One Future, Two Views

In a recent interview with Jim Koch of Sam Adams (Boston Beer Co.) fame, he was quoted in reference to a craft beer bubble that is soon to burst.  His view that we are currently in a bubble that will soon burst reminded me of another interview I read recently from another big name in the beer world.

This other interview with Charlie Papazian one of the pioneers of the craft brewing movement and president of the Brewer’s Association also touched upon the craft bubble.  In his view there is no bubble at all. We are actually on a road to explosive growth. 

Who should we believe?  On one hand you have the largest craft brewer in the US talking of bleak and doom.  On the other a founding father of the whole movement sounds almost polyanna in his visions of the future.  In the US we are currently at a position of brewery growth that we have not seen in over 100 years.  Craft breweries are gaining ground in a market of extreme competition.  The major players, the brewing companies that survived Prohibition, the ones who have had established ground since before the late 70s, have been losing ground for a while now. 

In an era of bigger, better, faster, it seems to follow that the road to survival is to spread out as far and as fast as possible.  Mind you, we have seen the results of this through the mega breweries.  At some point you end up cannabalizing those around you in order to feed your ever expanding girth. 

In a distant past, the majority of breweries that existed were small, local, their patrons were the community.  There was no worry of gaining market share in Cleveland when you operated in Lansing (just an example).  Maybe I am a bit idyllic but hasn’t that been what the craft movement has meant for many; support local, buy local, live local. 

We won’t know what our future holds till we arrive.  But of course the fun of the trip is the journey.  We have much to explore and discovery on our way.

Time for a pint…

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15 thoughts on “One Future, Two Views

  1. Boutique and craft are better than mass-produced, in my opinion. You can get closer to the makers. Makes you almost feel like part of the family. Of course, most people want to grow their business too, but that comes with other risks. The market is both shrinking and expanding, and each company and consumer looks at the market and life through their own prism. Both are probably right.

  2. I think there is still a lot of room for more craft breweries. Craft beer market share in 2011 was 5.7% by volume and 9.1% by dollars. That means there are still over 90% of the dollars spent on beer not spent on craft. If almost 10% of the dollars are supporting 2000 breweries how many can 50% of the dollars support?

  3. I agree with you here. The market is shrinking and expanding in the two areas (craft vs macro). It will continue to do this until it reaches equilibrium. What sucks in the meantime is the loss to the bigger breweries (and Boston Beer is a bigger brewery), they will lose some market share in this process.

  4. The part of this that does concern me is we are entering a situation similar to what happened in the 90s. Because of the growth we are seeing, there are a number entering the market who are doing it for the wrong reasons. Granted we see that with restaurants all the time. But the craft beer segment is still young, so the damage from fallout can hurt the future growth.

  5. I hope so Susan. Beer is like wine, in that the more you learn the more you will know of whats available. For the most part the craft brewers don't really have an advertising budget. Word of mouth is how they market.

  6. In most industries I'd say the bubble is the right one. Look at the car industry, at one time we had hundreds of US manufacturers, we now have 3. Consolidation is part of the natural business cycle in almost any industry. But craft beer seems a good fit to be an exception. For one, the bar to entry is relatively low: you can start a micro brewery for far less investment than a car factory, for instance. Also, part of the appeal of craft beer is the ability to get local, or connect with a singular product made by an individual or small team. In this it's more like a restaurant. Sometimes you want a quick run through McDonalds, but sometimes you want that local flavor, or to eat at a special place with a great chef. Craft beer can coexist with large scale brewing, I think, and with that in mind the bubble doesn't have to burst.

  7. Short and crisp (like a good beer) post. I have to admit, to have worried a tad while reading it until I reached the end – Love your point when you say 'But of course the fun of the trip is the journey. We have much to explore and discovery on our way.' Brewing your own beer is a very personal experience, a way to express yourself and eventually share something with others. As long as there are brewers out there who are passionate about their beers, there will be the beer lovers (like me) who will opt 10 out of 10 times for the small and unknown (to me) names. Bottom-line: We, the beer drinking folks also have much to explore and discovery on our way'. Great blog Jon – keep up to good work!

  8. So Jim Koch says the stores will/have reach their limit. I am not sure about that. I think we will see new stores putting more emphasis on craft beer. And let's not forget about bthe restaurant and beer bar industry growth. i have been reading how chain restaurants now focusing on craft.

  9. The more I read your blog, I am tempted to branch out into the world of beer, but what about my red wine and chocolate on Friday nights? In all honesty though, you're just a good writer, and that will definitely keep me coming back.

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