Jim Koch – The New York Times:
The growth and the excitement in the beer business is in craft, and its potential is threatened by a beer landscape that is heavily tilted toward gigantic foreign-owned conglomerates and against the independent, innovative entrants.
It matters because independent American breweries create beers for their local regions. They invest in their communities. They employ local workers. And they pay taxes — local, state and federal. American craft brewing is American manufacturing that doesn’t outsource these well-paying American jobs.
Get some craft brewers really talking, and they’ll tell you we are headed for a time when independent breweries can’t afford to compete, can’t afford the best ingredients, can’t get wholesalers to support them, and can’t get shelf space and draft lines. The result: Beer lovers won’t have the broad range of choices they have today.
We’ve enjoyed a golden age of craft brewing for a decade or more. Explosive growth in local craft breweries means there are often a dozen places for drinkers to enjoy new beers within range of an easy drive. I’ve wondered, though, when this expansion will end, whether we’ll face a contraction, and how far that’ll go.
No business grows forever. Mature businesses find a steady-state size if they’re well run. Over-expanded industries contract until the market can support them at a reduced size.
That’s what Jim Koch sees coming, but he claims the cause won’t be over-extension. It’ll be pressure from monopolist macro-brewers reducing space in the distribution chain and shelf space.
Keep in mind Jim started his business, Boston Brewing, with one beer, Sam Adams Boston Lager, but left behind the “micro” designation long ago. Boston Brewing makes dozens of beers, both all-year and seasonal, and distributes around the world. Comparing craft brewers to a company his size is an apples-to-oranges exercise.
He’s well-regarded in the craft industry, though, for giving back to the little guys. He personally intervened during a recent hops shortage by using his company’s purchasing power to buy more hops than they needed at a lower price, then re-distribute among smaller producers at that same reasonable price.
I’m not certain, then, that his issues apply to many local micro-brewers. Most don’t run a bottling line, don’t distribute beyond nearby towns (and only in kegs, at that), and don’t appear on store shelves. Crowding out in the distribution chain will limit how many small brewers can grow larger, but the more pressing danger for small breweries – the producers you find in a local industrial park, for example – is one of over-saturation of the local market for good beer. We haven’t reached that tipping point, yet.
The breweries I visit are consistently crowded every weekend, even in the dead of winter. The crowds grow as the temperature rises. New micro-brewers are opening all the time.
Now, I may be in a fortunate minority living in northern central Virginia. Our state has seen explosive growth in brewing and distilling, and there are a LOT of beer and spirits drinkers here. What I’m seeing may not be representative of the larger craft brew industry.
At some point the craft market will peak. It may shrink. I doubt it’ll disappear. I have yet to see or hear of a craft brewery disappearing for reasons other than being bought by another micro-brewer – because their beer was so popular it made sense to sell and made sense to acquire.
Give people a taste of something better and they’ll pay you for the pleasure. Witness Apple and their computing products. The same will hold true for the craft brewing industry. It may do so with a lower number of producers, though. Time will tell.
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