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Where Does U.S. Beer Go After 3,700 Breweries?

PORTLAND, Ore. (TheStreet) -- There's no "peak beer" or "beer bubble," but it's getting crowded in the craft beer world.

Word from the Beer Institute beer industry lobbying group in Washington, D.C., is that the U.S. now has a record-high 3,699 active "permitted breweries" overseen by the Alcohol Tobacco Tax and Trade Bureau. According to Beer Institute analysis, the majority of the 948 permits issued in 2013 went to brewpubs. That's great if you're up for a beer and a burger, but even a modest uptick in production breweries makes a big difference.

Just from a historic perspective, those 3,699 breweries are no small deal. That's well ahead of the 2,722 total presented by the Brewers Association craft beer industry group at the end of last year. That group noted that 1,744 breweries were in the planning stages at the end of December, though. The TTB's total would not only exceed 2,685 breweries that appeared on the Register of United States Breweries in 1876, but surpass the 3,286 that existed in 1870.

That's also a whole lot of new entries into what is, ostensibly, a shrinking market. Consumer research firm Technomic notes that craft beer production for the entire year grew 10%, while overall beer production slid 1.4%. Meanwhile, GuestMetrics reported that 2013 on-premise craft beer sales in bars and restaurants rose just 3.8%, which is well below the growth rate for store-bought beer. The news isn't so great for craft beer on tap handles, either as Restaurant Sciences just reported a 4% drop in craft beer sales in a single quarter.

There's mixed news about the future as well. According to a  report by consumer research firm Mintel, beer sales by volume are expected to rise by just 4% during the next four years after a post-recession stretch of flat sales or losses.

The standard argument is that big brewers including Anheuser-Busch InBev and SABMiller/Molson Coors joint venture MillerCoors and their fading light lagers have plenty of market share for the little guys to absorb, but there's more to it than that. For one, those falling sales since the recession aren't just a change in tastes. The Beer Institute compared unemployment rates with average monthly beer shipments during the same period and found that overall shipments began decreasing steadily in 2009 and continued through June of last year in direct correspondence with job numbers.

An entire class of beer drinker was priced out of his or her favorite brands. The folks who can buy beer aren't buying more of it, just more expensive kinds. Mintel notes that craft brewers introduced more than 1,000 brands last year, many at higher prices. Mintel forecasts that those price increases will boost U.S. beer sales 2.4% from $83 billion last year to $95 billion in 2018.

Stock quotes in this article: BUD, TAP, SAM 

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