Craft vs. Macro: America’s Evolving Beer Landscape, Part 2

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As so many were swept into the 90’s exciting microbrew movement, away from the established large production brewers, they invested their time and money into a new, ever growing cadre of regional brewers. And sure, brewers like Sierra Nevada, Boston Beer (Samuel Adams), New Belgium, Widmer and more have become household names because of that boom.

Many others were not so lucky in the mid 90’s, when growth slowed from 57% in 1995 to only 2% in 1997, not really picking up steam again till 2005. Many threw their hats in to make a buck, without the requisite knowledge of brewing practices, quality control, business acumen or understanding of distribution struggled and often folded. Critics lamented that “craft has a ceiling” back when there were only around 1,000 brewers in the country.

The irony now is that those same brewers who weathered that storm are today dealing with folks saying the same thing – “the market is saturated,” “there’s a craft beer bubble,” “growth is slowing.” What’s the difference now? The long established craft brewers are downsizing because their model, built on the three tier distribution system, is now being nudged off shelves by fast-growing upstarts with unique offerings, a growing retail market of locally focused brewpubs and mass-produced “craft brands” owned by established macro brewers.

Growing Pains

As I mentioned in yesterday’s article, the three-tier model of distribution that emerged following prohibition suited the largest brewers well, yet was now nipping them in ass as the microbrew revolution took hold – locally brewed and served, distributed regionally and word of mouth overtook advertising.

Now even those long established brewers, whether considered “craft beer” by the Brewers Association despite their size or not so because 25% or more of the company is owned by a non-craft brewer, are struggling just to keep up. Last year, Sam Adams seasonal beer sales slowed 18% from the year previous, not to mention their flagship (-12.6%), logothe Rebel IPA (-16%) and even their variety 12-packs (-6%). This month they’re expected to report their first year-over-year decline in revenue for the first time since 2003.

In October, Stone Brewing saw dozens laid-off and Red Hook, of the Craft Brew Alliance, cut in half their workforce at the Woodinville brewery. Even CBA’s last quarterly report focused exclusively on their growth via Southeastern and Northeast contract brewers assisting their “Kona Plus” strategy, with nary a mention of recently flagging sales from their Widmer Brothers or Red Hook breweries. Even a former behemoth, like Pyramid was in the 90’s, has been relegated to the discount beer shelf.

To me it seems clear that the old guard isn’t keeping up with today’s more sophisticated drinkers. They prefer freshly made local suds (an idea central to the enjoyment of the ever popular IPA) and they’re less “brand loyal,” more interested in exploring everything on the shelf.

But lo and behold, the craft segments for both AB-InBev and the MillerCoors brands (Tenth and Blake Beer karbachCompany) have stayed steady or grown. Karbach Brewing, AB-InBev’s last acquisition, is one of the fastest growing brewers in Texas. 10 Barrel has a new brewpub in Denver, adding to their popular pubs in Bend, Portland and Boise, plus a recent expansion of their production facility in Bend. And each of the other brewers in the segment has seen increased production and sales over the past few years.

And with new variations on traditional styles going on tap and hitting shelves constantly, it’s hard to keep up. I recall posting online my first taste of Apocalypse IPA by 10 Barrel in 2015, a year after the sale and being skeptical of it’s long term quality, I was asked by one of their twitter folks to check back with him in a year. I indeed had it only a few months back and to be honest, I didn’t know whether the beer had declined or my taste buds had evolved.

tavour-seal-100k-300x300It’s just not enough to make an IPA, Saison, Stout and a Pale anymore, especially if you’re in a city crowded with sophisticated drinkers. The rabid nerds and snobs of craft beer (myself included) thrive off our promiscuousness – trading bottles with others across the country, ordering shipments of beer via email, visiting multiple taprooms regularly and generally not perusing the flagship chocked shelves of the grocery store.

And remember that Cucumber Crush I mentioned in the first article? That once award-winning small batch Berliner Weisse made with cucumbers is now artificially flavored and tastes like a watermelon Jolly Rancher. This is what mass-production does to best laid plans.

It’s a new world and if you’re not able to satisfy your demographic, you’re slowly dying.

The End Game

Our country’s biggest brewers can only do so much to reverse the establishment of 5,000 craft breweries in the country… short of another Prohibition. The biggest producers certainly have money, history and distribution on their side – the smallest have neighborhoods, a dedicated fan base, the brewpub venue’s focus on retail, and word of mouth in the age of twitter.pfriem

Great brewers will always begat more great brewers. If anything is more likely to sustain smaller brewers and hurt the recently acquired, formerly “craft” brewers, it’s that collaboration breeds future relationships and spreads good
 vibes in craft circles – being branded a sell-out and doing less collaboration to spread the brand isn’t going to help their cause.

Good beer has and will continue to overcome bad beer. Yet whether a Blue Moon, a Cucumber Crush or a Devil’s Backbone brings in a new acolyte, they are more likely to go local in the long run. Whether a brewer is craft or not, the whole industry can prosper or struggle based on this important perception of quality on the supermarket shelves. We all have gateway beers, but we all outgrow them.

And sometimes great brewers stick with their ownership because they love brewing, still get to experiment and teach quality to those who wish to be even better artisans someday. And brewers move, start their own breweries and continue to revolutionize the industry, so just because a brewer isn’t independent now, doesn’t mean they won’t be again. In brewing today, anything is possible.

Header image courtesy of Vinepair.com (cropped for legibility)
Beer photos by author

 

About Warren Wills

Warren is the Assistant Editor & Portland Correspondent for American Craft Beer. Regular contributions include "The State of American Craft Beer" series and the "What the Hell Is" series on beer styles. "Anything worth doing, is worth doing right." ~Hunter S. Thompson
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