Category Archives: beer industry

No, There Aren’t Too Many Breweries in the United States

Not yet, at least. But for some odd reason, the subject keeps climbing back into the mainstream, most recently in a story by Joshua Bernstein in Bon Appétit online, which when shared on Facebook emerges with the headline “The U.S. Craft Beer Market Is Way Overcrowded – Bon Appétit.”

That sentiment is not actually reflected directly in the story, the online version of which boasts the more equivocal title of “America Now Has Over 3,000 Craft Breweries—and That’s Not Necessarily Great for Beer Drinkers,” but the sentiment has launched a flurry of discussion around the web.

So let’s get this straight: 3,000 breweries are NOT too many for the United States and increased selection is NOT bad for beer drinkers.

Got it? Good! Now, here’s why.

At 3,000 breweries, the United States is now beginning to approach the breweries per population ratio we have in Canada, and in fact, depending on the brewery count for Canada you use – an accurate count in the country is almost impossible to ascertain – could already have reached the same level. But we’re not exactly awash in breweries north of the border, and I have yet to witness the “bloodbath” predicted by Sam Calagione in Bernstein’s story.

That brewery to population ratio, by the way, is about one per every 105,000 people. Which in a global context is actually pretty laughable.

How so? Look at the United Kingdom, for starters, where they boast a brewery for roughly every 55,500 citizens. Or Germany, with one for every 61,500 people. Or little Belgium, where every 70,000 individuals could claim a brewery of their own, should they be so inclined.

And that’s counting only traditional brewing powers. Wade into the numbers of nations that are experiencing their own craft beer renaissances, as is the U.S., and some of the numbers drop even further, like Switzerland, Denmark and New Zealand.

But wait, I hear American brewers arguing, we have the three tier system, which means that distributors are going to fill up and not want to carry any more brands. Which is why, I counter, microdistributors are beginning to appear all around the USA, and will no doubt continue to do so for as long as the demand for their services persists. Besides, more and more states are allowing self-distribution, which is surely sufficient for smaller operations.

But even so, I hear in the distance, it’s not necessarily about the distributors, but the proliferation of SKUs (the acronym for “store keeping units,” the short form for a distinct item in retail sale, such as a bomber of beer, a six-pack or a case, which represent three SKUs even if they are of the same brand). Except that most of these little start-ups are selling not from variety stores or supermarkets, where SKU quantity is an issue, but from their own stores or pubs or one or two of a handful of specialty retailers. And as for bars, well, more taps are coming on-stream daily in the United States, both from new bars and restaurants and existing ones which are changing from regular brews to crafts. (Even Pete Coors sees that happening, although he hasn’t yet quite figured out why.)

Regardless of all the above, however, I’ve still the most compelling reason why a beer bloodbath is not forthcoming in my hip pocket. Now pay attention, because here it comes.

Roughly 92% of the overall American beer market is NOT craft.

That’s about 180 million barrels of beer, folks, which is a whole frigging lot! So long as craft brewers continue to eat away at that part of the market, as they have been doing for decades now, there will remain plenty of room in the marketplace for 3,000 or even 4,000 breweries. And for brewers who don’t think they can chip away at that massive core of the marketplace, well, you might as well hang up your wellies now.

 

 

 

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“More Bad News for Beer” is Actually Good News for Beer

My colleague and friend, Jack Robertiello, recently wrote a story for Nightclub & Bar Magazine entitled “More Bad News for Beer.” I was intrigued and surfed over to the website to read it, and then walked away smiling. Here’s why.

The “bad news” that Jack reports is almost exclusively about the big name, mass-produced convenience beers that we all know and probably don’t love all that much. You know the ones I’m referring to, those that distinguish themselves from the competition by how cold they are, how long they’ve been around or how “innovative” their bottle may be. (Amusingly, the side panel ad that appeared when I loaded the online version of the story promoted the “new bottle” for Miller Lite.) And yes, for such brands the news truly is bad.

At the heart of Jack’s story is a recently published consumer survey reporting declines in the overall popularity of beer and the numbers are indeed, on the surface, at least, bleak. Two percent fewer adults of legal drinking age were identifying beer as their “go to” beverage compared to the same time period in 2012; 21 to 27 year olds were deserting beer in significant volumes, with 33 percent saying it was their favourite alcoholic beverage as compared to 39 percent a year earlier; and three percent fewer men were siding with beer than did in 2012.

Thing is, though, those sad numbers are almost exclusively about big beer. How do I know? Well, check this out: “The major reason given by 21-27 year olds when asked why they are consuming less beer – 39 percent said they are ‘getting tired of the taste of beer.’” Sounds more like comment about a Bud Light or Coors Light than it does a Dogfish 60 Minute IPA or New Belgium Ranger, doesn’t it? And about craft beer, this is about the most negative thing Jack has to report: “…and crafts, while increasing dramatically, offer a wild and ever changing array of selections that can make the average consumer’s head spin.”

Too much selection and variety in craft beer may be an issue down the road, but judging from the bar owners and operators, and consumers, I’ve been speaking with over the last year — not all of them by any means beer aficionados or craft specialists — it isn’t now.

In fact, where bars and restaurants are concerned, variety in craft beer appears to be a big selling point, since people generally go out for experiences they can’t otherwise get at home, ie: new varieties of draught beer. But don’t believe me, believe the Adult Beverage Insights Group of the research firm Technomic, who report that when only bar and restaurant sales are accounted for, craft beer’s overall market share skyrockets from about 6.5 percent to an impressive 15 percent of total beer sales.

So yes, this really is a good news story.

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Bigger, Stronger, Hoppier…Just Stop It!

In case you missed it, a Scottish brewery called Brewmeister announced yesterday that they had topped their own record for the world’s strongest “beer” – reason for the quotation marks to follow – with a 67.5% alcohol liquid called Snake Venom. The bottle, The Scotsman reports, comes with a warning that no more than the contents of a single, 275 ml bottle should be consumed per sitting.

There is so much wrong with this that I scarcely know where to start. But I’ll try.

First up, unless Brewmeister has somehow come up with a way for yeast to survive in a ridiculously high alcohol environment, this is not a beer and neither is it the product of brewing per se. It is something that was once a beer before it was freeze distilled into a spirit, as are the slew of other “world’s strongest beers” that have come to market in recent years. (I’m looking at you BrewDog and Schorschbräu.) When you brew a beer, you ferment out sugars and produce carbon dioxide and alcohol. When you concentrate that alcohol by eliminating a large amount of the water content, that’s distilling. Period.

Secondly, who cares?! Producing the world’s strongest “beer” is right up there with producing the world’s most caloric hamburger and the world’s most tannic wine. It’s an empty, useless gesture than has nothing to do with the item intended to be consumed and everything to do with laying claim to a pointless title.

Thirdly, this is irresponsible to a massive degree. The one bottle per sitting that the brewery recommends you not exceed contains an enormous amount of alcohol, 185.625 millilitres by my calculations. To put that in perspective, it is the equivalent in pure alcohol of drinking just under 62% of a 750 ml bottle of 40% alcohol spirits, or in other words, enough booze to potentially make a person very, very sick.

And fourthly, this kind of “bigger, stronger, hoppier” bullshit is precisely what craft beer is NOT about! Beer should be about flavour, not strength or massive, unbridled bitterness, and headline-grovelling attempts like this simply undermine everything that skilled and dedicated artisanal craft brewers around the world are trying to achieve. As Garrett Oliver once famously stated, no chef goes bragging about how they make the saltiest soup, and neither should anyone proud of their brewing skills be wading into the “bigger, stronger, hoppier” realm.

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Shifting Sands in the Northeast

Craft beer in North America was born in the west, that much is pretty well documented – Anchor and New Albion in California, Horseshoe Bay and Granville in British Columbia, Yakima Brewing in Washington, etc. It thrived there, too, in the early days as well as still today, but thanks largely to Jim Koch, what we then called microbrews came to national prominence via not the west, but the northeast.

I refer, of course, to the Boston Beer Company, based in and typically associated with its namesake New England city, even if its beers were then, as they still are now, largely brewed outside of Massachusetts. The somber face of Boston Beer’s “Brewer Patriot” Samuel Adams was what introduced most Americans to craft beer, and the expansion of the Boston Lager to state after state after state played a huge role in opening up the national beer market to small, independent beer brands.

It was with this in mind, and after far too long a hiatus, that I returned to the U.S. northeast this past summer. After one hundred-plus beers, about 1,600 miles of driving and a whole lot of thinking, I arrived at the following conclusions and observations:

(Read more at The Celebrator…)

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Growing Up, Growing Big

Back in the 1980’s and right up until close to the turn of the century, what we today call craft breweries were referred to as microbreweries. The reason for this was that, relative to the massive brewing companies that dominated the marketplace from New York to Vancouver and Rome to Tokyo – pretty much any place beer was sold, in fact, other than Germany – these new, upstart breweries were indeed “micro.”

The above will not come as a revelation to most readers of Ale Street News. What may surprise you, on the other hand, or at least serve as a reminder of something you take largely for granted today, is that the size relationship that defined microbreweries then is still largely true today. Yes, even in these times of exponential growth, of craft market share approaching double digit territory, of Boston Beer’s Jim Koch being ‘outed’ as a billionaire, and of companies opening second or even third brewing facilities, the constant expansion and consolidation of the majors still make the largest of the craft breweries look pretty much, well, micro.

(Read more at Ale Street News…)

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On Bubbles, Craft Brewers, the BA and Naysayers

On Facebook yesterday, I posted this link. Then all heck broke loose.

(In truth, it wasn’t that big a deal, hence all “heck” breaking loose, rather than all hell.)

Various people chimed in, some of whom mentioned to me privately that they had already taken Mr. Watson to task for what they viewed as, at minimum, a too rosy view of things, and at worst, a full-on effort at propagandizing. Me, I thought it was a pretty decent response to what I’ve been reading in the media of late and hearing from certain brewers for over a year now. (Remember that the BA’s main audience is the craft brewing community – the article actually appears in their “community” section –  and therefore it is reasonable to assume that those nay-saying brewers were at least high among their intended audience targets.)

Here’s why:

-        There have been plenty stories of late about the craft beer “bubble” and whether or not it shall shortly burst. The article is, to my mind, clearly intended to balance those stories, many of which have repeated what I would view as misplaced assumptions – more about those below – and I think did a reasonable job of it.

-        In terms of brewery numbers, what Mr. Watson states is true in that the United States is not even close to brewery saturation when compared to other markets, including Canada, the United Kingdom and Germany. In order for parity with those and other countries to occur, on a brewery per population basis, the U.S. would need to double the number of breweries it currently boasts.

-        The suggestion that the market for craft beer is not growing is false. Critics point to the relatively stagnant nature of the American beer market, but that misses the point. Major beer brands have been in free-fall for the past several years – Bud Light has experienced five years of declining sales! – which has freed up major amounts of market share for the craft brewers. (And even so, the U.S. beer market grew 1% last year, which amounts to an additional 2 million barrels of demand.)

-        New breweries regularly come to market with small amounts of brewing capacity, as little as a few hundred barrels. As such, the impact of the regularly reported 1,200+ planned – note, not work-in-progress, but planned – breweries will be minor. (1,200 x 500 barrels = 600,000 barrels, and that’s being extremely generous on the production numbers side.)

-        New outlets for craft beer sales are coming online on a very regular basis. As someone who has worked with hospitality companies numerous times over the past several years and annually speaks at conferences involving top hospitality executives, I have seen the interest develop and grow first hand. I noted last year that when the restaurant company Darden (Olive Garden, Red Lobster) bought the multi-tap chain Yard House, it represented a sea change in the market for craft beer. That Yard House has been Darden’s top performing brand over the last year only cements that observation.

-        To suggest that the graph Mr. Watson presents is comparing apples to oranges – ie: financial data to brewery numbers – is to miss the point. In my view, he is clearly observing that the shape of the dotcom bubble and the craft beer “bubble” are apparently quite different.

Of course, none of the above is to suggest that unrestrained growth in the craft beer sector is sustainable indefinitely – you’d need be an idiot to infer that. But the likening of the current times for craft brewing in the United States to a “bubble” connotes the idea that the “bubble” is about to burst, and I’ve seen nothing that suggests it will any time soon. Mr. Watson’s analysis might be the most cogent or thoughtfully presented, but its conclusion is, I believe, correct.

There will be failures in the craft brewing sector. There may even be a number of them within the next, say, five or seven years, but even a few hundred mostly small and off-the-radar breweries going out of business is not about to burst any “bubble.” Craft beer is on track to continue its growth – all market indicators suggest as much, including the travails the big brewers in North America are experiencing these days – and that means there will be market share to fill, as much as 2 million barrels this year and perhaps as much or even more in 2014.

It will require a lot of brewery expansion à la Sierra Nevada and New Belgium, plus a large number of new brewery arrivals to fill that capacity. The thirst is evident, and I see nothing to suggest it is even close to being fully quenched.

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How to Write a Beer Story for a Fitness Site

Step 1: Collect a bunch of beers with “light” or “lite” in their names.

Step 2: Ignore fact that it’s the total number of calories ingested that count, rather than calories per bottle of beer, by oft-repeating phrases like “If you’re someone who likes to have more than a few in one night, this may be the way to go” and “it’s a significant savings — especially if you have more than one.”

Step 3: Regurgitate marketing pap from brewery websites, like “A brewing process that takes about twice as long as the average beer keeps calories and carbs down.”

Step 4: Pretend that the whole craft beer “thing” has never happened.

Step 5: Assume your audience is composed entirely of the feeble-minded.

That’s it. Follow the above and you, too, will be ready to start writing for dailyburn.com!

15 Better-for-Your-Body Beers

15 Better-for-Your-Body Beers

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