End to the bubble discussion

Reminds of when people talk about converting BMC drinkers with craft/import pilsners and the like. If the taste isn't different enough most people won't bother and will just stick to what they are used to.

The craft boom here in MN was (and still is to some extent) driven by Surly. They burst onto the scene with aggressive, unique beers and turned a lot of new people onto craft.

 

Those who truly believe there is a bubble will find one. Self-fulfilling prophecies seem to work that way.

 

I have friends who are into other hobbies as much as I am into beer (cycling, music, cars, skiing, snowboarding, etc.) and I have never heard any of them talk about bubbles or care that there are too many options in stores. Not sure why beer fanatics care about this so much. I can see brewers or retailers talking about this, but they don't seem to care as much as the drinkers do.

 

There is so much i hate about this article.

Why the fark does the author show the plot of the close price of the NASDAQ 100 versus the growth of the number of breweries? Is this just to show the brewery growth pattern versus what a bubble pattern could look like? Holy shit, talk about cherry picking data to suit your needs. the first 20+ years of the nasdaq shows the same growth pattern as breweries.

Second, the number of breweries doesn't tell me anything about production volumes and market shares and total consumption. Craft beer is still such a small part of the U.S. and an even smaller part of the global beer markets that it's almost irrelevant; although, in the U.S., craft beer is having more of an impact on the beer market as it broke into double digit market share. The stats show that beer consumption in the U.S. has been falling, but craft continues to grow its market share. But, is craft consumption falling or just maintaining? I believe craft consumption is up but don't have the data to support. I have seen a couple of local breweries start up in the last few years and the successful ones have been able to double their production about every year or two. I think this show more about their business skills than the state of the market.

The catch-all term brewery is garbage. A production brewery is different than a brewpub is different than gypsy brewing. I think there are quite a few brewpubs that could open and support the drinking in their local communities. Their owners may not have aspirations to open a full production facility to sell their products outside of the pub. I think growth here is only limited by the number of cities you can open a brewpub in. It's a restaraunt that has vertically integrated into booze production which is usually a boon for a restaraunt (aka alcohol sales). Production breweries on the other hand have a completely different business model to work with. Some "breweries" have both a brewpub and a production facility but one usually follows the other.

Finally, the author's complete disregard for product pricing and pricing power does not do the analysis justice. We have seen breweries consistently raise prices over the last 8 years at least. Beer is a perishable product so the breweries need to factor in spoilage, but as long as that is taken into consideration when pricing, shouldn't be an issue. What's beer worth, whatever BA's are willing to pay for it.

 

The one thing I don't get is why distributors here in MN bring in so many different (mostly mediocre) breweries from out of state that sit on shelves when it's clear which ones sell (local guys and bigger craft breweries from out of state with good reputations like Green Flash, Lagunitas, Founders, etc.). Can't imagine they make much money on Squatters, White Birch, Atwater, and others like that.

 

Harry Schuumaker is a very knowledgeable but also very old school guy (in my opinion, based on reading numerous linked columns in Beer Business Daily) with a healthy dose of skepticism about craft that was reinforced by the late 90s bust. The paradigm has shifted on him and he can't believe the "explosion" of SKUs. But this doesn't take into account the huge advances in information technology that makes managing that explosion doable. This site, or at least the Mountain forum I most frequently visit, is full of off-premise retailers who handle this enthusiastically, daily. And we have craft-only distributors eager to pick up any slack the various "Eagles" can't or don't want to handle.

And the BA article shoots down his point about excess capacity--and it's a good point, just not applicable on the actual facts, not to say it might not be applicable if capacity starts outstripping increased demand. We're just not at that point on the cycle.

oh and in, say, my state--one Avery expansion = about 30 new 200-500 bbl annual capacity nano-to-small-microbreweries. and non-distributing brewpubs are, as already pointed out above, and in the BA article, really restaurants and irrelevant to Harry's primarily off-premise focus. Typically they don't contribute a single SKU to the "explosion" and succeed or fail primarily on the basis of food quality. A brewpub that fails because of its deficiencies as a restaurant, or even a non-distributing nano that fails because of deficiencies in the quality of its beer or its on-premise experience, are not indicative of a "bubble" or, even, that we are on the downside of a boom-bust cycle.

 

You are shopping at a terrible store with a terrible issue with overbuying obviously.

Maine here flies a week from getting the shipment, Brooklyn Chocolate has gone through 4-5 cases already in a month, Double trouble was gone in a few weeks. That store needs to learn about product management.

 

Reported you for harrassment. You've followed and quoted me in 3 seperate threads with insults.

 

No, I'm shopping around. Some stores are worse than others, but the trend throughout the county is borderline, if not outright, out of date stock.

 

The only thing we have to fear is beer itself...