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
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