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Oakes Weekly - April 21, 2007

What’s next for craft beer? Part One
Features April 20, 2007      
Written by Oakes

Vancouver, CANADA -

We’ve all been there. We’ve all tried to talk to people about beer, and we’ve seen the responses. We’ve seen the results.

Lately I’ve spent some time observing people’s reactions and responses to beer and their same to wine. For the most part, people into craft beer view the two in a similar fashion. We may not like wine snobs but we do give at least grudging respect to the beverage itself. But for a lot of other people, the two are not the same.

The wine folks are kicking the beer folks up and down the block when it comes to marketing. One of the first and most important things Napa winemakers like Robert Mondavi did back in the 60’s and 70’s was to switch from generic European place names on their wines to varietals. This served a couple of important functions. It gave the wines their own sense of place and identity. Prior to this, you had “burgundy” and “chablis”, somewhat generic names for generic wines…and surely they were just lousy knockoffs of European classics. The varietal names sounded different. They were just plain sexier.

Varietal names also allowed for entry level consumers to have a greater understanding of the product they were drinking. So much of the way casual consumers approach wine stems from this. People now can easily compare pinot noirs with each other, and to other reds. With a simple identification of a type of grape, now it becomes easy to see how that grape responds to different climates and how this affects the wine. Now the concept of terroir is introduced, and that adds an additional element of sexiness and mystery. It also reinforces the notion of wine as a small-scale endeavour, however far from the truth that may be. After all, industrial products can’t be affected by such things as microclimates.

Plus it adds a focus on the ingredients. That makes wine a natural product to the consumer. There are some wonderful visuals to back that up. Visuals that are supported by the industry. They make the wine right there in the places where the grapes grow. They have “estates” with mansions and restaurants and tasting rooms. It’s not just a product, it’s a lifestyle. And it only happens in certain regions. You can’t make wine just any old place. Most North Americans can’t just go to visit some wineries on a Saturday afternoon. There are no world class wineries in Bubbafuck, NJ or Left Nut, MT. You have to go to California, or Italy, or France…and these are places that have always had an allure, and have long had a great reputation for their culinary traditions.

This makes wine an aspirational product. Joe and Jane Average can go down to Applebee’s in the strip mall and their bottle of wine still has the power to conjure up images of vineyards and harvesting and driving around some rural paradise on a sunny long weekend. It’s made in places where people have good taste in food, places where people desire to live, and visit.

Compare with beer. Beer was just as industrial as wine in the post-Prohibition era. There weren’t very many types of wine back then and there weren’t very many types of beer – Bock, Porter, Dark, and your typical industrial lager.

So what’s happened? Well, beer was up against it a little bit from the start. Winemakers, even the shitty industrial ones, didn’t spend quite as much on advertising as brewers. They had imports to contend with, for one thing. Brewers didn’t. You’d think that would make them want to spend more on advertising, but in fact the reason the big brewers spend so much on advertising is because there were very few players chasing the same pie. Winemakers could achieve growth without million-dollar ad campaigns because the sheer number of competitors meant there was always easy market share to be had. The beer business, being 99.9% held by large domestic players, didn’t have that luxury. Moreover, beer sales had already leveled off. Because America was built by people from beer drinking lands, wine was a bit player for the longest time. There was room for growth in wine without even worrying about competitors. Beer has been a zero-sum game since the 70s.

The result: big brewery advertising. This didn’t use to be such a bad thing. The Hamm’s bear may have been hokey but he didn’t do any harm to the business overall. But increasingly desperate brewers turned to rampant misogyny, they turned to cheesy giveaways, and they put excessive focus on the large segment of the market (young males) to the detriment of all other segments. Wine didn’t do that. It remained democratic. Women weren’t turned off; the middle-aged were not turned off.

Now this was the playing field that the small brewers had to start with. Beer was industrial, boring, and something for young men to drink mass quantities of. Except that beer isn’t. But the craft beer industry apparently felt it had to work on those stereotypes for and foremost. It’s easy to suggest that the confidence just wasn’t there to be themselves, but by the mid-80s the marketplace environment was tough for a small brewer. Most bar owners had grown up in a world without interesting beer. Winemakers didn’t sell to taverns anyway, so they were forced to focus immediately on restaurants. Small brewers would have actually been well-served in the long run to do that but in the short run the reality of being in a high-volume, low-margin business meant that they needed to target high-volume retailers…bars.

As for stores, even through the dark days for wine, there was a panoply of choices on the shelves. Maybe not such good choices, but there was always a variety of labels to choose from. Beer not so much. Plus, after winning some big competitions in the mid-70s, American wines basically had a 10-to-15-year head start on American beers in gaining market acceptance that allowed upstarts relatively easy access to shelf space.

I wonder, though, if craft beer as a business hasn’t been a little too slow to move on. I still see brainless clichés like “think globally, drink locally” being trotted out by craft brewers. I still hear small breweries talk like they have to “convert” swill drinkers in order to succeed. To me, that’s the 1985 reality. The 2007 reality is actually quite a bit different.

Almost anywhere you go, even places that are 10-15 years behind the west coast in the beer appreciation curve, consumers accept that there is a wide variety of beer out there. Watching the game the other day at a friend’s house, he’d bought a bunch of beers for variety…for my benefit yes but he drank a bunch of them too. This is a guy whose normal beer is Corona. His brother was excited because he found a sixpack of Granville Island Lion’s Winter Ale. To me, that’s kind of like drinking a bottle of vanilla…yuk…but here’s the thing. When we were in high school, this guy would not have known such a beer existed, let alone been excited to find some. How did he come to try it in the first place? He’s not a beer geek. And you don’t have to be. Everyone under the age of 40 has seen craft beer and most have probably tried it once or twice. You’re not going to win every single consumer out there. So it’s not about converting swill drinkers by force any more. It’s about getting the product out there, and giving people a reason to try it.

I’ve explained above some of what wine offers consumers. I think the craft beer industry needs to reposition itself a bit. The hard work has been done, and craft beer has been established. All but the most f*d up dives have some sort of craft beer on tap. It may not be the best stuff around – you beer geeks might not give it a sideways glance – but it’s there and this is important. The visibility of craft beer is actually ahead of the market share. That’s why craft beer has registered such strong growth in recent years. Let’s leverage that. Let’s start looking at how we can take craft beer to the next level. Why be happy aiming for a 5% or 10% market share when you can have 25% or 30%? Heck, craft beer today is an accepted part of the social fabric…that means there’s no reason for anyone to drink swill and then be converted later. They can start onto something better right away…now that’s stratospheric market share potential

Industry leaders and the writers who have the reach need to lead this push. In the coming weeks, I’ll outline some of my thoughts. Hopefully I won’t be the only one.



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start quote Joe and Jane Average can go down to Applebee’s in the strip mall and their bottle of wine still has the power to conjure up images of vineyards and harvesting and driving around some rural paradise on a sunny long weekend. end quote