A bubble in Oregon’s revered craft beer industry? Sales have slowed and some breweries have closed, but the state Office of Economic Analysis isn’t going on a bender about it.
Senior Economist Josh Lehner, who has written extensively about the economic impact of the state’s “alcohol cluster,” said it’s likely the industry is maturing. Some shakeout is not unexpected.
In a post on the department website, Lehner said making good local beer, as breweries and brewpubs around the state do, is no longer enough to assure success.
“In a mature market, good business decisions and strategies matter more,” Lehner wrote.
The Economist reported that U.S. craft beer sales in a three-month period ending June 17 declined 0.7 percent compared to the same period in 2016.
“It may be that craft beer has reached its natural limit,” the magazine opined on its website. Competition for shelf space, buyouts by big brewers and consumers’ turn to wine, hard cider and spirits are cited as additional possibilities.
Lehner said in-state beer sales have slowed or declined at many of Oregon’s breweries. Some have closed, including Medford’s Southern Oregon Brewing in 2016 and The Commons this year in Portland. Others sold to larger companies.
But Lehner said four or five Oregon breweries fold per year, a failure rate of about 2 percent. That’s compared to an 8 percent failure rate for all Oregon industries combined. Leisure and hospitality closures nationally are about 9 percent, Lehner said.
As craft beer sales slow, however, more breweries will struggle to retain market share, he said.
“I do think the brewery closure rate will increase in the coming years,” Lehner reported. “It is likely to converge toward the rates seen in other industries.
“Currently, the growing and largely successful beer industry is enticing even more breweries to enter,” he said. “Eventually this will lead to (over)saturation and for closures to rise as a result.”