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Oakes Weekly - June 29, 2006

Evolution vs. Intelligent Design in Beer
Oakes Weekly June 29, 2006      
Written by Oakes

Vancouver, CANADA -

If you know a thing or two about the history of beer, or even if you think you do, you have at least some sense of the evolution of beer styles. We have enough written records that we can trace the origins of IPA back beyond Hodgson’s. We know that Porter begat Stout, which begat Imperial Stout, which begat Baltic Porter. Yet all of those styles still exist today with other variants, like Foreign Stout and Oatmeal Stout. And Porter itself has seen any number of different forms over the years, criss-crossing between being stout-like and decidedly unstout-like with each successive generation.

But right now it seems as though the beer world is shifting in two different directions at the same time. As beer geeks, we rejoice at the fact that the strong are getting stronger. Evolution that in the 1980’s seemed to come at us in fits and starts now seems like a runaway freight train. Yesterday’s hottest beer scenes are still pretty hot, but today’s hottest scenes could be anywhere in the world – Denmark this month, Argentina next, maybe Japan after that. It’s actually pretty hard to follow. It used to be that you could write a book about the entire world of beer and only have to update it every four or five years. Now a beer book five years old is as relevant as hieroglyphic recipes on papyrus. But the way information reaches consumers has changed and beer books need to be highly specialized to get anywhere because the basic stuff is online, where it is kept up-to-date to a degree no book can hope to match.

So yes, we’re excited about the growth of craft beer. We see new styles, or at least new variations of styles created all the time. Most disappear as fast as they arrive, failing to strike a chord with the target market for one reason or another. In the world of craft beer, new ideas are presented to the public. The beer lovers, being educated consumers with relatively sophisticated palates, decide what is and what is not worth pursuing. The second something begins to look like a hit, there are hundreds of brewers out there ready to do their own version and the seeds of legitimacy are sown.

In short, the system works. One idea is put forth, and from it new ideas flow. New world brewers are the most innovative because their ideas flow with fewer constraints. These nations all drank the same ubiquibeer for decades prior to the arrival of craft beer and so everything was new, and nothing was unfeasible until the market dictated so. There was the perception that craft beer would take the world by storm, and this potentiality for a pot of gold had everyone trying to figure out what colours they’d need to put together to make the right rainbow. It brings a tear to my eye, quite frankly. From a few old world ideas about beer, the first basic microbrews arrived and those base concepts were then elaborated and expanded on, the net result being a vast pantheon of beer with flavours more wild and diverse than could ever have been imagined by those first pioneering brewmasters.

It gets better from here, too. Imagine what will happen when the Old World catches on to this. Right now, most of the Old World is stuck in thinking that seems outmoded to us New World drinkers. They still see their own entrenched beer styles as being the only ones really worth considering. Well, the English are starting to tinker a bit more and the first result has been, for better or worse, the emergence of their take on golden ale, which happens to be better than anybody else’s take on the idea. Imagine what will happen when all of the beer talent in the Old World starts to tinker like that. In fact, we’ve actually travelled so little distance on the scale of potential experimentation that the New World is only in the past few years taking experimentation to the realm of Belgian traditions. We’ve still got the entire set of traditions from Central and Eastern Europe to work on, and that’s after we get bored of the Belgian stuff, which could be a while. If our experimentation on themes that began with traditional English styles is starting to level off, the life cycle of Belgian-inspired experiments is still in its earliest stages.

So all of this has me wondering – what the hell are the macros doing? Well, they’re bleeding market share, for one. While it may be a mystery to their overpaid cadre of MBAs, bean-counters, and other assorted rocket scientists, it’s no mystery to me why they are getting their asses kicked. They are approaching the issue of beer’s evolution from the wrong perspective.

The rise of macrobrew was not an accident. But it was an anomaly. A-B started out selling sub-par beer using aggressive tactics, something they haven’t changed in their history. I mean, it worked pretty well. Their model became the model for pretty much all the brewers out there with an ambition more towards market share and fiscal success than towards making great beer. There is nothing inherently wrong with that, I don’t think. It’s not as though they invented the notion. I’m sure many of Mr. Anheuser’s contemporaries had the same outlook he did, they just weren’t as good as he was at making it happen.

There was some luck involved, of course. Prohibition knocked a lot of the competition out of the marketplace. Following the repeal and especially following WWII, the food and drink culture that the European settlers had brought with them became diluted and eventually dismantled entirely. Subdivisions and supermarkets replaced neighbourhoods and artisan shops. Bakeries were replaced by Wonderbread, traditional meals replaced by TV Dinners and fast food, live & local music replaced by pop crap manufactured by studio execs and professional hitwriters. You haven’t lived in a cave, you know this and you have a grasp of the many factors that contributed to it. But these underlying conditions made the rise of bland beer that much easier. The will was there on the part of the brewers. Prohibition and the rise of modern consumer culture with its ambivalence to quality provided the way.

Fizzy, yellow and bland. In theory, macrobrew could have been anything but. Well, except that fizzy, yellow and bland is good for the bottom line. That’s important because when products lack differentiation, price becomes a selling point and margins are squeezed. So cost of goods sold becomes an important number and so you have the progression from the 50’s to the present day towards ever more fizzy, yellow and bland. “Light” beer, however vague the notion might be to a serious student of beer style, is nonetheless a legitimate product-positioning category and is now the best-selling such category in the US.

That’s pretty much what the macrobrewers want. But here’s the thing. They wanted it. And they got it. And it’s been like that for them for quite some time now. Only since the rise of microbrewing (and to a lesser extent imports) has this changed. They’ve controlled the game for over a hundred years in some countries. So they naturally believe that they can continue to control the game. I understand why they think this is a good idea, but it’s just not a good idea at all. It runs against nature. It is intelligent design versus craft beer’s evolution. The macrobrewers are acting like gods who wish to impose their will on humanity.

So they see their market share shrink and they try all sorts of things to stem this bleeding of market share. They try introducing new products. Oh, the humanity. Seriously, the past twenty years have seen a neverending stream of flash-in-the-pan contrived innovations and futile knockoffs. You see, the thing about dry beer, ice beer, dry ice beer, or whatever is that there is no real differentiation between these and the existing offerings. Moreover, nobody asked for any sort of differentiation anyway. The test marketing probably showed people reacted favourably to the idea and that may translate into solid opening sales for a new concept, but sooner or later those numbers will taper off and the brand will stabilize somewhere far short of expectations. Why? Because it never did fill a need. Nobody asked for it. It was simply handed to them. When the consumer doesn’t actually have a compelling need for a new product, curiosity will inevitably fade into indifference.

When there is a need, those big brewers just aren’t identifying it quickly enough. Why is anybody’s guess but the monolithic size of their organizations can’t help. So you’ll see them reacting – late – to things like the rise of microbrews and imports. I don’t blame them for having trouble figuring out the appeal of Corona. I don’t get it myself. But they sure as hell missed the boat on that one. Nobody’s made a dent in Corona yet. The me-too micro-style brews they put out don’t quite incorporate the whole concept all that well. Even if the beers are perfectly competent and even tasty, other elements will inevitably be missing, like the marketing edge or the rapid-fire innovation or the element of local pride many people get when they purchase such beers. They seem to have missed out on the fact that most microbrewed brands aren’t particularly successful and the lightning-in-a-bottle that they’re looking for is actually a fairly rare occurrence even in microbrew circles. So when they try it out with a mediocre recipe, insipid ad campaign and nine-month product development lead time, the odds of hitting that winner any time soon are pretty slim. Coors at least seems to have done it with Blue Moon White, but I don’t see any others out there.

It’s all in the approach. Microbrew has succeeded on aggregate while the big guys are looking for a grand slam, getting microbrew-level success with one or two products. But that just goes back to them trying to control the game, which is a natural phenomenon. Small brewers don’t have the resources (nor the arrogance) to even attempt to control the game. They just want to go out and play their role as best they can within the constraints of the game. This forces them to have a keen understanding of how the game works, which is something you don’t need if you think you can control the game. What I’m seeing these days with the rapid growth of craft brew and the continued loss of market share for the big brewers is that the game cannot be controlled. The past hundred years may have tilted the game heavily in favour of the macrobrews, but the game is changing and unless their understanding of the rules of the game changes as well, they will not win this game. They only think they can control it. They’d be better off trying to go back and understand it.

My money’s now on the microbrews. In a couple of generations, good beer was wiped off the map due to changing consumer tastes, guided in large part by external forces. The same thing is happening now, only the forces are tilting things back in favour of good beer. This trend, being tied into issues of energy consumption and lifestyle patterns, is tilting back towards microbrew. In a couple of generations, it will be game over for the makers of fizzy yellow bland beer.



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