Wednesday, April 24, 2024

Is there room in Wilmington’s market for more breweries?

“We get asked all the time, is there a saturation point? What’s going to happen?”

With Wilmington’s brewery market surpassing Charlotte and Raleigh’s numbers per capita, market saturation is a topic both brewers and customers discuss frequently (Google Maps)

Editor’s note: This is part three of a series looking at Wilmington’s craft brewing culture.

WILMINGTON—Born out of California, the craft beer boom has billowed across the country since the 80s. Wilmington officially caught onto the boom in 2014.

Local and regional legislators have been loosening up and adjusting requirements across the state in recent years to encourage the production of craft beers, which added approximately $2.4 billion to the North Carolina economy last year.

RELATED: Canning is becoming the future of small brewery distribution

At least North Carolina isn’t last to the party; Mississippi just opened up its laws this spring to permit breweries to pour and sell their own beer on premises.

The contentious question of saturation has loomed in many markets across the country. In 2014, the Brewers Association, a national non-profit group, addressed the question of a market saturation or beer bubble, citing how often and perplexing the inquiry is in light of available data.

By 2016, they restated their position, stating that most markets are nearing maturation rather than saturation.

Paving the way for craft 

In September 2014, City Council approved breweries to be classified distinctly from other types of businesses and established business districts in which they could operate.

Before 2014, Front Street Brewery was the lone operating taproom in Wilmington. Then the dominoes started to fall. Brewers who had been perfecting their craft out of their homes or smaller venues opened up taprooms across town. There are nine breweries now open within the city proper, and a handful in the Cape Fear region, depending on where you draw the line.

Birth order breweries

The market overall, is looking more mature. Since the craft brewery boom is only three years old to us, respectively, the market still feels dynamic and highly variable to brewers in town.

To use a familial metaphor, the east, and especially Wilmington, are the younger siblings in the craft beer world. Our older siblings on the west got the brunt of the experience firsthand, both good and bad.

Craft beer takes up 12.3% of the national beer market, in an industry that has been dominated by domestic and important brews over the last century. (Port City Daily graphic / JOHANNA FEREBEE)

Wilmington brewers may be privy to the insight and influence more mature markets can reveal.

Jamie Bartholomaus, president and CEO of Foothills Brewing, based out of Winston-Salem, sees Wilmington as still being in the infancy stages of craft beer market development.

Bartholomaus also happens to serve as vice president of the NC Craft Brewers Guild, was president when it was founded in 2007, and has witnessed fluctuations in the market in his decades of experience brewing.

When a community is first met with their first share of craft breweries, Bartholomaus has observed an initial wave of local pride and interest.

“It just kind of awakens people. Right around the corner, there’s a brewery. The public gets exposed to the scene, and then it becomes normal,” Bartholomaus said.

“All markets are going to go through that wave. Charlotte is going through a very intense period of that (local) wave,” he said. “I think Wilmington is just kind of hitting that local phase.”

Related: With more breweries per capita than Charlotte, is Wilmington poised to be another Asheville?

“They’re earlier on in that pride phase than Charlotte. Durham and Raleigh are much more developed, more mature markets, in balance with national trends,” Bartholomaus said.

Boom and…. stabilize

Bartholomaus describes the local wave as an insulator of sorts, permitting new craft breweries to the scene a grace period to work out their kinks and find a space on tap handles across town.

Local supply shops and bars embrace the breweries wholeheartedly, then slowly start to weed out the good from the great on their tap handles.

The craft beer market share has been steadily increasing over the last decade, but over the last two years, the rate of increase is nearing a plateau on a national scale. (Courtesy of the Brewers Association)

“Then finally, there’s a balance, a tilt back to a more balance of beers from across the state and country,” he said. “People realize local beer does not necessarily equal good beer.”

In any market, some players will naturally rise to the top while others can’t seem to get it right. Breweries aren’t exempt to the natural order of business.

“I think you have seen some closings, not so much in North Carolina but around the country, in moderate size or bigger breweries that you would think would be more stable,” Bartholomaus said. “They’re not always run well. Or they just weren’t the right size – you’re going to have a mismatch – some of that will happen as the next couple of years goes on.”

As the market balances, Bartholomaus sees small to mid-size breweries as a sustainable business model.

“I say there continues to be room for small, neighborhood places to drink beer,” he said.

National data, provided by the Brewers Association, outlines closings and openings in 2016 as well as an estimated number of jobs created. (Courtesy of the Brewers Association)

Next in line

Flying Machine is set to enter a market some critics see as too crowded.

“I’ve never understood why a consumer would complain about having more choices,” said co-founder David Sweigart.

Sweigart notes his experience working in Denver’s brewery market will aide in Flying Machine’s ability to adjust to a fluctuating market and to prepare for foreseeable shifts in consumer demand.

“You have to differentiate yourself,” Sweigart said. “There’s a lot of good beer being poured, so you think about it strategically, how can we set ourselves apart in Wilmington specifically?

It took over a year for Flying Machine’s plans to finalize, so the team has had plenty of time to prepare for distinction.

“One of the biggest things is you always trying to think a step ahead,” Sweigart said. “Think about the way the market is moving and how that may affect your business one or two years down the road and how you can strategically offset that.”

As midtown’s second brewery, Flying Machine recently broke ground on on Randall Parkway.

“You can’t have a better brewery than Wilmington Brewing Company to be your neighbor,” he said.

Is Wilmington at carrying capacity?

For a brewery market to flourish, successful markets have received backing from supporting and related industries. Is Wilmington the next Asheville? Maybe not, but with three times more breweries per capita than Charlotte, a city that is said to have a more mature brewery market, it could have already set itself apart from its neighbors.

The explosion seen in previous years is steadying on a national scale. Take, for instance, the fact that craft beer only occupies a segment of the beer market, largely occupied by domestic and imported brews.

“I’ve never understood why a consumer would complain about having more choices.”

The share has increased over the past decade, but has slowed to a .01 percent increase from 2015 to 2016, compared to a 3.2 percent increase from 2013 to 2014.

“Big beer” conglomerates are buying up and mimicking independent, craft beer models, which can also impact overall market share.

For Wilmington to become a destination for beer tourism on par with Asheville, whose per capita brewery to population ratio is more than three times that of Wilmington’s and one of the highest in the nation, it would take 21 more breweries within the city limits.

“We get asked all the time, is there a saturation point? What’s going to happen?” said Michelle Savard.

For Savard and Sweigart, the more the merrier.

“A craft beer drinker doesn’t want to go to one place all the time,” she said. “It’s strange for people to understand, because it is competition, because it hasn’t hurt us.”

“We’re happy to have friends in the industry.”

Surrounding industries play a vital role in overall craft beer health. This afternoon, find out who is taking on supporting roles and encouraging craft brewing’s growth in Wilmington.

Related Articles