The world of craft beer keeps getting bigger and bigger. Let me, just as an example, talk about the Boise, Idaho area. First we had the Boise Co-op with their craft beer offerings. Then we got a couple bottle shops in Brewforia. Then Wine markets began to carry a larger and larger selection of craft beer. Then you began to see some selections on regular grocery store shelves. Then it went to the convenience stores, finally a place to buy a decent Russian Imperial Stout at 2 am.
Well there is a BIG player getting into the market segment (as they call it). WalMart is going to begin to carry craft beers. At their annual convention in Las Vegas this week their Craft Brewers Pavillion was the star of the show and representatives from Stone and Allagash were in attendance. The fact that Craft beer sales have shot up 14 percent while fizzy yellow lifting juice has decreased by 2% over the last year has not escaped them, and they are ready to jump in with both feet and begin to thrash around.
Clearly this is a good sign of the strides that craft beer has made over the last decade into the mainstream beer market, but will the current and fast moving waters of the massive retailers pull craft beer under? Here is what I mean. Walmart has done incredibly well as a retail chain because they are so large they can tell manufacturers what they will pay for product. To date the craft beer world hasn’t worked that way. Craft is all about flavor, unique ingredients, seasonal releases, and to a large degree rarity. Rarity ends up inflating beer prices and allowing brewers to charge enough for their product to turn a profit.
If Walmart comes in, and begins to demand more and more product, that rarity to some extent goes away. With rarity going away for some beers, what will happen to the others? There are a million different scenarios that could play out here, but my pea sized brain could only come up with two. First, Walmart begins to demand more and more craft beer at a lower and lower price. This makes brewers look to reduce their overall costs to keep profit margins high enough to make it worth their while and BAM, you have Stone’s Arrogant Rice Bastard! I’m pretty sure that isn’t where Craft beer needs to go. Cheaper ingredients almost always means less flavor, and that is where the craft beer geek lives. Its all about flavor for us. The other possible scenario I see is less defined, but involves brewers selling their souls and moving into more mainstream brews that sell well, so you end up with mini macro breweries that again begin to sacrifice quality for quantity to serve the monolith retailer.
So I guess I see this as a good news/potentially bad news event in the world of craft beer. Time will tell, but I’m thinking it could mean changes in the world of craft that we don’t really love. What do you think? Will you abandon the bottle shop for the cheaper prices WalMart will undoubtedly bring to the mix? Let us know in the comments?