Beer 2050
In the future, we’ll all enjoy a beer in our personalized drinking pods. (Source: Midjourney)
I was saddened to learn that Dave Infante was wrapping up his Taplines podcast when it dropped last week. It was a good one, and I had hoped to hear many more. Ah well, things change. Good luck going forward, Dave—hope to see a reboot in some form down the line. However, he went out with a bang, bringing his first guest and returning champion, historian Maureen Ogle, back for the finale.
They chatted about what the beer industry will look like in 25 years—both a more provocative approach to the inevitable year-end predictions posts that proliferate in December, but also a way to avoid accountability. Genius! Give it a listen if for no other reason than hearing Maureen talk about the centuries-old efforts to kill booze. We’re in the midst of a boomlet of neo-prohibitionism, and listening to her recite all the past efforts reminded me that alcohol—and especially beer—has a pretty good record in these battles.
The conversation got me thinking, though, and I think it’s worth a bit more exploration. Longer time horizons focus attention on different aspects of a subject. As I considered the question, it struck me as a more interesting one that what might happen in the coming twelve months.
The title of this post is slightly misleading, I confess, because in thinking 25 years ahead, I immediately had to consider 25 years ago. What has changed? Depending on how you look at it, twenty-five years is both a huge amount of time and not much at all. We went from fighting wars with horses to dropping nuclear bombs in 25 years (more or less). On the other hand, Snoop Dogg released an album 25 years ago, and he’s still on 73% of the ads I see during football games. In other words, some things change a lot more than we think, and others far less.
Over the longer run, what we see is a familiar pattern, not just in beer but across society. Systems change very slowly, while companies and products shift with fashion. The shape and structure of the beer industry hasn’t changed much at all. As an example, Dave and Maureen discussed distribution, and Maureen argued it wasn’t long for this world. She thought the internet and the ease of direct-delivery would ultimately break up the middle tier, since people like what they like and they want it now. I’m not so sure.
The middle tier has been in place, functionally unchanged, for nearly a century. It is a protected category, which has had some not-always salutary effects on the beer industry. Franchise laws, which force breweries to stick with their distributors even when the latter have failed to do their job, need reform. We are seeing worrying levels of consolidation among wholesalers. That said, distributors are a mundane and indispensable link in modern commerce. I would bet a lot of money distributors are still around, with good reason, for decades to come. Getting kegs and cases of beer from one starting place to scores or hundreds of retailers while keeping it cold and fresh is an entirely different business than making beer, and most brewers will always prefer to outsource it.
The arrival of craft beer was of a piece with the changes in consumer preferences from mid-20th century norms. We might say that in 2000 the beer industry looked a lot different than it did in 1975, twenty-five years earlier, when there were just a hundred breweries left. But the overall shape of brewing hasn’t fundamentally changed since the 19th century. The industry is dominated by big breweries. Most of the beer they make is a mass market product approaching a commodity in terms of distinctiveness. That’s because beer is heavy and cheap and margins are narrow. The fundamentals haven’t changed. Similarly, Americans have not really changed their drinking consumption a lot over time, though they have changed their patterns. Per capita, they drink a little little less than the ‘80s and a little more than the ‘60s. Sometimes they drink a little more or less beer, wine, or spirits as trends shift.
In terms of trends and preferences, in the way things feel standing in the beer aisle or at the pub, that’s where we see sometimes startling shifts. In 2000, hoppy ales were only popular on the west coast, and craft beer seemed to be fading as a commercial force; the entire industry produced around 5 million barrels (today it’s 23 million). There were about 1,500 breweries, a number that would remain static for another decade. Bud Light would become America’s best-selling beer in 2001, a title it would retain for almost the entirety of the 21st century, and light beer would be the most popular beer basically that whole time. Still, these macro, systemic trends were offset by what was happening among little breweries.
We sometimes dismiss the craft segment, which hit about 15% of the market and stalled out, as (pardon me) fairly small beer. (To be fair, it earns a quarter of all beer’s revenues.) A purely financial accounting belies the cultural effect the craft beer revolution had on American drinking habits. Most of the beer is drunk by a small amount of the drinkers. Those folks are the ones who buy 30-packs. Most of the drinkers, consequently, drink very little of the beer, and a lot of them drink craft styles at least some of the time. I can’t find any recent polling, but even a decade ago pollsters were finding that craft was drunk by a majority of drinkers, even though by volume craft was still a small segment.
The effects of this shift have been profound. Now it is very hard to find a restaurant or bar anywhere in the US that only offers mass market lagers; 25 years ago that was still very much the norm in most places. Today, anyone who drinks beer knows at least what an IPA is, and generally has a sense that beer comes in a lot of flavors and colors. (An analogue would be wine, where American drinkers once knew only “white” and “red,” but can now identify Cabernet, Pinot, and Chardonnays.) In the last 25 years, the US developed its own tradition of brewing, and now you can find IPAs and American-style craft breweries around the world. Craft beer did not win the volume race, but it did transform culture.
Based on all of this, if we look forward 25 years, we might expect to see:
A recognizable industry with three tiers, a few dominant players, and a (probably smaller) number of mom and pop breweries.
Minor shifts in alcohol category preferences, but stable overall per-capita consumption.
Significant shifts in flavor/style preferences, even some that might affect the mass market.
In other words I would bet the beer market looks more or less the same, but it might feel different. I am pretty sure, however, that we will not have our own backyard drinking pods, though I give Midjourney props for putting it out there.
Post Script: Dave and Maureen discussed cannabis’s future effect on beer and concluded it would be significant. As a final comment let me offer the counterfactual. Roughly a decade ago, Colorado, Oregon, and Washington legalized weed. These are big beer states! Did weed destroy the beer industry in these states? No. And that is despite the price of cannabis dipping to laughably low prices thanks to oversupply. If the US allows federal legalization of cannabis, the same thing will happen. It may dent beer’s sales at the margins, but it will be a very small effect—and hard to disentangle from all the other substances and beverages Americans will be imbibing that might dent beer’s sales.