Short Answer: Doubtful!
Long Answer: Keep reading!
Brewery Saturation in the Texas brewery market
It seems to be an ongoing trend lately for people to talk about the saturation of the Texas brewery market, or some proverbial “Is the Craft Beer Bubble About to Burst in Texas”. I know a lot of others, besides just me, who see this far from the reality of the scene.
The Texas brewery scene has absolutely exploded in the last couple of years. Usually, I am posting at least one new brewery/brewpub each week that is getting approval in Texas to open. These are not slowing down and only seem to be increasing.
There are many simple reasons that I do not see the Texas brewing scene at a saturation or busting point.
With the recent law changes, there has been a shift in the way that new breweries are opening. You are starting to see breweries, that in the past, would have been opening with a brewery license. Instead, they are opening with a brewpub license. This allows them to distribute their beer (whether via distributor or self distributing), while still selling beers to drink on site and to go. It also causes those places to operate extended taproom hours and sell a substantial amount of beer to-go from there.
In Dallas, a couple of new places that have opened recently are Noble Rey and On Rotation. Noble Rey has a more substantial brewing system than On Rotation, but both opened with the same concept – make good beer while still presenting beers on tap from other breweries. They are not only focused on their beer, but having a taproom that presents the local area beers. In the near future, DFW will see more of these places opening like Intrinsic who also recently received their approval. Collective Brewing, in Fort Worth, is another great example of what a smaller brewery can be. They make some great farmhouse inspired beers, but sell a lot of their beers from their taproom. This is an approach that will support more small-to-mid sized places while not having a saturated market. In Austin, we are seeing breweries like Hops and Grain expand their taproom hours to also focus on coffee. Breweries have the opportunity to be more than just about their own beer now.
Breweries do not need to necessarily start off with 15 bbl brewhouses from the beginning, instead we are starting to see more nano breweries coming online. Places like Bluebonnet Beer Company, who started with a system that (if I recall correctly) was a 1 bbl system. Sure, this is not what a lot of breweries would want to start as, but it also allows breweries to start for lesser amounts of money. Going this route, they are not demanding a large amounts of taps around town and can really test what the market likes. They are becoming more localized due to this. Bluebonnet does not even make it into Austin, same can be said for Bindlestick, and many others up in Cedar Park/Round Rock areas. You will still have breweries starting off with much larger system than that, but it does not need to be the case.
Onto the numbers for Texas, according to the Brewer’s Association, we are still ranked in the 40s for the number of breweries per capita out of the 50 states. Texas has four very large cities that are taking in all of the beer they can. Places like Community, Austin Beerworks, Lakewood, and Peticolas rarely have to distribute outside of their cities. They are not struggling for taps nor are they struggling to move their beer. Most breweries in Texas do not even need to distribute outside of Texas due to not being able to supply enough for Texas.
(Infographic courtesy of the Brewer’s Association – which can be seen here)
Then you look at a city like Denver, who has over 90 breweries for a city with a metro population of just over 2.5 million people. That is around one brewery for every 28k people.
Houston? One for every 274k people.
Austin? One for every 40k people.
DFW? One for every 185k people.
San Antonio? One for every 151k people.
To put that even into perspective, Austin could add 40 more breweries before it even gets to the level of Denver (assuming Denver does not add any more breweries). Houston would have to have a total of 217 breweries to be at the level of Denver. Do I think that is even remotely possible? No. But, it really puts it into perspective on where Texas beer scene is at.
Will any Texas city catch up to Denver’s levels in the near future? Unlikely. Austin could in theory, but the laws would likely have to change even more for that to happen to lower the costs of entering the market.
Onto actual breweries closing. There have been some breweries close down in the recent past. Places like Fort Bend from outside of Houston shut down at the beginning of this year. It did not have to do with fighting to get their beer to bars, but more of came down to the beer itself. They originally had some infection issues that did not seem to get fixed quickly enough and killed the brewery. The basic rule of thumb is that if you are making good beer, it will sell.
Every year, more people are moving over from macro beers to craft breweries. The craft market grew somewhere around 18% in the last year alone, while the beer industry only grew less than a percent as a whole. For all of the breweries coming online, they can almost be supported solely by the people moving over to craft beer.
Saturation is a long ways off in Texas. We will likely lose some breweries over the next couple of years due to increased competition, but that has more to do with not making as good of beer. When you are only losing one brewery for every 50 breweries opening, we are a far ways off from seeing a saturation point.