Little and local is future of brewing

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There is plenty of room in the market for many more breweries but only if they focus purely on supplying their local markets, with the majority of sales derived from their on-site tap rooms.

This was the view of Steve Hindy, Brooklyn Brewery co-founder, when Beer Insider made a visit to New York City to check out some of the borough’s newer brewers as well as the person that started it all in that part of town with his co-founders Tom Potter and Garrett Oliver.

Although he says there are been an explosion in brewery openings there are still significantly less per head of the population in the US. In the 1870s there were 4,000 breweries compared with 6,100 today but the population is now 325 million versus 45 million back then. “There could be a lot more breweries. Even though in 2003 when we had 1,485 I can recall people saying there were too many,” he says.

What he does foresee with the myriad newcomers in the market will be the fact most of them will remain small.  As it stands today 95% of breweries in the US produce less than 1,200 hectolitres per year. The route they will increasingly take is just being a local supplier.

“Many of the newer ones will just sell at their own locations and will never get very big. It’s very much a back to the future with [lots of] local brands. The new breweries will only be single generational. There will be some brands that break out but they will have to accept that they’ll have to give up some things to the distributors in order that they can grow,” explains Hindy.

The situation will be very much the same in the UK where he suggests growth for those that want it will be around the building of a brand that he says invariably “takes on a life of its own” and becomes the platform for moving into other markets and exporting.

Hindy believes the newer brewers that do not build a core beer brand – Brooklyn Lager accounts for 50% of the 350,000 hectolitres brewed by Brooklyn Brewery per year – will face more difficulties if they intend to grow beyond their local markets.

On top of this key (big selling) beer you can overlay the innovation, which is an area that Hindy says Oliver “has been very good at”. Testament to this is a constant stream of new beers coming out of the Brooklyn site. Most of the Lager production is contracted out to Matt Brewery in Upstate New York – just as it has been from the start before Brooklyn had its own brew kit.

Contract brewing and having the bulk of your sales derive from one beer sounds almost old school but Hindy says this has enabled growth and he says he “always wanted to grow big”. What it has not deterred though is respect from the new kids on the Brooklyn block as he says “they are very respectful as they appreciate we did a lot of the ploughing of the earth” before they planted themselves down. How high they grow is very much up for debate.

Glynn Davis, editor of Beer Insider