What Craft Beer Bubble?
The craft beer bubble or should I say, what craft beer bubble? As you can tell I am not one of those supporters of the craft brewery doomsday posts that keep showing up in my social media feeds. I personally find it rather ridiculous that people think this is a fad and that the number of breweries matters instead of the amount of beer produced.
There is usually the same squabbles about the number of breweries in the US. For arguments sake we will be only dealing with the numbers from the US; mainly because they are ahead of the craft beer curve and there are plenty of published statistics that we can refer to. Speaking of stats, it seems people are getting all freaked out about having over 3,000 craft breweries in the US right now. What’s the big deal? These are made up of mostly micro and nano-breweries and do not contribute a huge amount of barrels to the overall annual production numbers put out by the Brewers Association.
To put things in context about brewing capacity, the Brewers Association reports that the amount of beer sold in the US last year was a little more than 192,000,000 barrels (bbl.) which works out to roughly 4.9 billion gallons or 22.9 billion litres. That is a whole lot of beer! Craft beer had around a 15.3 million bbl., making craft brewers share of the market 7.8% as reported by the Brewers Association. So as you can see those 3,000 plus US craft breweries are only a drop in the bucket (or should I say barrel?) compared to the few huge macro breweries that pump out beer so fast you can hardly see the cans as they wiz by.
While the Brewers Association says that overall beer consumption is down by 2% in the US during 2013, overall sales for craft beer sales were $14.3 billion dollars which is a 20% growth over the previous year. They also say that the overall beer market is a whopping $100 billion and craft beer took $14.3 billion of it. So, the trend is obvious to me – people are spending more money on better beer. They may not be drinking more beer per se; they are spending more money for fewer quality brews. Money well spent I say!
The Changing Landscape of Beer and Breweries
At one time big breweries dominated cities all over the US and Canada. They have now become more automated, cut jobs and expanded more centrally located breweries. Craft breweries have become embedded in our society and our communities. They are involved, donating money and beer to causes that are helping our communities out. They create jobs, pay taxes and the money is usually staying in the area. They employ people in your town; the delivery drivers, the brewery staff, the office staff, distributors, truck drivers, tap room employees, brewery tour guides, sales people, etc. All of these jobs bring in much needed tax revenue and these employees spend their hard earned dollars locally as well.
These craft breweries also bring tourism to places that have had a hard time getting tourism dollars in to their county or city since the latest recession in 2009. There are enough breweries that there are now beer trails in several states that promote beer tourism even further. US Congress as well as several states have changed laws to allow smaller breweries and adjust laws to help breweries expand and increase distribution; all of which increase the tax base. Craft beer has been a very large part of the US economic recovery in my opinion. I am sure we will see governments continue to repeal old, prohibition era laws to continue to help the economy grow.
The only struggle craft brewers may be facing at the moment is shelf space. With the exploding number of brands and styles available these days, it’s a challenge for some breweries to get a spot at the local bottle shop. This may be a problem that will actually benefit consumers in the long run; I see the breweries bringing their A game to get their brews into stores. If a beer is good enough and people keep asking for it at the store, it will get there.
There may be breweries that don’t make it and fail. There could be all kinds of reasons for a brewery closing: lack of funds, poor financial planning, bad location, inferior product, bad management, too small to make profits (too much overhead) to name a few. These kind of failures are common in most industries and breweries are certainly not immune.
The Changing Beer Culture
There was a time that people grew up in a household that probably only drank one or two brands of beer. These same people, as kids, would go and grab their dad a cold beer from the fridge while he was watching the game or visiting with friends. In the process of grabbing that beer and popping it open they probably took a sip here and there, I know for certain I did! This built the next customer base for these brands. So I say in beer, much like in politics, you end up inheriting your parent’s ways. This was never really that big of a deal, when I became legal age there were really only a handful of beer brands. Even though they probably all tasted similar; we were all very defensive of our beloved brand. Then I grew up and moved to a big city; this was a bit of an eye opener. Selection, choices, brewpubs – oh my! It didn’t take me long to change my preference to darker, maltier, more flavorful beer. At this point, I had no idea what craft beer was. Fast forward 17 years or so and things are very different. I won’t drink a macro brewed beer any more – no, I am not really a beer snob. I really can’t stand the taste of it and it always gives me a headache whether it’s a couple or a six pack. When attending sporting events or other functions I will usually drink liquor or just have a couple of bottles of water when macro beer is the only option. I will often try and help friends find better beer to drink however they often have a hard time with the flavors. But at some point people will find a transition beer and slowly crave more full flavored beer until they end up becoming a hop head at some point.
In the end, there is not much in the way of brand loyalty when it comes to craft beer. Sure, people will have their favorites and go-to beers and such but with an unending variety of craft beer bombers showing up on the shelves of your local bottle shop it’s pretty tough to keep buying the same thing repeatedly. With all of that said – there is no chance that the craft beer bubble will burst any time soon. I really think it is still in its infancy. We will continue to see new styles, new hop varieties and great collaborations between brewers. Brewers will continue to spread word of the new beer at beer festivals, beer dinners and the like. We will continue to talk about this brewery or that one as they do amazing things. Our preferences will change with our age or even the seasons but we will continue to enjoy craft beer more and more as the years pass. Those lucky enough to be growing up in this new craft beer culture will hopefully have a very different introduction to beer than I had growing up. I can’t imagine turning legal drinking age and having so many great choices in beer!
If anything the craft beer is merely chewing gum that has only begun to be unwrapped, the bubble hasn’t even started – never mind burst at this point!