My man Harry Schuhmacher, in this morning’s Beer Business Daily, takes a hard look at the state of things in the craft beer world and lists some of the many challenges facing in the industry, all of them related in one way or another to the question/fear that seemingly is not going to go away: is all of this amazing success going to turn out to be a very burstable bubbled, a replay of the late 1990s?
Harry says, and has said before (and I totally agree) that conditions are very different now from what they were a decade and a half ago and such a collapse is highly improbably. He does say, and I agree again, that the real question is “with an additional 1,000 breweries in planning, who is going to get a seat at the table if/when the music stops?” He lists a series of challenges such as excess capacity and pricing, capital, tax policy, over-expansion and the like as issues that successful brewers will have to manage. Among “the like,” these three seemed intriguing enough to highlight here and see what you guys think:
Sense of Entitlement / Smugness. Do any of you watch Game of Thrones, and see how the Khaleesi, the young princess, go around with her pretty petulant frown demanding thrones and crowns and respect and yet she lacks any money, experience, or an army? (For those who don’t watch Game of Thrones, Khaleesi has these dragons you see, and….. never mind, it’s too nerdy to reproduce on the page). I’ve met many new craft brewers over the last year, and I get the sense lately that many think they invented beer. That’s okay — that’s just youth. But there’s another issue that I will say is NOT the majority of new craft brewers, but a definite minority: there’s an awful lot of holier-than-thou smugness among certain brewers and beer enthusiasts that borderlines on d-baggery. You can really see it manifest itself on blogs and bulletin boards. My point in bringing this up is that I can see that it turns a lot of people off and we open ourselves up for claims that the industry is too precious by half.*
Bad Beer. With 2,400 brewers, there’s going to be some bad beer. It’s already a problem, we’re hearing. If there’s enough of it, Brand Craft will get sullied again. And not just bad beer, but old beer. We’ve seen the before, and it ended badly. When brewers get in a financial pinch, they start sending beer all over the place, never to check on it again.
Flagship fatigue. Seven out of the top ten craft brewers lost dollar share of craft in IRI scans in 2012 (those who didn’t are Sierra, Lagunitas, and Bell’s). We are starting to see more and more red numbers for old flagship brands in mature markets, like Fat Tire in Missouri or Chicago. When flagships suffer at the expense of one-offs or rotating taps, the winification of beer becomes complete and it becomes increasingly difficult to make money.
*He suggests this blog post as a good example of the blowback against unseemly and often damaging smugness and (this is a recording) I cannot but agree. Nicely done.