Market Saturation

I've been thinking a lot recently about the astonishingly fast growth of the craft beer industry over the last decade, especially after coming across this article from last year's Draft Magazine. Whether the growth is sustainable into the future is anyone's guess (and a topic I'd like to explore in more detail soon), but today I'll focus on a wrinkle in that picture - market saturation.

Now, I'll preface this with a standard disclaimer: I'm not a businessman and don't have any formal business education. I'm simply an interested layperson who likes the big picture and not the wonky details.

Market saturation describes a situation wherein a product or service has become so diffused through a population that further growth is possible only through increased population or taking market share away from a competitor.

Are we experiencing market saturation in craft beer?

First, let's get some statistics to work with. Oregon Craft Beer, run by the Oregon Brewers' Guild, has some good basic information on breweries and the state. Now we have to decide how to practically measure brewery saturation. I think people per brewery is a reasonable place to start. According to recent census data, Eugene's got a population of around of around 160,000. This excludes Springfield and the outlying towns, but let's continue. OCB says there're 12 breweries in Eugene, giving us about 13,333 people per brewery (herein abbreviated PPB).

Now let's compare that with Bend and Portland, two cities both often said to be highly brewery-saturated. Bend's PPB, using the same data, comes out to about 3,809. Portland's, using just the city proper, is around 10,700. Bend should therefore be the benchmark for our discussion, being three times as brewery-dense as Portland.

Has Bend become saturated? I can't find any evidence - I looked for peaking/declining sales and brewery closures. By contrast, new breweries are continuing to open, and sales across the city (and state) continue to rise.

Tuesday, I'll look further into the topic and the related idea of sustainability.