Monday, November 09, 2015

Hippy beer! Huh?

"How pot and hippie beer explain the future of the American economy" was the headline of a recent Washington Post Wonkblog column. I've heard of 'craft' beer, microbrews, boutique beers, and fancy beers, but never have I heard of "hippie beer." Lumberjack-bearded millennials populate the small-brewery scene today; hippies are long gone, since, I believe, the 1960s. The author, a Jim Tankersley, attempted to compare and contrast the 'craft' beer industry with the newly legal marijuana industry. The nonsensical term, "hippie beers," not withstanding.

Breweries and dispensaries offer lessons for how policymakers might nurture a small-business comeback in the United States. But they offer very different lessons, one focused on government intervention, the other on reducing hurdles for entrepreneurs to enter a market — and their ultimate lesson could prove to be, the big guys tend to win in the end.

Here's some of his proof:
Some beer bloggers, though, have begun to worry that lax government oversight could endanger start-up brewers, whom the large players are targeting on multiple fronts.

Who are those beer bloggers and why are their opinions valid? To me, it looks as if Mr. Tankersley just inserted his opinion as unsubstantiated fact. Talk to brewers, restaurateurs, and beer shop owners, and, yes, beer-bloggers. Many would disagree with his low-barrier thesis. Ask them about the three tier system. Ask them about excise taxes. Ask them about licensing from the TTB, OSHA, and FDA, and about local health and zoning regulations.

Mr. Tankersley writes—
The nation has long had a start-up problem. The rate at which new businesses are formed has fallen steadily since 1984, a trend that accelerated during and after the Great Recession, according to research by University of Maryland economist John Haltiwanger and several co-authors. Since the recession ended, more businesses have failed every year than have sprung to life.
— Maybe true, but it does not necessarily follow that many start-ups haven't survived, only that fewer have survived than have been shuttered. Where, and what, are those numbers? And, in those start-ups that did fail, were quality, know-how, financing, and acumen absent or present?

There's this, for example, about Oregon, from where the author hails:
The number of breweries and brew pubs in Oregon has roughly quadrupled since 2001, to more than 200 today. Since the end of the recession, the state’s total beer production for consumption by Oregonians has grown from about 30,000 barrels a year to nearly 50,000. All but a few drops of that increase has come from start-up brewers, according to state statistics.

From that, it would appear as if start-ups are successful, at least, in Oregon, at least those making beer. And we know that to be true, nationwide. The [U.S.] Brewers Association has reported that there are now more than 4,000 breweries in the country, with double-digit sales growth over the last few years.

Mr. Tankersley does seem to find two reasons why beer start-ups might be succeeding. Little acumen, skill, or education being required is one.
It doesn’t cost much to learn to brew — just $100 or so for a starter kit and a handbook, more for hops and grains when you begin to experiment [...] It also doesn’t cost much to start a brewery, relatively speaking.

This seems a bit insulting to those who do study their craft, and is just plain wrong. What of the ability to brew WELL? There is good beer out there, but there also is a lot of bad beer out there (not meaning Oregon necessarily, but in general), on supermarket shelves and in taprooms. I once worked in a brewpub where the chef informed the brewers that "Any monkey can brew." It should go without saying that training, scientific and technological knowledge, and intelligence are vital ingredients in beer-making and beer-business-running as in any skilled endeavor. To say otherwise is to insult the monkey.

Mr. Tankersley's other premise is that government regulations on brewing are minimal, encouraging start-ups. Maybe they are such, but only as opposed to those imposed on the legal marijuana industry, of which I know little. I know much more about the legal beer industry; I'll stipulate that it is rife with many governmental regulations. This article comes off as a forced analogy.

He mentions that only the state of California is investigating potential anti-competitive implications of Budweiser's parent company, Anhuser-Busch InBev, purchasing beer wholesalers. California officials may be, but the Feds are as well. Do 'craft' breweries really wish to dismantle the entire three-tier system and then compete against tied-house Budweiser bars and restaurants?

Mr. Tankersley does make some interesting points. A bit more research on his part, and a few more conclusions from facts, would have made for better points.


1 comment:

  1. "in those start-ups that did fail, were quality, know-how, financing, and acumen absent or present?"

    Clearly they just weren't passionate enough.


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