Craft Beer's Looming Crisis

I think this is spot on to what the article is saying.

On the other hand, I'm not so sure about this. I don't recall a lot of fruit beers back then. I think the major cause for that correction was a glut in beer on shelves... sort of like now. Then again, back then a lot of the beers weren't as well-made as what we have now, so "culling that herd" might take a little more time.

 

Certainly, I agree with you. But, these articles come out from various sources, with boring regularity. A correction will come, but the important questions are when, and how deep? I'm just a guy on the internet, no economist or industry insider am I, but, I think the fall is farther away than it is near, and it won't be much of a drop. I think the breweries that will be hurt worst are probably the medium sized breweries that have expanded distro. Maybe instead of going wider and shallower, pull back and get deeper, with more loyalty, in your home region.

 

If they are underfunded, it will indeed be a crisis, IMHO. But if they're adequately funded, a correction will probably make them stronger, because "craft beer" is going to continue to take share from "big beer" (unless "big beer" buys all the craft brewers).

 

BTW, For a bit more context, Bryson is not an economist either (you can tell by his misuse of the term "bubble") but as mentioned he has been a pretty astute writer about alcoholic beverages for several years. (One might even be tempted to say he's the Michael Jackson of PA. :-))

 

I read his stuff semi-regularly on the Faceybookers. I wasn't pointing at him in particular, just the fact that these Sky-is-Falling articles seem to appear monthly, if not more often.

 

Everything in this article is hung on this unsubstantiated opinion:

"But even if one figures in direct brewery sales, the recent meteoric rise of craft beers can’t go on forever"

The author could have referenced the causes of the last "bubble' he refers to, and shown how those conditions now exist, and made some effort to justify the '6 months to 3 year' prediction he gave for when the bubble will burst. Unfortunately this is just more opinion, which the rest of the article gives me little confidence to trust.

 

Maybe, but when it comes from someone with a little more insight on the subject, it feels a little more serious.

 

In the early 00s very good brewing equipment could be found at good prices. Following the last microbrew/craft bust, folks were still drinking beer, planning on making beer, but lots of faces changed. Unless there's a big decrease in overall beer volume made and consumed, more than likely things will tick along as ever. Nothing will happen all at once, and marginal operators at any level in the business will always remain at risk. Business is risky. The good news is that good beer has become more of a passion for a greater number of people than before. "Craft" beer is a cherished commodity that many of us will not turn away from- the market may change, but the desire for ever interesting beers seems more well rooted this time around.

 

I am not an economist either so please take my comments with a grain of salt. What has me thinking that the correction may be sooner rather than later is all of the recent activity of craft breweries making business changes. From Victory and Southern Tier selling out to Private Equity to the recent spate of acquisitions of craft breweries by AB InBev and MillerCoors (Tenth & Blake). It has all of the appearance of the rats jumping off the ship. Is this an accurate indicator of a correction to come? Since I am not an economist I am not in a position to truly say but indications are....

Cheers!

 

Quite right! I'd say that what we are seeing these days is Fad riding on top of (and possibly even feeding) a wave of fundamental change in popular tastes (Trend) that has been going on and growing for more than a few years. When Fad changes ponies and goes away there will still be Trend. So I expect we'll probably see a decline (but not a crash) when Fad moves on to something new but Trend and its change continue their steady pace. (How's that for mixing metaphors... :-))

 

FWIW (zero), in some cases, and I think perhaps Victory is one, maybe folks have worked at it, built it, and are at a stage in life where the daily battle is wearing you out. A chance to get out, be debt free, and maybe with some money to show for years of hard work? I can see folks in their late 40's and up maybe seeing that as good shot at a graceful exit strategy.

 

I really loved the durian reference, nasty stuff

 

I personally know both Bill and Ron. Everything they have communicated to me is that they are not "worn out". They still intend to operate like 'owners' of Victory and produce beer for the foreseeable future. The fact that they do not have a huge personal debt obligation during times of uncertainty is a definite plus for them.

We shall collectively see what the future holds.

Cheers!

 

The burst of 00 and cheap equipment are the ashes that allowed this crop of brewers to build themselves upon.

Cheap equipment lowered the entry barrier to a host of brewers since. Some are great, some aren't. Some will fail. THEIR equipment will be dirt cheap again and current, strong brewers can get it to expand or the next group of aspiring brewers will buy it up and try to make their way.

Rinse and repeat.

 

I do often wonder if some of the large, "national" breweries are going to become overextended and in trouble, especially if craft beer becomes more localized. I could do with less Rogue, Green Flash, and Victory on the shelves.

 

If we do see some of our favorite big brewers, middle or small local favorites go belly up, as long as our best of the best brewmasters out there find new homes to continue their artwork of beermaking that we can enjoy, that is what matters most (from the consumer perspective). I just don't want to watch a TV show "where are they now" in 10 years and see all of the top brewmasters flipping houses, doing financial analysis for a bank, driving a dump truck, pro wrestling in the county fair circuit etc.

 

This was the exact thought that went through my head when reading this. He throws out quite a bit of information with very little substantiation.

"When that will happen is anybody’s guess, but it will probably be between six months and three years from now."

 

Even the Voodoo Doughnut series?!

 

I was there in 95 and no one was brewing "very sweet fruit infused beers".