Saturday, June 18, 2016

Beer Town: Will ABQ’s ‘Beer Bubble’ Burst?

BY TY BANNERMAN Marble Brewery opened its doors in 2008. Back then, Albuquerque was home to just two other craft brewers: Kelly’s and Il Vicino. As of this writing, that number has more than dectupled to 31, and more are on the way. Obviously, this is an amazing time for Albuquerque craft beer lovers, but such a rapid expansion also raises worrisome questions. Surely, the beer boom has to end sometime, right? And with the memory of the 2008 housing crisis still fresh on our minds, it’s not a reach to worry what might happen when the Albuquerque “beer bubble” bursts. According to UNM Department of Economics Chair Janie Chermak, the craft beer explosion doesn’t resemble the usual definition of an economic bubble. “My simple answer would be no. The current expansion of breweries in Albuquerque would not be an economic bubble,” Chernak said. Professor Chernak pointed out that a classic speculative bubble is a “situation where market prices are unrealistic relative to the true value of the asset.” For instance, during the run-up to the housing crash, real estate was wildly overvalued due to a huge influx of investor dollars and an unrealistic expectation of ever-increasing prices. With breweries, the expansion seems to be fueled by factors other than a belief in the continuing increase in the price of the commodity. “It does seem to be in a boom, with a rapid expansion of the number of breweries,” she said. “I’m not sure if this is driven by an expectation of unmet demand, an expectation of product differentiation, simple love of brewing, or a large amount of investment dollars.” In any case, unless those investor dollars spur an overvaluing of property, the so-called boom will settle once the supply exceeds consumer demand, leading to some breweries closing and others merging but not a catastrophic “crash” like we saw in thBeerTown2-20e mid-2000s. David Facey, co-owner of Quarter Celtic Brewery, isn’t too worried about a looming ale-pocalypse either. As far as he’s concerned, there’s always room for one more brewery.  “In short, I don’t feel — and a lot of brewers in town don’t feel — that we’re anywhere near the saturation point,” Facey said. “And the reason is that … people who drink craft beer support many different craft breweries. We share more business than we compete for.” In his view, Albuquerque beer drinkers aren’t giving their allegiance to just one brewery but rather to the industry as a whole. “Now, maybe some [customers] like Marble or La Cumbre more than they like us, but they’ll still come here and try [our beers.]”

According to Facey, when it comes to sustaining the industry, the quality of the beer matters more than the quantity of breweries.
“We all believe there’s plenty of room in this town for good beer,” he said. “Where the saturation point happens is with mediocre or inferior breweries. … For people who don’t have much experience in the industry, there’s [now] a steep learning curve to get to the level that people in this town expect out of their beer.” Chris Jackson, editor of  website NM Dark Side Brew Crew, agrees that Albuquerque isn’t close to its saturation point. “The best comparison I have is to Asheville, N.C.,” he says. “Their metro area is about 440,000 people. [Albuquerque] is over 900,000. They have 60 breweries. We have 30.” beer Like Facey, Jackson pointed out that the industry is changing.  “The days of Bob the business man and Joe the homebrewer opening their own place and being successful are over,” Jackson said.  “[Now] you have to have a specific kind of business savvy to run a brewery, and you need professional experience.” The next generation of breweries, Jackson said, will be founded by people with experience working in existing craft breweries. Additionally, Jackson said that new breweries may have to focus on offering styles different from the traditional stand-bys. “If all you’re offering up is a wheat, an IPA, a red and a stout, well, I can get better ones over here at La Cumbre — where they’ve been doing it longer and are more established,” Jackson said. “In the future, we’ll see more specialization. If you want to move into Nob Hill or Downtown, you’re going to need to do a very different kind of beer than what’s already available.” Jackson predicts that we’ll see about 50 breweries in Albuquerque within five years, “but they’ll be more spread out across town. We’ll have some more specialty breweries. … I think we’ve filled up Downtown, [and] Nob Hill is pretty full. But there will be another area to fill up. There’s probably room for four or five on the Westside or up on Montaño. You’ll see them filling in the gaps.” “There’s a ton of room in this town for good breweries,” Jackson said. “The smartest breweries are going to survive — the ones that have business savvy and good beer. People aren’t going to accept ‘Oh! It’s craft beer!’ The standard is higher now. You’ll have to bring your A game.” No one can know the future, but for now, it seems likely that Albuquerque’s beer scene will continue booming for a few more years at least. Plus, “peak beer” remains comfortably far off in the future. That’s good news for brewers and drinkers alike. 
Got a hot tip on Albuquerque’s beer scene? Know of a seasonal draft I’ve simply got to try? Drop me a line at
Ty Bannerman is a beer drinker, co-host of the City on the Edge podcast, and author of “Forgotten Albuquerque” as well as a forthcoming memoir. He most recently served as feature and food editor at Weekly Alibi.  

The following Beer Town: Will ABQ’s ‘Beer Bubble’ Burst? was first seen on ABQ Free Press

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