Despite growing numbers, Pittsburgh brewers say market far from saturated

Chris Togneri
| Saturday, Feb. 13, 2016, 9:00 p.m.

Something strange is happening in Squirrel Hill.

The Independent Brewing Co. — a pub founded two years ago on the business model of selling only locally made craft beers — recently expanded, but in a most unusual way. Taking over the space next door, they created ... a Tiki-themed bar, where the focus is not on beer, but sweet, rum-based cocktails.

Customers wondered: Is the craft-beer trend faltering? Could it be that there's truth to recent headlines warning of a bubble burst?

Um, no, says co-owner Pete Kurzweg.

Such thinking, he says, is as “crazy” as it is “absurd.”

Craft beer is stronger than ever, Kurzweg adds, which is precisely why the Independent opened a cocktail bar.

“What's occurred since we opened the Tiki (last month) is what we wanted to occur: The Independent has become a space that's even more about drinking beer than it was before,” Kurzweg says. “We've been able to take this cocktail element we had flourishing in our bar and move it into its own space.

“As a result, this past week we sold more beer than we ever had before by a factor of 20 percent. Which is really interesting.”

But what does it mean?

In December, the Brewers Association — a nonprofit trade association whose membership includes 75 percent of the country's professional brewers — announced that there are now 4,144 breweries operating in America, or more breweries than at any other point in American history. (The previous high was set in the late 19th century.)

That news, on top of years of constantly robust growth, has caused some pundits to question just how long it can continue. Indeed, a quick Google search for “Do we have too many breweries in America?” nets more than 37 million links, including the following headlines:

“The U.S. Craft Beer Market is Way Overcrowded.”

“Craft Beer is Booming, but Brewers See Crossroads.”

“Will if fall? A look at America's brewery boom.”

“Too many brewers hopped on the craft bandwagon.”

“America now has more breweries than ever. And that might be a problem.”

Sounds alarming.

But is it accurate?

“I don't think so,” says Lew Bryson, an Eastern Pennsylvania-based drinks writer, blogger and historian. “Nobody ever worries about having too many Starbucks. Although, I did see a Walmart close recently, which amazed me.

“Look, is it a problem? No. We have a lot more people now than we had in, what, 1890? There's a ton more people. If you're going to be touchy about it, we even have more states now. On top of that, we're essentially deconsolidating. The trend for the longest time was for the large brewers to get bigger. Well, we're unpacking that now.”

Bart Watson, chief economist for the Brewers Association, agrees that the numbers should not frighten craft-beer fans.

And he predicts the numbers will continue to soar, dramatically.

In addition to the 4,144 existing breweries, there are more than 1,300 breweries in the planning stages, Watson says.

“And I assume they've done their due diligence,” he says. “As long as they keep the quality high, there are lots of opportunities. There's a demand shift toward fuller-flavored products, and not just with beer, but a variety of artisanal products. I don't see that demand going away anytime soon.”

Western Pennsylvania brewers — established and newcomers — are banking on continued growth.

At least four new breweries are in the works within Pittsburgh city limits: Allegheny City Brewing in Deutschtown, War Streets Brewery in the Mexican War Streets, Spring Hill Brewing in Spring Hill and Eleventh Hour Brewing in Lawrence-ville.

Meanwhile, established brewers are expanding. East End Brewing Co. in Larimer, for instance, announced earlier this month that it will open a second tap room in the Strip District, possibly by March.

Gary Olden, owner of Hitchhiker Brewing Co. in Mt. Lebanon, announced plans last month to expand into the South Side. While Hitchhiker will maintain its cozy Mt. Lebanon tap room, production will shift to the significantly larger facility in Bedford Square. The new site will include a second tap room and a canning operation.

“You look at a city like Portland, and they're pushing more than 80 breweries,” says head brewer Andy Kwiatkowski. “The greater Pittsburgh region has (30 to 35), so we're not even halfway to where a city like Portland is. And Portland continues to expand. I think we're still in the infancy stage here. We're really at the beginning.”

Secondary businesses also are thriving.

Sherris Moreira, director of PA Brew Tours, which buses groups of 15 to 25 people on tours of regional craft breweries, says demand is rising sharply. In 2014, PA Brew Tours had one or two public tours a month and served 1,500 customers. Last year, they doubled that number and began running tours every weekend.

“We're just getting pounded,” Moreira says. “Libations and tourism are a huge deal, and this is not stopping. This is not a fad.”

For brewers, the expanding market does present certain challenges.

With increased competition, for example, brewers must be on top of their game, because the next tap room might be just down the street.

“But that's a good thing,” Kurzweg says. “You want everyone to be pushed. There should be a spirit of competitiveness because that's going to make Pittsburgh a better place to drink beer.”

Other issues arise when breweries try to expand to new markets. With so many craft beers out there, they say, it's hard to get noticed.

“In Pennsylvania, we get a good response, but it's very difficult to get into a new wholesaler,” says Sandy Cindrich, co-owner and president of Penn Brewery in Troy Hill. “Trying to get our beers outside of Pennsylvania becomes more difficult because wholesalers' portfolios are so crowded with local craft brands.”

But back to the gloom and doom:

Is there a ceiling? Is such expansion sustainable? Because this kind of growth can't continue forever … right?

“There is a limit — I don't want to imply there isn't,” economist Watson says. “But I think it can keep rolling for a while. This isn't something that's going to retrench. You're not going to see the number of breweries decline any time soon.”

Blogger Bryson suspects predictions of the industry's demise are simply a byproduct of human nature:

“People want to see the end of the story. They see the sun going up, and they want to say, ‘I see it coming down and I'm going to make it a story even if there isn't a story.' It's a natural thing for people to want. But it's not happening.”

Adds Dominic Cincotta of CoStar Brewing in Highland Park: “People are rushing to declare saturation for no reason at all. Why not just enjoy the growth?”

Chris Togneri is a Tribune-Review staff writer. Reach him at 412-380-5632 or ctogneri@tribweb.com.

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