Tuesday, August 18, 2009

Good news, bad news: Craft beer in mid-2009.

Good news .... or is it?

The Brewers Association has announced that, in the first 6 months of 2009, 'craft' beer sales and production are up over the same period last year, and that there are more breweries in operation today than there were 100 years ago.

There will be some who will gleefully compare craft beers' increase with the major brands' anemic figures. That's fine. It'll make them feel good. Then, get back to business.

BeerNews.org analyzes the figures, and finds good news but troubling trends.

Craft beer numbers are floating back to earth. Dollar Growth has gone from 14% to 9% in two years with most of that coming before the word, “recession,” started gaining steam late last summer. In the same timeframe, production growth has dwindled from 11% to 5%. Meanwhile, we have 100 more breweries than we did two years ago. The beer supply is increasing despite demand decreasing.

BeerNews looks at a recent column by Andy Crouch at Beer Scribe and sees another potential for concern. A not insubstantial portion of recent 'craft' beer mega-growth has come from expansion into new markets (geographical growth) as opposed to the development of local sales (organic growth).
When distributors were giving craft brewers the cold shoulder, they dedicated themselves to the organic growth model. With the change in fortunes, breweries of all sizes are increasingly rejecting it. In early 2003, Colorado’s New Belgium Brewing Company sold beer in twelve states, focused on the western U.S. By the end of 2009, that number will hit twenty-five, including South Carolina. For a brewery of New Belgium’s size, selling around a half-million barrels per year, that model may make sense.

But what about the neighboring Avery Brewing Company, which sells only 16,000 barrels in thirty-three states and parts of Europe? [Contrast this to] New Glarus Brewing, which sells 80,000 barrels in just one state.

The two business models are healthy partners. But long-term viability, especially in times of economic downturn, depends on the latter -- on home-town loyalty. Fill the pipeline first, then build more.

But, yes, even a slowing rate of growth is ... growth.

The full Brewers Association release here. The BA defines a 'craft' brewery as "independent," "traditional," and producing less than 2 million barrels of beer per year.

1 comment:

  1. Very informative post. I think you summed it up, growth is growth, but no one grows at a fast clip forever.


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