News Washington Post: The craft beer industry’s buzz is wearing off

Discussion in 'Beer News & Releases' started by Smakawhat, Apr 10, 2018.

  1. Smakawhat

    Smakawhat Poo-Bah (6,589) Mar 18, 2008 Maryland
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    JackHorzempa likes this.
  2. ManBearPat

    ManBearPat Disciple (384) Dec 2, 2014 Colorado

    Just wait until everyone starts making hazy IPAs!!!
    Growth will skyrocket.
     
  3. BayAreaJoe

    BayAreaJoe Zealot (512) Nov 23, 2017 California
    Trader

    I'll pass on paying the $1 to read the article. Rather spend it on beer to help the industry before the buzz wears off.
     
  4. jageraholic

    jageraholic Disciple (318) Sep 16, 2009 Massachusetts
    Trader

    I thought it was a pun and they were talking about more lower alcohol options coming out like Pilsners and lagers. I'm all for that as long as flavor doesn't take a hit at the same time.
     
  5. frozyn

    frozyn Zealot (561) May 16, 2015 New York
    Premium Trader

    If you use Chrome, right click and open in an Incognito window. Should let you read the whole thing, at the expense of seeing some ads.
     
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  6. jcos

    jcos Initiate (194) Nov 23, 2009 Maryland

    I have access to the Post. Nothing groundbreaking in the story, the amount of new breweries has slowed a little bit and some have closed.
     
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  7. JackHorzempa

    JackHorzempa Poo-Bah (3,618) Dec 15, 2005 Pennsylvania
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    From the article:

    "Still, Watson and Simpson agreed that it will take some time for the industry to reach full saturation. And albeit at a slower pace, craft breweries are still growing."

    What was not specifically discussed in the article is that most of the new craft breweries that are opening are serving the small, local craft beer market. There is indeed still room for these types of breweries. The breweries that seem to be experiencing a lot of competitive pressures are the larger, distributing breweries like Sierra Nevada, Green Flash, Smuttynose,...

    Cheers!
     
  8. eldoctorador

    eldoctorador Zealot (517) Dec 12, 2014 California

    Anecdotal evidence: My local 7-11 got rid of most of their craft selection, and replaced it with more Coronas, Negra Modelos, Budweiser, etc
     
  9. dcotom

    dcotom Poo-Bah (1,946) Aug 4, 2014 Iowa
    Premium Trader

    NEWS The Craft Beer Industry: "The Washington Post can buzz off."
     
  10. jesskidden

    jesskidden Meyvn (1,313) Aug 10, 2005 New Jersey

    The Brewers Association has been putting out press releases for 20 years about the amazing double-digit growth of the brewers that fit their definition of "craft" - as that growth slows down, it's kinda understandable that all the media that's bought into their PR now reports that fact as news, too.

    But "tasting better (to a Beer Sommelier)" doesn't necessarily help sell beer to the ~80% of the market that still buys and likes the taste of adjunct lagers and light beers.
     
    #10 jesskidden, Apr 10, 2018
    Last edited: Apr 10, 2018
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  11. moshea

    moshea Devotee (458) Jul 16, 2007 Michigan

    edit:ignore
     
  12. BayAreaJoe

    BayAreaJoe Zealot (512) Nov 23, 2017 California
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    That's about all there is to do with your posts.
     
  13. Ray9230

    Ray9230 Initiate (0) Dec 17, 2017 New York

    Macro brands will always sell themselves compared to craft beer which is now all about hype... If its not triple dry hopped, 10 abv and requires you to stand on line for hours it doesnt matter.. Brands like sierra, oskar blues, etc are the ones hurting
     
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  14. cronimi

    cronimi Initiate (84) Jan 28, 2009 North Carolina

    I don't think that's true at all. One, I see no evidence that SN or OB are "hurting". If you have it, please provide. And while there is a fair amount of hype in craft beer, there isn't nearly enough to justify the industry's performance over the last couple decades. The fact is, consumers have been provided more options and have gained a better understanding of what they like. Many, upon tasting craft beer, can no longer return to drinking macro swill. But there are many many more who either haven't tried craft beer or for whatever reason eschew it -- either because of taste, price, availability, etc.
     
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  15. JackHorzempa

    JackHorzempa Poo-Bah (3,618) Dec 15, 2005 Pennsylvania
    Premium

    @jesskidden recently posted about Sierra Nevada volumes over the past few years:

    “2015 = 1.222 million barrels
    2016 = 1.136 million barrels
    2017 barrelage not yet noted in industry sources that I've seen but, according to Beer Marketers Insights (based on IRI scans, so not exact):

    Sierra Nevada improved a bit following tuff product recall early in the year, but ended the year down 5%, shedding 0.7 share of craft (dollars).”

    https://www.beeradvocate.com/commun...ocuses-on-pale-ale.562380/page-3#post-5915894

    So for sure Sierra Nevada declined in 2016 vs. 2015 and likely had a bad 2017 as well.

    Cheers!
     
  16. BoldRulerVT

    BoldRulerVT Champion (856) Oct 2, 2013 Vermont

    With the lead line of more craft breweries closed than in recent memory, a lot of it has to do with the consumer. Its not enough to just be 'craft'. I'm in Vermont and even here there are a good amount of 'craft' breweries that just don't make very impressive beer. As craft beer gets better and better, it's going to weed out breweries that just don't cut it. That doesn't mean the buzz is wearing off. It means consumers are more educated and demanding.
     
  17. Loops

    Loops Initiate (73) Feb 13, 2014 Missouri

    What's the old adage "Only the strong survive" The Craft beer industry growth at break neck speed is over, death no, just life, the weak are being thinned out.
     
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  18. cronimi

    cronimi Initiate (84) Jan 28, 2009 North Carolina

    I had not seen that, so thanks for sharing. Interesting (and somewhat concerning) news.
     
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  19. JackHorzempa

    JackHorzempa Poo-Bah (3,618) Dec 15, 2005 Pennsylvania
    Premium

    Well, Sierra Nevada added some new hoppy beers to their year round portfolio this year (e.g., Hazy Little Things, Sidecar IPA,...). My guess is that they think producing more IPAs will yield increased sales? This hoppy strategy appears to have worked for Stone Brewing in 2017. Whether this is a sustainable strategy?

    Cheers!
     
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  20. Oktoberfiesta

    Oktoberfiesta Aspirant (235) Nov 16, 2013 New Mexico

    A lot of breweries set their future growth paths as always assuming there would be double digit growth.

    A lot of them are also not very good at running an actual business. Loan wise with a slowing growth rate ,What was projected to take 10 years to pay off now is easily in the 20 years range. These places just weren't happy being at 100% capacity. They had to have more.

    I'm always reminded of cigar City who said they had to keep growing in order to make any profit. They got bought out so they were lucky. Some of these other breweries are in for a world of hurt if they can't run their business at current 100% capacities and still come out ahead.

    Yet I don't feel we have hit full saturation or a bubble. There are tons of places that still only sell macro products or 'name brand' craft offerings. Many gas stations or grocery stores are very limited in selection. Definite room for growth there.

    I know many who got into craft and like so many hobbies, they got bored or moved on. I feel the pool of potential craft drinkers is limited. If you haven't already jumped on board, that's it. The macro crowd will have their millions of drinkers for life.

    I'm also seeing a lot of people not going for draft pours any more. There is a true cost analysis going on and they are choosing packaged or growler type fills. You almost need to can or bottle from the onset. Lots of local places are barely bottling stuff and even then. It's small run bombers that go for $15-$20. They aren't exactly captivating a crowd. $15-$20 4 pack of 16 oz. cans is still seen as quite the value.

    @BoldRulerVT good point. So many breweries tried to go into markets with little competition to gain that market presence early. Now others are joining them and forcing them to actually produce solid products. I was in VT for a week two weeks back. Lots of great stuff there but also a lot of mediocre products. Like I mentioned about hobbies and people getting bored, I think people are getting bored of being guinea pigs and buying mediocre products constantly. There are five local breweries I still haven't visited because I haven't heard enough good things for them to earn my money over a few local stallworths. The old me would try anything on first day of opening.

    Question for those somewhat in the know. How long do you think it would take for a 20k bbl facility to pay off a $2 million dollar loan? Let's say 20 turns into 23 and by year 10, they may be at 40k. Reality may be more slated for even growth to maybe 25 in 7 years. Is even growth realistic for these smaller breweries. Can they be happy as small players?
     
    #20 Oktoberfiesta, Apr 11, 2018
    Last edited: Apr 11, 2018
  21. THANAT0PSIS

    THANAT0PSIS Crusader (747) Aug 3, 2010 Wisconsin
    Trader

    I think that this is a result of both the cost (which you touch on) as well as those coming of drinking age being more introverted and preferring to drink at home, which I think is evidenced by how absorbed in social media rather than social activities newer and newer generations are. Newer generations also don't seem as interested in craft beer as my micro generation was when we were coming of age. This is anecdotal, however.

    Cost of draft also just does not make sense to me. Why is a 12oz. pour of something $6 or more when a six-pack of the same beer is $9-10? I get that there are costs to running the business and this is most likely where a lot of the profit comes from (plus even more asinine wine and spirits markup), but it is a bit absurd. There are very few bars in my area that are what I would consider reasonably-priced, and even then, it's not ideal.
     
  22. Prince_Casual

    Prince_Casual Aspirant (280) Nov 3, 2012 District of Columbia

    Rent, equipment, staff, insurance, required healthcare...and that's all on top, of the cost of the brewing process to create the liquid.

    Nonetheless, I agree with what you said, it's pretty damn easy for me to drink a beer or two at home, play with the dog post on a couple of my favorite messageboards/reddit, text my friends, etc, rather than pay out the nose to get literally the same product served to me in a noisy bar. Where I have to again pay out the nose for shitty food, and worry about paying for parking+getting myself home. Pretty easy pass in 9/10 scenarios, and I do save my money for the occasion that I do want to be at.
     
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  23. Prince_Casual

    Prince_Casual Aspirant (280) Nov 3, 2012 District of Columbia

    I agree, a lot of these people feeling the squeeze are definitely not good at running a business, in addition to not really being great brewers, and least of all good marketers. I think money was loaned to people (or personal+investor money is being torched) on the idea that craft beer was an infinite well that would keep serving.

    I don't think these places have a written "business plan" at all, much less one that breaks even at all. What's the endgame? Outright owning your brewery? What if your beer (or beer in general) goes out of vogue? Some prize that would be, a huge ass brewery that's not being used that you sell for pennies on the dollar. Restaurants, even successful ones, close eventually, 99% of the time. What's their goal, pulling out profits, having a good time, owning the building?
     
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  24. BeerPugz

    BeerPugz Initiate (0) Dec 4, 2016 Wisconsin

    Fake news.
     
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  25. rgordon

    rgordon Champion (837) Apr 26, 2012 North Carolina

    Seems like a pretty valid article to me. The headline is misleading, attention grabbing. And as @JackHorzempa noted, there doesn't seem to be a well quantified analysis of the recent boom in local beer growth, both on and off premise. But, I think a pacing off of the overall growth of craft beer is inevitable. I really don't think we'll see a decline like the late 90s and early 00s any time soon.
     
  26. EvenMoreJesus

    EvenMoreJesus Crusader (778) Jun 8, 2017 Pennsylvania
    Premium Trader

    Exactly. Nothing to see here.
     
  27. chipawayboy

    chipawayboy Devotee (429) Oct 26, 2007 Massachusetts

    Competitive pressure or plodding bloated corporate MO? It’s hard to grow Jack when you need to make 100 test batches to market a single beer....:grin:
     
  28. JackHorzempa

    JackHorzempa Poo-Bah (3,618) Dec 15, 2005 Pennsylvania
    Premium

    I have a weird feeling that you will never let Boston Beer Company live that down!?!:astonished:

    Cheers!
     
  29. Crusader

    Crusader Aspirant (236) Feb 4, 2011 Sweden

    The craft breweries have built the craft beer market and at some point they will hit the limits for how large the higher priced beer market can be, and then it will become a question of attaining, retaining and gaining marketshare within that market, a market which may fluctuate between slight growth or decline year over year. With 6000+ breweries there's plenty of competition out there but some breweries, large and small, are still growing, along with the larger market, so what are they doing differently from those in decline? The macros might get away with blaming a contracting market since their main competitors are in the same situation (for how many years now have the US macros been touting decreasing year on year declines as an "improvement in trends"?), but I don't think the same situation applies to the craft breweries. If Sierra Nevada is declining slightly and Founders is gaining by 34% in volumes in the same year it might mean the market is volatile, but it's not like it's in decline. It just means that one brewery's gain is another brewery's loss (the way a competitive market typically operates). Craft breweries might prefer a market where a rising tide lifts all boats but after the build up phase of the market I think that dynamic is bound to go away and be replaced by actual competition for dollars and volumes.
     
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  30. JackHorzempa

    JackHorzempa Poo-Bah (3,618) Dec 15, 2005 Pennsylvania
    Premium

    Patrik, do you know how much of that growth is due to expanding their distribution (e.g., Delaware, Mississippi, Northeastern Kansas,...)?

    Do you happen to know what their organic growth (i.e., within established distribution regions) was?

    Cheers!
     
  31. Crusader

    Crusader Aspirant (236) Feb 4, 2011 Sweden

    It's not as detailed as a report from a bigger company would be but as per this brewbound article "5.2 percent of 2017 sales growth came from new markets.".
     
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