The State of Beer
The magazine I used to write for, All About Beer, officially died when owner Christopher Rice filed for bankruptcy earlier this year. To preserve some of the content I've contributed over the years, I'm reposting some of my favorite pieces here. This article was published on the website April 27, 2015.
Note: This is one of those amusing “what we project” posts that’s fun to look at in hindsight. Amuse yourself with what I got wrong—and right.
It was odd having a media credential recently at the Craft Brewers Conference—the one place on the planet no actual beer news was getting made. Like any conference, the focus was inward; it’s a place to trade business cards and share info, maybe gather some information about a piece of equipment you’d like to add to the brewhouse. The one ostensibly newsy event also wasn’t—the General Session, where the Brewers Association (hosts of the conference) gave a familiar state-of-the-industry overview and pep talk. The Brewers Association (BA) has a great publicity department, though, and we’d already seen the numbers.
Except that there was news, if you looked hard enough, but it was just hidden within the negative space between the speakers’ words. From the first speaker on, there was an edgy sense of anxiety animating the otherwise happy reports of spiking growth. The words that were never spoken—words like “consolidation,” “buyouts,” “private equity” and “Anheuser-Busch InBev”—were the subtext that framed all the good news. This is the really interesting thing about this world called craft brewing: the more successful it becomes, the harder it will be to maintain the identity it has created as a tiny rebellion inside the giant beer world.
For over 30 years, the Brewers Association (and its precursor, the Association of Brewers), has represented the companies we now call craft breweries. A bright line once separated this group from the much larger regional, national, and multinational breweries not only in structure but product. The big guys made mass market lagers, and the little guys made everything but.
As recently as five years ago, these little guys made just 5 percent of the country’s beer; 10 years ago they only made 3 percent. So long as they were such a small niche, there was no reason for craft breweries to explore the practices of big breweries, and no reason for big breweries to dabble in the beer made by the small breweries. All that has changed, and now craft beer accounts for 11 percent of the beer produced—and 20 percent of the dollars earned on beer. If craft beer continues to grow at its current pace (keeping in mind that it’s actually accelerating, growing faster in each of the last seven years), it will double again in five years. [Note: see end of post for the growth as it actually happened.] At current growth, it would look something like this:
In 2014, craft beer accounted for 11 percent of beer produced in the United States.
As a consequence of this growth, that bright line separating the corner brewery and Budweiser is getting fuzzier by the day. Craft breweries are now behaving very much like the big brewers of yesteryear. They are increasingly focused on quality and consistency, opening up satellite breweries so their beer doesn’t have to travel cross-country. They’re leading the way in technological innovation, and guiding research in beer. And of course they’re focused on branding and marketing in a way that would startle the pioneers.
A generation ago, the big international brewers visited hop researchers in Corvallis to learn about bittering hops. They instructed growers to cultivate ever higher-alpha strains (so they could buy ever fewer hops). Now it’s the craft breweries who are interested in the research, but they care about aroma varieties and dry-hopping. Talking about the various professional organizations—the Hop Research Council, Master Brewers Association, the Society of Brewing Chemists—researcher Tom Shellhammer told me, “The craft brewing industry is the future of the brewing societies.”
Meanwhile, the big breweries are no longer ignoring what they might have once called “niche styles.” Pat McGauley, vice president of innovation and new products at Anheuser-Busch, is well aware of this trend. “If you deny what’s happening in the marketplace, you get left behind. You can’t stick your head in the sand and say I hope this goes away. We understand the dynamics in the palate shifts. … We understand [and ask] can we participate in that?” Last year, the world got a taste of how St. Louis plans to participate—by building a network of erstwhile BA-approved craft breweries. [AB InBev had just purchased their fourth brewery, Elysian, but would go on to buy two more that year; the company’s portfolio of craft brands is now up to a dozen.]
In his comments at the general session, President Charlie Papazian said this about craft brewing: “Never, ever underestimate the importance of defining yourself as a group of small and independent brewers, yourself as an individual company, your brand and your uniqueness.” He went on, drawing specific attention to a recent Budweiser ad about “fussy beer,” and continued. “Others say beer is beer and there is no need to define craft beer nor define craft brewers. For some who observe the American beer scene from abroad, the craft brewer definition seems too dogmatic’ [and] the whole size-and-ownership caboodle sits so prominently on Americans’ mind.”
But this is just the trouble. For the past 30-odd years, it was possible to fuse two unrelated concepts Papazian highlighted in his speech—independence and quality. The little breweries were the ones that made the interesting beers, and big ones made the boring “corporate beer.” What happens when craft beer (IPAs, saisons, stouts) becomes so popular that everyone is making it? What happens when the independent corner brewpub is making mediocre, inconsistent beer while the corporate-owned brewpub down the street is making exceptional, innovative, and consistent beer?
After Papazian’s talk, BA Director Paul Gatza spent a few minutes talking about the importance of making quality products. “People who aren’t focused on quality don’t belong in this community,” he said—to thundering applause. But what happens if AB InBev, seeing that its future lies in 7% dry-hopped IPAs, turns its attention to making the best one in the world? [Note: it hasn’t.] What happens when quality becomes completely untethered to independence?
The beer we once called craft is the future. Breweries like Deschutes Brewery, Dogfish Head Craft Brewery, Sierra Nevada Brewing Co. and Stone Brewing Co. have turned Americans’ taste buds toward full-flavored beer and the BA has been instrumental in telling a story about quality and independence that helped propel the entire segment. The BA deserves to take a victory lap or three. But the anxiety is well-placed, too. Success attracts attention, wanted or not. How much longer can they keep craft to themselves?
Update, August 2019.
The anxiety I witnessed at the 2015 Craft Brewers Conference was well-placed, as we now know. That same year, the Brewers Association set a goal for market penetration: 20% of the total beer volume by 2020. It was based on growth rates seen over the past decade—and looked very much like the graph I included, with a dotted line extending into the future—or our present. So how did things really turn out? See for yourself. (It is worth noting that former BA member breweries keep coming off the board as they get snapped up in whole or partly by other breweries, inhibiting what the BA calls “craft beer’s” share.)