Craft beer as we know it is about the same age as Major League Soccer, a league whose growth gets dissected daily by the most critical of sports fans and watching its growth over that same period is just as fascinating. None of us imagined there would be over 5000 breweries with more coming in this country. Honestly, we were just happy to get a beer that didn’t taste like fizzy yellow water.
This article is about a speech Brewers Association economist, Bart Watson gave to the Ohio Craft Brewers Association conference yesterday. In it, Watson touches on some of his thoughts on the growth of craft beer. He points out that the market is changing. In his opinion, the idea of a brewery going from startup to a regional multi-state player is not dead, but much harder. That is because most us live within ten miles of a brewery now. In some markets, it’s even more than that. I live in an area with 19 breweries within 6 miles of me.
The primary implication is the one mentioned above, it becomes harder to stand out and explode like Wicked Weed has and become a multi-state power. So how do you stand out in an almost saturated market and survive?
Primarily, you will need to make your beer stand out. You must make good and interesting beer. That means you must master the craft. This goes hand in hand with another article with an interview of Ken and Brian Grossman in which they lament the lack of mastery in the craft of brewing. (Our society has lost respect for craft or skill. No one wants to be an apprentice.) It’s easy to start a brewery and that leads to a lot of people getting into professional brewing for the wrong reasons. Either they are a good homebrewer whose friends keep telling them how great their beer is or they are a group of investors who think they can be the next Golden Road and cash out in a few years when one of the big beer companies come knocking. At some point, it will always come down to the liquid in the glass and if that isn’t spot on, the brewery will fail. The problem is that not only hurts that brewery but it often affects the perception of the other breweries in the area.
The second way you differentiate yourself in a crowded market is to appeal to underserved segments of your customer base. Look, we can’t really increase the number of white guys drinking craft beer. So, you go after the increasing female demographic and you go after non-white groups. So, the question I asked a couple of days ago if it matters if African Americans drink craft beer has an answer. Yes, because if they don’t (and Latino Americans don’t and Asian Americans don’t) the customer base for craft beer will begin to shrink and this will precipitate that bubble we’ve all been afraid is just around the corner.