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America Boasts Most Breweries Since 1880s

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Big beer makers like Molson Coors (TAP), Boston Beer (SAM), or even ABInBev (BUD), who just reported a 75% jump in first-quarter profits, might have to make room for a few more stools at the bar.

Craft beer makers are brewing up something good with a total of 250 new breweries opened in 2011. This is only a bit of the sensational news coming out of the 2012 Craft Brewers Conference in San Diego, where makers of America’s favorite frothy beverage met this past week.

The Washington Post reports Craft beer ended 2011 up 13 % in volume and 15% in dollars. Compare this to overall U.S. beer sales which are shrinking, down by 1.3% in 2011 and 1.2% the year before, according to the Brewers Association. Imported beer sales were up only 1% in 2011, a considerable slip from 5% in 2010.
At the conference, brew masters were enthusiastic about the boom.

“Did you ever imagine it getting this big?” Steve Hindy, co-founder of the Brooklyn Brewery and keynote speaker asked the crowd.

Brewery openings vastly outpaced last year’s 37 closings. 1,989 breweries were operating by year end in 2011, a number that’s believed to currently exceed 2,000. America hasn’t seen this many domestic breweries since the 1880s.

Amidst the excitement, Colorado based Oskar Blues, whose beer production has grown from 19,500 barrels in 2008 to 59,000 last year, announced the opening of a new facility in North Carolina capable of topping off 40,000 barrels from the start.

In addition, a slew of packaging innovations were introduced, including a spout top can, a growler in the shape of a milk carton, and a disposable clear plastic keg.  

Back in New York, state legislators are seeking to support the local brewers. Sen. Chuck Schumer is pushing for state-based tax credits to combat a new federal tax that is affecting beer makers and distributors. According to the New York Post, industry members believe the proposed subsidies will save beer makers at least a $1 a pint.

However, the recent beer boom has some asking if the industry is bound to go bottoms up.

There is fear within the industry that there might be a bubble about to burst, that the burgeoning number of new brands could push distribution channels to the breaking point. It scares at least one Mid-Atlantic brewer, who nevertheless was planning an expansion to keep apace with the competition.

There are currently an additional 1,119 breweries in the planning stages, and no signs that brewers are planning to slow down. While some are sure to survive, might all this beer leave the industry feeling a bit bloated?
POSITION:  No positions in stocks mentioned.