Tag Archives: craft beer growth

One Beer Article You Need To Read And Why, 3/4/17

The One Beer Article You Need To Read And Why, is a cheat.  It is a quick way for me to come up with a topic to write about daily without having to do too much brainstorming.  So, when I can’t find an article I want to write about, it makes it kind of hard.

Anyway, here is an article about…wait for it…the NC distribution cap fight.  At least this one finally puts a number on all the money the N.C. Beer and Wine Wholesalers Association and individual distributors have given to NC legislators.  The total is almost $1.5 million.  That should explain all you need to know as to why progress has been slow.

I’ve been following this story since it started gaining steam 3 years ago, and I’m tired of talking about it.  However, I think the distributors are more afraid of the big beer companies pulling out of their contracts and distributing themselves.  That is a more realistic fear than the one of all these small brewers distributing their own wares.  It isn’t that much more realistic, but more realistic.

I just get tired of political fights whose conclusion is inevitable.  If the Supreme Court hadn’t stepped in, we would still be in a 40-year battle to finally get to marriage equality.  This is a much smaller and less important issue, but the conclusion is inevitable.  The politicians want to vote to raise the cap, but they get a lot of money from its opponents.  Eventually, the politician’s beliefs will win out and they will vote to raise the cap.  Wholesalers should spend less time worrying about how to stop the cap and more time trying to build good relationships with brewers.

Last thing, the distributors who treat brewers as if they are doing them a favor by distributing their beer are the ones who should worry.  I think the biggest change raising the cap will initiate is making distribution contracts fairer and forcing some distributors to treat brewers more as partners.

One Beer Article You Need To Read And Why, 2/24/17

Amid a myriad of fascinating craft beer storylines, one that I keep coming back to is the how do legacy brewers navigate this world that they have created.  It is one increasingly unforgiving to brewers who get a little too old and too successful.  Boston Beer Company released their 2016 4th quarter earnings yesterday and they were not good.  Neither are their projections for 2017.

I was struck in reading the article that Boston Beer Company thinks of itself as just that, a beer company.  I see a distinction between a beer company and a brewery.  I always refer to ABI and MillerCoors/SABMiller/whatever as big beer companies.  They own breweries, but as a company they are concerned more with selling beer than making beer.  I think Boston Beer and the people that work there think of themselves as a brewery, but the rest of the world sees them as a beer company.  That is in contrast to a brewery like Sierra Nevada.

I think craft beer drinkers still have respect for Sierra Nevada as a brewery and see Boston Beer Company as simply a beer company who owns a lot of different brands. One of the first things the article points out is that the company was hurt by flagging sales of Angry Orchard Cider.

Boston Beer jumped into cider the same way ABI jumped into craft beer.  They bought a producer, then dumbed down the recipes while pumping up the production.  While I think in his heart Jim Koch is a beer guy, his company has seemingly lost sight of its beer core.

It is something you see a lot.  Your business starts to slow down and in an attempt to keep growth at a certain level, you begin to chase the new hot trends in your sector.  Instead of innovating you begin imitating and in the process, you lose what you are best at and you fail anyways.

The brewers that best survive whatever is coming next in craft beer are the ones who stay true to the core of who they are.  They will be the ones who may brew a hot new style, but won’t change their core products just to stay relevant. If a core beer is flagging and dragging the whole company down, they will shelve it, but they will come up with a replacement that still plays to their strengths.

Don’t chase trends and just brew the next hot beer style.  Understand why beer drinkers are drawn to that style and why it became a thing and incorporate that into what you do.  Understand that the haze in a NE-style IPA is simply a by-product of how the beer is made and concentrate on making a bright fresh hop forward beer.

David Bowie made vital and good music literally up to his dying days.  He stayed relevant and successful so long because as trends changed he didn’t chase them, but he absorbed the cultures that spawned them into his music.

As craft beer matures, the brewers who operate like Bowie will be the ones left standing.

One Beer Article You Need To Read And Why, 2/17/17

Last night on Twitter, Bryan Roth asked a question, does the beer matter for a brewery to be successful?  I quickly replied yes. Amid a few replies and forth Bryan recommended I read this article.  I did.  For my non-business type brain, I gathered what the article says is if you are planning on selling your craft beverage business (brewery, winery, distillery) this is probably the best time to do it.  The market is still in growth mode and hasn’t quite saturated yet.

It is a good article, especially if you know anything about business, but I don’t really want to talk about that.  I want to get back to the question Bryan asked, “Does a brewery actually have to make good beer to succeed?” He attached the screen grab below. I suggest you go to Bryan’s Twitter timeline right now because the question is still getting replies.

As I said, I immediately jumped in and said, yes, the beer in the glass matters.  Eventually, even if you have a great story, you are a local brewery and represent something greater than yourself, you must make good beer to be successful long-term.  One of my core beliefs about craft beer is the liquid in the glass is all that matters.  If craft beer gets to the point where the beer doesn’t matter more than the story, what is the difference between craft beer and big beer?  The altruistic reasons you get to a place are meaningless if you get to the same place as the bad guys.  All that matters is you are in the same place.

I understand a lot of people coming to craft beer right now aren’t coming because they believe the beer tastes better.  I serve beer to a lot of these people every day.  In Charlotte, it is the “it” thing to do.  Also, people believe local is always better.  They want to support local breweries and they will drink their beer and smile and tell me how good something is.  However, in a market as saturated as Charlotte is and will become, you must make good beer to survive.  In a smaller market where there are only one or two breweries nearby, you can get away with it, but you will never grow outside of that market.

What I hope and I think will happen is as Charlotte’s market becomes more mature and people drink more good beer, they will start to discern what is good and what isn’t.  Right now, most drinkers know what is good.  They haven’t learned what is bad yet.  In other words, when they drink it, they know what a good witbier tastes like, but they don’t know what a witbier isn’t supposed to taste like.

I understand and support the idea of craft beer as part of the slow food, local, artisanal cultural dynamic that shuns chain restaurants, big box stores, and big beer.  I’m one of the people fortunate to be able to afford to buy a lot of those things (artisanal soap, yes please), but the products must be good (and somewhat affordable) to survive long term.

A great story is wonderful.  It should help with the marketing and selling of your product. However, if that is all you have at some point someone is going to call you on it and you will fail. Kind of like what happens here.

One Beer Article You Need To Read And Why, 2/9/17

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.

One Article You Need To Read And Why, 10/30/16

I have issues with this article.  My issue is not with the overall premise that craft beer sales are slowing down.  I’ve been one of the people saying the slowdown was coming for over a year now.  That was to be expected.  The explosive growth of the last few years within craft beer was unsustainable.  You combine too many breweries with the virtually the same amount of shelf-space and a slightly lower number of available taps, growth was bound to slow.  Combine that with the growing movement towards more localized beer choices and could not keep its growth at the same level.

I think those factors affect the bigger craft brewers the most.  Stone, Sierra Nevada, New Belgium, and Ballast Point have expanded their footprints across the country, into places that didn’t have huge local craft beer scenes.  Now, in part because of these large brewers moving across the country like Johnny Appleseed, there are breweries popping up in the unlikeliest of places giving people the option of locally brewed and locally owned (very important) beer.

So, again, my problem isn’t with the overall premise of the article.  My problem is with the examples used.  If the writer wanted data to back up his premise, that information is easily available from the Brewers Association.  They even have a staff economist who blogs and tweets and everything.

Instead, Bloomberg News, used AB-Inbev, Craft Beer Alliance, and Stone Brewing as examples.  First, AB-Inbev is a company that owns brewers and has purchased craft brewers it isn’t an actual brewer much less a craft brewer.  Second, the slowdown AB is experiencing is focused on its Brazilian market.  The whole of the Brazilian economy is a mess and the people of Brazil don’t have money to spend on beer instead they are trying to buy things like food.  So, while that is a factor in the slowdown of the overall world beer market it isn’t indicative of a slowdown in the craft beer market.

The second example is the Craft Beer Alliance cutting production of Redhook.  Craft Beer Alliance for those who don’t get into the weeds of craft beer, is a group of breweries funded, in part, by a capital funding firm bankrolled by, wait for it, AB-Inbev.  CBA is cutting production of Redhook because no one is buying Redhook.  The last time I had Redhook was at least ten years ago.  Question, why would anyone in say North Carolina buy a Redhook when you can drive 5 to 15 minutes and get a fresh beer.

Stone Brewing has spent money on two new breweries one in Richmond, VA and one in Germany.  They spent money like they expected the road to go on forever and the party to never end.  As, I’ve said, the nature of craft brewing is becoming more localized in nature and large national craft brewers must adjust to this new world.

Writers who understand craft beer have already written about this subject in better and more comprehensive ways.  Two of my favorites are Jason Notte and Bryan D. Roth.

One Article You Need To Read And Why, 10/3/16

Today begins a week when I will talk a lot about the Great American Beer Festival.  My vacation usually centers around me going to Denver and attending the GABF and this year is no different.  The 500 words will be terribly late on Wednesday because I will be on an airplane heading out for the festivities.

To start here is an article that gives a 10000-foot view of the state of the craft beer industry leading up to the festival.

First of all, who in 1981 thought the craft beer business, which it wasn’t called then, would be this big and the GABF would be this massive of an event?  There is also the fact that the industry is maturing and the older, regional breweries are starting to band together in private equity relationships that allow them to share resources without giving up their independence.

Besides all that, the article gets at two things I have been saying to people who ask for the last year.  One, the explosive growth of the industry is going to stop.  There won’t be a retreat or shrinkage in the number of breweries but it will stay relatively the same through the next couple of years.  Why, I think the growth will come to smaller towns and less populated areas while the concentration of breweries in large cities will start to decline.

Second, large breweries and really small breweries are the way to go.  As I said, I have felt for a year or two that the growth of the industry will take place at the local level with breweries that concentrate on serving their immediate area only and breweries opening up in smaller towns outside of urban or even suburban footprints.  I believe this because I saw it start to happen in North Carolina a couple of years ago.  The large breweries will also be fine because they have the size to weather most fluctuations and storms in the industry.

The breweries I see having a hard time are those in that middle tier that I have trouble defining.  Is it the brewery that only distributes in its own state or neighboring states?  Is it regional distribution?  I have been trying to figure out how to define the line between the different levels for a year now and still can’t quite figure it out fully.

I think it is that level of size of the Oskar Blues, Victory, Southern Tier, Cigar City breweries that need and want the help that a partnership with other similar sized breweries to help take care of some the overhead costs that can sap a brewer that isn’t big enough or small enough.

Anyway, besides the 500 Words articles for the rest of the week, there will be the occasional dispatch from Denver of interesting things I’ve drunk or eaten or seen.  It is the kind of vacation I like, one where I get to see good friends, eat good food, and most importantly drink good beer.

Five Beer Articles You Need To Read And Why, 4/6/16

There is a distinct to the Five Articles today, and it is a familiar one.  One of the cool things about the United States is it is in a constant state of evolving into the more perfect union it purports to be.  People are constantly fighting to expand the rights this country professes to love.  Sometimes it is just about allowing consumers to buy beer and sometimes it’s about treating people who are different than you, whom you may not completely understand fairly.

Five Beer Articles You Need To Read And Why, 4/5/16

Well, that sucked.  That is all that I will say about the game yesterday.  Seeing the images of the UNC students who were heartbroken after the game makes me wish I still cared about sports like that.  A good night’s sleep has me feeling up and ready for the next part of my life.

  • Russians want to drink good beer? Of course, they do.  We all want to drink good beer.  It will be interesting to see how the entrepreneurial and capitalistic backbone of the craft beer movement will be adapted to Russian culture.  For all the truth behind the “we are all in this together” of craft beer, it is still a business sector that fails or succeeds on the strength of how good the product is and how successful your business model is and once you start distributing the margins are small.
  • We have now reached the navel gazing, “Oh my God, we have too much choice, what do we do?” part of the craft beer story. Here is what is going to happen, because it is what always happens (“All this has happened before.  All this will happen again.” Ronald D. Moore, Battlestar Galactica):  The next 3-5 years will see the breweries with good product and/or business plans survive and the breweries that don’t have good product and/or business plans will fail and the number of breweries will fall slightly and then stabilize.  The one thing that will not happen is that choice will not go away.  That means the market for someone or something curating all this beer will grow.
  • This Georgia taproom/beer tour story is still fascinating to me. The breweries’ persistence and deliberate efforts are slowly moving the laws into their favor.  Without doing a lot of posturing and spouting hyperbole, they have managed to effect real change in the Georgia Department of Revenue’s rule interpretations.  Quite interesting to watch happen.
  • This is so sad it is almost comical. However, knowing who goes to the Masters and how the people who run the Masters are still in the 20th century, this is about as good as you could hope as far as craft beer in concerned.  Like Russia, the Masters is about 10 years behind the rest of the world culturally at all times.
  • I continue to believe that stories like this represent why craft beer will continue to expand its footprint even with the number of new breweries opening starts to slow. Every town should have its own brewery and every town has property that needs cheap redevelopment and every town needs to find new tax revenue streams.  It’s a win/win for everyone.

Five Beer Articles You Need To Read And Why, 1/29/16

Friday is here.  I have a weird relationship with Fridays.  I don’t have Saturday’s off so Friday is just another day for me.  For you, however, it is probably the end of the week.  Go out and enjoy pretending to work this afternoon as you wait for the clock to finally get to 5:00.  On to the links.

Five Beer Articles You Need To Read And Why, 1/28/16

The week moves on and Thursday is here.  This has always been a weird day to me.  The week is almost over, but not quite.  You still have to work the next day, but you know the atmosphere is a little more relaxed.    Anyway, with legislative sessions around the country getting started this month, there is a lot of movement in the beer law front. To continue yesterday’s theme, here are a few articles on beer and alcohol laws around the country.