The Coming Purge

Here in Tampa/St.Pete, as in many other parts of the country, the craft beer revolution has exploded.  New breweries are opening at break neck speed, and you can find locally brewed bottles and cans in places you never would have thought of before, such as your supermarket or gas station down the street.  No longer do you have to go to a liquor store or craft beer bar to get your fix.  There are now about 45 craft breweries and brewpubs in the Tampa/St. Pete area and about 10 more currently in planning.  Nationwide, the US just recently topped over 4100 breweries.  There were less than half that just 4 years ago.  While the craft beer market is still a pretty small share of the total beer sales in the US, craft beer is a hot commodity and it’s predicted to continue to gain market share in the foreseeable future.

But I just learned some important news recently.  One of the smaller craft breweries in Tampa is closing.  That’s a first.  To my knowledge, of all the breweries that have opened in the craft beer renaissance of the last 4 years in this area, I have not heard of any of those businesses failing and closing shop.  I’ve actually been waiting for this to happen.  I just didn’t know when.  And I predict there will be more to come.  Just like any business, specifically restaurants, they come and go.  Some succeed but more fail.  Why would craft beer be any different, if not now, at least eventually?

This particular brewery was opened by a husband and wife team about 2 and half years ago.  He started as a homebrewer and took the plunge into being a professional.  They used a 3.5 bbl system, had a tasting room and they locally distributed their kegs to bars and restaurants.  That is how most of the breweries start out and they eventually expand and bottle/can if they are successful and grow their distribution.  A minority of breweries open right out of the gate brewing batches greater than 30 bbls and  distributing six packs.  That requires huge capital up front and most likely are backed by investors.  But the majority of breweries are “mom and pop” operations to start.  Small volume, tasting room, a certain amount of keg distribution.  And these small breweries have to find a way to survive on that until they can expand.  Between overhead, federal and state licensing fees and taxes, paying yourself, maybe paying an employee or two, I always wondered how they COULD survive.  You need to sell a lot of kegs and sell a lot of pints in your tasting room to make the numbers work.  And as the local market gets more crowded year after year, it must get tighter and tighter trying to get by.    I’m sure a lot of these breweries, even though they are losing money, hold on as long as they can, hoping things will turn around.  It’s difficult to let go of your dream.  So it may take a couple of years before they say “No mas” and close it up.

A market for anything will eventually get saturated and there will be a purge of sorts.  There are those that succeed and expand because of good location, good marketing, good business plan and (hopefully) good beer.  Many others will fail because of a lack of any combination of the above.  There is a finite amount of retail shelf space and tap handles in this area.  So the upward trend of the number of breweries in a town will ultimately slow down and even out.  It’s just a matter of when.

So I was wondering when the first brewery would close.  Now I’ll be wondering when the next one will.

Update 12/16/15:  Just got word yesterday that another Tampa brewery is closing.  This one had been around since 2010 and was the one of the first handful of breweries in the area.  They canned and distributed within the region.  But their reputation was for “just ok” beer.  No particular reason was given.  But another brewery is taking over their location.

 

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