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10/23/2018

OR Brewery Closure Rate “Barely Budged,” 2-4% for Yrs, “Significantly Lower” than All Firms Avg

The number of breweries in Oregon has quadrupled in the last 15 yrs, but despite tougher competition and slowing overall sales, closures haven’t yet spiked in the state, according to recent post from OR’s Office of Economic Analysis. The brewery closure rate in the state has “barely budged” and hovered in the 2-4% range since 2008. Last yr, 6 breweries in OR closed, putting rate at just below 3%. At same time, the “All Firm Closure Rate” was more than double that, at just over 7%, the OR OEA estimates, which is down from about 10% in 2009, the peak of the Great Recession, but on par with last 6 yrs or so.

“Slower growth can strain business finances, eventually leading to more closures or failures,” economist Josh Lehner wrote in post. But that hasn’t happened in OR. Yet? After massive uptick in the number of breweries, “we should see more closures given there are so many more potential places to run into issues – be they low sales, high costs, personal problems, or the like.” That may still be to come. But even with volume declines, “that does not mean the industry overall is unhealthy,” Josh argues. Say what?!? “Brewpubs continue to thrive, and some of the bigger breweries are revamping their tasting rooms, and adding more locations for better direct-to-consumer sales given they maximize revenue per pint this way.” Ah yes.

The fast rise in brewery count in OR is also associated with big jumps in alcohol industry employment there over the last decade. In fact, the broader OR alc bev biz added 8,700 jobs between Jan 2008 and Jun 2018, post notes. That’s compared to gain of 7,600 (much higher paying) tech jobs over same period. Of course, on the books, the marijuana industry has added about 5,300 too, but the real number is probably closer to 12,000, with average pay just below the alc bev biz around $30K/yr. Strong employment growth is one thing, but Josh points out an important factor in the alc bev biz that he expects to come more into play with cannabis too: satellite industries. “The true economic impact from vice sectors lies not with the growing and retailing of the products, but in all the ancillary and support industries that grow along with consumer demand and evolving markets,” he wrote. Beyond “value-added manufacturing” jobs at breweries, “a plurality of brew system manufacturers in the US call Oregon home,” providing the potential for that much more job growth in the state, even when a brewery opens elsewhere.

Publishing Info

  • Year: 2018
  • Volume: 9
  • Issue #: 95
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