Despite tightening market share and shelf space, reports of the industry’s death have been greatly exaggerated, say Upstate experts

 

For a decade, craft beer has been a hot ticket.

According to the Brewers Association, a trade group that advocates for the American craft beer industry, the number of craft breweries in the U.S. increased from 1,409 in 2006 to a record 4,269 at the end of 2015. In South Carolina, the number of craft breweries grew from 16 in 2011 to 36 in 2015.

Some experts have voiced concerns that the industry is headed for a cooling period because it has become saturated with breweries, which has led to intense competition for new market share and shelf space.

But craft beer authorities in the Upstate remained bullish on their future and agreed that there is still plenty of room for growth, particularly at the local level.

“When we acquired RJ Rockers in 2007, craft beer comprised about 3 percent of the market,” said John Bauknight, owner of RJ Rockers Brewing Co., based in downtown Spartanburg. “Today, that number is about 14 to 15 percent, and it’s expected to rise to 20 percent by 2020.”

Bauknight was heavily involved in the passage of the state’s Stone Bill, which paved the way for breweries in South Carolina to sell food and brewpubs to increase their production and sell to distributors.

He said he has noticed the market moving in a “microlocal” direction, meaning customers are gravitating away from national craft beer brands and toward regional and local brews. The state currently has 40 licensed breweries, and that number is expected to climb above 50 by 2017, he said.

Bauknight said his brewery will soon amp up its beer-tasting experience and begin offering food after it completes the renovation of about 3,000 square feet near its current tap room. The space will be climate-controlled and should be completed before the new A.C. Hotel by Marriott opens across the street.

“I don’t think the industry is slowing,” said Devin Cox, owner of the Greenville Beer Exchange, a craft beer retailer at 7 S. Laurens St. in Greenville. “I think it is normalizing. It isn’t dying or going away.

He added, “When you see that kind of growth in an industry, you have to know that it’s going to hit a plateau at some point.”

Cox said the demand for local beer at his store is the highest it has ever been. He had to expand part of the store to be able to carry more stock from craft brewers in the Upstate. One of the first things Cox did when he took ownership of the store — it was started by the owners of the Charleston Beer Exchange and the restaurant Edmund’s Oast in Charleston — was to begin selling pints to customers. He said the move has helped the store generate more interest in local beers.

“Brewery 85 can make something new and everyone wants to try it out,” he said. “Birds Fly South is on fire. Thomas Creek is a staple … We have 15 local brands on the shelf and they’re all selling.”

And tap space for local brands appears to be on the rise as well.

“We like to focus on local and regional, with about 60 to 80 percent of our taps dedicated to those brands, then we bring in some East Coast and West Coast brands that we like,” said Craig Kinley, owner of the Growler Haus, an Anderson-based tap house that will soon open its fourth location in the Upstate. “It’s extremely important for us to form relationships with these [local] breweries as well as distributors so we can provide our customers with the best beer possible.”

Local experts said the market could continue to tighten for national craft beer brands as local brands continue to become more popular. They said they wouldn’t be surprised to see larger companies buying smaller breweries as part of the trend.

For now, at least, they are hopeful that the industry in the Upstate, state and beyond will continue to boom.

“Craft beer continues to be a strong seller for us, and our stores have a wide selection of both national and local beers,” said Ron Freeman, CFO for Black Mountain, N.C.-based regional grocery chain Ingles Markets. “We work with our distributors and monitor our sales data to help determine what we carry and how to allocate our shelf space. There are many great products out there, with more coming all the time. It’s not easy for us to decide.”


The region claims its space as a beer tourism destination >>

Collaboration trumps competition in the craft beer world >>

Prohibition-era distribution regulations are archaic, brewers claim, but the Legislature may soon tap into a solution >>

United Community Bank adds craft-beverage sector lending program >>

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