Wednesday, June 2, 2010


A topic on several Internet forums keeps coming up addressing the increasing number of craft breweries and the various beers they produce. With more breweries, with each producing more styles of beer, is the craft beer market being saturated? Is this good or bad? Here are my two cents:

It depends. Your local liquor store will probably only sell a handful of craft beers from an even smaller number of breweries. Reasons for this are many, but the top 3, I think are shelf space, sales, and awareness. Unless a liquor store is the size of a grocery supermarket, it cannot stock even regional craft beers. Even if it could, the sales numbers persuade the owner(s) to focus on wine and liquor, as they have higher mark-ups. This means that a store owner cannot rely on beer sales to stay afloat. Shelf space is, therefore, reserved for higher mark-up products. The limited space provided for beer then requires some decision making by the owner of the store. What to put in this space? With Bud-Miller-Coors (BMC, which encompasses all macro breweries) flexing their distribution and production muscles, the liquor store owner allocates more space for these beers, and their "sub-beers" (e.g. Blue Moon, Michelob, Landshark Lager...). Even less space remains for the craft beers. The decision becomes tougher. Making a selection can be made on the basis of sales...which beers sell the most. That path limits variety as the awareness of other craft beers is minimal, for both the owner and consumer. Sticking with those that sell the most perpetuates this lack of awareness. How can we try something new if we don't even know about it? Awareness may be a more powerful factor than at first glimpse. In capitalism, consumers drive the businesses...and the BMC guys know this, hence the bombardment of commercials, adverts, and marketing gimmicks.

So, what are craft breweries (and their supporters) to do? I think it depends on the ambitions of each brewery. Do they want to use their beer as a vessel to riches, or are they content on making a living and perhaps not "make it big"? The former requires massive marketing, production capacity, distribution, and attracted attention (and competition) from BMC. Right now the craft beer market takes about 5% of overall beer sales. That number already has BMC aware of this threat. One thing the BMC guys do well is produce consistent beer. Producing millions of barrels per year, that all taste the same, is no easy task. A craft brewer doing the same would require considerable capital, practice and an even more strict adhesion to quality control. Then they'll have the decision of how they want their product line to look: 4 beers, 5, 6, 10?
If the brewery is content with not making it big (of course, this is undefined term), then staying regional or local is probably safer than challenging the big guys. Production can be more concentrated, distribution less robust, and a product line that can accommodate more different beers styles. Regional breweries usually bottle, but limit their availability to one or two states. Local breweries may bottle/can/keg beer, but rarely are they found outside their state. Some brewpubs don't package at all and sell their beer on-site, perhaps with selling to-go growlers.
I think the "staying regional/local" option is the best for both consumer and brewer. Sure, this limits availability of beers across the States. For instance, we cannot buy Duck Rabbit (NC) beers in Colorado. Yet, that's fine because it doesn't put strain on the brewery, and gives us motivation to travel to North Carolina. It's an adventure. Plus, having a beer in a local brewpub is better than pouring it out of a bottle in my living room.
My two cents.

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