Is Austin’s craft beer market saturated?

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North Austin is brimming with craft beer, but experts and local brewers say the area is far from saturation.

Ben Sabel and Judson Mulherin co-founded Circle Brewing Co., a small 800-barrel-per-year operation, on West Braker Lane in 2010. At the time the craft beer scene in Austin was much smaller, Sabel said.

“When we first started, there were only a handful of breweries,” he said. “Everyone knew everyone else.”

But the local craft beer scene has grown, and Circle Brewing has grown with it. Sabel said the brewery hired its first employee—a delivery driver—in 2013, and the owners hope to manufacture 3,000 barrels in 2015.

Michael Graham co-founded Austin Beerworks  in North Austin with Adam DeBower, Mike McGovern and Will Golden in 2011.

“We’ve grown a lot quicker than we ever initially planned,” Graham said. “Supply has always been behind demand.”

He said he expects Austin Beerworks to brew 17,000 barrels in 2015.

Adelbert’s Brewery also opened in 2011. Since then the brewery has expanded its barrel-aged beer selection, and distribution has swelled out of Texas into New Mexico, California and Florida, General Manager Sarah Haney said.

Competition, consumers multiply

With so many local brews for retailers and restaurants to choose from, Haney said, the beer scene in Austin has become more competitive.

New brewing facilities are opening in North Austin regularly. In October, 4th Tap Brewing Co-op on Metric Boulevard opened, and The Brewtorium is scheduled to open in North Austin in 2016 with a full menu and a selection of German-style beers brewed in-house.

Colorado-based brewery Oskar Blues announced in September it would open a 50,000-square-foot brewery, taproom and music venue on Metric Boulevard in April. Adelbert’s is less than 2 miles from the future Oskar Blues site.

“Beer tourism-wise, it’s going to be good for us,” Haney said. “We are the brewery district.”

She said eventually the Austin craft beer market will reach a saturation point, but breweries making quality products will stick around as the market shakes out others producing subpar beer.

“That’s the nature of business and industry,” she said.

John Stecker is a co-founder of 4th Tap, located less than 1 mile from the future Oskar Blues site. He said he enjoys having other breweries close by and thinks there is still plenty of room for the Texas beer market to grow.

“Consumer tastes are changing and evolving for the better, in my opinion,” Stecker said.

Graham also noted the consumer base for quality beer is growing.

“You never meet an ex-craft beer drinker,” he said.

Sabel said he does not worry about competition harming Circle Brewing’s business. He also said the growing industry has increased consumers’ appetite for quality beer.

“We’re so far away from a saturation point,” he said.

Bart Watson, chief economist for the Brewers Association, a national nonprofit trade organization, said Texas ranks 44th in the U.S. for breweries per capita, but that could change as Texas laws become more favorable to brewers.

“In the last few years, Texas has really seen a rise in breweries,” Watson said. “It’s certainly poised for another year of very strong growth in Texas.”

Even in states such as Oregon, which ranks second in the nation for breweries per capita, Watson said he has not seen an oversupply in the market.

“I think we’re nowhere near a saturation point [in Texas],” he said.

Watson said Americans drink more beer than wine, and there are more than 8,000 wineries in the U.S. and only about 4,000 active breweries.

Texas Beer BY THE NUMBERS

Guild lobbies for lax beer laws

Sabel said Circle Brewing helped found the Texas Craft Brewers Guild, along with several other breweries and brewpubs throughout the state.

“We were tired of having the laws be stacked against us,” Sabel said. “We wanted to fight the laws that were keeping us down.”

The guild scored a victory in 2013 when the state Legislature passed a law allowing breweries to sell their products for consumption on-site. In Austin breweries had to wait until 2014 for City Council to change zoning laws to comply with the new law.

“A huge thing for us was being able to sell beer here. Until then we had to give it away [for free on-site],” Sabel said.

Graham said being able to sell directly to consumers is a small part of Austin Beerworks’ overall volume but a valueable way to connect with customers.

“It allows us to have a direct relationship with all of our consumers,” he said.

In the 2015 legislative session, the guild lobbied for a bill to allow customers to buy beer to-go directly from a brewery, but the bill died in a Senate committee.

Texas craft beer productionChemistry among brewers

Sabel said Circle’s North Austin location is central and close to major highways, making it easy for the brewery to distribute its product. The space was also affordable, he added.

As another self-distributing brewery, Graham said access to highways played a major role in deciding Austin Beerworks’ location, near the intersection of US 183 and MoPac. He also said city zoning regulations narrowed his choices.

Austin City Planner Wendy Rhodes said zoning in the North Burnet/Gateway district allows industrial structures larger than 5,000 square feet, such as breweries, in the area bordered by Walnut Creek on the north, Metric on the east, US 183 on the south and Braker Lane and MoPac on the west. Rhodes said three other nongeographic industrial districts that allow breweries are spread throughout the city.

With much of the industry concentrated in North Austin, the brewing community is tightly knit, Sabel said.

“Even though we’re competitors, we’re all still friends,” he said.

With breweries and pubs popping up throughout the city, North Austin has its own beer clique, Graham said.

“It’s a really great community,” he said.

Haney said the Austin breweries regularly share supplies, and the camaraderie helps everyone produce great products.

“Everybody’s really collaborative and supportive,” Haney said. “It’s a really awesome time to be in the craft beer scene.”

State inaction keeps microbrewery status quo

Two bills last session could have affected microbreweries in Texas—one for the better, one for the worse. The Texas House and Senate failed to act on either bill, thus solidifying existing consumption and distribution laws for microbreweries.

Breweries can only sell beer for consumption on-site. Senate Bill 1386, introduced by Sen. Kevin Eltife, R-Tyler, would have allowed customers to purchase beer from a brewery to-go, but the bill was never scheduled for a committee hearing and never brought to a vote.

In 2013, the Legislature increased decreased self-distribution for microbreweries to 40,000 barrels per year. House Bill 3389, introduced in 2015 by Rep. Senfronia Thompson, D-Houston, would have reduced the amount of beer microbreweries could self-distribute from 40,000 barrels to 5,000 barrels. The bill was assigned to a committee that never took action on it.

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  1. In 2013 the legislature reduced the self distribution limit from 75,000 to 40,000 barrels.

    • You’re right Mike. The sentence should read, “In 2013, the Legislature decreased self-distribution for microbreweries to 40,000 barrels per year.” I will make that change in the story above.

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