For our 80th Session, our host is Derek Harrison, who writes online at It’s Not Just the Alcohol Talking. His topic for this session asks bloggers to weigh in on the question that pundits and business analysts have been asking and answering frequently in recent months, Is Craft Beer a Bubble?
It’s a good time to be in the craft beer industry. The big brewers are watching their market share get chipped away by the purveyors of well-made lagers and ales. Craft breweries are popping up like weeds.
This growth begs the question: is craft beer a bubble? Many in the industry are starting to wonder when, and more importantly how, the growth is going to stop. Is craft beer going to reach equilibrium and stabilize, or is the bubble just going to keep growing until it bursts?
So on Friday, October 4, let us know where you stand on the bursting bubble hypothesis. Is the bubble precarious and ready to pop any second or as solid as a glass ball?
We talked about this on the beer cruise. I do believe people think they have to “like” beer because it is the cool thing to do. Those of us who love the malty bevy will continue to imbibe and there have been many consumers that have learned to enjoy a complex beverage that was once considered something college kids and rednecks drink. I don’t think it will be a burst, but there has to be a slowing down of the creation of all the new the breweries and beer bars. The market will get saturated soon, within the next 5 years I’d guess. Many of us remember when a large chunk of the microbreweries went out of business. Hopefully it will be a natural selection process, so we don’t lose the best of them.
This is different than the 1990s. It wasn’t only bad beer that caused closures, but smaller consumer base, inexperienced distributors, essentially unknown path to success for breweries who didn’t get everything right especially in unforgiving markets. (everone should have opened on the west coast.)
Today’s issues are different: shelf space, distributor share of mind, consumer fatigue, preferences turning more local, etc. A more complex list for a more sophisticated industry.
My prediction: many, many brewers will go out. But different than the 1990s, no reason why category growth will stop. And there will be 10 people bidding on the equipment of every closed brewery. Go ahead, take your shot!
I agree w/Barry. Don’t know where he lives, but I’ve seen the “natural selection” process go down in the SF Bay Area for moons – the sad thing is that bad business + good product won’t do as well as bad product + good marketing, not to mention the “sugar daddy/mama” factor.
What’s struck me the most over the last 10 yrs has been the # of mergers amongst the macros, which I think has been driven somewhat by the craft industry. Back in the early 90’s Miller tried a few “craft” brews, which sucked, & a few of my homebrew club members called their toll-free # to try to get ingredient lists – all got put off by some “trained monkey” who had to respond from a script. Coors, before merging w/Molson, created Blue Moon & established a pub in the Colorado Rockies’ ballpark (been there; drank other than BM – I hate most wheat beers – the ale styles were decent). InBev made Goose Island an offer they couldn’t refuse, which gave GI nationwide distribution, but at least they had the good sense to let the brewers at the original continue to make quirky brews for in-house & limited local distribution. A-B, before selling out to InBev, tried a few times to make “craft” – the only one I found tolerable was Michelob Amber; the pale ale they made circa 2008 sucked compared to SNPA & numerous others I’ve had @ brewpubs/bought micros’ boittled versions of.
Bottom line: It’s an evolving scenario, the best outcome of which would be for the macros to keep losing market share. What I dread is Sierra Nevada & Lagunitas (who are building plants in other areas to increase nationwide distribution) going the route of Sam Adams w/nationwide TV & radio ads. But, unlike the pretentious twit Koch & his financiers in Boston, their owners are laid-back Californians who’ve done very well by producing excellent products & only spot-advertising in beer geek publications. Local brewpubs who make good beer & serve decent food always will survive if they keep their finances in order & treat their patrons well; ditto for micros who have good product & tasting rooms (& food trucks onsite).