Maine’s boom in craft beer production shows no signs of stopping this year, a trend that stands to increase craft beer’s share of the overall beer market and raise competition among smaller brewers and national giants joining the fold.
A study commissioned by the Maine Brewers’ Guild found the 35 breweries operating in 2013 plan to increase production by 36 percent this year and triple collective production in five years. This year, another eight breweries have come online, and another five are expected to open.
That growth comes against a national backdrop of craft breweries increasing production by 18 percent in 2013 and opening at an average rate of 1.2 breweries per day in recent years, according to the national Brewers Association.
“Which is insane,” said Bart Watson, the association’s staff economist, especially given that overall beer production last year was down about 2 percent.
But counting the number of craft breweries — the nearly 2,900 independently operated breweries that can be as large as Boston-based Samuel Adams — is not the way to think about just how much the market can sustain, according to Watson.
“Everyone should stop talking and/or worrying about the number of breweries,” Watson said in a 2013 article. “It is much more relevant to talk about capacity and/or market share.”
And that depends largely on changing beer-buyer preferences for dynamic flavors and local production. Peter Bissell, who started the Portland-based Bissell Brothers Brewing with his brother in November, said that leaves a lot of room to grow for the industry generating $92.6 million in Maine sales last year.
“The interesting thing is that the craft beer industry is changing at the same time as our economy is changing,” Bissell said. “Older people say, ‘When is the bubble going to burst?’ and the truth is there is no bubble. … I think the sky’s the limit.”
And national craft brands, such as Sierra Nevada, see something happening here, too. In August, the nearly 1-million barrel California brewery will bring its beer tour to Portland, one of seven cities nationwide.
Nationally, Watson said craft beer makes up just less than 10 percent of the total beer market. In Maine, that number is close to 17 percent by volume, with Maine-made beers making up more than 7 percent of that total in 2013, according to state figures. And Watson said areas such as Portland, Oregon — where craft beers have more than 30 percent of the market — prove more is possible.
When there’s not more market share to grab, brewers in Maine expect competition for producing unique, high-quality beers will heat up.
“It will ultimately create a higher level of quality across the board, and the weaker [breweries] aren’t going to succeed,” said Tim Adams, a co-founder of the Newcastle-based Oxbow Brewing, which expects to put out about 1,300 barrels of beer this year. A barrel contains 31 gallons.
Luke Livingston, founder of Baxter Brewing Co. in Lewiston, agrees that dynamic could be good for the industry, saying breweries that lose focus on quality and “aren’t treating the business like a business” stand to be weeded out. But the newcomers have posed short-term challenges for his brewery that recently expanded and expects to produce up to 25,000 barrels this year.
Livingston said it’s become harder to find space at the tap, prompting his company to look sooner than expected at distribution outside of its base market in northern New England.
“It’s more difficult for more established breweries to get draft access than even two years ago,” Livingston said. “It’s funny being 3½ years old to consider ourselves more established, but this is just how this industry is now.”
Sean Sullivan, executive director of the Maine Brewers’ Guild, said he expects there’s still room to add to the new batch of brewers, most of whom have different approaches, geographic focuses and do not compete directly.
“What we’re seeing is a shift toward a lot of smaller breweries that have different distributions rather than a lot of nascent startups that are looking to total domination,” Sullivan said.
That’s the case for Tim Gallon, founder of the Orono-based Black Bear Brewery. Gallon said he expects to put out around 1,000 barrels of beer this year, up from 850 in 2013. So far, demand in northern Maine has been enough to move that much beer through bars, restaurants and the brewery’s tasting room, which he said opened up his brewery’s local niche.
So far, he said, collaboration with Bangor-area breweries has been a boon to his business. But he acknowledged there may be a tipping point.
“If a brewer opened up next door, I’d feel differently possibly,” he said, but he tries not to focus on competing. “I think there’s a healthy competition there, and you want to be the best you can be for yourself and not worry too much about what other people are doing.”
But that competition won’t come just from within the state. The craft beer boom has drawn attention from companies such as conglomerates Anheuser-Busch InBev and MillerCoors, who are putting more resources into developing and buying up their own craft brewing brands. Anheuser bought Chicago-based Goose Island in 2011, and it inked a deal this year to acquire the New York-based Blue Point Brewing.
In an October 2013 investor presentation, Adam Oakley, the company’s vice president for high-end brands, said year-to-date production of Goose Island was up 67 percent over 2012. Its move to keep Goose Island independent, while providing the resources to boost production and distribution, kept quality high, according to Livingston.
While craft brewers in the state all said quality is the keystone to success, they noted local production and the ability granted by a 2011 law to open on-site tasting rooms still gives them an edge with customers in Maine and across the region.
“We get tourists here who can purchase directly from the brewers, and people are basing entire vacations around that,” said Adams, with Oxbow, which last year tested sending its beer during the quieter winter season abroad to Copenhagen, Barcelona and Rome.
Closer to home, Adams said he’s not worried about bigger breweries pushing into the craft market.
“I think consumers are becoming much more educated and for the most part are able to see through those facades,” he said, noting some upside, too. “Some of those faux craft beers have actually been stepping stones for people to make the transition toward better beers, so I’m fine with it.”