Are Rhode Island’s 24 Breweries Facing Growing Pains?

Thursday, December 12, 2019

GoLocalProv News Team and Kate Nagle

 

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Is the craft beer market hitting maturation?

It has been a decade-plus of growth for Rhode Island’s brewers and more big plans are in the works. But with twenty-four licensed brewers in Rhode Island, is the market becoming saturated?

Nationally, the numbers and experts say the growth may have slowed, but the industry is still expanding. In Massachusetts, the industry is seeing hyper-growth and that may not be good news for Rhode Island brewers.

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Regardless of the macro numbers, there are a number of big initiatives being planned in Rhode Island.

Narragansett Beer is scheduled to open a brewery in the Fox Point section of Providence this year. The developers of the proposed soccer venue in Pawtucket see further expansion of venues. Brett Johnson, one of the partners in Fortuitous tells GoLocal that their plan includes breweries onsite as part of the retail development, “I see it as food halls, and you know, breweries — things that are very complementary to sports and in particular soccer.” 

Rhode Island’s industry received a dose of reality when star entrepreneur Nick Garrison announced that he was selling his Foolproof Brewery. He has been one of the faces of the industry.

Another star has been Grey Sail Brewing — who earned a “best beer” in Rhode Island accolade by Business Insider — and the brewery's chief executive says there are mixed indicators.

Jennifer Brinton of Gray Sail Brewing tells GoLocal, “I think the culture of drinking locally is expanding — I think more consumers are getting on board and are supporting [local breweries]. There are a ton of new breweries and some that are closing. I’ve felt for a few years now that it’s been a lot of new entries and have been waiting to see if the market will bear it. I think it remains to be seen.”

“I think [the craft brew industry] will continue to contract for a little while. The brewers association put out data [recently] that more breweries closed than opened. Rhode Island has always been behind the curve, we're always playing catch up,” said Brinton.

While Grey Sail is nearing its eight year mark, Derek Luke with Newport Craft Brewing is celebrating his 20th year in the business. 

“It’s an industry with ADHD — and as someone who has [ADHD], it’s not necessarily a bad thing. We just heard here about a brewery who says that their flagship [beer] changes every year. I have a bunch of unfinished projects. I see what’s happening, and it’s exciting, that brewers are trying to do new things. The quality and uniqueness now versus five years ago is much better,” said Luke, who started his company just out of college.

 

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One of hundreds of beer events across Rhode Island each year

What are the Trends

Bart Watson, the Chief Economist with the national Brewers Association, tells GoLocal that there is a strong path to success, through differentiation. “This is going to vary by business model, size, and place. If there is a common thread, it’s differentiation. With more breweries than we’ve ever had in the U.S. (and more every day), what makes yours stand out? Even local isn’t enough for many breweries, as there are lots of other local options in many locations,” said Watson.

The industry is anticipating 4 percent growth for 2019 -- an industry that includes more than 4,500 craft brewers across the country.

For Brinton and her team at Grey Sail, business continues to be strong.

“We have grown continually.  We opened in 2011, so we just passed our 8-year mark. We'll post growth for 2019 as well, which is good. I can say the rate of growth has slowed for us — we had a huge growth period but it has slowed, but we do continue to grow.  To succeed, we need to stay consumer-focused — and we strike a balance on the quantities that we brew, the mainstays vs. rotational [beers],” said Brinton.

“Our business is great — we’ve expanded into markets and taken over a few brands — we have a young crew that we’ve put a lot of training. But it means you have to pay for those kinds of things. We’re two years into a new model and it's certainly posting in the right direction. We have some great pieces of machinery,” said Luke.

“It’s always been survival of the fittest. Beer is a business. If you don’t run a good business, the money runs out. For us, most of our business is not inside our building — again, it’s not right or wrong, but it puts us in a good place,” added Luke, of Newport Craft's position in the community. 

 

Dangers

Watson says at the national level, “Overall, it’s a maturing market. One that is still growing, but not at the same rates as previous years.”

He adds, ”That growth isn’t as strong as a few years ago and I think there are good questions about whether its enough growth for every brewery to succeed, but the market isn’t contracting.”

In New England, there are words of warning too.

“For anyone interested today in entering the business? I would say I wouldn’t do it now. There’s a shakeout. And a lot of today's brewers, they want a shiny fancy taproom, and they don’t want to be DIY craftsmen. If you don’t understand the back workings of fixing a leak  — if you can’t fix it yourself, don’t open a brewery,” said Luke.

"Do your homework. To own and operate a successful brewery takes strong business savvy and the ability to push through licensing challenges and unravel the laws and red tape in the town you hope to open up shop, and number one - the knowledge and skills it takes to produce a high quality and consistent product. If you are missing any piece of this puzzle, build a strong team," Katie Stinchon of the Massachusetts Brewers Guild tells GoLocal.

 

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Industry is still seeing overall growth

Massachusetts Growth

"The brewing industry in Massachusetts has seen exponential growth during the past three years, growing from 120 breweries to 200," Stinchon says about trends in Massachusetts.

"Those in planning still far outweigh the number of breweries that we hear are struggling. While we do expect to see more closures/sales in the next five years, we also will see roughly 30 breweries open before the end of 2020. When compared to similar industries the rate of closures is much lower," she adds.

In the Commonwealth growth also means more competition."While more taprooms and places to experience craft beer is great for consumers, it also means increased competition, harder to get shelf space and draft lines. Plus challenges in breaking through the noise and creating brand loyalty," said Stinchon. 

Newport Craft's Luke stressed that consumers play a direct role in the success of a brewery. 

"It’s an interesting time to be a consumer — and I think the consumer will need to bear the burden of a lot of the [brewers] decisions," said Luke. "I heard from people who were upset that Boulder Beer [has stopped canning], and I said OK, when’s the last time you had in your fridge?"

 

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