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The Craft Beer Bubble

7/1/2014

2 Comments

 

Today I would like to discuss a topic that I have discussed with various craft beer store owners and aficionados alike. Is there a craft beer bubble forming?

When one enters a liquor store, what is the thing they are most likely to see? A Bud Light, Miller Lite, Coors Light or Guinness neon sign, display or cardboard cutout with a famous individual. Additionally, when it comes to the fridge with the six packs, the top 3 shelves are often these genetic beers, with craft beers fighting for shelf space.

It used to be that emerging craft breweries were able to vie for this shelf space, but we have come to the point where mere craft status isn't enough. Breweries like Sam Adams and Dogfish, which consider themselves craft, have evolved into "mini-mega" breweries. This has left the small guys fighting for their lives in regular stores, hoping to stay alive by pandering to the small craft beer shops that value diversity of product and practically unlimited options.

The major victim of this has been smaller local breweries. Many of their beers sell out extremely quickly, but at discount liquor stores, people do not understand the difference in quality vs price. (See my article from last month)

So where do I see things going?

At this rate, smaller breweries are not going to be able to grow, except for in a small few places. It will be practically impossible to grow outside of local markets, with a few exceptions. What we will be left with are a medium amount of medium to large sized breweries. Consolidation and absorption of small breweries will occur. We have already seen this with breweries like Goose Island and Blue Point. Large breweries will attempt to trick consumers into thinking they are buying true craft beers, when in reality they are arms of the big guys.

I foresee a bubble forming in the next 5-10 years, and there is little people can do about stopping it. There is limited capacity for new entrants, and the only way to avoid the bubble from popping is for people to stop buying mega brewery beers. Buy local and small, and the quality craft beers we have come to love will stay around. Additionally it is these smaller breweries putting out cutting edge products that may not appeal to a larger audience. The beer is brewed for the love of the craft, not to make the most money.

Cheers!

Scott

2 Comments
Peter
7/1/2014 10:15:42 pm

local is the key! my favorite places to buy beer are the indoor farmstand-type places with a small corner for beer and wine. these places tend to stock 70-90% local brews, all are pretty similar in price to big liquor stores. i used to live in western mass, where i'd go to atkins farm to get amazing beers and meads from the surrounding towns. recently, i was super impressed with volante farms in needham and city feed in JP- both stocking a ton of very limited-run mystic, night shift, element, maine beer co., etc (especially volante farms). new breweries can grow their presence through places like these that will showcase their beers and display information about the brewery. established local breweries can get the fridgespace they deserve.

i've lived in new bedford for the past year and a half, and it's amazing to see how buzzards bay brewing has grown- a year ago i hadn't seen their stuff in boston or out of state, and now it's everywhere i go. bbb is the quintessential local brewery- brewing solid and simple beers in a barn on a gorgeous farm (the taproom is easily one of my favorite places in mass, check it out). they own their equipment and will rent it out to other local breweries, such as pretty things and clown shoes, before these places can acquire their own equipment/space. big companies may buy up one or two of the more conservative breweries in your area, but there will always be local beer outside the bubble.

Reply
Scott Holbrook
7/1/2014 10:31:08 pm

Well said Peter-I completely agree with you. I definitely will check out the recommendations next time I'm back up north!

Can't wait to try BBB as well-I honestly had not hear if them and look forward to trying their stuff

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    Scott is a craft beer lover living in NYC who enjoys sampling new beers and educating friends and family on the diverse and exciting world of beer. 

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