Price increases. Is this the bubble buster?

I wish I could choose more than one option.

I gotta say that the main threats to the craft 'bubble' are saturation and sub-par beers. Too many players are in the game just trying to get a slice of the growing piece of the pie with no regards to the quality of their beer

 

I don't see pricing as a problem at retail outlets but I do at bars. Market Saturation could become a problem long term. Too many choices can lead to no one selling enough beer to make $$.

 

I think it will be a combination of market/saturation and buyouts.

I'm not sure there is enough hop growing infrastructure to support the growth of craft brewers. From what I understand, hops are one of the less profitable crops and starting a farm dedicated to hops. isn't really economically feasible at this point given the time and money required. I'd guess that established breweries with large hop contracts will continue to exist, but the selection and quality of what's left may make it exceedingly difficult to come up with a solid line of brews. I think that the craft beer price gap will widen as ingredients become more expensive, again lending an advantage to those who can buy hops in larger amounts. I suppose it's possible that the infrastructure will catch up with the demand, but a lot of small breweries will get culled out before that happens.

Additionally, I think that the buyouts are going to play off of this and make the shortage worse at the same time. The bought out companies are going to see an abnormally large distribution of ingredient-intensive beers. Even established breweries will be leveraged to sell out in order to be able to reliably secure the ingredients that they need.

Again, perhaps this is a little too helter-skelter of a prediction, but at the very least, I think that the price of admission into the craft beer game is going to keep going up.

 

This is why Stone releases a new IPA every two weeks. It's proof that even us "craft beer drinkers" are nothing more than your average, short attention spanned consumer.

 

Every bar owner with a few extra bucks and the dream of cutting out the middle man is starting to add a brewery to their bars. The problem with that is they put out an unimpressive product with an inflated price, at least that has been my experience.

 

Once too many brands get bought out by BMC, its over. Its a cycle I guess, cuz there used to be a ton of regional breweries, then they all got bought out, but now were back to independent brewers. For now.

 

This is the same thing that happened to the cigar market. Both saturation and prices were the cause for it to push people in new directions (ie. gray market). I'm not saying that could/will happen in the beer world as it is more regulated than cigars. Although, there is one thing that both vices have in common that we cannot control, and that is taxes. Just a thought.

 

I dont think most Craft operations will simply raise the price. They will do what CCb is doing moving there large bottle format from 25oz to 22oz. And most liley charge the same for the 22 that they did the 25. This is most certainly a price increase but for most people they will get over it fast. Sort of when that 1/2 gallon of icreceam became 1.5quarts. But the price stayed the same.

They also are moving to cans, lighter to ship and handle. Less expensive than glass, less breakage and thusly a minor uptick in profit.

 

Damn i meant to put market saturation. price isn't a big deal. there's still cheap craft beers, and outrageously priced craft beers.

 

Saturation? What is this nonsense... Craft beer still accounts for around 10% of ALL beer in the US. 10%! We are a long, long way from "saturation." All this talk of saturation makes me wonder if many people on this website actually know how big the beer industry really is.

High prices? Craft beer prices are high relative to what? Please don't point to an individual beer or brewery's prices and say that is indicative of all craft beer. Things are worth what people will pay for them. The days of $5.99 sixpacks of craft beer are gone, never to return. Gas is more expensive than it used to be. So are steaks from the grocery store, deal with it. Jesus... who would have ever thought we'd be willing to pay $6 for a cup of coffee?

If there is a bubble, it will burst when breweries that make bad beer finally go out of business or breweries that have good beer, but horrible business plans, finally shut their doors.

 

I don't think any "bubble" will be bursting anytime soon. Despite craft beer's growth, it's still just 10% of the beer market. There is a lot of room for growth as more and more BMC drinkers start drinking craft, and older BMC drinkers leave the market. The biggest threat to craft beer is bad beer. There is a glut, but I think the market will work itself out on that, just as it has in other fields. We may see a lot of breweries making mediocre-to-bad beer close, but the overall growth of the market share of craft should continue. Also, market saturation isn't a huge worry. Given how informed the most ardent craft beer drinkers are, if a new brewery releases some exceptional beer, it's unlikely to stay hidden for long.

I'm also not too worried about buyouts. When BMC buys a craft brand, their people have good reason. The investment is not going to pay off if they cut corners and turn it into a mediocre beer. Goose Island has done quite well for InBev, and I expect that will be the model for other buyouts by macros.

 

The minute craft brewers brew Stout's and IPA's to satisfy the pedestrian palate...

...is when the real crash begins.

 

I have to disagree with this. I get what you are saying from a total market perspective, but all you have to do is look at the threads on here detailing new beer releases. You'd have to be a major alcoholic to keep up with what seems to be by-the-minute new beer releases. When I walk into my grocery/beer shop, there are already a mind-numbing amount of craft brewery's offerings on the shelf. It is an intriguing decision one has to make, whether to try the new kid on the block or to go with the 'tried and true' option that has earned respect. There will always be a segment of beer drinker looking to try the latest and greatest, but I would guess the majority likes their 'old reliable' 6pk/4pk/case/750ML and that would seem to set up a scenario where those breweries producing mediocre product get dropped like a brick.

 

This is not really an answer to the question but I have made a decision about my beer buying. Ive only been buying craft for about 5 months now. I have allowed myself to get sucked into the hype a little regarding limited release beers. But I have found, for me, that there are plenty of great beers out there that are just as good or better than those that I had to hunt down and pay extra for. So, that isn't going to happen any more. I am not going to "work" to get beer, just be happy selecting something awesome from whats available in the good stores in my area and take all the hassle out of it. Besides, its going to take years to try most of the good stuff i know I can get anytime so there is no use worrying myself over hard to get stuff.

So, yes, i am sure KBS is really good. But you won't find me calling 10 beer shops a day for weeks hoping to find some. There will be a ton of REALLY good other beers for me to buy.

 

If a brewery is relying on gimmicks and novelty for their long-term success.. that's a bad business plan. If they are relying on foolishness like that, what other fatal flaws have been built into their business plan... or lack thereof?

If too many skus creates confusion and causes some bubble to burst, is it the consumers fault? or the brewery's?

Come to Portland or Seattle sometime. The craft beer market here is far larger (as a %) than just about anywhere else in the country. Craft beer here accounts for a staggering 35% market share as opposed to the 10% national average. Is the competition fierce? sure. Have some breweries closed? sure. Is is a bubble? Awww HELL NO. It is a fundamental change in what the consumers want. When the consumers pulls products through the market instead of breweries trying to push products through, it works.

 

Um, no one is just naturally a craft drinker. We all had to take that first sip. Mine was of a Fat Tire. A mellow and accessible yet delicious beer. The bigger is better mentality that is creating so many subpar beers could likely lead to a bubble buster or some sort of glass ceiling of market share. Trying to appeal to a small market size is exactly how the craft beer revolution slows down. I think expanding the audience is the key. Goose Island across the country? Perfect business strategy. Limited release rando barrel aged stout that goes for 40 a bomber and most of the bottles go to a few select fanatic hoarders? Not good business.

 

The answer is "other" because THERE IS NO BUBBLE. Craft beer is here to stay! Demand is increasing so supply is increasing with it although I don't have exact numbers by how much of each. In business, as in nature, natural selection occurs. The fittest, most efficient and best product breweries will survive. The mismanaged, shit product breweries may hang around awhile but don't have the staying power. Prices have gone up before, in fact when many brewers went from 6 pks. to 4 pks. and dropped the price by the price of one bottle, prices went up when many perhaps thought they were going down.

 

Craft beer percentage of market = 7%
Likely percentage when craft reaches its market limit = 15%
Bubble? What bubble is that? Expanding market does not equal bubble.
Higher prices from the big boys = More opportunity for the fresher, local, better competition.

 

I disagree. I haven't had a Budweiser since I was 18 [and I'm over 60 now], went to college in Colorado and never bought Coors [never liked it but did partake once at the brewery]. For years, I drank Molson Golden, Becks and anything else but American adjunct lagers. When I was through with those, my taste went to liquor. Then I had my first Anchor Steam in 1988, and I was in. In the last 10 years or so, I don't believe I've had more than 3 or 4 mixed drinks, shots or any kind of liquor. It's like I found my true love after looking for so many years. If craft beer disappeared tomorrow, I'd sob for days.

 

I think a lot of these options overlap to make it difficult to choose just one answer...
As the scene continues to grow by leaps and bounds people talk about saturation, but I believe that microbreweries can become the next bar next door. Think about how many bars there are in your hometown and somehow they stay a float. Yes there are options for everyone at a regular bar to drink, but microbreweries are coming out with lots of different options as well. People want that Cheers feeling and the beer scene can provide this as well.

Sub-par beer will help solve the saturation point as well, IMO. If said brewery continues to put out a bland product people will stop going and eventually the brewery will need to change or they will go under. We continue to see breweries try and reinvent themselves only to fail and go under.

Pricing is a relative term because it refers to supply and demand. Look at the Eclipse series for example. Some people do not find $30 for a bomber worth while, myself included. If the demand is there people will buy, but as I see more and more sub par beers being overpriced I think demand will change and price will need to as well.

Finite resources could play into consideration if there were to be a huge drought, but I am not counting on that one anytime soon.

Buyouts are a threat for sure, but we have seen that BMCs are playing their cards correctly with their buyouts; Goose Island for example. Some mergers have failed thus far, but in a free market that is going to happen.

I chose trademarks because I think this will destroy what the scene currently is. I personally hope that this trend of lawsuits ends soon.

There is lots of room for growth in the industry and I hope the beer scene continues to flourish.