Thursday, May 31, 2012

Craft, Macro and the In-Betweens

Since early this century, craft beer has grown into a force to contend with in the adult beverage industry.  The number of craft breweries today approached 2,000 in the U.S. alone, with overseas craft breweries popping up from Zealand to New Zealand.  For the most part, this is a new industry, not simply one that has grown. This presents several questions:
  1. How was it established?
  2. How did it grow?
  3. Why did it grow?
  4. What does this mean for those breweries that already existed
  5. How will this affect competition in the industries (beer, wine, spirits)
Well, this is a blurry question for it is difficult to pin the establishment of a new industry on one particular moment or person. BUT, Fritz Maytag deserves credit if we were to pin somebody, with his resurrection of Anchor Brewing. From there, breweries like Boston Beer Company (Sam Adams), Sierra Nevada, Leinenkugel's, Pete's Brewing Company, and New Belgium helped cultivate the new industry. Word spread of beers that tasted different than the mass marketed, and quite similar, macro beers from Anheuser-Busch, Miller, Coors and the like. 

The trailblazing effect of these breweries was two-fold. More breweries popped up, and the public's attention was captured. But that's just a portion of the answer. The diversity of America (well, this is my belief anyway) was ripe for plucking by brewers who brewed diverse beers. Finally, those who liked Belgian beers could find some form of them in the States. Same for those who like German, English and Scottish styles of beer. And as time went on the U.S. brewers crept ever closer to matching the quality of their Old World inspirations. 
The new industry grew based on the difference, variety, diversity and culture of craft beer. Yes, culture. Lemme explain. With craft breweries came brewpubs and homebrewers (thanks President Carter). This culture was more of a clique, and cult to some. Craft beer lovers would gather to discover new beers, compare home brew recipes, and ponder life in general. Today, this culture is quite noticeable. Culture is strong, and resists intrusions. More on that later.

Those Existing Breweries:
At first, this new industry meant nothing. To the large brewers this new beer was just a fad, and a very small one at that. Coors then introduced Blue Moon, and they saw its sales numbers sky rocket. Soon Guinness became more popular. A-B joined in with their Michelob "flavor" line, then with Shock Top.  Miller gained control of Leinenkugel's.  Other smaller breweries were bought up, gobbled up, torn up by the big guys. Rolling Rock became A-B property. And recently a beloved Chicago craft brewery, Goose Island, was sold to A-B (which itself was bought out by InBev).  All of this to get a market share of the new market, or to stop the surge of the smaller guys from grabbing a piece of the bigger pie. Whatever the motivations, the big brewers notice the growth of craft beer, and they react with their considerable weight, power and money. (we now see James Bond favoring Heineken and not martinis.  Makes you wanna yell.....KKKAAAAAHHNNN!!!)

Law is one arena where competition is getting...competition. The 3-tier system, excise tax, interstate commerce, on/off-premise sales and consumption, etc. are just several areas where laws affect brewing, beer, consumption, sales and the economy. The big brewers cannot compete with the culture and quality of craft beer, and craft beer cannot compete with the distribution and volume of big brewers. Deciding the tipping point may just be the laws that govern both.
But it's not just breweries who are affected by this 'craft culture'.  Craft spirits and local wineries are gaining momentum. Flavored spirits of odd flavors (marshmallow vodka?) are exploding across the scene. The blandness, even the simple comfort, of non-flavored, base spirits are not attracting the same audience. Consumers want something different, they want quality--or at least diversity--product. They are no longer satisfied with brand loyalty and commercials that use frogs, dogs, comics or celebrities (see: Bond/Heineken above) and not the product itself. 
If one thing craft beer has done for the consumer is that it's made them realize that flavor is important. If a company chooses not to focus on this in their adverts, then it is quite likely this is due to the "familiar" flavor of their product (see: Bond/Heineken above...again). 
What is for sure: the established wine, beer and spirit labels have taken notice to the growing demand of flavor, quality and attention to detail that craft beer has spawned (or awakened).  There may just be a conflict brewing...