Was There a Beer Bubble (and Pop)?

Over 500 breweries commenced operation in the year that followed legal beer’s return. To finance beer’s return the American public invested nearly $80 million (nearly $2 billion in today’s dollars) into new issues of brewery and beer-allied stocks. Given the euphoria surrounding beer’s return, the industry was certainly at risk of what economists call a “speculative bubble.” In fact, numerous pundits, journalists, and better business bureaus loudly warned of an impending beer bubble. Were the financial and physical investments in brewery assets too much, too little, or just right? Were brewery investors rewarded with strong returns, or did they lose their shirts due to heavy overinvestment? Were there massive brewery failures in the years that followed the 1933 surge in new entries? This chapter of The Brew Deal answers these questions.