Are Craft Beer Sales Really “Tapping Out?”
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Earlier this week, a Wall Street Journal article reported on a significant decline in the sale of craft beers—a $143 million drop, resulting in sales of $2.7 billion for the first half of 2017.
Implied in this story is that craft beer bubble, which I have discussed earlier on this site, may finally be bursting:
After years of strong gains, American craft brewers are now bracing for a shakeout. Shipments are falling for many independent brewers stuck in the middle between local niche brands and competitors that were bought by heavyweights such as Anheuser-Busch InBev and Molson Coors.
Earlier this winter, I wrote that we’re experiencing a golden age of craft beers in the United States and that some day, this golden age—as all others must—will end. But the decline reported in this article does not portend the end of the current craft beer golden age.
Craft beers are kind of like coffee in that there are three tiers, if not necessarily three waves as there is with coffee. The tiers of craft breweries are:
- The big, legacy players that emerged during the “micro brewing” era, such as Sam Adams and Sierra Nevada that have national distribution. They have been around long enough to have a place at just about every taproom in the US and are well-position to stave off acquisition.
- The newer breweries that have either been acquired by a big conglomerate, such as Ballast Point, Lagunitas, and Goose Island, or those that are still independent but around in many regions throughout the country. Some examples of the latter include Dogfish Head, Brooklyn, and New Belgium.
- The local nanobreweries that emerged since the end of the last decade—coincidentally around the same time as the last financial crisis—remain available only at the brewery’s taproom and at a few bars and grocery stores in their home region. These are also the breweries that release cans to much celebration. There are too many examples to name, but it seems that just about every town in America has an Irish pub, a Chinese takeout restaurant, and a brewery of this sort. The quality of their beer can vary greatly.
The article’s discussion about the decline in craft beer sales seem to be concentrated in the second tier I named above. Those big names in craft beer have fallen out of favor, either because they were acquired by a conglomerate and have lost their “street cred” or because their beers have lost their edge compared to what the newer, more experimental nanobreweries are producing today.
Personally, I am certainly more interested in trying out new offerings by breweries that might seem more experimental. To return to my comparison of the coffee market, I’m more attracted to what a local coffee shop or well-known roaster has to offer than what I can get at a Starbucks or Peet’s location.
The decline in the overall craft beer market is certainly significant, but it is entirely plausible to attribute that decline to people switching from Sierra Nevada and Goose Island to something that they got at their local brewery’s taproom. In short, it might still be a great time to be a locally oriented craft brewer, just make sure you don’t get too big or don’t stick with the same offerings forever.
It also might help if you consistently make good beer, too.