It's about the beer
Gina Miller and Bill Keeper
Hey Bill, I just read the Tap Room Newsletter from our friend Kevin over in NJ and was
interested to read that today there In the late ’70s, there were just 44 brewing companies in
the entire U.S. Now, there are nearly 2,500 breweries in the US. I did a little checking and
found out that total includes 409 new craft brewers added only last year. Not only that but
there are another 1,250 breweries are in the works. That's explosive growth by any definition.
My question and worry is can this continue? Are we heading toward overload which will lead to
the decline and maybe demise of the type of beers we both love? We both remember the late
1990s when the beer industry saw low volume growth, excess brewing capacity, and no pricing
power to sustain their long term debts.
Last year 48 out of the 50 states saw an increase in craft-beer production. The two exceptions
are North Dakota and Vermont both of which might be a precursor to what could happen
nationwide. North Dakota is rife with red tape concerning licensing and distribution, and
Vermont. Despite its relatively small population, Vermont ranks 15th for overall craft-beer
production. If the politicians and the neo-prohibitionists get involved they'll make it almost
impossible for the small brewer to survive. As for Vermont I know they have more craft
breweries per capita than any other state but their beer production fell 2.45% last year which
might indicate overproduction or dare we say, people can have enough beer. And no, I'm not
one of them so don't dare say it!
Even if consumption continues to increase as I believe it will there will be more than a few of
the new and even familiar breweries biting the dust. What will be left are newcomers with
access to big capital and intimate industry savvy. That's fine but the craft movement was built
on the little guy's desire to make good beer and learn the business ropes as he went along.
Beer was first not money considerations.
I hate to say it but with 2,400 brewers, there's going to be some bad beer. We've both had a
few of those which hurts the craft beer movement overall. Since there breweries are often
new and underfunded they can't afford to take the beer back and make the needed changes.
Instead they start sending beer all over the place, never to check on it again. More bad beer
get to the consumer and another black eye for the industry. That's why I applaud some of
major craft names who have withdrawn from some states as to concentrate on the demands of
their local market. That means consistently fresh beer for the consumer which makes for a
loyal customer to fuel sustained growth.
I guess I'm just a worry wort but it's just that I don't want anything to happen to this industry that
has provided us with the finest beers ever made.
That's it from me, chug-a-lug, Bill.....see you next month.
Hey Gina, lets keep things in perspective. I agree that the 2,500 breweries in the US is a big
number but it would have to double before we were on par with the per capita brewery rate of
Germany. I agree that there are some bad beers out there but that's why having so many
breweries is a good thing. Ultimately, increased variety and competition will result in better beer
for all of us. Today's beer drinker is too knowledgeable about styles and quality for a company
to count on solid sales just by putting “craft” on the label.
Even with the growth of craft beer the big 3 control about 90% of beer sales which means there's
lots of beer drinkers who can be converted to the good stuff. It's happening ever day so the
potential to expand demand remains exceedingly high and that doesn't even count the wine and
cocktail drinkers who are beginning to see craft beer deserves consideration. Now don't think I'm
one of those people who see a conspiracy behind everything but I wouldn't be shocked to find
out that some of the publicity about craft saturation is being pushed by the A-B/Coors/Miller trio.
You mention what happened in the late 1990s but remember that was a period when there were
a lot, repeat lot, of bad beers being made. You can only fool the consumer for so long. Good
beer will always sell. You and I both travel for beer and rarely consider price. And we're not
alone. Don't underestimate the willingness of the American drinker to seek out and support good
lf you're still worried take a look at wine. It sometimes makes my head spin when I try to choose a
wine since my local store boasts of thousands of bottles. No one is worrying about saturation
with wine so you don't have to worry about our favorite beverage either. Remember there are
more styles of beer than wine so we have variety on our side. That of course means breweries
have to diversify the styles they make. Everyone loves an IPA but if the brewers can educate the
public on other types of beer you'll see even more overall growth.
One issue that concerns me about new breweries is marketing. If some fail that might be the
main reason and not market clutter. Many of the new breweries out there have not realized that
simply getting on the shelf will mean success. You do actually have to "sell" this stuff. You have
to work the festivals and shows. You have to provide tastings. You have to visit beer clubs and
give out as much swag as possible. It's more hustle and effort than expense but it has to be
done to sustain sales. Over-saturation happens when ideas run out and whatever opens up is
just a regurgitation of what’s already out there. There’s a lot more imagination and ingenuity left
for craft beer in many areas
Take this to the bank -craft beer will continue to flourish and grow!
Here's looking at you, kid! See you next month.