U.S. beer trends brew bigger question for Rochester economy

The Democrat and Chronicle today reported Rochester-based North American Breweries ranked sixth among United States beer brewing companies for a second consecutive year. Before raising a Genny Light to celebrate, the latest report from trade group, the Brewers Association, requires a deeper analysis. 

  

According to market research firm IBISWorld, U.S. breweries represent a $33 billion industry at 3.1 percent annual growth between 2010 and 2015. By comparison, the $5 billion U.S. craft brewing industry grew 19.1 percent annually during the same period. 

These figures make Governor Andrew Cuomo’s recent support for craft beer brewing companies — especially small businesses — a smart move for the state’s economy. However, industry experts at this year’s SXSW festival foresee an impending bubble as a result of rapid growth. 

Two statistics help illustrate the potential risks:

  1. 6,718 percent growth since 1980
  2. An estimated 1 in 4 craft brewers fail

Many perceive this rate of growth as unsustainable; only the very best craft brewing companies will survive. 

Samuel Adams founder and Boston Beer chairman Jim Koch views the market differently. He estimates room for as many as 4,000 additional entrants to craft brewing. 

Regardless, New York lags behind the burgeoning craft brewing market. The list of top U.S. craft brewing companies includes just a few from the Empire State. West coast companies comprise a larger share of the market. Common states on the list include Colorado, Oregon and California. For the Rochester region, these geographic trends project a limited outlook despite a rapidly growing market. 

As for North American Breweries, its future success will likely require a combination of strategic acquisitions and support from government to increase ease of distribution, especially with Rochester’s close proximity to major centers of population such as New York City, Boston and Toronto. 

Most of all, the dynamics of the U.S. beer industry raise a more important question: is New York’s economic development policy structured to push its cities’ potential growth — especially those in the upstate regions like Rochester — beyond mature markets?

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