Reports of Beer's Death Greatly Exaggerated
Let's start with Gallup, which sounded the gong of doom first, one week ago. Each year they round up a bunch of lushes and ask what they drink, and the results are usually pretty interesting. This year's edition was no exception:
I started seeing posts like this one from the Atlantic commenting on the findings with shocker headlines like Why Are American Drinkers Turning Against Beer? Writer Derek Thompson lasers in on the youth trend and tries to get to the bottom of things by talking to unnamed beverages analysts for the poop. (You can follow the link to see how fresh the theories are.) Ah, but I have an advantage Thompson lacks: I am old and have been writing about beer for a long time. This Gallup thing is fun, and long-term trends are valuable, but you shouldn't look at one year, compare it to a year in the distant past, and extrapolate. (I know because three years ago I trumpeted the finding that young women were flocking to beer and that turned out to be ... statistical noise.)
The problem? The numbers jump around a lot. Let's take a look at that young person's stat. It does seem alarming that only 41% of America's youth prefer beer (though it's still 13% above liquor at number two). Yet let's look at the totals from the last three years: 51%, 39%, 45%, and now 41%. You see, it hops around a lot even among the same group answering the question. The trend is toward more diversity in what they're drinking, but beer still has the lion's share.
Now, the second panic was sparked by Joe Stange, who wrote an article for Draft Magazine with its own screamer headline about what is inevitably now characterized as craft brewing's "boom": Will It Fall? Stange gets answers on both sides of the aisle. Some say craft beer is headed for collapse others say pshaw. On the one hand, he goes to brewer Dylan Mosley of Civil Live in St. Louis for my vote of the year's best quote: "Seriously? It’s beer. You know how many people drink beer? If I opened a hamburger joint, nobody’s going to be, like, 'Hey, you know how many hamburger joints there are?' They’d be like, 'Sweet! Another hamburger joint!'" But then he gives beer geek Ashley Fox the final word and she says--doom gong please--"all bubbles burst."
And from that jumping-off point we get the more definitive judgment from Lew Bryson, an old-timer like me who lived through the 90s plateau. "'Will it fall?' Yes, most definitely." I wanted to clarify that Lew meant the actual barrelage would fall, not just the growth rate. He meant barrelage: "It's definitely possible. Denying it is denying historical fact. Everything crashes, eventually."
I don't buy it.
The American beer market is 200 million barrels strong and has held steady at that level for two decades. Of those 200 million barrels, craft beer, by whatever definition you want to give it, is definitely no more than 20 million barrels, or about 10% of the total. (Brewers Association numbers, which show the US consuming about 15 million barrels in 2013, skip beers like Widmer/Redhook, Blue Moon, and Schell Berliner Weisse for reasons that have nothing to do with beer. Americans think of all of those as craft beer.) Now you have to ask yourself: in a 21st century world where fragmentation is the way of all things--media, pop culture, the arts, and consumables--why would we expect mass market lagers to continue to hold 90% of the market? Nothing has 90% of any market.
Could the United States manage to support a craft beer segment that was 15% of the total beer market? What about twenty or twenty-five? Of course it can. We have tons of laboratories where the experiments are happening in real time. So far, in each case, where craft brewing catches on, it grows faster. No doubt there's a plateau, but places like Oregon haven't hit it yet. The new, far crappier Oregon Brewers Guild website no longer lists these stats, but I recall that our consumption is around 20% and growing each year. And Oregon's market keeps growing and getting more crafty. This makes complete sense: fragmentation begets fragmentation; choice begets choice.
I challenge proponents of the "fall" theory to muster some data in support of your case. Can you point to any cases of over-saturation? All the doomsday stories I read about point to what you actually expect in a mature market. Things like real competition for tap handles and shelf space--which Stange mentioned. I've mentioned this before, but I think a lot of the panic comes from a fear that double digit growth won't continue. Agreed. That's clearly unsustainable past a certain point. (In ten years at 10% growth, the craft market would be over 50 million barrels. That seems far-fetched.) But a falling growth rate is a far different beast than actual falling barrelage. To companies used to double-digit growth--or those whose business plans unwisely depend on it--there may be a rude shock in the future. But that's no collapse. In mature markets you have business failures. Maybe breweries who have lived in a nearly risk-free world will get skittish when things tighten up. But that's not a fall.
___________________
Note: I am aware that Twain actually said "the report of my death is an exaggeration," but if I'd titled this post The Report of Beer's Death Was an Exaggeration, no one would know what I was talking about.
Young adult drinkers' alcoholic beverage preferences have changed dramatically over the past two decades. In the early 1990s, 71% of adults under age 30 said they drank beer most often; now it is 41% among that age group. There has been a much smaller decline in the percentage of 30- to 49-year-olds who say they drink beer the most, from 48% to 43%, with essentially no change in older drinkers' beer preference.
The problem? The numbers jump around a lot. Let's take a look at that young person's stat. It does seem alarming that only 41% of America's youth prefer beer (though it's still 13% above liquor at number two). Yet let's look at the totals from the last three years: 51%, 39%, 45%, and now 41%. You see, it hops around a lot even among the same group answering the question. The trend is toward more diversity in what they're drinking, but beer still has the lion's share.
Now, the second panic was sparked by Joe Stange, who wrote an article for Draft Magazine with its own screamer headline about what is inevitably now characterized as craft brewing's "boom": Will It Fall? Stange gets answers on both sides of the aisle. Some say craft beer is headed for collapse others say pshaw. On the one hand, he goes to brewer Dylan Mosley of Civil Live in St. Louis for my vote of the year's best quote: "Seriously? It’s beer. You know how many people drink beer? If I opened a hamburger joint, nobody’s going to be, like, 'Hey, you know how many hamburger joints there are?' They’d be like, 'Sweet! Another hamburger joint!'" But then he gives beer geek Ashley Fox the final word and she says--doom gong please--"all bubbles burst."
And from that jumping-off point we get the more definitive judgment from Lew Bryson, an old-timer like me who lived through the 90s plateau. "'Will it fall?' Yes, most definitely." I wanted to clarify that Lew meant the actual barrelage would fall, not just the growth rate. He meant barrelage: "It's definitely possible. Denying it is denying historical fact. Everything crashes, eventually."
I don't buy it.
The American beer market is 200 million barrels strong and has held steady at that level for two decades. Of those 200 million barrels, craft beer, by whatever definition you want to give it, is definitely no more than 20 million barrels, or about 10% of the total. (Brewers Association numbers, which show the US consuming about 15 million barrels in 2013, skip beers like Widmer/Redhook, Blue Moon, and Schell Berliner Weisse for reasons that have nothing to do with beer. Americans think of all of those as craft beer.) Now you have to ask yourself: in a 21st century world where fragmentation is the way of all things--media, pop culture, the arts, and consumables--why would we expect mass market lagers to continue to hold 90% of the market? Nothing has 90% of any market.
Could the United States manage to support a craft beer segment that was 15% of the total beer market? What about twenty or twenty-five? Of course it can. We have tons of laboratories where the experiments are happening in real time. So far, in each case, where craft brewing catches on, it grows faster. No doubt there's a plateau, but places like Oregon haven't hit it yet. The new, far crappier Oregon Brewers Guild website no longer lists these stats, but I recall that our consumption is around 20% and growing each year. And Oregon's market keeps growing and getting more crafty. This makes complete sense: fragmentation begets fragmentation; choice begets choice.
I challenge proponents of the "fall" theory to muster some data in support of your case. Can you point to any cases of over-saturation? All the doomsday stories I read about point to what you actually expect in a mature market. Things like real competition for tap handles and shelf space--which Stange mentioned. I've mentioned this before, but I think a lot of the panic comes from a fear that double digit growth won't continue. Agreed. That's clearly unsustainable past a certain point. (In ten years at 10% growth, the craft market would be over 50 million barrels. That seems far-fetched.) But a falling growth rate is a far different beast than actual falling barrelage. To companies used to double-digit growth--or those whose business plans unwisely depend on it--there may be a rude shock in the future. But that's no collapse. In mature markets you have business failures. Maybe breweries who have lived in a nearly risk-free world will get skittish when things tighten up. But that's not a fall.
___________________
Note: I am aware that Twain actually said "the report of my death is an exaggeration," but if I'd titled this post The Report of Beer's Death Was an Exaggeration, no one would know what I was talking about.