RateBeer
Related stories Related stories

Other Stories By Oakes

  Oakes Weekly - July 23, 2009
       Jul 23, 2009

  Oakes Weekly - July 9, 2009
       Jul 9, 2009

  Oakes Weekly - July 2, 2009
       Jul 2, 2009

  Oakes Weekly - June 25, 2009
       Jun 25, 2009

  Oakes Weekly - June 19, 2009
       Jun 19, 2009

  Oakes Weekly June 11, 2009
       Jun 11, 2009

  Oakes Weekly - May 14, 2009
       May 14, 2009

  Cheers to America’s Craft Brewers
       May 8, 2009

  Scoping out the Scene in St. Lucia
       Mar 26, 2009

  A Short Visit to San Diego
       May 8, 2008



home Home > Subscribe to Ratebeer.com Weekly RateBeer Archives > Oakes Weekly




Oakes Weekly - August 23, 2007


What’s Next for Craft Beer, Conclusion (part 5)
Oakes Weekly August 23, 2007      
Written by Oakes


Vancouver, CANADA -



The craft beer business is growing. Rapidly. The beer business as a whole, not so much. Despite its dominant market share, industrial beer is dying. Despite the best efforts of big brewery marketing departments, consumers are becoming increasingly savvy. They know crap when they see it, and aren’t amused.

It started with counterculture people in counterculture areas. From there it spread, picking up foodies, hipsters and random dorks along the way. At first, you had to have your ear to the ground to even know about it. Then your good ear was needed to keep on top of the latest. Now everybody knows about it, info on the latest is a mouse-click away and that ear to the ground is only required if you absolutely must know when that rare cask of ultra-obscure whatever is going to be tapped.

This is not by accident. If you read books on brewing history, particularly with regards to the rise and fall of brewing regions and beer styles (the two being very much intertwined until only the most recent years) one thing that stands out is that the beer business is shaped to a high degree by broad trends in society and government, as well as by prevailing legal and tax structures. To those with a strong grounding in government or economics this won’t come as a surprise but the vastness and complexity of these relationships seems often undervalued by Joe Sixpack.

And so it is that the successes of craft brewing these past few decades mirror trends in society as a whole. If the post-war period in North America was marked by an industrial golden age of mass production and cookie-cutter suburban living, the past couple of decades have seen a reversal of these trends in a way that matches pre-war diversity of product with modern communication and transportation options.

Diversity is the key to this whole trend. People spent decades abandoning inner cities and small towns alike. Now cities are cool again – note housing prices on the trendy West Coast – and there is a renewal of interest in rural living. People used to drive sedans, hatchbacks, pickups made by one of three or four companies. Now transportation options have been greatly expanded. It is a trend that is all-pervasive: music, furniture, wine, food, television (heck, entertainment options in general). The growth of craft beer is reflective of this broader trend.

A wave like this can impact businesses in a lot of ways. The first thing to recognize is that no matter how powerful you are, you can’t reverse waves. They come at you, and you can’t stop them nor change their direction. If you try to, you will drown. Right now, Big Beer is treading water. That’s not such great performance relative to some of its peers. To wit, suburbia still grows unabated in the face of the wave. We still have fast food, though that industry is struggling in the same way that big beer is, both tied to the “increased focus on healthy living” component of the wave. We still have bad coffee and atrocious pop music still goes platinum. After all, this is right now still a small wave. To some of us, it’s all we know but in the grand scheme of things, it is hardly a tsunami. But all tsunamis start small and only become huge right before they hit land. In other words, this wave won’t look dangerous until it’s too late.

I have a hard time imagining how this wave will not grow in the manner of a tsunami. We’re rich. Filthy rich, really. Every single American, Canadian and Western European is filthy stinking rich compared to all the other humans in existence both past and present. We won the lottery just by being born here and now. The rich like to indulge. The rich don’t like to settle for what everyone else is having. Why do you think this trend is being led by educated, upper middle class white people? Because that’s who is most able and willing to express their desires for indulgence and individuality. The main difference between now and past times is that this wealth extends much deeper into mainstream society than at any point in history I can think of.

That’s why the wave will grow – the mainstream is just as capable of being a part of it as the higher strata of our society. And quite frankly, the more the baby boomers (who grew up in a bland industrial world and remain the major contributors to its perpetuation) die off and are replaced by those who grew up in today’s world of increased diversity and character the wave’s growth will become easier, just as the tsunami’s growth is made easier by the decreasing ocean depth as it nears the shoreline. This is why I said earlier in this series that the objective of the craft beer industry should be total domination of the beer business.

When it comes to waves, treading water is hardly the best outcome. If that’s what the big brewers are doing these days, it seems clear that the craft brewers are doing better than that. They’re on their surfboards, and after falling in the drink a few times in the late 90s, craft brewers are standing upright and hanging ten (percent growth per year, that is).

But as with anything, there’s being able, being good and being world class. What I want to see with craft beer is the latter.

This series has discussed some of the ways this can be done. The existing fan base represents the most passionate fans craft beer will ever have – evangelical fervour is hard to recreate after twenty years and a healthy degree of market separation. Evangelists are most powerful when they believe they are letting you in on a big secret. It’s no fun for them to preach to the converted. The business must develop personalities – cult of personality has always been big amongst the human race, but it’s on the upswing right now.

But you’ll notice a difference – for the most part – between amazing brewers who sell their personalities and the ones who don’t. Dogfish, Brooklyn, Stone – these guys are big in part because of the way they leverage the cult of personality in their marketing. Brooklyn’s been aggressive in its first year in the Vancouver market, and they’ve made sure to fly Garrett out a few times as part of that.

In some places, the product still needs work. The “craft beer revolution” is falling behind in some markets because the beer doesn’t live up to the hype (or the price). The industry can and should twist a knuckle into the backs of certain brewers. Not only is it a question of cleaning up the sketchy beers – as a rule the free market should be able to take care of that sooner or later. Indeed, iffy beer seems to have lingered longer in markets where the government have involved itself in the business a bit too much, stifling the forces of capitalism that may harm certain small, mediocre producers but in the long run harm the business as a whole. More on that later. It’s also a matter of the industry leaders dragging the laggards out of the “safe beer” myth.

Most breweries have safe beers. This makes sense. Some people like the idea of craft beer more than they like the flavour. But for some brewers, that’s all they have. If it’s making money, I don’t see a need for change. But if it isn’t an overwhelming success, if it isn’t the core your business plan, if playing it safe is out of fear of rejection by inexperienced consumers – that’s an approach the industry needs to eliminate. Chicks dig confident guys. Consumers dig confident brewers. Not rocket science.

Ultimately, individual breweries have to make these decisions on their own specific sets of circumstances. Their money, their sweat, their call. If you live by the sword you can die by the sword. But the warrior stands a better chance of escaping slaughter than the hapless, weaponless peasant.

The above analogy is that even though we cannot control the ocean’s surge, we can practice our surfing so that we’re the best damn surfers we can be, thus giving the beer business a better shot at total dominance. When you get to be that good, you can also improve your lot by building a better surfboard. In the beer business, this means having the best legal and legislative framework possible.

There are two ways to exercise control over these frameworks – directly and indirectly. Direct control is a tough one – it’s not impossible for a small group of people to exert change on a large one, but it usually requires force. Since guns won’t fly, the next best tools are money and charisma. I’ve mentioned personality previously and the craft brewer’s relative lack of money seems fairly self-evident. So what else? Image is the bottom line. Money helps. Charisma is very powerful, but there’s more than can be done.

If this wave relates to diversity of choices and overall higher quality of life, of bringing luxury to the everyday sphere of the masses, then craft beer needs to disassociate itself with industrial beer. It’s tough – we need the big guys’ clout and money as I’ll illustrate shortly. But the industrial brewers are trying to swim directly against this particular wave and the craft brewers are not. You can’t tie yourself to a ship that is going down. In the media, to many consumers, and especially to rival products (this is about market share, remember) the two are still one and the same. It irks me to see craft beer and industrial beer taken as one entity but for the craft beer business, it costs money. The patronizing tone of “oh, look, beer is trying to be sophisticated” or “yeah, but it’s just beer” can turn “great exposure” into “exposure”. One is floating on the wave, the other is surfing it like a champ. The business needs to take control over what the media says about it. This runs from making sure media outlets have access to proper beer writers and the most articulate and passionate of brewers to watching what people in the business themselves are saying. It kills me to see a new brewery open and talk like it’s still 1990. “We’re a craft brewery, which means our products are 100% natural. We make them fresh right here in town, and we don’t use preserva…” Oh shut up! Don’t’ justify your existence. Justify your excellence. “I opened this brewery because quite frankly, I make the best American Pale of anyone in the state and I know the people of this county are going to love it.”

It goes back to earlier in this series when I discussed how the wine world uses proprietary vocabulary (amongst other things) to separate itself from the beverage rabble and sell its sophistication even before selling the actual product.

Indirectly, the beer business needs to build a better surfboard by having an impact on the legal framework in which they operate. They need to band together and get what they need out of government. Oftentimes, this needs to be done at multiple levels. Most of my local brewpubs won’t do growlers, because the rules are too arcane to make it worth their while, at the city level much less the provincial one. But for a brewery not selling to capacity in house, growlers are a key part of the business plan. At least, in other places.

We have quite a few state industry associations and the US has a national one. I worry that many of them are underfunded (this is why craft brewers will need to crawl into bed with industrial brewers once in a while) and understaffed. Yet, if an association wins a favourable tax concession, that can pay a small brewer’s association fees for ten years. When I think of all the niggly little restrictions that hurt brewers all over, I think the need for not just having industry organizations but having ones that are well-funded, well-staffed and well-connected is critical. Consumers and brewers alike can see when two jurisdictions side-by-side have vastly different beer scenes what the impact of legal, taxation and legislative structures can have.

The next logical step, of course, if for local brewer’s associations to talk with one another. You can never have too much information about what has worked for other people in the same business. If one state sees a surge in small brewers because of a tweak in distribution laws or tax code, all brewer’s associations should hear about that, so that they can seek the same concession from their governments. Knowledge is power.

This is the end of the series. I wrote it because I think about it, and I know I’m not the only person who does. I’ve received a lot of feedback on this series so far. It’s more or less a starting point for discussion but hopefully my willingness to come to bold and aggressive conclusions rubs off a bit, too, since discussion may be fun but ultimately it isn’t actual work. Success for the craft beer business is there for the taking. This series can be taken as a rough road map with a handful of stops. Creative minds with more in-depth knowledge than I have will surely be able to draw a better map with more stops. I urge them to do it.
................................................................

Comments

No comments added yet


You must be logged in to post comments

................................................................


Anyone can submit an article to RateBeer. Send your edited, HTML formatted article to our Editor-In-Chief.

start quote I have a hard time imagining how this wave will not grow in the manner of a tsunami. end quote