October 29, 2018

CT beer brewers wonder if growing sector is becoming oversaturated

HBJ Photo | Steve Laschever
HBJ Photo | Steve Laschever
Hartford's Hog River Brewing Co. co-owners Ben and Joy Braddock.
HBJ Photo | Steve Laschever
Joy and Ben Braddock, co-owners of Hartfordís Hog River Brewing Co., say they have benefitted from the presence of the Capital Cityís three other breweries. The couple is currently expanding their taproom and brewing space on Park Street to 10,000 square feet.
Photo | Contributed
Branfordís Stony Creek Brewery recently opened a location at Foxwoods casino.
Photo | Contributed
Back East Brewery co-founders Tony Karlowicz and Edward Fabrycki Jr.

Brewery production in Connecticut has surged by over 600 percent over the last six years, while the number of breweries in the state has more than tripled since 2014.

The state's massive production growth in recent years ranks among the top 10 nationally, morphing Connecticut's brewery sector into a $745.7 million industry in 2017.

However, with 82 operating breweries in Connecticut, and almost 40 in planning stages, the budding sector faces a key question: Is Connecticut's brewery industry becoming oversaturated?

Connecticut brewers say the local industry is still ascending, even though the beer landscape has become crowded with new businesses sprouting seemingly every month. Many established brewers say their annual production hikes have slowed in recent years as the market reaches its equilibrium.

While breweries keep close tabs on their competitors, the majority say they are rooting for each other as local beer makers continue carving a larger share of sales from national vendors like Anheuser Busch, MillerCoors and Heineken.

Nationally, beer volume sales last year were down 1.2 percent compared to craft beer sales that continued to rise 5 percent, according to the Brewers Association, which represents 74 breweries in Connecticut, including the state's three largest: Two Roads Brewing Co., Stony Creek Brewery and City Steam Brewery and Cafe. The craft beer market now accounts for 12.7 percent of beer sales in the U.S., the Colorado-based trade association says.

But brewery growth has slowed in recent years, in both annual barrel production and the number of new breweries opening across the state.

Barrel production, for example, rose 58.1 percent from 2015 (105,484) to 2017 (166,848), down from a 120 percent increase from 2011 (40,947 barrels) to 2013 (51,457). (By most U.S. definitions, a barrel equals 31 gallons.)

Those figures indicate Connecticut's craft beer industry — which employs almost 11,500 people in brewing, wholesale and retail jobs — may be reaching its peak, says Bart Watson, a chief economist for the Brewers Association.

Still, Watson says Connecticut's brewery industry has some growth potential. The state, for example, has fewer breweries per capita (2.23 for every 100,000 adults age 21 and older) than neighboring states (Massachusetts, 2.48; New York, 2.25; and Rhode Island, 2.24).

"To me, these signs do point to the idea that Connecticut may be inching closer to an equilibrium or mature market state, but as long as that production growth continues, there will be opportunities in the local market," Watson said.

The majority of Connecticut brewers are small, with most selling exclusively on-site. That gives them an opportunity to build personal connections patrons crave in taprooms, which often feature live music and food trucks.

"We've seen breweries can create their own demand," Watson said, likening the brewery industry to speciality coffee shops, which only recently gained popularity nationally due to market innovation. "Breweries can shift the benchmark of how much a state needs. How many can exist shifts over time."

Local buzz

The co-founding couple of Hartford's Hog River Brewing Co., Ben and Joy Braddock, are among many brewers statewide scaling up to meet hyperlocal demand.

After two years in business, the brewery is currently expanding its 5,500-square-foot facility in the Parkville neighborhood to accommodate a 7,000-square-foot taproom and 3,000 square feet of brewing space by year-end.

Hog River, Joy Braddock says, has benefitted from the presence of three other breweries in the Capital City, including City Steam Brewery, Hanging Hills Brewing Co. and Thomas Hooker Brewery at Colt.

Similar to "bar hopping," a cluster of breweries in Hartford has created a hotbed for craft beer tourists looking to visit several breweries in a day, she said.

And that's good news for Hog River and its taproom, which accounts for 90 percent of its sales.

It also helps that the Braddocks have a strong relationship with other local brewers, including collaborations with nearby Hanging Hills.

Ben Braddock, who broke into the industry more than a decade ago with stints at Hooker Brewery and Willimantic Brewing Co., says entrepreneurs are drawn to the business because there isn't "fierce" competition seen in other industries.

"We all reach out to each other when we need things and share information," Joy Braddock said. "It's a brotherhood and is slowly becoming a sisterhood, too."

Although the couple expects to increase barrel production this year by 40 percent to 700 units, they question how Connecticut's brewery industry will fare in the coming years.

"These are the questions that have been floating around the industry for several years now," said Ben Braddock, on whether the sector has room to grow. "I don't know that anyone can predict where the industry is going. It changes month to month."

Ahead of the pack

As Connecticut's brewery landscape continues to add new players, brewers say they are always looking to evolve their brand, taproom experience and assortment of brews to satisfy both beer enthusiasts and occasional fans.

Stony Creek Brewery, Connecticut's second-largest brewery in terms of employees, is one of many companies investing in its brand, despite becoming a regional leader in sales known for its sprawling waterfront campus in Branford.

The 83-employee brewery tapped into the casino market in August, opening New England's first casino brewery in a two-floor, 7,100-square-foot space at Foxwoods Resort Casino.

Owner Ed Crowley said the expansion aims to spur Stony Creek's brand among the casino's customer base in New England, where it distributes through about 20 vendors.

Stony Creek unveils new brews every month or so, offering flavors in a casual environment that features yard games and, in Branford, a view of the Long Island Sound.

Crowley, also an advocate for small breweries, sees growth opportunities in Connecticut as Nutmeggers continue producing innovative blends unseen nationally. He suggested nearly all of Connecticut's 169 towns and cities can support a brewery.

"The more people drinking local is better for not only Stony Creek, but for the Connecticut consumer," Crowley said.

Meantime, two entrepreneurs in Stratford have set themselves apart this year by launching one of the nation's first non-alcoholic breweries.

Co-founders Bill Shufelt and John Walker opened Athletic Brewing Co. in May for beer lovers who may also be "frustrated" by non-alcoholic options.

Shufelt, who abandoned the finance sector after 12 years, said Athletic Brewing's 10,000-square-foot facility serves some 30 percent of adults who don't drink alcohol and 40 percent consuming less than one alcoholic beverage a week.

It also meets the needs of active adults who are mindful of their food and beverage intake. One of Athletic Brewing's flagship brews — Upside Dawn Golden Ale — has just 50 calories.

Cracking the industry

There are 38 Alcohol and Tobacco Tax and Trade Bureau permits pending in Connecticut, which industry insiders say indicates how many entrepreneurs are planning to crack the brewery market.

Jennifer and James Wright will soon up that tally to 39. The Windsor couple is currently working their way through the local and state approval process to open Windsor Locks' first brewery on Main Street.

They selected the Windsor Locks location because of the town's downtown revitalization efforts.

Specifically, they were drawn to the Dexter Plaza space because of the foot traffic it could draw from the relocated Hartford rail line stop and soon-to-be renovated J.R. Montgomery Co. factory complex, which is being converted into a 160-unit apartment building. The $62 million project is expected to be completed by summer 2019, a town official said.

Plus, nearby Bradley International Airport could also encourage patronage, the Wrights said.

"There are not many places that locals are eager to share with visitors and there are no breweries in Windsor or Windsor Locks," the application says. "Many hotels and area businesses would be excited to steer visitors to their hometown brewery."

James Wright began homebrewing more than 10 years ago, learning the trade by reading and listening to brewing podcasts. He gained commercial experience at Back East Brewing Co. in Bloomfield from 2013 to 2016.

Wright climbed the ranks at Back East from packaging tasks to cellar work, and spent the last four months there as a brewer.

Back East co-owner Tony Karlowicz says Wright was honest about his aspirations to build his own brewery someday, and served as his understudy learning the trade over four years.

Karlowicz says many workers in Connecticut's brewery industry toy with the idea of building their own brewery as the "entrepreneurial spirit is baked into" the business. The smart ones, he says, trial their passion at breweries before investing in their own venues.

But now is not a great time to debut a new brewery in Connecticut, says Karlowicz, who opened the state's seventh brewery in 2012. He estimates Connecticut's beer market has another 5 percent of growth left before the industry flattens.

"The pie itself is growing but everyone is trying to get a piece," he said. "There is going to be a shakeup. It remains to be seen how big it is."

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