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Monday, November 09, 2009

Good Time to Start a Brewery?

In this widely linked Portland Business Journal article (1, 2), we learn this rather remarkable fact:
Coalition will join an industry that, thanks to Oregon’s brewing pedigree, is sizzling. Coalition is one of 15 breweries or brewpubs — which sell beer made on the premises and food — that will have started operating in Portland between summer 2009 and early 2010.
Derek hasrounded up the various breweries slated to open that he knows about (though I remain confused about the fate of Clinton Street Brewing--see Bill for more).

All of which does begs an obvious constellation of questions. As Stan notes, this is "fifteen new breweries in richest brewery region in the world." Why so many breweries and why now--and critically, is it too many? The Business Journal buries part of the answer three-quarters of the way into the article:
While recession-era launches can be difficult, the climate may have benefited Hoyt and other Oregon brewers. For its new pub, the three-year-old 10 Barrel brewery found lease rates were about 40 percent less than what owners would have paid in 2008. Wales’ contracting costs were also 10 percent to 20 percent less than he’d anticipated.
Portland is lousy with brewers. Homebrewers, assistant brewers, brewers moving to the brewing mecca. And half of them are harboring secret desires (or not so secret) to open their own places. Perversely, the recession has provided them with a surprising opportunity. Loans are harder to get, but for those who can secure them, opening a brewpub is cheaper now than it has been in years--and maybe cheaper than it will ever be again.

That leaves the final question: can even Oregon absorb another 15 breweries? In the abstract, the answer is yes. The market is still growing, and as far as I know, these are all small breweries--their output will be just a fraction of the market. On the other hand, the market has gotten extremely competitive. If a brewery enters the market and their first keg of beer is clean and tasty, they should find an audience. Breweries that come out with bad beer, or even just uninteresting beer, may be dead before they get started.

Good time to open a brewery, but still risky.

7 comments:

iggir said...

you should start a brewery ;)

Jack R. said...

I wonder if this is uniquely a Pacific Northwest phenomenon.

I have a vague recollection of a recent Camra.Org.UK or BBC report on a wave of new UK breweries.

Information regarding the World Without Beervana [aka, ROW, Rest of (the) World] would interest me.

Brewers Union Local 180 said...

It's a shame they're all headed to Portland. It's a big state, and the real challenge is setting up in the smaller cities. If I had the cash I'd put a real ale pub in Florence, for instance.

Anonymous said...

It seems to me that Portland is currently supporting more brewpubs per capita than I would have ever guessed possible even five years ago. The question is how close are we to saturation? Right around the corner, or a long way to go?
I'm guessing the most recent stats on the population you need to support a new place are either out of date, or don't apply to our wacky beer-loving city.

Lucas said...

Perhaps starting in an economy like this means they will have to work even harder and come out with some interesting brews to stay in the game? It will be interesting to see how they are all doing one year from now.

Anonymous said...

"Perhaps starting in an economy like this means they will have to work even harder"

And maybe pints will get a bit cheaper?

Jeremy in SE PDX said...

I harbor no desire to run any kind of business -- my hat's off to you brave entrepreneurs! -- but I harbor a tremendous desire for a brewpub I could walk to (and home from)!

When is the good beer going to move a little further southeast, folks? Rent is cheap on Foster Road!

Almost everybody I talk to at the park, neighborhood association meetings, etc is wondering the same thing. We've picked up a few good restaurants and coffee places... where is the beer?

They are ready, as am I, to drink gallons if it is brought to us...

--JT

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