1. American Craft Beer Fest returns to Boston on May 29 & 30, featuring 640+ beers from 140+ brewers. Tickets are on sale now.

The Challenges Facing Craft Beer

Discussion in 'Beer News' started by Todd, Apr 11, 2013.

  1. Todd

    Todd Founder (1,625) Colorado Aug 23, 1996 Staff Member

    Our friend Harry Schuhmacher over at Beer Business Daily (an insider trade publication) recently blogged about his behind-the-scenes conversations at the Craft Brewers Conference in DC last month regarding concerns with craft beer's sustainability.

    http://www.beernet.com/publications_daily.php?id=2908

    Issues Raised:
    • Excess Capacity and Pricing
    • Capital
    • Sense of Entitlement / Smugness
    • Bad Beer
    • Tax Policy
    • Succession
    • Expanding Markets Too Quickly
    • Flagship Fatigue
    • SKU Proliferation
    • Craft vs Crafty
    Follow-up blog: Truth Squad Speaks on Craft's Challenges
    http://www.beernet.com/publications_daily.php?id=2909

    All known issues, many of which have been raised here at BeerAdvocate, but overall the market doesn't seem to be addressing them quickly enough, while some seem to be ignoring them entirely.

    Regarding "Sense of Entitlement / Smugness," Harry indirectly points to forums like ours.
    From a consumer/website point of view, this has been a growing concern of ours for nearly a decade now and an issue we deal with on a daily basis today. As craft beer grows in popularity it invites more people to the party, and their differing opinions, whether you want them at the party or not. Pair this with the other above mentioned challenges facing craft beer, their impact on consumers and online anonymity and of course self-entitlement, smugness and d-baggery will come to play.

    Anyway, I'm glad we're talking about these issues. For decades craft beer was all rainbows and unicorns, but if the party doesn't get bigger, and if we don't address the challenges that come with hosting a bigger party, craft beer will never grow and mature to its full potential.
     
  2. GregoryVII

    GregoryVII Savant (335) Michigan Jan 30, 2006

    I think by the time someone has gone so far as to join a consumer website/post on its boards they are already a "part of the party." This is a great place for sharing information, growing knowledge and being part of an established community. But as for spreading the love of quality beer, I don't think sites like this are ground zero and their effect on whether or not craft brands reach new audiences is limited within the context of the forums (planned events/festivals that grow out of it being a different matter).
     
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  3. Reneejane

    Reneejane Savant (425) Illinois Jan 15, 2004

    I'm curious what is SKU proliferation (SKU, i understand is the ordering code) and why is it a problem?
     
  4. Todd

    Todd Founder (1,625) Colorado Aug 23, 1996 Staff Member

    I'm guessing you didn't bother to click and read, so here you go:
     
  5. Reneejane

    Reneejane Savant (425) Illinois Jan 15, 2004

    thanks for that, I have to admit, though I'm still confused. What is the individual brewer's solution to this? To reduce their offerings so that there are fewer skus?
     
    gcamparone and Norica like this.
  6. Not a marketing/sales guy, but I believe SKU proliferation is the issue of having too many similar products in the market. From a manufacturer's standpoint they can end up diluting their brand or having too high of costs (I think Gatorade has something like 50 flavors!). From a distributor/retailer standpoint how can you ever move your stock when there are so many options for the consumer? It sounds counter-intuitive, but from an industry perspective too many options for the consumer can be a bad thing.
     
  7. emannths

    emannths Savant (425) Massachusetts Sep 21, 2007

    It's a bit of a tragedy of the commons scenario...
     
  8. PHBoiler

    PHBoiler Advocate (575) Illinois Jan 14, 2013

    I think that some of the breweries that were intially nanos that grew into micros absolutely are having issues with the "bad beer" problem. With so much product out there, the lack of bottle dating can really be an issue for some of these companies. If I decide to try your product and I have no idea when it was bottled, if it tastes bad then I'm probably not buying more of your product. Could part of it be on the liquor store? Absolutely, and maybe I decide not to shop at that store again either. So I guess this issue can impact the brewer and the seller from my perspective. I saw two shelves of expired Hop Henge yesterday alone. That's bad business for that store, and luckily the brewer did enough to warn me. Some of these start-ups need to take note. I think more breweries could do either "best by" dating or give us some idea on your website of how long the beer should taste like it is intended to taste.
     
  9. ressling

    ressling Savant (270) Georgia Oct 26, 2011

    Yeah I could see a lot of breweries not adhering to the "walk before you run" school of thought. Perhaps this is why there is so much mediocre beer on the market? Not to say that this is bad (there's a beer out there for everyone in my opinion), but I'm assuming it can really screw up the whole economics of the business.
     
  10. For a Gatorade or Bud it's a way to keep competitors off the shelf. OK you want 25 cases of Bud Light, will that be the 12 ounce bottles or 12 ounce cans, 12 packs or 6 packs or loose cases or 6 pack cases or 18's or the new special disposable case with speakers, now is that the Light or the platinum light or the lime or the platinum lime, are you sure you don't want the 16 ounce aluminum bottles? We have them in your local sports team colors. How about the 24 ounce cans? You know we have a special SuperPakSaver order, specially designed for a store of your type in your market, scientifically engineered to increase sales with science while hitting all the demographics of 12 ounce to 24 ounce single,multi, single-multi and multi-single consumers, easily marked with 139 different SKUs, don't worry we'll come on in and program them in your system and stock the shelves!
     
  11. stupac2

    stupac2 Initiate (0) California Feb 22, 2011

    I don't get why douchebaggery of supporters is a problem, tons of extremely popular endeavors are known for followers' douchebaggery (for instance, sports). But this is a case where he just begs the question, why is that bad? What's the consequence of some brewers and drinkers acting like assholes? I mean, some huge percentage of the population is assholes, they've always been into beer. So why is this a problem?

    The only conceivable explanation I can think of is that it'll turn people off the brand, but that clearly doesn't happen with, say, the Eagles, so why would it happen here? (A more apt metaphor might be "Few people are turned away from wine because it's 'effete and snobby', so why would it happen here?")
     
  12. The Sku issue has been address by some other markets throughout the world and possibly could be addressed in a similar fashion within the world of craft beer. The breweries could be put on tiers. based on size, populairty, costs, whatever the case may be.. thats a different discussion. But essentially, a client of the distributor has the ability to pick a specific number of choices from each tier based on their size and agreement with the distributor. That in turn would assist in moving the small breweries as well as the larger ones and help to move aging inventory within the distributor. Not saying it is perfect, and I am not saying it would necessarily work out.... anyone have any thoughts?
     
  13. joeebbs

    joeebbs Savant (360) Pennsylvania Apr 29, 2009

    What I worry about for a Brewery is the markets they expand into. Right now PA, and in particular SEPA, has a TON of beer on the shelves. If I'm running a brewery I might be scared at entering PA because there is a ton of beer already there. Granted there are a lot of drinkers to get a hold of but just because every brewery is there why should I fight for shelf space against already established brands?

    Would it make more sense for a brewery to ship to a state which might have less offerings or even inferior offerings to my new brew than to a state that gets a ton of beer already?
     
  14. stupac2

    stupac2 Initiate (0) California Feb 22, 2011

    Also, now that I've read the rest of it (that point seemed particularly dubious to me so I wanted to tackle it) many of these aren't actually issues:

    -Excess capacity: This is how normal industries work. Are we really supposed to care that bad breweries are going to start to fail? I wish it happened more often now.

    -Capital: You could say this about any industry. The start-up capital has to come from somewhere and it often takes a long time to see an ROI. Most new businesses fail, why do we expect breweries to be different?

    -Bad Beer: Yeah, this is a problem, but it's a problem because we have a ton of breweries/brewers with more business sense than brewing skill who opened at the right time when anything would do. As competition increases the marginal breweries will start failing. Again, this is what you expect in a market that's growing rapidly and not yet fully competitive. (This is especially true for brewpubs and the like, it's as though all restaurants were McDonald's until 35 years ago, there'd be some turmoil in the market for a while but eventually it'll settle down into something like what we have now, with places constantly opening and closing based on how good/lucky they are, etc.)

    -Tax policy: I know nothing about this.

    -Succession: This is a problem for individual brands, not the industry. Some will do it well, others won't. The ones that do well will continue to flourish, the ones that don't will fail. What's the problem? I'm starting to get the impression that any brewery failing is a crisis for the industry in some people's eyes.

    -Expanding too quickly: This I agree with. Expanding without the capacity to actually support the area is an issue, and breweries need to cut it out. Then again, it seems to be working in terms of growth, so maybe it's actually a good idea. Maybe the ones expanding are right, either way eventually the market will decide, and ones that do this poorly will fail and all will be right with the world.

    -Flagship fatigue: This makes no sense to me. So some breweries' flagships lost share, but that means that it's harder for them to make money? Maybe those flagships just aren't good beer. Sure, Fat Tire is a pretty good gateway beer, but I'm not going to be buying it unless the other options are macro crap (and I was faced with this recently, had a couple of them at a conference a few weeks ago, it's a servicable beer but it's not very good). Are we really supposed to cry about flagships losing out when they're mainly big because they were made in a time when there was was less competition?

    -SKUs: If this is what consumers want (and it sure seems to be) then distributors will figure it out or fail. I don't see the issue.

    -Craft vs Crafty: I can't imagine caring about this. So ABI is making beer that's basically as good as some larger craft flagships and stealing their share? Super, that's good for consumers. Make better beer that they can't copy at half your cost or fail.


    Anyway, the whole piece seems to be lacking in analytical rigor and plagued by fear of markets working as intended. Some breweries are going to fail, some big breweries are going to fail. That's how capitalism works. Capitalism is the way to organize an economy, and brewing isn't immune to it. Let it do its thing.
     
    lhteacher, DaveOB, ceazaleo and 12 others like this.
  15. I would like to springboard off of PHBoiler’s post concerning dating of beer. I suppose this could be associated with the “bad beer” topic but I think the blogger really intended this for beer that was bad fresh from the brewery.

    With more and more craft beers hitting the shelves there is likely to be more issues of old beer sitting around. With more beer choices there are greater chances that the beer brands (both existing breweries and new breweries) will be sitting a while before selling. There really is a need in the craft brewing industry for proper dating of all of the products. Proper dating would optimally be both a bottled on date and a recommended best by date. There are just too many breweries which don’t properly date their beers. I have gotten to the point that I refuse to purchase beer that isn’t properly dated.

    Cheers!

    P.S. An example of a less than properly dated beer: I have Sam Adams Double Agent IPL that has a best by notch of August. Listing a best by date of 6 months for a hop forward beer is nonsense! I happen to know that Boston Beer is using a 6 month timeframe but not everybody does. It should not be a requirement for you to have a smart phone and do research while purchasing a 6 pack of beer!!
     
  16. Are you sure BBC's using 6 months on that beer? Typically, on their "average" ABV beers they've used 5 months (as do a number of notable brewers like SN, Victory, Sly Fox) regardless of beer style - "hop forward" or not. That's also been confirmed by calls to their 888 toll-free line.

    BBC's bottles are easy to double-check for this, since their coding (on the bottle glass near the shoulder, and on cases and 12 pack boxes) includes the bottling in Julian dating - after the letter "P" (for Pennsylvania) or "C" (Cincinnati) - first 3 digits day of the year - 4th digit, last digit of the year. I have a bottle of their New Albion, bottled on Dec. 20, notched to enjoy before "JUNE, 2013".

    Seems to me, as long you know that, you're free to decide when you'll buy and "enjoy" a hop-forward beer.
     
    • Expanding Markets Too Quickly
    I'm seeing this one mostly with newer breweries who price their slightly above average beers in an Ultra-desirable price range.
    Why has Clown Shoes, Pretty Things, NapaSmith and White Birch already made their way to their respective opposite coasts?
    Very few people are repeat purchasing their beers at the prices they are charging. They open a new territory, tickers tick, sales slow; open new territory, tickers tick, sales slow; repeat....
    That is a big problem for these types of brewers IMO.
     
  17. socon67

    socon67 Advocate (680) New York Jun 18, 2010

    This is very much the case. As a retailer it is very difficult to keep up,stock, and promote so many new products released. It is especially challenging when the distributors are unable to keep up and communicate the information down the pipeline.
     
    trbergman likes this.

  18. JK, maybe you can double check my math. My Double Agent was bottled on the 32nd day (Feb. 1st). The notch indicates August so the beer should be good until the end of July. February to July is 6 months by my reckoning. Do you concur?

    You state: “Seems to me, as long you know that, you're free to decide when you'll buy and "enjoy" a hop-forward beer.” I respectfully disagree with that statement. I am of the opinion that breweries should properly date their bottles with a bottled on date. I really don’t think the average beer consumer should have to research the varying best by timeframes of the numerous breweries.

    I will repeat that a best by timeframe of 6 months (or even 5 months) is too long for a hop forward beer like Double Agent IPL.

    Cheers!
     
  19. But you checked the Julian date so you know when it was bottled. The more casual customer can take BBCs suggestion, one who cares more can look at the Julian date. Seems like all your bases are covered...
     
  20. “But you checked the Julian date so you know when it was bottled.” I checked it after the fact since I had jesskidden holding my hand on a beer forum. I consider myself a bit beyond average as a craft beer person and I didn’t even know:

    · Check the black ink on a brown bottle code (which I had great difficulty reading)
    · Know the code (I don’t own a secret decoder ring that works for every brewery)

    Even the ‘dreaded’ Anheuser-Busch places brewed on dates for their beers. They give it a stupid name of “born on date” but I appreciate their willingness to be transparent on this topic.

    Cheers!
     
  21. Starkbier

    Starkbier Savant (270) Maryland Sep 19, 2002

    I see the market developing in some interesting and exciting ways, not the least being the development of multi-taps with good craft beers in Mid scale/affordable/casual dining establishments. When your Bennigans and TGIFs start putting Headwaters on tap its a nice development. I also see stratification into tiers in the industry, at least in the shipping micros. You will have top tier brands doing very well due to lower costs via increased capital utilization and top quality products- Deschutes, Bells, Sierra, Stone, etc. Another item to watch is brand diversification - recall back when Sierra was pretty much just Pale Ale, now they have branched out into Torpedo and other varieties. My own view is there is a lot of room for lower ABV and some lower hopped beers, not that IPA and DIPA are going away anytime soon. The consumer wants diversity, so its gonna be met by someone somewhere. Totally agree with the article's comments in general and the significance of sales support to match brand quality. The hardest part will be the small startups with limited capital and sales support - if I was in that boat Id stick to being a brewpub and if your beers are good enough then step up to a 25BBL or 50BBL system like Devils Backbone has done.

    For those of us old enough to have come of drinking age in the '80s, its a very exciting time to be a beer lover in America!

    Cheers,

    Jim
     
  22. “For those of us old enough to have come of drinking age in the '80s, it’s a very exciting time to be a beer lover in America!” Amen to that!

    Now if I could only get a real Classic American Pilsner at the Phillies ballpark!?!:)

    Cheers!
     
    sajaffe1 likes this.
  23. Sounds like there will be some downsizing on the number of IPAs on the market since they fade the fastest and won't able to stay on the shelves as long as some other styles.
     
  24. Don't leave out the 7 oz. bottle format.
     
    mschofield likes this.
  25. Well, it is beer writing. Not many (any?) beer writers are known for their critical analysis.
     
    lhteacher and andrewinski1 like this.
  26. Not likely since IPA's are the fastest growing style in craft beer. Sale of stale beer has been the cornerstone of craft beer for years - yet it still grows.
     
  27. As someone living in the Philadelphia market who can't stand the Eagles, I heartily applaud your choice of example. And, I also serve to prove your point. The D-bags Eagles fans I'm surrounded by have generated my hate for the Eagles, but that hasn't dimmed my love of professional football in the least.

    As far as how this affects the future growth of craft brewing, I don't think blowhards pontificating on sites like these have any impact on craft beer sales or popularity. Release those same blowhards into the general population to annoy friends, family and strangers at gatherings or in bars and now you could have a problem. Just look at the longstanding image of the effete, snobby wine drinker that still exists in the minds of many people who resist drinking wine (or at least good wine) as a result. Some people are intimidated, others just don't want to become "that guy."

    People who use their knowledge of a subject as a bludgeon to make others feel dumb, inferior or unworthy are, in my opinion, purposefully trying to drive "the unwashed masses" away so that they can keep their little sandbox all to themselves. And that's the attitude that could serve to limit the growth of the audience for good beer.
     
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  28. As a single store owner in this tough economy managing to have a product on your shelves that is projected to be on the increase is almost non existent except for two things, food service and craft beer. Arguably we are in the golden age for craft beer in an economy that makes it very tough for anything to succeed. Like many things in life, especially in the beverage and food industry, products that spike very fast level off or eventually crash. Are we going to see a time where the market has been flooded by so many craft brewers that the demand will eventually drop off and see the market crash. Will breweries suffocate each other out with product and be left with only the strong?
     
  29. Crash? No.

    Suffocate? Yes
     
  30. OMsweetOM

    OMsweetOM Savant (340) California Feb 1, 2011

    Unmentioned but important (if not critical) is brew dispersal and how it can lead way to the "Bad Beer" situation.
    While not necessarily a challenge for the individual brewer (since they should be smart enough to pour their brews at proper temp and gas ratio), their quality brews may emerge into the market (prior to production line distribution) via tap offerings and then be entirely dependent on how it's poured elsewhere. Hopefully, the emerging brewers are partnering with the right outlets that know how to pour beer and don't spit out brews per the big 3 standard.
    It'd be a shame if quality brew (trying to gain reputation) is underwhelmed and thus not properly received, leading the consumer to mistakenly think it's sub par and not worth a 2nd shot. This scenario would sadly be a shot in the foot at the attempted expansion by the brewer - in which they may have been better off keeping their cards close to their chest but then less capable of judging the market potential and becoming less likely to reach my taste buds.

    Taps everywhere, I ask that if you're going to support the craft brew industry - do it justice, do it right. Please do not maintain your entire line (save for perhaps one/two) at the ridiculous (outdated) industry standard. Consider the benefits of a little investment in tap regulation/control - you'll serve each beer the way it's intended and decrease the potential that tenured kegs turn flat.
    Not that it's commercially available, the Flux Capacitor (by Gabe Gordon of Beachwood Brewing) is a great example of what should be taking place everywhere that beer is tapped. Read about it here: http://www.details.com/blogs/daily-...cene-one-perfectly-poured-beer-at-a-time.html

    To the perfect pour - cheers!
     
    SSEngelbrecht likes this.
  31. Schumacher is not the average beer writer.

    http://www.beernet.com/about_us.php

    His work is followed closely by the entire US brewing industry on a subscription basis. if he didn't offer serious critical (and high quality) analysis breweries, wholesalers and retailers would not pay a subscription fee.
     
    dan027 likes this.
  32. Norica

    Norica Savant (360) Massachusetts Feb 2, 2006

    Bingo. Harry Schumacher knows more about the beer industry than 99.99% of people in the beer world...I think the other .01 is JessKidden.



     
    fx20736 likes this.
  33. russmann

    russmann Aficionado (135) Idaho Oct 3, 2007

    This is my constant challenge. We're developing new business methods to deal with this, the good distributors are getting on board and the evil ones are getting left in the dust.
     
  34. Harry is just all over the map with this one. There is no clear thesis or even opinion most of the time. Let alone a definition of what the issue at hand really is, as many of the listed issues aren't terribly relevant to the industry as a whole's long term viability or isn't terribly relevant to individual brewers. All of these things are potential issues for some people, but really it justs seems to be an observational piece that as the industry segment grows the challenges change along with it. Which... Yeah. Economics. Groovy. It's fine as a conversation starter, I guess.
     
  35. lionking

    lionking Savant (320) Pennsylvania Nov 25, 2006

    I m waitting for the crash from all the breweries follow every fad i craft beer. They sell a bunch of one offs across a wide geographic market.The better model is to have a product people buy every week in the local market.
     
  36. rlcoffey

    rlcoffey Savant (490) Kentucky Apr 20, 2004

    Anyone want to interpret this for me?

    Combo of too much beer and too much posting from a phone maybe?

    I cant usually work around typos but I have no clue on this sentence.
     
  37. yemenmocha

    yemenmocha Poobah (1,235) Arizona Jun 18, 2002

    Sense of Entitlement / Smugness
    Bad Beer

    Very interesting to see it acknowledged as existing among brewers. I've seen the combination of these two in some brewers and I'm half laughing to myself and half shaking my head at some of the attitudes of some rather mediocre brewers. Also I think it could be stressed that even if these new, younger brewers are well-funded that they still have to stand out with excellent beers if they're going to make it. It's just so competitive now and so many other great options on retail shelves. Exceptions exist, most notably underserved markets where a new, mediocre place could be successful because there's in essence a shortage of any quality local competition.


    Flagship Fatigue

    I've worried about this here in AZ but there's a variety of factors for why this could happen. Arguably, Bell's Two-Hearted is a good candidate for Bell's flagship here but it seems like it is moving off shelves slowly compared to a year or two ago. I'm finding it harder, much harder in fact, to find fresh sixpacks and I shop nearly everywhere. Maybe distributor ordered too many? Maybe buyers reach for another IPA once the current stock is too old for them and then it snowballs into having product be even older and older? I don't know.


    Bad Beer - Again

    This one I'm seeing everywhere and that's why it's almost impossible to not believe there will be some sort of consolidation coming in future years. Even though I'm aware of it, I'm still surprised at how much bad beer is on shelves, on tap at places, etc. when there's so many clearly superior options out there. Maybe the continued existence of bad beers has something to do with craft beer now having more mainstream & minimally knowledgeable consumers, rather than more enthusiastic & educated folks who can tell that there is a very big difference between Stone IPA and Amnesia IPA.
     
  38. DogTown

    DogTown Savant (260) California May 17, 2006

    Harry sees all.

    You can look to the late-late nineties for how a mess got sorted out... Thing to remember is that demand never did slow one bit. Supply just got ahead of demand. The music never stopped, there just wasn't enought music for everyone. Some brewers fell backward toward their breweries and became profitable pubs. Some just faded away with a sigh. Some sold to other small breweries as labels only and became the walking dead. Some retreated to true cottage-style business and are still around doing nice things. Some went away completely, but most morphed somehow. In the debate between fire and ice, ice seems more common.
     
  39. BeastLU

    BeastLU Advocate (550) Virginia Dec 20, 2012

    Or 8oz cans,
    16oz aluminum bottles,
    16oz plastic bottles,
    40s,
    18 oz bottles,
    32oz bottles,
    Ect ect ect
     
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