romig
      October 15, 2016 at 12:08 pm

      Front page of today’s Minneapolis StarTribune business section today: ‘Worlds largest brewer invests in Minnesota’.

      “The venture capital arm of A-B InBev has acquired Roseville-based Northern Brewer, the nations largest home-brewing supplier, and its sister company Midwest Supplies.”

      ” … executives would not disclose terms of the deal.”

      Northern Brewery started in St. Paul in 1993, but it is now part of ‘Big Money’. Hell, even if you brew your own suds at home, A-B InBev wants a piece of you!

    • KnuckleDragger
      October 15, 2016 at 10:09 pm


      Mine cost a bit than yours at .47 a bottle. I like making my own and I can experiment when I want to. Plus My friends aren’t complaining ;-)

  5. little meaningless man among Silicon Valley Gods.
    October 14, 2016 at 10:14 pm

    Oh boy so there is a beer bubble too. It seems with all the central bank money printing there is too much money chasing too few beer. Here in the Bay Area were in one giant bubble: Tech companies and real estate. Plus you figure all the techies who lose their jobs they won’t be able to buy the craft beer.

    Heck even Whole Foods has the hipster bearded bartender serving craft beer.

    But wait there is still craft soda. Since we don’t make real things but software publishing, we can all brew craft soda until that bubble pop

    • kitten lopez
      October 15, 2016 at 9:59 am

      your “name” is so funny, i could barely make it to your comments!!!

  6. little meaningless man amongst Silicon Valley Gods.
    October 14, 2016 at 10:19 pm

    One last thing that craft beer chart looks like the stock market and real estate prices lol. Boy the Federal Reserve has blown more bubbles than we can count. We’re all doomed.

    Actually I am a cockroach of Silicon Valley. I always manage to survive every tight pants wearing techie invasion and subsequent tech implosion. I remember the arrogant “I wanna change the world” tech guy from 1996. I’ve been down this road before.

    • kitten lopez
      October 15, 2016 at 10:01 am

      ‘Actually I am a cockroach of Silicon Valley. I always manage to survive every tight pants wearing techie invasion and subsequent tech implosion. I remember the arrogant “I wanna change the world” tech guy from 1996. I’ve been down this road before.’

      …you need to write more. there’s a whole lot more going on behind your comments.

  7. Edward E
    October 14, 2016 at 10:33 pm

    “simmon beer and ash-cake is equal to cash, but it don’t make glad come like whiskey”

    -The Farmers’ Registry, 1838

    “I drink you the following sentiment, in a glass of persimmon ale: May the product of the persimmon tree, substitute foreign wines, molasses, sugar, tea, and coffee, and save the ‘old dominion’ thousands annually”

    – Willam B. Smith 1838

    There is a brewery in Virginia trying to bring back Persimmon Ale. There is someone in our extended neighborhood who made a homebrew, it was pretty good.

  8. OutLookingIn
    October 14, 2016 at 10:46 pm

    Quality. You just can’t beat “good” beer.
    You can’t fake it, nor make over the moon claims, then have it fall flat.
    (pun intended)
    A good quality beer will gather follower’s and that following will only grow larger as the word spreads. Paid advertising is not needed when the main aim of the brands owner is not greed, but an honest living.
    We have a local craft brewer that has been in business for almost 20 years now. There are only two retail stores (besides the brewery store) that carry their beer.
    Their advertising has always been by-word-of-mouth. The owners favorite line is; “Please, tell only one person about it”. The family owned business only wants to make a comfortable living from it and enjoy family life. Greed is not their motivator. Making an affordable, high quality beer for the everyday man is.
    These small local brewers of good high quality affordable beer, will still be around long after all the greedy money grubbers that try to sell swill, fall by the wayside.

    • kitten lopez
      October 15, 2016 at 10:11 am

      ‘Their advertising has always been by-word-of-mouth. The owners favorite line is; “Please, tell only one person about it”. ‘

      –YES! YES! YES! i, too, feel this is the only direction you CAN go now in an era of ubiquitous bullshit marketing where everyone’s a whore, placed strategically next to you in a cafe to sell you SOMETHING just by sitting there ostentatiously using some “product.”

      “word of mouth”!!!! i think that the edgiest marketing is now hiding from all of humanity.

      and Chris from Dallas and Petunia– if you’re reading this, i’m still plotting and planning –still the jacket as well as the entire private, albeit in-your-face “marketing” angle where i dance with music and create a “scene.” but only for those who’re THERE in PERSON.

      and Petunia… it is turning into a HIGH ART. i’m reading/learning about corset making so i can learn about light boning and structure. little waists…big tetas and hips… i hate the term “plus size.” i prefer women who look like WOMEN! (i went to a painting school and we had a brazilian model lady once with a butt thong tan line and she was so tiny, we didn’t know how to DRAW her without her looking like a cheezy little pin up.)

      so wait til you see even the REVISED jacket. it’s getting so detailed in a good way, no one in AMERICA would even dare to try and make it. but i keep learning and revising so fast, i haven’t updated that secret link since i last posted the update last week or so.

      i love that this micro business idea is so PERFECT, i think about it every waking moment. it’s never boring. it’s got expansive possibilities that will keep me challenged and engaged.

      thank youse guys for that.

      this place is amazing, you all. it’s not just entertainment. it’s for REAL.

      • Edward E
        October 15, 2016 at 11:14 am

        I was thinking about you and your jacket idea, so I bounced around the idea to my superstar and her friends. They would like a bright pink color.

        • kitten lopez
          October 15, 2016 at 5:41 pm

          I’D LIKE A BRIGHT PINK COLOR, TOO! at the fabric store last week i fell in love with an eye-searing hot pink/orangey mix that i MUST return for.

          the young woman at the library who pulls all of my over-sized art/fashion/corset books for me to pick up is also DYING to see it finished. so are the girls at the fabric store.

          i’m going to try and get others to sew their own superhero haute couture clothes, too. even sew by hand if they must! it’s empowering as hell.

        • Edward E
          October 16, 2016 at 1:57 am

          Hot pink/orangey mix, now that sounds like something she would definitely like, because every time we’ve ever been shopping together hot pink is the color she always goes for. She has this hot metallic pink fishing lure that she picked out herself and it is really embarrassing how she almost always catches more fish than I do with them. Everybody teases me about how this works out…

          HOW TO IMPRESS A WOMAN   Compliment her, cuddle her, smooch her, caress her, passionately love her, stroke her, comfort her, protect her, hug her, wine and dine her, buy gifts for her, listen to her, respect her, stand by her, support her, go to the ends of the earth for her.
          HOW TO IMPRESS A MAN   Arrive naked… with beer.

          More beer jokes
          Q: What is often an Ozarks hillbilly’s last words? A: Hold my beer and watch this!

          Three Ozarks hillbillies are riding in their truck while drinking beer, having a jolly good ol’ time.

          The driver looks in the mirror and sees the flashing lights of a state patroleum car so he pulls over.

          The other two are really nervous, “What do we do with our beers? Gosh, we’re in trouble now!”

          “No,” the driver says, “just do this: pull the label off of your beer bottle and stick it to your forehead and just let me do the talking.”

          So they all pull the labels off their beer bottles and stick ’em to their foreheads.

          The trooper walks up and says, “You boys were swerving back down the road. Have you been drinking?”

          The driver says, “Oh, no officer,” and points to his forehead, “we’re on the patch, trying to quit.”


          One night, a police officer was staking out a particularly rowdy bar in the Ozarks for possible violations of driving-under-the-influence law.

          At closing time, he sees a fellow stumble out of the bar, trip on the curb, crawl along the grounds and try his keys in five different cars before he found his.

          Then, sat in the front seat fumbling around with his keys for several minutes.

          Everyone else left the bar and drove off. Finally, the fellow started his engine and slowly began to pull away.

          The police officer was right there waiting for him.

          He stopped the driver, looked him over, examined his coordination and administered the Breathalyzer test.

          The results showed a reading of 0.0. The puzzled officer demanded to know how that could be.

          The driver replied, “Tonight, I’m the designated decoy”

        • kitten lopez
          October 16, 2016 at 9:35 am

          EDWARD E!!!!
          those were HILARIOUS!!!!
          good morning, my dear man, thank you for all those!

        • Edward E
          October 18, 2016 at 12:15 am

          Great awesome, made you laugh, ya know I was beginning to wonder if California folks like my jokes… nobody ever says anything. God is great, beer is good, and people are crazy!!! The Flying Monkey Ale, Netherworld’s taste wonderful at first, awful down the middle, finishes perfect. So seldom do I drink that it only takes one of those monkeys for a buzzing. But Netherworld makes ya think about voting for a Reflubitcan, that’s concerning, voting for any of the two majors now is like supporting Capone.

      • Petunia
        October 15, 2016 at 11:56 am

        Cool! The fashion business is so drab now you are bound to make a splash.

        • kitten lopez
          October 15, 2016 at 5:53 pm

          yeah, Petunia- i actually do think this wild swagger superhero clothing WILL catch on–it’s more perfect because i also want to inspire others to
          SEW and make up their own “costumes” (that’s my edict to “make an art/fashion scene” that i heard in my head after dancing and praying and mulling over what the hell i could do that wouldn’t have me going postal).

          but if it’s just ME alone, then it’ll be more work. i wanna start a little “scene” of some sort… do something that OTHERS will talk about and get excited FOR US, you know?

          but what’s even more cool is that i’m already finding other baby lady artists i’m going to incite to create. one’s my neighbor girl downstairs, and she works at a grocery store and is born here, and she’s blue about the death of art here.

          and then the dancing the music? fxckin’ hell! it’s ON! i looooved what you said about making SHOWS at a BOUTIQUE –that’s IT. that’s the KEY! i know how to do shows easy as pie and can set people’s hair on fire with my pinky finger! ha!

          i just picked up a bunch of library books that made my bicycle wobble on the way home. but even the library girl is inspired and excited. i like showing them the bones behind magic. it’s EASY; just takes focus and time and attention, you know?

          i would’ve been a horrible mother but i LOVE being like a broke and frizzy Auntie Mame.


        • kitten lopez
          October 15, 2016 at 6:27 pm

          p.s. clarification: my neighbor girl below who works at the supermarket and was born here, but her girlfriend saw my jacket design and said her girlfriend went to F.I.T.! i can’t tell a story for nada. it’s amazing i was EVER a writer. but i’m writing from my own life and it’s impossible for me to find an “amicable” beginning or end, as the older i get, the “beginning” goes back further and further depending on how my original understanding evolves or gets complicated.

          and i was brought here by a mentor’s fan letter. sight unseen, both Kris as well as san francisco. and this building is one of those crazy san francisco magic secrets as i’d been tutored by a couple of different “older sister” san francisco women who were so special, now i see those as magic days with all they taught me about being a “wild woman”.

          they’re gone and now i’m the crazy older woman tapping the next wild ones to go out into the world as their bigger selves.

          it’s like our own ghetto version of armistead maupin’s “tales of the city”–stories of the inhabitants of a wild victorian apartment building in the ’60s, with an elder glamorous drag queen as the house mother.

          that’s ME, now! i can’t wait til i’m ready to wear lipstick all proudly outside the lines of my mouth. my late grandmother used to say that her friends had badly drawn on eyebrows because they could see close up anymore. that’ll be me, too!
          sideways eyebrows that’re always scary mad. it’ll keep the riff raff out so the good ones can always see me.

  9. Michael Francis
    October 14, 2016 at 10:47 pm

    It’s difficult using beer as a measure of the economy. When times are good, people drink beer to celebrate and when times are bad it’s drunk to drown ones sorrows.

    • Bryce Nelson
      October 14, 2016 at 11:17 pm

      An argument could even be made beer consumption goes up during recessions. Some also switch to cheaper forms of liquor. Alcohol is pretty recession proof and the only real change comes from people drinking more at home instead of in the bars to save money.

      • DanR
        October 15, 2016 at 9:19 am

        I would think hard liquor would do well in a recession. The alcohol content of a $20 bottle of vodka should be higher than equivalent of $20 beer or wine.

        • kitten lopez
          October 15, 2016 at 10:14 am

          over the beer calories and bloat, i’d prefer a rise in a good underground moonshine speakeasy.


          i can hear the music, too. real stuff. with strings. no auto tune!

  10. Julian the Apostate
    October 15, 2016 at 4:12 am

    I thought when Inbev (if I spelled that right) bought out A-B it would be easier to find Becks. Ha! The beer cases seem to be all Bud all the time. Sam Adams lager is harder to find as well. Now I know why

    • Dan Romig
      October 15, 2016 at 6:53 am

      Beck’s sold in the USA has been brewed in St.Louis, not Bremen, since 2012. That has been going on a long time. Foster’s in the USA comes from Molson of Canada not Australia. Irish brand Harp in the USA is brewed at the Moosehead brewery in New Brunswick. And this is just a few of the name brands that have been bought and sold.

      Here in the Twin Cities, we have seen an explosion of craft breweries. One of the more well-known ones, Surly, has a brew pub and restaurant which has a tremendous following locally. The restaurant’s chefs are fantastic and they pair entrees with brews as well to compliment each other.

      Just a bit to the southwest of Minneapolis there’s a German craft brewery in New Ulm on the Minnesota river called Schell’s (my favorite). Family owned and independent since 1860. Zum Wohl!

      • Edward E
        October 15, 2016 at 11:22 am

        What is the deal with Country Club Malt Liquor by Pearl Brewing? They only make batches and they’ll show up no telling where in the country, then they’re gone. Found some in South Carolina at a Wal-Mart of all places, have a few left.

  11. mike
    October 15, 2016 at 5:46 am

    Well, the declining sales certainly are not my fault. Another factor to consider is craft beer is often higher alcohol. Imperial and douple ipa are 8-9 percent alcohol and barleywine is 12. Most mass produced beer is 5 to 6, light beer is even less. i buy 2 sixpacks of stone double ipa instead of the 30 pack of pbr I used to get.

  12. mike
    October 15, 2016 at 5:48 am

    Big beer will eventually ruin the craft brewers they buy as anhauser busch ruined becks and louenbrau, etc

  13. October 15, 2016 at 7:15 am

    And here I was gunna turn part or all of my 5 acres of grass into a hops farm to supply the local craft yuppies…….. oh-well…..

    We have a local craft beer company started rebuilding a long closed brewery added a building, and revamped 2 others, but it looks like it’s taking longer and longer…. I wonder if they cut back on their grand plans… I was pretty surprised when it stared, there is really not much going on in that town…. Long slow decline there……

    I’m not into beer, but at $5. glass, that is not a recession drink….


    • MC
      October 15, 2016 at 8:43 am

      It’s a whole lot like any other bubbles: those who first started selling overpriced beer have made a fortune, those who got in later have made some decent money but not as much as they expected while those who are jumping onboard now will only have a mountain of debts to show for their efforts.

      Regarding hops… it grows wild in patches here up to where evergreens take over. Funny thing is yups have no idea what it looks like nor that is a relative of hemp…

  14. Petunia
    October 15, 2016 at 7:58 am

    Just an observation, the millennials are more likely to hang out at Starbucks for the free wifi than any bar. In my generation the guys went out for beers but now the young guys hang out on Skype. This doesn’t bode well for drinking establishments in general. Plus energy drinks seem to be the thing with the “kids”.

    • October 15, 2016 at 8:39 am

      That doesn’t match my own experience. I see lots of millennials at the bars I go to, and at the bars I walk by and don’t go to. In fact, at the bars I go to, there are mostly millennials, and some gen Xers. It feels good being surrounded by young people. They have a great energetic vibe, full of optimism. Boomers don’t seem to go out that much anymore.

      Maybe it has something to do where we live (there are a LOT of young people in San Francisco).

      • Petunia
        October 15, 2016 at 9:20 am

        It is definitely local to you. The young people I see don’t have the money, and in the suburbs it’s harder to get around.

      • kitten lopez
        October 15, 2016 at 10:57 am

        “That doesn’t match my own experience. I see lots of millennials at the bars I go to, and at the bars I walk by and don’t go to. In fact, at the bars I go to, there are mostly millennials, and some gen Xers. It feels good being surrounded by young people. They have a great energetic vibe, full of optimism. Boomers don’t seem to go out that much anymore.”


        then i’d bet you’re talking about TECH PEOPLE. they’re the only ones with any energy vibes and ANY “optimism.” they have to even learn to fake how to SWEAT optimism even if they’re full of despair because others can SMELL regular folks’ type of exhaustion/despair/horror. they’ve completely taken over “enjoying” this city as they’re the only ones who can afford it without kids, mortgages, and they’re ALL about networking, as even their well-paying jobs are harder to get and a lot are contractors.

        the boomers i know from this town can’t hack going out and seeing hordes of yelpers take over tables and photograph their food and not talk to each other while texting.

        as for the mission, at night you ONLY see young tech people on 24th street now. how does one know? you feel the urge to give wedgies or beat them up for the apple watches and gadgets you’ve never even SEEN before. the kind you think, “real people USE this?”

        the rest of us hole up holding onto our rent controlled apartments.

        yesterday i made the mistake of visiting one of my old site haunts (i really have only been visiting wolfstreet now that i’m focused on my tiny venture idea), and on mission local i accidentally read about an eviction where the 17 year old kid answered the door so the landlord came in, changed the locks and made them leave right then without their stuff. almost kept the dog. then the landlord let them take the dog but the dog was frantic from sensing all the trauma, and ran out into the street and promptly got hit by a car and died.

        yeah. i had to smear that on you all.


        just that tech folks are the only ones with that energy happy optimism. or those who’re selling the shovels and fancy cornmeal crust pizzas. our world is falling down all around us and we can only afford the cheapest of highs, like spinning around in circles and begging someone to hit us with a baseball bat in the noggin….just hard enough so we can still add up what’s left in our checking accounts.

        have a good day. there’s a spit of sun so i’ve gotta do errands while i can.

      • economicminor
        October 15, 2016 at 12:17 pm

        I was wondering about the wine business in conjunction with this piece. I live in Southern Oregon where the Craft Beer phenomenon started about 20 or more years ago. Today there are a lot. And many have expanded in the last few years. But this place has gone insane with the expansion of wineries. Pot too but the amount of wine grape growth here seems parabolic. All along the I5 corridor up to Portland there are lots of grapes and just about every where I go there are new small family wineries, including all the way up in British Columbia. As I read about things like the velocity of money and the slow down of retail sales and the decline in family wage jobs and job security I wonder how all these wineries are making any money. These are not the big guys but thousands of mom and pop wineries like in France and Spain.

        Wolf, do you have any stats on wine sales growth?

        • October 15, 2016 at 12:39 pm

          According to the site linked below, in 2015 wine sales in the US grew by 1.3% in $ and by 0.07% in terms of cases shipped. So that’s better than beer is doing, but it’s probably about flat with population growth. So per-capita consumption may have peaked too.

          60% of wine sold in the US is from CA, 31% is imported, and 9% is from other states.

          US is #1 wine consuming nation in the world.

          There are 8,702 wineries in the US, so a lot more than breweries.

    • Mary
      October 15, 2016 at 9:22 am

      I’m curious about the overall slowdown in beer consumption aspect of the story. I asked this in regard to another post–is this more a lifestyle change than a sign of economic doldrums? Is there greater consumption of wine? Beer versus wine perhaps a gender thing so women drinking more and men drinking less? Or as Petunia suggests, is it an age thing? Less overall consumption of alcohol by millennials?

      Or are we all just waiting for the legalization of pot?

      • MC
        October 15, 2016 at 10:11 am

        I cannot speak for the US market, but most European markets have seen a slow but steady decline in alcohol over the past years: we are talking about something along the lines of a 7% decrease in volume over a decade.
        I haven’t got the breakdown for beer, wine etc but there hasn’t been a year without a slight decline in consumption.

        Numerous factors have been blamed, of course but, shockingly, Millenials aren’t the boogeyman here. Yes, they don’t drink as much as their grandparents used to, but they drink more than their parents, especially spirits. In fact if it weren’t for Millenials the European spirits industry would be in the throes of a deep recession, made worse by the fact once the novelty wore out China didn’t turn out to be that miracle market many assumed it would be.

        This comes at a moment when vineyards planted during the boom years of 2002-2009 are finally starting maturing, especially in Spain and Italy, albeit the craft beer explosion seems to have already died out. As the saying goes, high prices are their own cure and €8-10/pint craft beers haven’t the same appeal as San Francisco housing.

      • October 15, 2016 at 10:14 am

        Mary, I replied below with some data and a chart (I needed the full column due to the a chart.) So please check a few comments down.

  15. Gregg Armstrong
    October 15, 2016 at 8:20 am

    I won’t buy any beer or ale or cider made or partially or wholly owned by any corporation. Any corporation that buys into or that buys out a good independent maker immediately loses my patronage.

    The big beer corporations uniformly make uniform crap. That’s why their sales have been on the skids for years, year after dismal year. That’s why I won’t buy anything that they produce.

    But, be my guest, Mr. Corporate CEO. Take your free money for billionaires from the criminals at the Goldman Sachs Feral Reserve System. Buy out some excellent little beer, ale or cider maker with imaginings of riches dancing in your brains. You will ruin them and their products. In the process I hope that you lose everything.

    • Dan Romig
      October 15, 2016 at 10:08 am

      The original Michelob Lager is, in my opinion, a very fine Munich-style helles beer. It’s brewed with only two-row malt, hops, yeast and water.

    • nick kelly
      October 15, 2016 at 11:03 am

      Most of the small brewers are corporations. Many professionals, doctors etc. are incorporated even though the ‘company’ consists of one person. Once more than 3 or 4 people are involved in an operation, the bank will want them to incorporate. it doesn’t want to deal with multiple entities.
      Even a small micro-brewery to make enough beer to support itself will require tens of thousands in equipment.

  16. Mel
    October 15, 2016 at 9:16 am

    A business that succeeds because it’s small is going to have problems with growth. A business that succeeds because of painstaking production processes is going to have trouble going to national-scale sales.

    The same thing happened to micro-lending.

  17. unit472
    October 15, 2016 at 9:51 am

    I’m amazed at the proliferation of hard cider ads I see on TV. They’re good ads too so there is money and ad agencies behind them. Thing is 10 years ago you were lucky if you could find a six pack of hard cider in your grocery store.

    Now Tequila enjoyed a surge in popularity but, apparently due to a shortage of cactus, it resulted in steep price increases rather than a glut of supply.

  18. October 15, 2016 at 10:13 am

    Mary, the problem started in the 1980s, when per-capita beer consumption in the US began to fall as people switched to wine. The trend has been relentless ever since, as the chart below shows. I used to write about this annually, but haven’t recently, so the chart isn’t updated and only goes through 2011 (in gallons of beer per year per capita).


    What has papered over the per-capita decline in beer consumption has been population growth. So total beer sales kept inching up. But a few years ago (2012?), even that wasn’t enough anymore, and total beer sales began to decline as well.

    Other beer-drinking countries too, including Germany and Austria, have seen a decline in beer consumption over the years. Some of this has to do with people drinking less alcohol than they used to, and some of it has to do with people switching to wine.

    From the chart, which covers the last three recessions, you can see that recessions don’t really have much of an impact on beer consumption one way or the other.
    So people don’t stop drinking beer during a recession or when they lose their jobs – though people might switch to cheaper beers. There are other theories that say that beer consumption rises during recessions as laid-off guys start self-medicating. But that doesn’t show up in the data either.

    Either way, beer drinking is on the decline in the US (wine drinking is up, as is, more recently, the consumption of high-quality hard liquor). Craft brews are a great revival. But regular Big Beer brands are dying.

    • Petunia
      October 15, 2016 at 12:29 pm

      We haven’t bought beer for the frig in years. We keep a bottle of wine instead.

      As an aside, the price of drinks in restaurants keeps us away. Last year we had a steak dinner at a chain steakhouse and the 2 cocktails we each drank cost more than the dinner. It was a very expensive night.

  19. william
    October 15, 2016 at 10:17 am

    Fort Collins, CO has a mini-boom of newly built breweries, many lined up next to each other to make brewery tours easier. It’s a great place, fun, lots of tours and friendly people. I recommend it as a tourist stop for anyone interested.

  20. Ptb
    October 15, 2016 at 10:26 am

    I keep walking through the beer section of the grocery store waiting for a price war to erupt. No such luck, yet. $8/ six pack is just not in my budget.

    • polecat
      October 15, 2016 at 11:12 am

      Solution: BREW YOUR OWN !

      If you follow basic sanitation procedures and can read a recipe, you can make great beer …. ;’)

      • kitten lopez
        October 15, 2016 at 6:34 pm

        Polecat… you’re INSPIRING. i remember in the 70s when my mom had these hippy friends who’d visit us. hairy people, you know? pubic hair out their waistbands and the guy was getting fatter and fatter because he took to making beer and he’d bring it whenever he’d visit and i thought it was so bad ass that you’d have to drink it with a piece of fabric over the bottle mouth to catch the sediment.

        my mom is perfectly fine with boxed wine so it was completely lost on her.

        i was too young, but that always stayed with me as the best thing to EVER bring to someone’s house would be beer you made yourself. what could top THAT? those crappy zales diamonds we were all reading about in that last article wouldn’t even out do someone’s own garage or basement beer. nada. nothing. never.

        that’s lay it down big hard and final “thwack!” cool.

        amazon ring buying guy from the earlier post on millennials not buying diamonds, make a special BEER for your new wife. name a variation after her and you’ll get head for LIFE. / even if she doesn’t LIKE beer.

        now THAT’s romantic.

      • Ptb
        October 16, 2016 at 10:51 am

        I’ve brewed my own in the past and I think it was still pretty expensive just for the raw materials. The gear was around $50 to $100 as I recall as well.

        • kitten lopez
          October 16, 2016 at 11:26 am

          yeah…. entrance fees.

        • Ptb
          October 16, 2016 at 5:38 pm

          Looked it up on Amazon. About $60 for the gear and then about $1/pint in raw materials. Not bad. I think I’ll give it a go.

  21. Chicken
    October 15, 2016 at 11:00 am

    Look and see which ones are using cheap ingredients, corn is a big cost cutter. Personally, I avoid this ingredient but it might go unnoticed by an uneducated audience?.

  22. Chicken
    October 15, 2016 at 11:19 am

    Where can one locate interesting craft brewery paraphernalia, I still can’t find much of interest beyond a paper coaster or napkin, perhaps a tap handle.

    We used to go to the Infirmary in Palo Alto I believe it was.

  23. NotSoSure
    October 15, 2016 at 12:32 pm

    Not sure what QE has anything to do with this. This is just how things work in capitalism? Someone makes big money, other players move in and big profits become normal profits.

    They had no QE during the gold rush either.

    • October 15, 2016 at 1:24 pm

      Cheap money (lower yields) induces investors overpay for everything … including overpaying for breweries, which creates a mad dash to build more breweries now that they have become a bubble asset.

      • kitten lopez
        October 16, 2016 at 10:04 am

        “Cheap money (lower yields) induces investors overpay for everything”

        –this morning in the wee hours of the morning, i was JUST thinking and wondering about that VERY concept and wondering how and WHEN it’ll STOP. it’s killing everything and changing how people think on a deeper level.

        the only RELEVANT ART these days is SOUTH PARK, because they’re ALL OVER this and what’s happening to society.

  24. Islander
    October 16, 2016 at 2:58 am

    So the Wort on the street is that the beer industry is becoming too bubbly? Oh well, I’m an arrogant bastard with a heart of stone, so i just laugh at the fools who waste their time getting in near the top.

    Reminds me of the alkaline water craze, if you want hard water just drink from the tap!

    Seriously though, craft beer still hasn’t invented the one brew i really lust after, which is something that tastes like the incredible smell in the air after an Arizona thunderstorm. That piney creosote aroma after the parched desert slakes its thirst, that cool moist breeze with towering storms in the distance, now that is something that should be bottled. Too bad we’re so limited by only using hops.

    Beer used to be made with hundreds of different herbs; my own home brew attempts in that area have actually been pretty drinkable. But it would probably take me hundreds of experiments to make the perfect Arizona Monsoon beer i hunger for, so it’s relegated to my voluminous to do list.

    But all the elements are there for the next marketing campaign. People like experiencing brand new flavors. Energy drinks are just emasculated durian flavor for example. Using other herbs is also more authentic than sticking to hops only in a historical sense. Maybe this craft beer revolution is hops’s last hurrah. For my bored taste buds i certainly hope so.

    • kitten lopez
      October 16, 2016 at 10:09 am

      holy COW! “arizona monsoon beer”…

      “…craft beer still hasn’t invented the one brew i really lust after, which is something that tastes like the incredible smell in the air after an Arizona thunderstorm. That piney creosote aroma after the parched desert slakes its thirst, that cool moist breeze with towering storms in the distance, now that is something that should be bottled. Too bad we’re so limited by only using hops.”

      THAT’S AMAZING. how can you put this idea down on a list of many? THIS IS INCREDIBLE.

      • JerryBear
        October 18, 2016 at 12:41 am

        Living in the desert I am familiar with the wonderful incredibly refreshing aroma that creosote bush releases into rainy air, but it is elusive. I have done a number of experiments with the plant but basically got nowhere. During a severe drought it can smell as harsh as the creosote it is named after.

    • kitten lopez
      October 16, 2016 at 11:24 am


      you’ve really got a great idea in your own little head with that Arizona Monsoon Beer that i hope you follow up. it stayed with me through breakfast. it’s a poem of an idea that is so beautifully LOCAL, it’s the kind of thing that’d become legend. i KNOW those smells. i’ve spent a lot of time in arizona.

      it’s the kind of idea having you go BACKWARDS into researching the herbs and combinations (forget what is done now out of habit, laziness, etc.), and you’d discover OTHER ways to use what you find, in whiskeys or whatever. how could you EVER be bored with such an idea?

      i went to san antonio and tasted chipotle sauce and never forgot it. it reached into my soul and stayed there until years later when i figured out how to make a chipotle salsa that we now eat just about every day for every meal.

      arizona monsoon beer would be the same. i heard the poetry in what you wrote and i KNOW what you’re talking about.

      i hope you’re haunted enough to follow through this idea somehow. if i were you, it’d make me messy-haired crazy with how you wrote about it like that. talk about casting spells and love letters! wow.

  25. chris hauser
    October 16, 2016 at 10:31 am

    not to be wordy on the subject, but

    “Terence, this is stupid stuff:
    You eat your victuals fast enough;
    There can’t be much amiss, ’tis clear,
    To see the rate you drink your beer.
    But oh, good Lord, the verse you make,
    It gives a chap the belly-ache.
    The cow, the old cow, she is dead;
    It sleeps well, the horned head:
    We poor lads, ’tis our turn now
    To hear such tunes as killed the cow.
    Pretty friendship ’tis to rhyme
    Your friends to death before their time
    Moping melancholy mad:
    Come, pipe a tune to dance to, lad.”

    Why, if ’tis dancing you would be,
    There’s brisker pipes than poetry.
    Say, for what were hop-yards meant,
    Or why was Burton built on Trent?
    Oh many a peer of England brews
    Livelier liquor than the Muse,
    And malt does more than Milton can
    To justify God’s ways to man.
    Ale, man, ale’s the stuff to drink
    For fellows whom it hurts to think:
    Look into the pewter pot
    To see the world as the world’s not.
    And faith, ’tis pleasant till ’tis past:
    The mischief is that ’twill not last.
    Oh I have been to Ludlow fair
    And left my necktie God knows where,
    And carried half-way home, or near,
    Pints and quarts of Ludlow beer:
    Then the world seemed none so bad,
    And I myself a sterling lad;
    And down in lovely muck I’ve lain,
    Happy till I woke again.
    Then I saw the morning sky:
    Heigho, the tale was all a lie;
    The world, it was the old world yet,
    I was I, my things were wet,
    And nothing now remained to do
    But begin the game anew.
    Therefore, since the world has still
    Much good, but much less good than ill,
    And while the sun and moon endure
    Luck’s a chance, but trouble’s sure,
    I’d face it as a wise man would,
    And train for ill and not for good.
    ‘Tis true the stuff I bring for sale
    Is not so brisk a brew as ale:
    Out of a stem that scored the hand
    I wrung it in a weary land.
    But take it: if the smack is sour,
    The better for the embittered hour;
    It should do good to heart and head
    When your soul is in my soul’s stead;
    And I will friend you, if I may,
    In the dark and cloudy day.

    There was a king reigned in the East:
    There, when kings will sit to feast,
    They get their fill before they think
    With poisoned meat and poisoned drink.
    He gathered all that springs to birth
    From the many-venomed earth;
    First a little, thence to more,
    He sampled all her killing store;
    And easy, smiling, seasoned sound,
    Sate the king when healths went round.
    They put arsenic in his meat
    And stared aghast to watch him eat;
    They poured strychnine in his cup
    And shook to see him drink it up:
    They shook, they stared as white’s their shirt:
    Them it was their poison hurt.
    -I tell the tale that I heard told.
    Mithridates, he died old.

    the fizz may wind down, but beer will continue on.


  26. kitten lopez
    October 16, 2016 at 11:36 am

    Wolf, i feel odd asking such a remedial question that’s on everyone’s mind, but if all this cheap money’s killing EVERYTHING–even beer biz— every idea, and changing so much, and the fed won’t really raise rates because they don’t wanna piss money people off, how’s this supposed to ever end up??? how long can this go on??? it seems we’re already firmly in the twilight zone.

    i don’t expect you to answer this in a few-day-old thread, but it begs for its own article, so maybe you could point me to one you may have already written???

    i used to stay awake worrying about the mind blowing expansiveness of the universe; now the insanity of cheap money ruining everything LOGICAL and ignoring natural limits and human basic needs is what keeps me up at night in a panic.

    • October 16, 2016 at 1:18 pm

      Great questions, kitten lopez: “how long can this go on??? it seems we’re already firmly in the twilight zone.”

      No one knows the answer.

    • economicminor
      October 17, 2016 at 3:43 pm

      How long can this go on? This is how I see things.

      Change is a constant in the universe. Wall Street, the TBTF institutions and Big Government (I call them the Marie Antoinettes) abhor change. Change is way to much work and thinking and planning for them. They have become bloated and lazy as they have their servants feed, clothe, entertain and move them from venue to venue. Life couldn’t be better if you are one of the Chosen Ones! Lucky Ones!

      Change is like a river, it can be dammed up for a while but it needs to do something. So you can drink it, irrigate from it or use it to make more power (or float around on it like the MAs are doing) but you can not dam it up forever. Without Change/Rain everything becomes barren and sick and stagnant. What the MA’s are doing is trying to capture and own all the assets by damming them up and trying to control them. Higher and higher the dam goes.. And the higher it goes the more change is held back.

      Yet again, Change is constant! Damming it up (being selfish and greedy) will just cause a much bigger flood when the dam finally breaks..

      When will the dam break? I think we are currently seeing the cracks in it with the slowing down of commerce world wide. You can see this in the US by looking at the FRED velocity of money chart at the St Louis FED site. You can see it with the increasing amounts of debt against assets. The MAs are trying to control Change thru the creation of phony debt. These two charts are parabolic in opposite directions. More and more debt and less and less money moving around thru society can not be a good indicator.

      The high levels of debt support high asset prices YET Some assets are already starting to crumble as in freight and oil and copper etc. The debt has to be repaid and when the asset supporting it and it loses value (evaporation?)… well, I think the cracks are getting bigger and more numerous.

      I think the distrust of the politicians is part of the cracking of this huge dam. I think that the fall from grace of DB and what is happening in Greece, Spain and Italy are the dam cracking. And France and Germany.. I think Brexit is more cracks.. The downward spiral of CAT and other large old school corporation are more cracks. The list is already large and seems to be growing larger daily.

      It is not only a growing list but an accelerating list with the demise of manufacturing in the USA and the tensions between the US and Russia and China. It appears to me that Globalization is failing. All this pent up Change appears to be breaking out.

      I will be surprised if we make it another year with out multiple Black Swans landing and a few Rogue Waves thrown in.

      People say the FED will flood the system with money but flooding the money where and how? Giving it to dysfunctional greedy banksters or corporations isn’t going to solve anything. Hasn’t in a decade of doing it. Congress would need to be involved with any general change in the way money is distributed and I don’t care who wins the Presidency there are going to be large groups of disenfranchised people who will be angry. Angrier than you or I have seen people in this country. Probably much worse than during the Viet Nam protests or during the Civil Rights movements. The police are militarized and people who feel they have nothing to lose are very dangerous. Cracks!

      So, the dam hasn’t yet broken but Change can not be held behind a wall of desire (or phony debt instruments) forever. Cracks are showing up in many critical areas. So all I can say is get ready. It will happen.

  27. kitten lopez
    October 16, 2016 at 3:46 pm

    thank you for trying to answer, as i know that’s what this site is ALL about. i can “feel” the wrongness in all aspects of current life, but it’s all too “mystical” for even me and i’m used to living in perpetual states of being “in between.”

    i’m trying to understand the “math” since it’s human-made. (but IS it???) staying awake pondering my puny existence in the vastness of the universe now is more calming than how we got to this place collectively.

    you’ve GOT to watch South Park, last season as well as this one. it’s the only NEW story out there in a world of endless remakes. when i watched the first episode of this season online, i had to stop watching and take a break, it was too beautifully relevant and that actually HURT me. i had to catch my mental breath because i’m still stumbling trying to ENUNCIATE my horror. they capture so much existential absurdity and Truth and sadness with the crudest of drawings. it was beautiful.

  28. Brian
    October 18, 2016 at 7:18 pm

    The craft beer bubble will hurt breweries like Stone, Sierra Nevada, Dogfish, New Belgium and Lagunitas that were once top dogs but now are being outshone but smaller local breweries that are now what embodies the spirit of craft brewing. These larger craft brewers are becoming dinosaurs that the next generation of drinkers couldn’t care less about.

Leave a Reply

Your email address will not be published. Required fields are marked *