Prospects Might Be Drying Up for Many Home-Brew Suppliers

Lager ‘N Suds, Mark Diamond’s home-brew supply shop, is headquartered in the garage of his country home.

It’s a low-overhead business he began with a couple thousand dollars. But it’s also a low-volume business, and he works as a mechanic to support his family.

In Albany, 85 miles away, Geoff Sokolsky’s Beer Necessities occupies a storefront in a building he owns in a neighborhood of coffee shops and bookshops. He depends on a healthy walk-in business to cover his high overhead and pay for his part-time help.

Sokolsky and Diamond are both trying to keep their piece of a U.S. home-brew hobby market estimated at almost $200 million a year, with about 1.5 million people brewing pale ales, stouts and lagers in their kitchens.

Though vastly different, both businesses face the same challenges: too many suppliers in an industry with slowing growth, and customers who are known for their ability to hold onto a buck.

The viability of the industry is tied directly to the health of the shops, said Jim Parker, director of the American Homebrewers Association, in Boulder, Colo.

“People who stop in shops and browse, well, they can become home-brewers. The only place you’re going to get new brewers is from shops,” Parker said.

In addition to staging a national home-brewing convention every year and mailing recipes and home-brew hints to its 20,000 members, the American Homebrewers Assn. has begun an effort to use shops as home-brew classrooms.

“It’s part of our effort to keep the excitement going,” said Parker, who defines a home-brewer as someone willing to spend 10 hours figuring out how to make a drink worth $5.

Nonetheless, the home-brew supply industry may be suffering the aftereffects of too much excitement. There was a time when the business was booming, and it seemed everyone set up shop.

Estimates put the number of home-brew supply stores as high as 2,000, but most in the industry agree that the U.S. customer base can support about 350.

In the late 1980s and early ‘90s, sales were growing by as much as 40% annually, said Sam Wammack, who owns The Home Brewery, the nation’s largest retailer of home-brew supplies with licensed stores in 12 states.

Now, with so many suppliers out there, he and his wife are in what they call their “survival mode” and joke: “I talked to a home-brewer today and he’s not starting his own shop!”

Wammack said many of those who jumped on the supplier bandwagon did so after the peak.

“This is a sorting-out period, and the chances of a new home-brew shop succeeding now are very close to zero,” he said.

Craig Bystrynski, editor of Brew Your Own Magazine, believes the hobby surged in popularity because of the increased demand for microbrewed beer and the improved quality of home-brew products: better malt, fresher hops, quality yeast.

“It’s easier than ever to make good beer at home. Also, people are generally successful on their first try now, where a decade ago that wasn’t always the case,” Bystrynski said.

The average home-brewer will spend anywhere from $300 to $500 a year on supplies, paying about $20 or more for a five-gallon batch of beer. And although some beer-lovers will drop plenty of bills for a microbrew at the local pub, home-brewers tend to be what Parker called “price-conscious.”

Charles Dowdell, of Rochester, is the type of home-brewer that makes many shop owners shiver.

He isn’t loyal to any particular shop, and fashions much of his equipment himself, making “big-money” purchases at discount stores and plumbing suppliers.

That makes Sokolsky groan.

“We need loyalty. We’re a specialty retail business,” he said.

Wammack, Sokolsky and Diamond understand that their job is to provide expertise just as much as it is to provide malt extract, kettles and German-grown hops--and credit their survival to that attitude.

“They’re thrifty. I know that. That’s sometimes the reason they got into the home-brewing hobby,” Diamond said. “But if you take care of them, they’ll be loyal. In home-brewing, people always have questions. And that’s my job, to answer questions and make sure they make good beer. If your customers aren’t making good beer, you won’t see them come back.”

Despite the current turmoil for suppliers, Parker sees nothing but good things for beer and home-brewers.

“It’s not as if all the beer lovers are going to wake up and say, ‘Hey, let’s forget about taste and freshness.’ ”