Craft Beer Needs an Attitude Adjustment

But beer is still special. Hard or soft tea isn't the same.

Earl Heineken's Tea? They can go for it.

 

Craft beer has always been a small niche demographic. The fact that we have 100x more breweries and taprooms now vs 10-15 year ago means that alot of non-beer drinkers are visiting these establishments now. The brewery taproom has become the "going out" preferred place for alot of Americans for dining, socializing instead of the local bar, or other venues. So naturally most oweners of a tap room model operation that want to maximize their revenue will also cater to the non craft beer drinkers if that is their goal by offering selzer, NA beer, the trendy sweet beers etc.

- there definitely needs to be some sort of contraction of the # of choices of craft beer sold at most stores. The products just aren't turning over and not sure why after several years now, the wall of cans has not shrunk much. I see craft beer sections still dominating the space at most stores (over wine, liquor, selters etc), but very few patrons coming in to move those $16-$22 4 packs out the door. If people are buying beer, its usually macro and big-craft mostly vs. the high-end or local 4 packs.

- there is too much saturation for a craft brewer to be stuck in their ways to only offering classic styles for a niche consumer unless their establishment offers something better that other taprooms in the area.

- I think the really outstanding brewers need to stop the wide distribution to stores and do on-site only or beer "drops" in certain areas from time to time to ensure their product moves out quickly. Kinda like Heady drops occassionally in the Philly area.

 

There is some interesting topics in the linked article and sometimes with ‘mixed’ messages.

How is the beer (and beyond beer) market evolving?

From the article: “All of which was fine, until those mainstream drinkers, as they’re wont to do these days, lost interest in craft beer and went looking for things — hard seltzer, hard tea, spirits-based canned cocktails, whatever — that craft brewers did not make.”

The above sentence is challenging to interpret: is the author stating that consumers that once preferred to drink craft beer are now preferring to drink other alcoholic beverages? I really wonder if there is data to support a transition such as this.

But later in the article: “College kids are trading kegs of cheap swill for hard seltzers, High Noons, and borgs! High schoolers are making fun of their millennial dads for using Untappd! Fireball is one of the biggest “beer” brands in the country! The landscape, Watson argues, “has fundamentally shifted, and if brewers don’t recognize these shifts, [they] risk alienating the next generation of customers.”

OK, this I sorta understand (I think). The assertion seems to be that people who are ‘entering’ the market for drinking alcoholic beverages are different from their parents, who drank beer in college. They are preferring to consume other stuff (e.g., Fireball, which is a 33 proof malt liquor flavored with sweeteners and natural whiskey flavor, along with other natural flavors (like cinnamon)).

Is Bart Watson intimating that craft breweries should chose to serve customers who prefer to not drink beer (e.g., make malt beverages like Fireball)?

Dave Walker’s (Firestone Walker) perspective

From the article: “I look at some of these beyond beer elixirs, it’s like a chemistry experiment chasing numbers,” he told the audience, according to Brewbound’s Jess Infante. “They just don’t align with the values that we set out to propagate when we started brewing beer, and I just don’t feel comfortable in that space.”

Bart Watson states: “Don’t insult your customers”

But implicit in the above quoted statement is the business case: which customers does a business want to serve?

Should a business like a craft brewery chase customers who demand a “beyond beer elixirs”? And considering how fickle some customers can be (e.g., always chasing the shiny new thing) is this a worthwhile endeavor for a craft brewery?

Is there a future for businesses to just provide a limited number of beer products?

There was a spirited discussion about Sacred Profane in a 2022 thread since they opened last year with the business plan to only produce two beers: a Czech Pale Lager and a Czech Dark Lager. Sacred Profane has only been open for less than a year so it is very much a ‘work in progress’ but maybe there is a sufficient consumer market to support a business that only makes two beers?

So what should a craft brewery do to be able to stay in business?

The majority of the craft breweries that have opened over the past couple/few years are small breweries that serve a local market (e.g., most (and in some cases all) of their beers are sold on-premise). The advantage of a business like this is that the owner gets to see their customers directly and hopefully listen to what their demands are. If there is a robust demand for “beyond beer elixirs” they could determine whether their brewing setup can produce these new products and make a value judgement whether there will be sufficient and continued demand to make this a worthwhile business endeavor.

Craft Brewing in my area

The local, small breweries in my area are concentrating on just producing beer. I have zero insight into their financials but they appear be sustaining (and thriving?) with just making beer. Maybe my local market is unique here?

Cheers!

 

The other topic I should have added above is the difference between larger, distributing craft breweries vs. small, local breweries. The market condition differ between those two classes of craft brewing and likely would dictate a differing response to changing customer demands.

Cheers!

 

People sometimes wonder why I carry a 'torch' for breweries like Genesee, Minhas, & Cold Spring (where I toured in 2010). It is because one of my core beliefs is "a closed brewery cannot produce a superb beer".
Therefore, if said brewery feels it has to divert into seltzers, packaged cocktails, and alcopops, in order to make enough money to keep brewing its beers, I am cool with that.
I have scribed on threads here that when a metropolitan Chicago grocery store chain puts Leinenkugel 12-packs on 'sale', I will check its inventory to see if a specific store stocks its beers - not merely its shandies. Depending on the 'sale' price, I could quite well haul the 1987 Chevrolet Sprint out of the garage to buy two 12-packs. (Toasted Bock is O.K.; Snowdrift Vanilla Porter is solid.)
Basically, I have no problem with slumming. Whether it's Genesee Cream Ale, Simpler Times Pilsner, or Montucky Cold Snacks. It sustains the brewery.

 

I get what the article is saying, but IMO not every brewery should make every single beer-like beverage. Do what you do well. You aren't necessarily insulting another beverage by refusing to make it. Do what you're good at and what people are going to actually prefer vs. just hoping your [insert popular style/beverage today] can keep up with every other one out there. I'd love to know how craft brewed seltzers are selling vs. what the larger players are doing. I still have yet to have one that I'd choose vs. a White Claw, a Bud Light Seltzer, or a Topo Chico.

 

Your core belief is what kept me sane in the 70s. I wouldn't necessarily say it's slumming. Pabst brewed Red, White and Blue and ANDEKER. Falstaff brewed Falstaff and BALLANTINE ALE. Huber brewed Wisconsin Holiday and AUGSBURGER. Blitz brewed Olde English 800 and (eventually) WEINHARD PRIVATE RESERVE.

 

I said to myself: “How well did Hard Seltzers sell in 2022?”

I did a quick web search and found this article published in Dec. 2022:

“THE GIST

We’ve been here before: Industry watchers are confident in declaring hard seltzer down for the count, while U.S. drinkers continue to buy millions of cases of the stuff. What feels different this time is that hard seltzer growth has, in fact, stalled: For the first year ever, 2022 will end with hard seltzer volumes falling compared to the year prior. This isn’t a death knell, rather a stabilization point as hard seltzer reaches its maintenance phase.

· In 2022, malt-based hard seltzers make up 7.4% of total beer volume, and about 9.5% of dollar sales in chain retail stores tracked by market research company IRI. Hitting 10% of dollars was once seen as a dream scenario.

· For comparison, craft beer currently makes up 9% of beer volume and almost 13% of dollars in chain retail thanks to a wide range of price points.

· By total volume, seltzer will decline about -17% against last year while craft will be down about -11.5%”

https://www.goodbeerhunting.com/sig...r-no-longer-alcohols-champ-but-still-swinging

It would seem that Hard Seltzer was not a growing product for 2022. It will be interesting to see if this is the case for 2023.

Cheers!

 

There's two dynamics at play in this article that I think need to be considered;

First, from the author. Writers have a mandate to give readers a compelling tale. It is literally their job. This manifests, in journalism, as a tendency towards hyperbole (especially regarding conflicts and risk trends) as a reliable tool to make wonky issues interesting to laypersons. And this seems to be even more pronounced in journalism focused on less consequential sectors, like niche alcoholic beverages.

Secondly, Mr. Watson has a primary mandate of supporting the economic health of "craft breweries". In the modern era, "economic health" tends to be interpreted as annual economic growth of the sector that meets or exceeds the level that makes it attractive to general investors. As growth in craft beer, which is ultimately a niche product that has a practical ceiling of total possible consumers, has flattened this means that Mr. Watson and his employer have a vested interest in expanding the definition of beer so that they can capture nonbeer drinkers as a source of perceived market growth.

The way I see this play out in the article is that the author plays up the dire straits that the beer market is in (last numbers I saw "craft" beer was not losing volume, it was "losing" hypothetical volume while its explosive growth curve flattens) and that alarmism is leveraged to make Mr Watson's suggestion that incorporating non beer malt beverages into a brewery's portfolio is well nigh essential.

I'd suggest that breweries pivoting en masse to a spectrum between Boston Bev Co and 450 North in some effort to meet the demand for all canned alcohol buyers is a much greater threat to the reality of actual beer in the US.

That's not to say that any brewery that opts to make a seltzer, a cider, a smoothie sour, etc... is some sort of class trader. But it is to say that a brewery that only makes hard seltzer is not a beer maker, regardless of what the tax forms say. And there's a good argument to be made that even things like slushy level "sour beers" are not beer in any culturally accurate way. And turning breweries into producers of those types of beverages isn't going to "save" the beer market in any country anymore so than calling automobiles "buggys" would magically save the buggy market.

 

I would like to see a good estimate of total available craft beer manufacturing capacity to compare with craft beer consumption over several years. I suspect that capacity is rapidly outpacing consumption. I think that overcapacity, which causes economic stress, is a root cause of the proliferation of related products, hard teas and ciders, malternatives, etc., etc.

 

All the hard seltzer brands taste the same to me. They’re not bad, hit kind of nice on a beach but in general I don’t really buy them.

 

I think in my part of the world, liquor stores have caught on to the craft beer scene recently and some are doing the best they can to supply craft beer to its customers. I have had some success at finding very good IPAs that are reasonably fresh and filling my little beer fridge in my little man cave. Therefore spending more time at home drinking beer and enjoying it more, spending less in bars drinking an okay IPA when I have better beer at home.
More IPA-FESTS!!

 

Well said.

The article has such a feeling of disingenuousness about it. Are there really a lot of brewer driven consumer touch-points out there claiming that certain beverages produced by brewers aren't beer? Were the first generation of craft brewers really different from today's brewers because they were brewing products that mainstream drinkers wanted? Are today's craft brewers really refusing to make seltzer and beer styles that cater to today's audience? Is "every brewery taking shots at every other brewery?"

To use Fireball as an example of the new road that needs to be recognized or risk losing your customers is telling. Just promote its sales figures and ignore the consumer lawsuits about it misleading them. I don't pay attention to the whisky industry, but I wonder if producers that want to stay in their lane are concerned about category dilution making things harder for them. To me, that's a story worth telling rather than pushing away (as this article does within beer).

 

I should have added that the author is using the Fireball beverage on the left in the above pic as an example of "beer" (his quotes) since it falls into the product category by law.

 

I always thought Fireball was a liquor...cheap bourbon diluted with various junk and cinnamon addition.

 

I went to the Chat GPT for some stats (giving @jesskidden a break for the weekend) Basically between 2017 to 2021 (last year stats are available), all alcoholic beverage sales volume (in sum) dropped year after year in the US while US population increased each year after year in those same years. So I think all big alcholic beverage makers board rooms are scrambling to some degree to figure out gains, as less people are consuming alcohol and/or less alcohol overall. Usually their quick fix approach is to sell their existing product in a new market.

 

Nevermind these stats aren't accurate. I regenerated and got different figures. All alcholic beverages combined actually when up each year (with 2020 being only lowered year due to pandemic).

 

to me there's room for both people a) like David Walker saying "we're not comfortable in this space" to b) people like some of your and my local breweries in Colorado jumping into the seltzer market with both feet.

I'm personally in Walker's camp here but that doesn't make me think I'm right and the author is wrong.

However I will say, perhaps the author and I differ on what some ill-defined amorphous noun like "Craft", as in "Craft needs to do X, or else!" really is, at its essence.

Maybe "Craft" doesn't have to (gasp) keep growing? Maybe "Craft" (gasp) doesn't have to turn into some smaller mirror image of the beverage industry as a whole? Maybe "Craft" is --and should remain--a niche within the beverage industry, even if that means some "Craft" breweries will continue to fail? Maybe the implied "or else" in the author's warning/exhortation isn't something to be dreaded, but celebrated?