This feels good. I’ve spent the last two weeks moving across town. It is never the physical aspect of moving that upsets my balance. I am a creature of habit and when you move all your habits get disrupted. From the direction you drive to and from work, to where you shop and eat, to the sounds you hear as you try to sleep, moving is a disruption. However, disruption is good. It changes what you do, how you do it, and it shifts your perspective on many aspects of your life.
American craft beer has spent the last 20 years disrupting the whole beer industry. As craft beer has expanded almost exponentially the last 5 years, many of us who have been around since the last “great expansion” have been fretting over another bubble bursting. However, we may have had it wrong. This article from The Motley Fool has a better term for what is coming: shakeout.
The difference between now and the bursting bubble of the late 90s is that the beer industry has matured and changed. As the article points out, the coming shakeout will be a continuation of the consolidation we’ve seen begin with the mega-brewers buying up regional breweries and those same regional breweries consolidating themselves to protect against outside purchase.
With such explosive growth over the last few years, we have seen a lot of breweries enter the market who have no business being there. Those breweries will be the leading edge of the coming contraction. Of the ones I’ve seen shudder in the last 18 months or so, the most common reason is poor planning.
We all know the apocryphal story of many breweries that started as a home brewing enthusiasm that leads to good beer and friends deciding to pool their money and resources to start a brewery. That is a dream that dances around the back of almost every home brewer’s mind. That is a great story, that can go one of two ways that are mostly dependent upon having a good plan.
From my vantage point on the bar/retail side of craft beer, I encounter a lot of small breweries who either self-distribute or are starting to work with a distributor. Some of the things I’ve noticed about the breweries have come and gone in just the 2.5 years we’ve been open
- Inconsistent beer. It is either, they have one good beer and the rest are mediocre at best or they have a few good beers, but they taste different with each batch.
- No plan for their beer. What is your brewery’s aesthetic as far as beer and personality? What is your plan for your core/year around beers? What is your plan for your seasonal beers? What is your process for creating new beers? Then, how will you market them? That is why you need to know how your beer and your brewery’s personality are tied together as your business front face.
- No distribution/unrealistic distribution plan in your business plan. I’ve seen many breweries come into the Charlotte market with unrealistic expectations. This market is immature in two ways. One, the craft beer drinking community is very young and new to craft beer. Two, most the breweries in the market are less than 10 years old. The market is also very locally focused (meaning Mecklenburg County) and very IPA and lighter craft beer focused.
I want to spend the rest of the week exploring these three points and how they may affect the next couple of years of craft beer. Also, now with the move over, I have a new part of The Beer Counselor colony that will start in May.