Amid Craft Brewery Boom, Some Worry About A Bubble — But Most Just Fear Foam : The Salt Fueled by customers' unquenchable thirst for the next great flavor note, the craft beer industry has exploded like a poorly fermented bottle of home brew.
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Amid Craft Brewery Boom, Some Worry About A Bubble — But Most Just Fear Foam

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Amid Craft Brewery Boom, Some Worry About A Bubble — But Most Just Fear Foam

Amid Craft Brewery Boom, Some Worry About A Bubble — But Most Just Fear Foam

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KELLY MCEVERS, HOST:

So you figured out how to brew your own beer, and you start asking some your friends, what if we started our own craft brewery? This scenario is apparently pretty popular. New breweries are opening at the rate of three per day in the U.S. NPR's John Ydstie wonders if we could soon be at peak brew.

JOHN YDSTIE, BYLINE: We'll get to whether it's time for you to start a brewery in a minute, but first let's check in with someone who's just done it.

MIKE KATRIVANOS: Hi, my name is Mike Katrivanos. I'm the founder of New District Brewing Company here in Arlington, Va. We're locals, and we're very blessed to have about eight beers on tap tonight.

YDSTIE: Local is a big deal in craft brewing, and locals like Don Ripper and his friend Chana Morrow show up often at New District.

DON RIPPER: We come pretty much every week. We live over the hill. We just walk up here.

YDSTIE: What are you drinking tonight?

RIPPER: I'm having a Folded Note because I'm a IPA kind of person, and this is a really good balance. It's not too hoppy but very delicious.

YDSTIE: And what are you drinking?

CHANA MORROW: I'm drinking one of their experimental brews. I'm actually getting some nutty, malty, so it's not on the hoppy side, which I know is the trendy thing.

YDSTIE: Driving the demand for craft beer is a desire for beers that have more taste. Just ask New District regular James Miervaldis.

JAMES MIERVALDIS: Honestly, I love how they experiment. It's always a great experience when I come here.

YDSTIE: Do you ever drink Bud or Miller?

MIERVALDIS: Oh, God, no.

YDSTIE: Never.

MIERVALDIS: Never, never, never.

YDSTIE: Mike Katrivanos says that intensity is also apparent in the commitment the craft beer crowd has to local production that supports their local community.

KATRIVANOS: Folks, when they come to a brewery, they want to meet the brewers, and they want to connect with what they're drinking.

YDSTIE: As a result, the craft beer industry has exploded like a poorly fermented bottle of homebrew. Now 1 in every 8 beers sold in the United States is craft beer, and more than 20 percent of the dollars spent on beer goes to independent and small brewers.

Jim Caruso is the CEO of Flying Dog Brewery in Frederick, Md., part of an early wave of craft breweries founded in the 1990s. But Caruso says there's been an even bigger boom since 2008 with a growth rate that's pushed the number of craft breweries to more than 4,000.

JIM CARUSO: Ten to 15 percent a year for the last seven or eight years, probably a greater growth rate than any consumer product while your domestic lagers - they're just different from craft beer - Budweiser, Miller and Coors - have been trending down.

YDSTIE: The giant brewers have taken notice. Anheuser-Busch just bought up a number of craft breweries, including Seattle's Elysian and Chicago's Goose Island. And Constellation Brands just paid $1 billion for Ballast Point, a San Diego craft brewer. Jim Caruso says these developments are convincing some people to start brewing because it's the next get-rich-quick scheme.

CARUSO: So you have some people getting into the industry because they have the financial resources to do so, and they're putting out some bad beer - not just beer that we don't care for, but it has some defects in it.

The downside to that is that consumers get a few bottles of beer that is not good and then they get turned off to the industry. It may be months or years before they come back and try it again.

YDSTIE: But let's get back to whether there's still time for you to get into the business, or does all this tremendous growth mean craft brewing has reached a saturation point and become a bubble? Bart Watson, who's an economist for the Brewers Association, says there's no evidence of a bubble - quite the opposite. He says new brewery openings outnumber closings nearly 10 to 1. But Watson says some markets have become pretty saturated.

BART WATSON: You know, San Diego County has more than 110 breweries. Portland, Ore., has 60 breweries in the city proper, where certainly the market is much more competitive than in other parts of the country. So you know, those places are really pushing the limits.

YDSTIE: Watson says the craft beer movement largely started in the West and is now moving eastward. That's partly because state regulation of alcohol was strongest in the East after Prohibition and has been loosened more slowly there. So Watson says in the East and the Southeast especially, there's lots of room for craft beer to grow.

WATSON: You know, one statistic I always like to point out is that there's about 8,000 wineries in the country now, and Americans drink a lot more beer than we drink wine. So as long as many of them are small and locally-focused, operating like a local restaurant or bar, I think there's plenty of opportunities for market niches where small birds can still thrive.

YDSTIE: But expect to come up with an initial investment of around half a million dollars for your brewery, and, says New District's Mike Katrivanos, don't expect to get rich.

KATRIVANOS: If you're getting into brewing specifically to make money, I would advise against it. You should go start a tech company.

YDSTIE: John Ydstie, NPR News, Washington.

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