"This Is Why My Brewery Shut Down"

They paid an independent marketing research firm to study the market as it was at that time and priovide them with the final report. Since then they chose to indirectly make some of the data public, which is how it got to the point of being discussed on here.

 

It takes a savvy business owner who cares about who his/her consumers are to appeal to as many demographics as possible, though. The good ones take the time to do this and tend to be around longer than ones who don't.

 

This one? It's still online at CBD -The Numbers Behind Majority Craft Consumption

 

FTFY.

 

It's sometimes referred-to as "the brewers catch 22". The first time I read it (I think) was in "Beer Blast" by Philip Van Munching (of the Heineken Van Munchings). It's the middle ground between macro and craft that requires capital infusion or massive debt to fund growth. Since that book was written (late 90's), there are now several national craft brewers so maybe they are unto their own since they have sufficient scale and cash flow to make the math work.

 

As I read through this thread one thing that comes to mind is that old saying, "Hindsight is 20/20."

 

If this is true then from reading James Watt's book on Brewdog the other month somebody needs to go to Columbus and tell them, lol !!

 

Good idea, but not really needed. They already have a plan.

It might not be a plan that is popular with some folks, but it has been working for them for quite a while now. (I'd say any brewery with multiple patents has been doing some futures planning.) With Columbus they may have overeached a bit given some fairly recent changes in the marketplace, that have caught more than one brewery by supprise, but they won't be the only ones who may have done that.

 

JK, that is it.

Thanks!!

I wonder how the results of this sort of study would look today?

Cheers!

@Sixpoint @RobH @sierranevadabill @Alexmc2 @rotsaruch

 

Hard to say, but the industry is definitely at a major pivot point and it would be extremely foolish IMHO to be taking on huge debt loads and leverage right now as a brewery - whether you are a startup brewery or little guy looking to aggressively expand or even a major craft player who has been around for a long time.

All signs point to the opposite actually - i.e. the craft market got ahead of itself by overbuilding, overpushing, overinvesting, and oversupplying the market. I remember back in the day when craft had the "ambitious" goal of getting 1% of the market share. Then all of a sudden the new mantra became "20% by 2020." I have news for you: that is NEVER going to happen in 3 years from now, especially if you take into account the current definition of "craft."

All breweries need to have a plan in place to think more than just living "paycheck to paycheck" but also about the long-term future, even if that future means handing the company over to one of your heirs, your staff, or another eventual exit strategy. Having a large conglomerate such as Heineken (bought Lagunitas), Mahou San Miguel (bought Founders), or AB-InBev (bought too many to list) invest in your brewery is often an attractive option, and these large conglomerates will most likely not look to sell the brand immediately, as they typically hold onto brands/breweries for a very long time. Of course, the optics on such a transaction for many customers don't look so good though!

I think one of the biggest train wrecks that has yet to occur (but is imminent) is all of the traditional private equity money that flowed into craft beer in the past few years. By very definition and modus operandi, these traditional PE firms must exit their position (i.e. sell the brewery) in about 3-7 years from the time they made their investment, and deliver their returns to the investors. Since many of these PE investments were made in 2014-2016, we're going to start to see many of these investments get liquidated in the next few years. That's going to send a few ripples through the water....

 

Shane, what is your personal perspective on the Brewers Association's definition of a craft brewery? For example, do you personally no longer view Lagunitas as being a craft brewery?

Cheers!

 

I would say they are starting to look less and less like a traditional craft brewery, but then again the definition of "craft" continues to evolve and change with the times as well, so its a moving target.

I can tell you that when you remove the 1 million barrels of beer that Lagunitas now makes from the "Craft" definition, that is a lot of new barrels that these thousands of tiny new breweries need to make in order to offset the losses! If you do the math, it would take 1,000 breweries making 1,000 barrels per year simply to offset losing Lagunitas' 1,000,000 barrels from the definition.

 

Another kind of false perception is the situation that has not been mentioned yet in this thread. I don't know how many times I've done a Place review where I wrote that the food is better than the beer (although the beer is just average, never been bad in my experiences) and is driving the receipts/profits. I really wonder if the owners can figure that part out, or maybe it doesn't matter until the brewery loses its chef.

 

Well, as far as I am concerned Lagunitas is a craft brewery. That is also the case for Ballast Point and even the craft breweries that were purchased by 'evil' ABI (e.g., Wicked Weed, etc.).

I understand that the Brewers Association can't classify them as being craft because of their agenda(s) but this is all nonsense as far as I am concerned. Just one man's opinion.

Cheers!

 

I would have to agree with you on that point for many reasons, but in a lot of ways because the definition of "craft" seems to be a moving target. I do not see how one day a brewery can be "craft" and then the next day it is not, even when the overall formulations, vibe, and culture are virtually intact.

There seems to be a large emphasis on the ownership/capital structure of a brewery, but perhaps more attention should be focused on what the brewery actually does (their actions and their work) vs. their ownership structure.

 

My point was actually in the book James specifically says that if anybody came with a business plan under his arm he would "politely" tell them where to go. What he seemed to be saying thru the whole of the book is what they are selling if anything is a love of good beer and throw everything into that come what may.

 

Because someone published an arbitrary definition of what they thought a craft brewery should be.

That would be commonsensical, but when people start putting spin on definitions because of political agendas, common sense tends to be over looked. Purposefully, most of the time.

 

One would hope that these wouldn't last long, but, many times, homerism powers these abominations pretty strongly.

 

....and 2 million barrels of Blue Moon and 1 million barrels of Leinenkugel and 20-60 thousand barrels of another dozen or so. If the pace continues, the "craft" share will be declining in the not to distant future.