A wise man once said “you don’t know what you got till it’s gone.” Actually, it was the 80’s hair band Cinderella, but it’s still a good insight into the way things work – you usually don’t know that the best times are happening until they’ve passed you by. I’m sure Cinderella didn’t realize that they were at their pinnacle when they released that song. It’s kind of ironic, actually.
When it comes to craft beer, I think we should breathe deep and take it all in, for this is certainly the Golden Age of craft beer.
The industry is gaining steam as good beer starts to get recognized by the mainstream, creativity is flourishing, the variety of beers and the number of breweries is truly mesmerizing and continues to grow, and in most cases quality is more important than the bottom line. Great days indeed.
Not to be a downer, but I don’t think they are going to last forever. The money people will soon smell opportunity and the craft beer industry will slowly transform from a loose federation of rebels and free thinkers into a highly organized group of corporate entities. It won’t happen overnight, rather it’ll change bit by bit over the course of years. Actually, it has already begun, just look at the Craft Beer Alliance.
As the craft beer industry matures, you can expect to see corporate breweries taking fewer risks, which could lead to fewer weird and wonderful beers. Ingredient costs will also fall under the watchful eye of bean counters, which might lead to the use of inferior ingredients (or just less of the good stuff). I won’t name names, but this is already happening today.
These days, it seems there’s always a new brewery popping onto the scene making some interesting beer. This may also begin to change. It might become harder and harder for upstart breweries to compete for market share, as the larger, more established craft brewers use their clout to gain and retain shelf space. You can also expect mergers and acquisitions to shrink the number of independent breweries.
The nature of the men and women running the show will change, too. Right now, many brewers started their professional lives as something other than beer makers. Many were fed up with corporate life or felt a calling for brewing and took the plunge. They are rebels of sorts. As the industry grows, they will be joined by young men and women who set out after high school to become professional craft brewers. I’m sure the passion for making great beer will be there, but perhaps some of the rebel spirit that has fueled the current state of the industry might give way to a more considered, even-minded approach to the business of making beer.
Overall, craft beer will most likely suffer from its own success. I’m not saying all will be lost, but the current elements that make the craft beer industry feel like the Wild West or the Dot Com Boom will slowly be reeled in. Territories will be drawn. Googles will be born. Slacks will be worn.
I know this sounds like a lot of doom and gloom, but that’s not the point. I’m sure the beer will still be good, and that’s pretty important. I’m simply saying that the quirky, slightly wild industry I love will be tamed moving forward, and as a result it might be a little less special.
I just want to make sure we all take a long look at the rose while it’s in full bloom, and that we all enjoy what we got before it’s gone.
Beer & Whiskey Brothers 
Its similar to what happened to the cigar industry back in the ’90’s – everyone and their brother (no pun intended) jumped on the bandwagon and there was a lot of crappy cigars. Eventually those that used inferior materials faded away and only the guys making quality stuff were left standing. Like you, I see the same pattern happening within the beer industry where there are too many brewers making some great, some good and some not so good beers. My plan is to taste all the beer I can now and pick my top 25 breweries with the hope they stay around a long, long time!
A good plan, Rob. I think the bigger fish will do just fine, except that they may become a bit more corporate and squeeze out the upstarts. But as long as the beer is good, it’ll be fine.
And you certainly have to look for people and their brother’s jumping on bandwagons! 🙂
I tend to agree that this is the golden age of craft beer, there have been so many great beers on an increasingly larger amount of shelf space recently– but I feel that corporatization of craft beer may already be creeping up around us. For example, I had a work lunch at TGI Friday’s (oh yeah!) and on their beer menu they are featuring a “Craft Beer” selection. Now, at first, I thought, hey this is cool. I can get a Dogfish 60 minute IPA (not exactly an underground craft beer, but hey, it’s a start) with my burger. And it is cool, but I don’t want to see great craft beer get bought out by the “big guys” with huge corporate wallets.
I mean, I just don’t think it would taste as sweet if my Nugget Nectar was brewed by MillerCoors. Actually, I may start stock piling Nugget Nectar next year just in case…
On the flip side, I’m very glad that more and more people are drinking good beer. I think there’s a whole generation of post-college grads that actually have jobs now and want to drink something that doesn’t require a beer bong. CHEERS!
I’m actually physically unable to stock up on Nugget Nectar Brian, because if it’s in the house, I’ll drink it!
I too don’t want to see the day when the craft beers I love are part of a large corporate portfolio, but I’m not sure it’s avoidable. I have no clue actually. Maybe I need to learn more about how the wine world works – it’s probably a good model for where beer is heading.
As far as the wine world goes it is way too different to be looked to in order to forecast what might happen with beer. Beer is in no way near as agrarian based as wine. If you think about it, all the ingredients for beer can be dried out and shipped or other wise preserved and shipped all over the world for processing. The only limiting factor is the water at the brewery. Wine must be made primarily where the grapes are grown and that produces the limit of how much can be produced in a given year. The worlds largest wine grower is a microscopic company compared to Miller/Coors or AB/Inbev. I’d even guess Sam Adams is a fair size larger than the worlds largest wine producer. (That is a hunch). So, I’m afraid you wil need to look at some other corporate entity for a model of what might happen to craft beer.
I dunno, Don. Gallo makes more than 25% of wine in the US, and Constellation Brands is worth tens of billions of dollars. I think they are comparable to the mega-brewers. Then there are all the smaller groups of brands and the truly little guys. I think it’s a model worth looking at.
I think that a portion of the industry will follow the same route as Craft Brewers Alliance and Pyramid/Magic Hat, and all those.
BUT
The reason the craft brewing movement is the way it is, is because those of us CONSUMERS who love to try new things, and will continue to support the interesting, the innovative, and just plain quality. As long as our breed of consumer is in the market place, we’ll still have the portion of the craft breweries that make the craft brewing world so great.
Thank You Evan for not being so doom and gloom, and like we as consumers have no choice in the matter but to just drink shitty beer. Thankfully this is still a capatalist society and while there is a portion of the market that will consume great beer, there will be a portion of the beer industry that will scratch that itch.
I think what will happen more than likely, will be that there will be bigger chunks of market share taken out of the current industrial brewers, who will move to “pseudo craft beers” as that segment continues to grow. As more Budhook, Pyramid, Widmer, Magic Hat, etc type places become more numerous and available, I don’t see those of us “enlightened” beer enthusiasts settling for such. There will always be someone there to fill our niche.
At least the optimist in me wants to think so.
I hope this golden age will continue for lots of years, unfortunately here in Italy we don’t have a strong Brewer’s association like yours… and I feel a soon-to-come fallback in our craft beer scene 😦
I hope not, Filippo. As long as there are passionate beer geeks, you’ll be okay. And if not, there’s always home brewing! 🙂
Nice post Jim. We are definitely enjoying growth and creativity in the craft world. Brewers, by nature, are entrepreneurial so I think there will always be that spirit and creativity. What I think we’ll see, however, is a correction of sorts where distribution and volume is affected. Case in point, Dog Fish Head’s announcement that they’re pulling out of four markets, the UK, and Canada. They realized that their product isn’t living up to the quality and standards that they strive for so they are correcting. There is definitely a difference in their 60 minute IPA in the last couple of years which is a shame, but I hope this will help them in the long run.
There will always be the big players who purchase smaller, more creative, highly sought after breweries to add to their portfolio, which will probably be balanced out with mid-level regional players, which we’re seeing right now. In the northeast, we have the BMCs, Sam Adams, Harpoon, and DFH with a ton of smaller players. I bet this is similar to other regions as well.
Personally, there is nothing more satisfying than traveling and grabbing a few pints at the local brewpub with limited distribution. I hope this never changes.
I agree that trying the local brews is one of the best parts of traveling. I was recently in Dusseldorf and had a blast with all of the altbiers – they were all very good.
I think you have to look a bit deeper into the DFH distribution issue. They might cite quality, but I bet it’s more about maximizing profits. It’s cheaper to send more beer to fewer areas while pulling out of under performing markets. Why send beer where it’s a struggle to sell when other areas can’t get enough, especially when there are economies of scale to be had by serving fewer, larger markets? It’s a sign that DFH is growing up as a business and making hard (and smart) choices based on the realities of the marketplace. They might speak from the heart, but they’re making decisions with their head.
I totally agree on the profitability pov too – great call out. In the end, it’s all business right? I’d rather have DFH be profitable and continue producing a good product for years to come instead of stretching itself to ‘grow’ for growth’s sake.
I’d be happy for the marketing agency we started a little over a year ago to double in revenue organically but I don’t see us becoming a mega agency of sorts. It’s just not in our DNA. Happiness has its boundaries.
Agreed that big does equal happy – look at New Glarus. They made a decision not to be big because that’s not who they wanted to be, and I applaud them for that. I’d applaud even louder if they shipped to New Jersey, but I guess you can’t have it both ways. 😉
I’m also okay with Dogfish Head making sound business decisions, but it goes to show how the industry is growing up. I think we’ll see more of these leading craft brewers talk like they’re “of the people” (citing quality concerns, not profit motives for instance) while making business decisions that leave some folks out of luck.
I’ve been thinking about this issue a lot since Don’s Dogfish Head post. Coupled with all of the books and articles I’ve been reading about the financial crisis, I can’t help thinking about how the current craft beer scene resembles a bubble economy. I really hope it isn’t the case, but we could be at the point where the bubble is about to burst. It would be foolish for smaller craft brewers to assume that the market will continue to grow at the pace it has been growing for the past few years. A sudden dip in popularity could be ruinous for a brewery that expands solely to meet the current demand for their beer.
I’ve heard through the grapevine that Avery is wrestling with their own expansion plans, since their current setup won’t allow them to physically add on to their space. They would have to build a whole new facility in order to grow. Adding new fermenting tanks (like Great Divide is doing) is one thing. Building multi-million dollar brewery, however, is a scary prospect in this economy.
And yeah, I agree with Adam. There is something special about having to take a trip or attend a festival to sample rare beers. I’d hate to lose that aspect of craft beer culture.
The bubble theory is interesting, but I think it misses the mark. Craft beer isn’t a fad, it’s an industry that puts out a better product than the established players in a marketplace with an enormous and dedicated user base. People won’t stop drinking beer, and many have started drinking better beer. It’s hard to see this trend reversing, especially with the growth craft beer has enjoyed during the nastiest economic conditions in 80 years. Do you think fewer people will buy craft beer as condition improve? I don’t.
That said, I don’t know that expansion is the smartest way to go. Even if the industry continues to grow, bigger may not be better. Perhaps acquisition is better than growth – I have no idea, as it’s not my business (literally).
But I wouldn’t bet against craft beer.
Chalk it up to my recent fixation with economic collapse. 😉 I think you’re probably right, since most of the folks who have gotten into craft beer won’t go back to the macro swill. I just think it will be hard to sustain the enthusiasm we are seeing right now. So while we probably won’t see a craft beer crash or a burst bubble, I would not be surprised to see a bit of a plateau effect in the near future.
It’s really hard to say what will happen next, but I agree that the growth the industry has seen will not last forever and breweries will lost to the tides of a changing market.
Wow – that was almost Greenspanian of me!
Let’s hope not! He got us into this mess!
I agree, this is the Golden Age! I think the most fragile part of the craft beer market as we have seen in the not so distance past is the volatility of hops crops. All it takes is one bad year and craft brewers will face financial stress that will shape the type of beer they brew. The craft scene has trended toward using massive amount of hops in almost every American style beer. Even the subtle amber and brown ale recipes are now smothered with hoppy goodness. Industrial lagers don’t have to worry about this too much because they use widely available hops and very little of them relative to the recipe. I would also be concerned about BMC putting a squeeze on hop availability by purchasing hop farms that used to grow many varieties and replacing them with the light lager varieties (Skunkade? Simskunk? Amarillskunk?) There are many ways BMC could squeeze the craft guys financially and I see hops as the weakest link.
Don’t give them any ideas, Matt!!
I think all the big guys use this stuff (or a variant of it):
http://www.hopunion.com/tetrahop10percent.html
Gross.
No way! That’s what I use in the shower!!
Fascinating. I wonder if they sell volumes scaled to the homebrew level. I have to do research now. It seems like a great way to get consistent, measurable bitterness while still allowing full flavor and aroma hop additions.