The Landscape of Beer

The SessionThis post is in response to Jay Brooks’ The Session. Each month a guest host invites beer writers and bloggers to address a topic of his choice. In August, Allen Huerta, known online as Active Brewer, selected “The Landscape of Beer.” He asks, “How do you see that landscape now? What about in 5, 10, or even 20 years? A current goal in the American Craft Beer Industry is 20% market share by the year 2020. How can we get there? Can we get there?”

This is my response.

Four months ago, I watched Charlie Papazian walk onto a stage in Portland, Oregon and tell 11,500 people, “I personally get passionate about doing the right things.”

CBC Portland

CBC Portland, photo via craftbrewersconference.com

The man had just received a reception worthy of a rock star or a presidential candidate. The legendary founder and president of the Brewers Association was kicking off the 2015 Craft Brewers Conference with a speech titled, “The Past Doesn’t Define Your Future.”

When Papazian told the attentive crowd, “My message to you is don’t let others define you,” I felt like I was at an old-time revival and should shout, “Amen, preacher!”

That moment was an amazing metaphorical snapshot of the craft brewing landscape today. Craft brewers tend to be a passionate bunch. They’re resourceful, creative and independent. They like to push boundaries—in their brewing and otherwise—and they don’t care for others trying to define them or their beer.

Yeast Project Participants Luke, Paul, Leslie and José

A March homebrewers’ meeting in Monterey, CA

The image, though not necessarily the reality, of craft–and homebrewing culture–is that it’s cool. It’s hip. It’s beards (on the guys), tattoos, flip-flops and relax, don’t worry. It’s discerning consumers, mostly under forty, willing to pay extra for good quality and a rewarding tasting experience. Who wouldn’t want to be part of this culture, of this veritable movement?

At the close of 2014, there were 3418 U.S. craft breweries, an increase of 19.4% in one year. Craft beer now has 11% of the total U.S. beer market and the magical “20/20” has become the new mantra—20% of the market by 2020. It’s a beautiful, exciting time for craft beer producers and consumers.

And the macros, primarily Anheuser-Busch and MillerCoors? They’re not exactly hurting. They are, however, keeping a close eye on craft beer. Remember Budweiser’s “It’s not brewed to be fussed over” commercial during this year’s Super Bowl? That came on the heels of AB’s purchase of Elysian Brewery in Seattle, which they added to their portfolio of formerly independent craft breweries that includes Goose Island and Redhook. Shock Top is an AB creation, and Blue Moon is Coors’ equivalent.

The question of how long craft beer can continue this hot streak comes up frequently. It was certainly a topic at the Portland conference. Folks in the industry cite all sorts of statistics that indicate the pace will continue for the foreseeable future. A related question is, can craft beer sustain the almost religious fervor of the faithful?

Great American Beer Festival via Bryan Roth and GABF

Great American Beer Festival, photo via Bryan Roth and GABF

That depends, in part, on bringing new converts into the fold. As beer writer Brian Roth said so eloquently on Monday, August 3, in a post titled “Color of Beer: Addressing Our Whiteness,” the producers and consumers of craft beer are overwhelmingly Anglo. The post provoked a minor firestorm of online racist comments, but it made many more of us pause to consider our answers to Roth’s thoughtful questions.

The numbers of African-Americans, Latinos, Asians and women producing and consuming craft beer will grow in the coming years. The product and the culture attract younger audiences, and this demographic is growing less white by the day. Craft beer would do well to welcome and pay attention to Americans over forty, too. Many have healthy disposable incomes but came of drinking age when craft beer wasn’t on the radar for macro beer or most beer drinkers. Plenty of them still think all beer tastes the bargain basement beers they drank at parties back in college.

Craft beer—particularly employees who actually sell to the public—will need to educate more than ever in the future. Ten years ago, how many brewpubs had a barrel-aged or a sour beer or a cider on tap?

As for brewers, increasingly, the romantic image of the passionate self-taught homebrewer gone commercial is being supplanted by brewers with formal training. When Charlie Papazian and now billionaire Ken Grossman were twenty-one, there were only a few places in the U.S. to study brewing. That’s no longer the case.

And craft breweries will continue to evolve. The largest—Sam Adams, Sierra Nevada, New Belgium—will grow even bigger. Those major craft beer players now have the income, net worth and track record to attract investors and financial institutions eager to loan them great sums. There will still be a market place for the homebrewers going pro, but it will be harder as the competitors grow in number.

Craft beer lobbyists and others in the industry will continue to work to educate lawmakers who will, in turn, do away with outdated laws, particularly at the state level and pass favorable legislation.

I predict the toughest challenge in five to ten years will impact many of today’s smaller breweries that are looking to grow, particularly those currently producing under 30,000 barrels per year. Many will reach the familiar point in growth when they have to put on the brakes or else take on investors or loans so huge they have to put up their first-borns as collateral.

Allen Huerta (red shirt) judging a homebrew competition, photo via Bryan Roth and Allen Huerta

Allen Huerta (red shirt) judging a homebrew competition, photo via Bryan Roth and Allen Huerta

Will 20/20 become reality in five years? Honestly, I see it as a long shot. I’d put my money on a 16-17% market share, though. As Papazian said in Portland, “Your success is the result of developing your brand and your image; knowing who you are and why you do the things you do. It’s about establishing core values and defining who you are as a company. This is the cornerstone upon which to build your brand.” So long as the people in craft beer follow this advice, the industry as a whole should continue to thrive.

One thing is certain: craft beer’s next decade will be an exciting time and those of us on board are in for a great ride!

Comments

  1. An interesting article. I think the 20/20 goal is a bit pie in the sky as well but could see craft beer breaking that 15% line. Hopefully it’s closer to 20% but I think Macro’s mission to buy up multiple craft breweries will keep 20% out of reach for a while longer.

    And diversity is something I fully expect to see much more of. With colleges now offering brewing courses the opportunity to reach a broader audience and by extension bring more diversity into the business side, should grow.

    I think there’s much more diversity on the part of the craft beer drinker but with still a long way to go. The craft beer group I belong to is a very diverse group. But whether we are a microcosm of the craft beer fan base or an anomaly, I have no idea.

    There’s certainly a lot to be excited about when it comes to the craft beer landscape, as well as much to be trepidations about. Can this level of growth be sustainable and keep it’s quality level? Can craft beer survive the Macros turning their attention/ire its way? The next decade should be an interesting one.

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