Craft Beer's Looming Crisis

Oh yeah, I "loved" that beer in the mid-90's and that's why I typed "unfortunately" in my post as I'd probably choose a PBR over it today.

In relation to the article, I think the use of "crisis" may be pandering a bit. No matter what happens, the days of being stoked to see a Spanish Peaks Honey Raspberry Ale are likely never coming back. The beer choices in a mid-size town in Kansas during the mid-90s was the crisis.

 

Falling Sky Brewery in Oregon

https://www.beeradvocate.com/beer/profile/4365/236453/

 

Yes. The piece was almost half again as long, and got cut to fit. I was hoping they'd run the whole thing.

And the fruit beer thing? Guys, it was comic relief. I thought the general tone of the fruit beer references and Bill's response made that clear.
And then there are all those fruit beers. “The signs you point out are humorous, but also serious,” admits Bill Covaleski...

There definitely were a lot of sweet fruit beers back then; Spanish Peaks built their business on them and then were crushed when tastes changed. Just my memory, can't find the references, but I'm pretty sure they went from 50,000 bbls. (which was a LOT in 1996) one year to 15,000 the next...after investing in the capacity to go to much more than 50,000. They never recovered. Pete's tried a strawberry beer; there were the "Oregon" beers Boston Beer made; even Rogue was making fruit beers. The GABF had a medal category for raspberry beers, separate from the other fruit beers, because there were so many of them. But again...just joking about the resurgence of fruit beers as any kind of evidence of a coming correction.

I probably won't be back for more; really busy with work right now, getting my son ready to leave for his first away from home job, and putting in a bid on a house on top of that. Glad the piece spurred discussion: that's what these pieces are always about. Well, I mean, they're about work, too, but they're what I do, and I try to do them well, and have a point. And that's the point!

Cheers,

Lew Bryson

 

Thank God someone got it.

 

Crisis--no way--for drinkers, anyway.

Even if HALF of the >4000 current breweries closed, we would have more than 5 years ago. A "crisis" if you are putting your money in, sure--for some--esp those with weak business plans or jumping into the "fad" for fun-- but for the current beer drinker, there has NEVER been a better time. 5 years ago with half, was still an awesome time.

And agree with the sentiments of those that some of the dead wood needs to be culled.

In this day and age of social media and electronic isolation, the local brewpub/brewery/taproom seems to have enjoyed a sense of fostering reconnection. Not sure how long it will last but seems to be resonating a bit in this neck of the woods.

 

Rogue is the one brewer I am most surprised is still in business. They don't seem to have a great following. I don't see Dead Guy often, even at the stores that sell other Rogue beers, and that is their flagship and the one beer I think has crossover appeal. Their beers often just sit on shelves for eternity at shops around me, especially their bombers. They don't produce that one "must have" release, and I think everything in their line-up has a better quality and lower priced alternative in the market.

 

There is an article written by Andy Crouch which is somewhat related here: https://www.beeradvocate.com/mag/14291/a-theory-of-evolution-the-future-of-global-beer/

An interesting aspect from that article discussing Private Equity (PE) firms:

“But as Alan Newman once famously said about PE, including the folks who eventually took control of his brewery, Magic Hat, private equity guys enter the room walking backwards, with their eyes firmly focused on the exit.”

Cheers!

 

To me this is a good thing, there is too much so so or even crap beer out there marketed as craft but just really not too good at all.

 

The unfortunate thing is that a lot of the mediocre beer may survive while lots of good beer dies. I've seen several mediocre breweries growing faster locally than good ones, because they're being run better.

 

• People here seem to assume that a shakeout will only impact low quality breweries. To the point where they avidly look forward to the shakeout (perhaps they have read alot of Austrian School economics) . I am not convinced of that. I can easily see us losing some relatively good breweries, and some lower quality ones that have done a good job marketing surviving.

 

The one thing people forget to realize is that when bubbles burst, there will be a lot of your favorite breweries and beers that are casualties as well. It's not just the dead weight in terms of worst beer makers.

It may be a great local brewer who was in a bad location but thrived on taproom visits. Someday taproom tourism won't be the trendy thing to do on a Saturday afternoon, and they may have to close shop.

Maybe its one of the big craft brewers who opens a new plant for multi-million dollars and people are buying local beers instead of bottleshop buying.

Maybe its an InBev buyout of one of your favorite mid-sized brewers.

Who knows, but it won't soley be the wannabe local brewers who can't make good beer that burst. It will be all across the board.

Like I mentioned earlier, I just hope the guys who are the great brewmasters across the country get a new brewing job so we don't lose the all-stars.

 

Catamount is a case in point. The beers were very good. They had built a big production brewery, but did not hire the reps and marketing people to move the product beyond word of mouth. The tide went out, the boat hit the rocks. Opposite of the rising tide lifts all boats.

 

If and when the shakeout comes the quality of a brewery's beer will have less to do with who remains standing than their debt load will.

 

Yeah, that's spot on. It bound to happen since doing a successful start up, regardless of the industry involved, seems to take several things working out at one time to keep that business up and running. As you say, it isn't all based on quality of product. There are lots of start up failures where poor management was the source of the problem rather than product quality.

 

Another factor is that many are not familiar with brand affiliations and distribution networks. Many of the quasi-crafts filling out the shelves and cold box, the ones that lots of us would like to see go away, are the big brewer's products that will be replaced if they marginally falter (with their products). In areas of limited distribution, where a large distributor dominates, that market is at the mercy of that distributor......some are great, but many are not. In any case, since the big brewers dominate the chain retail "atmosphere", I choose to support independent retailers and local brewers (as much as I can). This may be the best way to keep beer as honest as we can.

 

Yup, that is indeed a big concern (at least for me). IMO it is pretty much a sure thing that the BMC owned 'craft' breweries will stay in business and if there are closures of independent craft breweries you can be rest assured that 'somebody' will fill the vacuum (presuming that there is a vacuum). The BMC folks will do their utmost to be 'players' here.

Cheers!

 

A lot of people get into business for reasons other than passion, and love for the craft of what they do. Maybe they do it as a hobby, maybe they have a friend who brews and they put money towards it, a second source of income, or someone hoping to capitalize on a hot market.

It's not exclusive to this industry and over time the fakes get drowned out, the industry suffers some bumps and bruises, it's no longer the "cool" thing for a while, but the strong survive and the good companies pick up the customers from those that go by the wayside.

Lets not kid ourselves, the beer industry isn't disappearing, times and tastes change. Picture 20 years ago finding American tastes have gone from Bud Light to IPAs Saisons, Porters... hell Guinness almost seemed like a novelty way back when.

 

I saw the article the other day and have been thinking about it ever since. Aside from the p[arts made in jest (I personally don't like most fruit beers, other than sour styles, but I won't hate on someone who does,) I think the point is still there.
The craft beer industry can not keep growing like it is indefinitely. At the very least, at some point there will be a leveling off. People will never give up their Bud, Miller and Coors. There will always be that market for them, and as long as they have the advertising dollars, people will still buy them in abundance.
I do think there will be a correction in the market - there are breweries opening every day. Some of them will not survive. If I remember the numbers right, something like 500 breweries opened last year, under 20 closed.
This can't comtinue. As people continue to learn about beer, they will discover what is good and what isn't. A brewer that is merely average today will be behind the ball a year or 2 down the road - the average point will continue to move. If a brewer doesn't hit it consistently, the consumer will move on to someone who does. Even if they do hit everything sopt on all the time, they'll still have to innovate and follow the trends, the consumers dictate what sells. It's all well and good to say that I will open up a brewery with Pils, Ambers and brown ales, but if I don't have the triple IPA, and barrel aged stout, I won't sell a lot of beer compared to if I offer those. I can offer the Pils and so on alongside the IPA, but I won't make a living on it.

 

Bud Light has a larger share of the total US beer market today than it did in twenty years ago:

1996 = 10.5%
2016 = 17%​

And, of course, that 17% for a single brand represents more beer than all the the "IPAs, Saisons, Porters " and every other craft beer combined.
Not sure one can say that "American tastes " is represented by the 12% of the market that craft makes up, when over 50% of the US beer market is just the top ten best selling light beers and light lagers.

 

Bang. You can be a well funded ship going down. You can have your investors checks in the bank. But if you don't have a good sales team, while making bad decisions about how to treat them and those markets. It won't matter if you are selling Heady Topper. If it gets lost in the shuffle and your marketing prowess is actually just rendering bad account management afield. It gets old. It gets ignored. It sits in a warehouse only to be found six months past sell by.