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Big year for small beer
If trends continue, 2007 is going to be a good year for craft beer. Sales of craft beer rose nicely last year, including 17.8 percent in supermarkets. That’s $467 million in sales—and this year, the market research firm Information Resources Inc. expects craft beers will break the $500 million mark. That makes it the fastest-growing segment of the alcohol market.
The nation’s small breweries are excited. “This is not a marketing push,” says Julia Herz, spokeswoman for the Brewers Association. “This is a beer-drinker-driven. Drinkers are going after flavor and diversity, and that’s what craft beer delivers.”
What comes next? Herz says it’s unfair to speculate. Maybe more hobbyists start breweries, maybe large companies begin more aggressively buying up the smaller ones. If more sales means a bigger boost for the most successful craft brewers, the Brewers Association can tell you where to look: Based on its records of last year’s sales, the top five craft breweries in the nation are Boston Beer Co. of Boston, Mass.; Sierra Nevada Brewing Co. of Chico, Calif.; New Belgium Brewing Co. of Fort Collins, Colo.; Pyramid Breweries of Seattle, Wash.; and Matt Brewing Co. of Utica, N.Y.
Free beer’s getting easier to find
For drinkers who only know Bud and Bud Light, the growing selection of craft brews can be intimidating. So just as wine stores offer samples to expand their customers’ palates, some beer sellers are trying to introduce customers to new brews—if they can.
Most states permit free beer sampling in a store or restaurant, but the law varies from state to state. In Delaware, for example, samples can only be given at stores that sell alcohol. In Arkansas, sampling comes with a ridiculous gauntlet of barriers: Only package store employees can get free samples, the sample must come from a wholesaler, it must be no more than 1 ounce, it can only be of a drink that had not been previously purchased by the store and the bottle must be immediately removed after sampling. Some others, including Wisconsin, have just moved to legalize it. California once permitted only wine samplings, but this year added beer to the mix.
Some of the major breweries, including Anheuser-Busch and Miller, have championed changing the law in states that prohibit samples. (“We support sampling by brewers and wholesalers at bars and restaurants,” AB says in a written statement.) Smaller breweries and stores haven’t been universally enthusiastic, though; some say they don’t have the resources to give out much free beer.
But at Bruisin’ Ales—Ashville, NC’s “first and only” beer-exclusive store—regular samplings have been a business boon. Owner Jason Atallah says he’s been drawing about 70 customers into the store every other Thursday, when they crack open different beers and let people taste. The store doesn’t lose any cash on the deal; they partner with different distributors, who provide it for free. Atallah says he’s already seen an impact on business: People return after the samplings, and longtime customers are buying new things. “I think they want to try new beers—and the fact that it’s free obviously doesn’t discourage them,” he says.
Big beverage companies explore brewing
It isn’t easy to rise up and challenge the largest beer companies, but a fight may be brewing in Australia. Coca-Cola Amatil, a beverage distributor owned partially by Coca-Cola, has begun distributing some beers, and is exploring whether or not to begin brewing imported labels and its own line of beers as well. If it does, its size and financial power could make it an immediate rival to Foster’s Group and Lion Nathan Ltd., the two companies that currently sit atop the Aussie beer throne.
Coca-Cola Amatil says the move is only natural: The company, “with its vast manufacturing capacity and sales and distribution networks, already has the necessary infrastructure to be able to get started in the beer market,” says spokesman Sally Loane. The same, then, could be said for major American companies like Coca-Cola and PepsiCo—and both of them, like Coca-Cola Amatil, have been steadily diversifying, following consumers away from soft drinks and toward things like bottled water and energy drinks.
But would a company like Coca-Cola ever want to challenge Anheuser-Busch? A Coca-Cola spokesman said the company doesn’t comment on speculation, but John Sicher, editor and publisher of the industry newsletter Beverage Digest, claims that not everyone’s been tight-lipped: “There’s been talk,” he says. But because the alcohol and non-alcoholic beverage markets are already staked out by a few gigantic corporations, he says, the non-alcoholic companies are content on their side of the fence; and, according to Sicher, if they did want to enter the beer market, they’d have to deal with America’s complex laws on alcohol distribution. “I think it’s highly unlikely,” he says.
Will beer get the barley blues?
It’s a bad time for barley. The grain, which Anheuser-Busch has called “the soul of beer,” has become less profitable than some other crops, meaning fewer farmers are planting it. Changing weather patterns have wreaked havoc on barley fields worldwide. And sporadic cases of diseased crops have forced some farmers to abandon their barley fields entirely. But will the barley blues affect brews? That remains to be seen.
The number of acres of barley harvested in the US has been declining steadily since 1986, and last year reached its lowest level since 1885. It’s a problem in other popular beer-producing countries, too. Czechoslovakia makes some of the world’s most celebrated barley beers, but last year’s barley crop was alarmingly bad. Brewers there are left with a tough choice, according to the Prague Post: Import barley and raise the price of beer, or brew with lower-quality barley. German brewers are facing the same quandary.
But don’t count barley out yet. Although production may be dropping, much of the US decline has to do with farmers who once grew barley as animal feed, according to Allen Baker, an economist with the United States Department of Agriculture. Farmers can get more money for a crop like corn—which cows will eat just as eagerly—so there’s little reason for the farmers to grow barley; however, the beer industry still values barley. Because of that, Baker says, malting-quality barley’s future is secure—for now.
Changes could be coming, though. Researchers around the world have been toying with new crops that could be malted, perhaps posing a threat to barley’s value in beer. And if barley becomes rarer, and therefore more expensive, could beer prices follow suit? Baker says it’s impossible to know. ■