The Philadelphia Daily News’ Joe Sixpack (his family name was apparently Ponykeg, but it was changed at Ellis Island) takes a look at the various arguments trying to prove or deny the impending popping of the craft beer bubble.
The doomsday seers claim there are too many breweries (some 2,800 in the U.S. alone, with many more slated to launch), making too many brands for a limited audience.
Much like independent music or publishing, the only way to survive is to either carve out a big enough niche and keep your costs low (and prices high), and be happy just to stay in business. Or you can sell out to Big Beer like the folks at Goose Island, ensuring the survival of the brand you created but ceding control. Alternatively, small-to-medium breweries can band together as one company or consolidate things like distribution and other expenses to help stay afloat.
And even if a craft beer is frickin’ awesome, many of them have to charge a premium just to make any money. Alas, while there are plenty of people willing to drink whatever’s cheap, craft beer drinkers only account for about 10% of all sales.
“The portion won’t grow unless craft brewers drop prices and begin advertising during the Super Bowl,” writes Mr. Sixpack, “and that’s never going to happen.”
So that’s it, right? Nothing left to do but call it a day and watch as the craft brewers go all Hunger Games on each other… Not so, claim the optimists in the industry!
“I don’t think the bubble is about to burst,” the owner of the recently opened Conshohocken Brewery tells the Daily News. “If anything, we’ll be taking an even bigger bite out of the big guys.”
Those who say the bubble isn’t bursting (or who deny the existence of a bubble) look at the same stats as the pessimists but see something else in their crystal beer stein.
Too many breweries? Pish-posh! If the U.S. had the same brewery-to-person ratio as Germany, there would be nearly double the number there are now, and that would still only be about two-thirds of the 7,000 wineries currently operating in the U.S.
And this business about brands cannibalizing each others’ market share? Pure gibberish, claim the optimists who point out that most craft beer fans are rarely dedicated to a sole brewery or brand and — like oenophiles — are often looking to explore and give new beers a try.
So the future of craft brewing isn’t about taking each other’s audience, it’s about convincing the casual beer drinker who orders a Bud or a Coors because he just doesn’t know better.
And the glass-half-full types claim that the children are the future of craft beer — or at least they will be when they reach adulthood (or get passable fake IDs; not that we condone that, but we know a guy… never mind).
Many people of my generation — those who remember the advent of the video game, who can recall the first e-mail they wrote or the first computer they bought — had to be converted to being craft beer fans. The next generation, many of whom are growing up and eyeing with curiosity those dark bottles with the oddly illustrated labels. When these kids start buying beer for themselves, it’s likely that a larger percentage of them will want something other than the stuff you can get by the gallon at Dollar Beer Night.
Obviously, some small companies will fail — whether it’s because they made a bad product or just didn’t know how to sell it — that happens in any industry. But here’s hoping that we have at least a few more rounds before they ring the last call bell on this bubble.