Craft beer is booming. Is that bad news for the U.S. economy?

Discussion in 'Beer News & Releases' started by Smakawhat, Aug 6, 2018.

  1. Smakawhat

    Smakawhat Poo-Bah (6,675) Mar 18, 2008 Maryland
    Premium

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  2. drtth

    drtth Poo-Bah (3,648) Nov 25, 2007 Pennsylvania

  3. MNAle

    MNAle Meyvn (1,031) Sep 6, 2011 Minnesota

    1. The number of craft breweries keep expanding.
    2. Sales of the larger craft breweries is declining (with specific examples of BBC and Smuttynose going into foreclosure)
    3. Loans will be coming due, interest rates are rising, inflation is rising, and private equity firms will want their money
    4. Oh, yeah, throw in a typical WaPo shot at the Trump tax cuts and tariffs (the latter of which will "end up walloping the bottom lines of craft brewers", because, you know, the cost of aluminum is such a significant percentage of the CGS of craft beer...)
    5. The previous craft beer bust in the mid-90's preceeded a recession by 1 year
    6. Conclusion: doom and gloom for the USA economy
     
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  4. FatBoyGotSwagger

    FatBoyGotSwagger Meyvn (1,116) Apr 4, 2009 Pennsylvania

    Worked fine for me on my phone no subscription here.
     
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  5. EvenMoreJesus

    EvenMoreJesus Champion (866) Jun 8, 2017 Pennsylvania
    Premium Trader

    And that, not multinational corporations buying up independent brands, is the real problem for craft brewers — and maybe for the U.S. economy. The existential threat doesn’t come from AB InBev but from the small operation down the street coming out with its own IPA or Belgian sour.

    This bit alone shows how little the author understands about craft beer.
     
  6. EvenMoreJesus

    EvenMoreJesus Champion (866) Jun 8, 2017 Pennsylvania
    Premium Trader

    Yeah . . . that was certainly more than a bit of a jump in reasoning.
     
  7. dcw6363

    dcw6363 Initiate (75) Nov 11, 2009 Utah
    Trader

    Some quotes:

    One big past beer boom came just before a recession.
    ...
    The more alarming issue is that older and more recent craft brewers alike have all ridden a wave of investment, financing and consumer spending since the financial crisis in 2008, but that wave can’t take them that much higher. And we all know what happens when a wave crests.
    ...
    A lot of the financing is in the form of loans that take advantage of historically low interest rates
    ...
    Cheap financing. Consumer spending. Tax cuts. All sound familiar?
    ...
    The craft beer bust preceded the turn-of-the-century recession by about a year. It’s impossible, of course, to say whether history will repeat itself. But the times do taste familiar, and the good times in craft beer have turned out not to be so good. Will the good times in the economy end up the same?


    The article tries to imply there is some correlation between a craft beer boom and a coming recession. The case for a correlation is weak; it's more speculation than anything.

    Could be a common-cause situation though.
     
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  8. FatBoyGotSwagger

    FatBoyGotSwagger Meyvn (1,116) Apr 4, 2009 Pennsylvania

    The thing I found most interesting was the point made about the recent lack of investment/buyouts of smaller breweries by International mega breweries. Combine that with a new brewery opening up a day and it seems the writing is on the wall. The comments are amusing also with a quarter of them asking for Sam Adams and Yuengling to be removed from craft status.
     
  9. Smakawhat

    Smakawhat Poo-Bah (6,675) Mar 18, 2008 Maryland
    Premium

    That was the one point that stuck out to me as well.
     
  10. eldoctorador

    eldoctorador Zealot (551) Dec 12, 2014 California

    lol, what an awful article.
     
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  11. rgordon

    rgordon Champion (859) Apr 26, 2012 North Carolina

    I've read worse, but it dd seem to be a conclusion looking for facts. And by the way, it wasn't competition from new brands alone that sunk Smuttynose. They had other issues that were much greater than added competition.
     
  12. AlcahueteJ

    AlcahueteJ Champion (853) Dec 4, 2004 Massachusetts

    Wouldn't the cyclical nature of the economy be the reason there would be a looming recession, and craft beer's recent boom possibly being simply a coincidence?
     
  13. jageraholic

    jageraholic Disciple (322) Sep 16, 2009 Massachusetts
    Trader

    what BBC?
     
  14. MNAle

    MNAle Meyvn (1,031) Sep 6, 2011 Minnesota

  15. threeviews

    threeviews Zealot (556) Apr 18, 2011 Florida

    Well, I think that (if nothing else), the days of large-scale craft breweries (Samuel Adams, Lagunitas, Stone, Dogfish Head, etc) with significant distribution footprints are long gone. Distributors and retailers alike are up to their eyeballs in SKUs and do not have enough warehouse and/or shelf space to accommodate the tsunami of product.

    With a brewery seemingly on almost every corner, people who want to support local can now do so within a reasonable distance from their homes. That is all great. However, it is definitely hurting "big craft." I envisage those ubiquitous craft breweries to continue to lose market share and start to shrink back their distribution and ultimately their production. Like 'em or hate 'em, they employ the largest percentage of people working in the craft beer industry.

    On the other hand, the small nano/micro breweries continue to open up at dizzying frequency, yet usually employ <10 people, wages are modest (at best) and benefits are almost non-existent.

    ...all that said, I really have no idea as to whether the industry will be able to sustain itself without another significant shakeout. When it comes down to it, there is an awful lot of great beer being made and an awful lot of sub-par being made...I say let Darwinism play out and be the ultimate barometer of the future for craft beer.
     
  16. BayAreaJoe

    BayAreaJoe Defender (603) Nov 23, 2017 California
    Trader

    Try opening it in an incognito window - sometimes works on these news sites that say you've hit your free article allotment.
     
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  17. drtth

    drtth Poo-Bah (3,648) Nov 25, 2007 Pennsylvania

  18. MNAle

    MNAle Meyvn (1,031) Sep 6, 2011 Minnesota

    Sorry... poorly worded by me.

    Those were two separate examples cited in the article:
    1. BBC sales decline, and
    2. Smuttynose foreclosure.
     
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  19. drtth

    drtth Poo-Bah (3,648) Nov 25, 2007 Pennsylvania

    Works. Thanks!
     
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  20. drtth

    drtth Poo-Bah (3,648) Nov 25, 2007 Pennsylvania

    Got it. (Clearer now I've had a chance to read the article. :slight_smile:)
     
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  21. nachos

    nachos Initiate (106) Jun 4, 2012 Michigan

  22. MNAle

    MNAle Meyvn (1,031) Sep 6, 2011 Minnesota

    The link was embedded... just not the "display text". I suppose clicking the link is too much to ask?
     
  23. nachos

    nachos Initiate (106) Jun 4, 2012 Michigan

    Sorry, meant to say, embed them correctly!

    I suppose typing the actual relevant, requested information (the name of the company) was too much to ask? Or even, typing out that acronym was too much to ask?

    If you had done the link correctly in the first place, I wouldn't have had to click on the link at all. I mean, that's just proper web design/whatever.
     
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  24. EvenMoreJesus

    EvenMoreJesus Champion (866) Jun 8, 2017 Pennsylvania
    Premium Trader

    Why would Big Beer need to keep buying craft breweries? They've already bought enough and are now growing the ones that they have. It doesn't make sense for them to just keep buying more breweries if the ones that they have are not at capacity.

    Most of the Big Craft breweries that are having problems aren't having them because of competition. They are having them because of mismanagement, a la Green Flash.

    Indeed. Deregulation of US industry and trade wars will be a much more likely causation.
     
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  25. MNAle

    MNAle Meyvn (1,031) Sep 6, 2011 Minnesota

    You are quite the scold, aren't you?
     
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  26. nachos

    nachos Initiate (106) Jun 4, 2012 Michigan

    Querulous, even :wink:
     
  27. Ranbot

    Ranbot Zealot (545) Nov 27, 2006 Pennsylvania

    The author projects the "problems" of the niche craft beer industry [which some argue is not having problems] onto the "problems" of the entire US ~$85 trillion economy [which some argue is not having problems]. Relating the two subjects is a massive stretch, regardless of one's opinions on either. It's like describing a beach based on a single grain of sand.

    Agreed. I've seen worse writing, but a poor assessment doesn't get any better by being written well.
     
  28. Lahey

    Lahey Disciple (386) Nov 12, 2016 Michigan

    The cyclical nature...
    1. Raise prices of everything and hand out loans like candy until people collapse under the weight of inevitable debt.
    2. Give banks and companies breaks while kicking people to the curb.
    3. Wait for the economy to rebuild (while the shattered lives remain so)
    4.reinstate unfair lending practices and raise interest rates all over again.
     
  29. AlcahueteJ

    AlcahueteJ Champion (853) Dec 4, 2004 Massachusetts

    You read, "Running the Government for Dummies" too?
     
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  30. Smakawhat

    Smakawhat Poo-Bah (6,675) Mar 18, 2008 Maryland
    Premium

    The article makes some interesting points, but his theory that "craft" beer success is a barometer of the greater US economy is a hell of a stretch.

    Your going to want to probably look at better indicators like GDP per Qtr, housing prices/sales, consumer spending etc... other than how well your local is keeping the taps flowing :wink:
     
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  31. Squire

    Squire Poo-Bah (2,031) Jul 16, 2015 Mississippi
    Premium Trader

    Craft beer is successful because people like it but if an editor gives me a writing assignment that simple declarative sentence does not an article make.
     
  32. eldoctorador

    eldoctorador Zealot (551) Dec 12, 2014 California

    Haven't BBC sales actually increased this year? I remember reading that, somewhere.
     
  33. MNAle

    MNAle Meyvn (1,031) Sep 6, 2011 Minnesota

    Corporation, yes. Beer, no.

    (Going by memory, so reader beware...)
     
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  34. FatBoyGotSwagger

    FatBoyGotSwagger Meyvn (1,116) Apr 4, 2009 Pennsylvania

    Their beer sales have been steadily declining for years but have been negated by increased cider sales.
     
  35. BayAreaJoe

    BayAreaJoe Defender (603) Nov 23, 2017 California
    Trader

    It's tough to take the article seriously when he stretches the # of breweries in America from a craft beer problem to an overall US economy problem.

    Then he makes a wave analogy with financing issues facing the industry and suggests we all know what happens when a wave crests - but who the hell knows what happens when a theoretical wave analogy crests? They're not the same thing.
     
  36. WhiteHart

    WhiteHart Initiate (35) Apr 16, 2018 North Carolina

    It is not unfamiliar in their historical business practices to buy breweries and close them, at least ultimately. All of the shenanigans of the late 70s to early 90s (but really reaching back into the 60s) speak to that. May never happen on that scale again, especially with such open and hostile tactics, but it could still happen.
     
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  37. jmdrpi

    jmdrpi Poo-Bah (5,304) Dec 11, 2008 Pennsylvania

    And hard seltzer and FMB. From a couple weeks ago:

     
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  38. Norica

    Norica Aspirant (214) Feb 2, 2006 Massachusetts
    Trader

    Can you name 3?
     
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  39. WhiteHart

    WhiteHart Initiate (35) Apr 16, 2018 North Carolina

    1. Olympia: founded in 1896, bought by Heileman in 1983, acquired by Pabst through consolidations in 1999, closed in 2003.

    2. Falstaff: founded in 1840 as Lemp, brand sold to Griesedieck in the 1920s who renamed their operations Falstaff Brewing, consolidations under S&P in the mid-70s who then proceeded to close the plants in St. Louis, New Orleans, Cranston, Galveston and Omaha. The last, in Ft. Wayne, closed in 1990 and the brand became the property of Pabst.

    3. Pearl: earliest permutation in the 1880s, 118 years later...you guessed it.

    Actually, just look up Paul Kalmanovitz and you'll get an idea of what has happened before. 'Big Beer' used to be more than ABI, Miller and Coors. And them bastards were ruthless.
     
  40. pinyin

    pinyin Disciple (359) Sep 19, 2013 New York

    The US economy is somewhat overdue for a recession. We haven't had one since 2008. That may deter more breweries from opening when the coming recession hits. It may also cause job cuts at larger corporate brewing enterprises, but I don't think many of the smaller more popular breweries will be effected much.