The Session #43: The craft brewing industry is indeed welcoming. How long will that last?

For this month’s Session, Carla Companion, The Beer Babe has asked us to write about welcoming the new kids, the new breweries, into the craft brewing community. Here’s what I have to say about that.

Social Kitchen & Brewery opened in San Francisco this year, and I finally got to sample some of their beer at last weekend’s Eat Real Festival in Oakland. Social Kitchen Brewmaster Rich Higgins is well known in the Bay Area, having organized this year’s SF Beer Week , and has received plenty of outward support from the close knit Bay Area brewing fraternity. One of the great things about beer festivals is you can actually talk to the brewers about their beer, and Rich Higgins poured some of his L’Enfant Terrible, which he describes as a table Belgian Ale. I found it to be a great mix of slightly chocolaty roasted malt, a little fig, and a clove-like finish. It checks in at only 4.5% abv, proving once again, there’s some really flavorful, complex, yet drinkable session beers out there.

How should the craft brewing community welcome Rich Higgins and his brewpub Social Kitchen? I’m afraid I do not have any particular deep insights into that, but a wild guess is that if members of the craft brewing community actually actually purchased Rich Higgins’s beer, he’d probably feel pretty welcome.

What strikes me about this month’s topic about the craft beer community welcoming new breweries is very much in the spirit of the extremely chummy craft beer industry. In virtually every other industry, new entrants are rarely welcomed, and often scorned. But when new craft breweries open, there’s often plenty of support from the regional craft brewing industry, who seemingly do not view this new entrant as a competitor.

There’s always room for new players with the craft beer pie growing robustly despite a deep recession and glacial economic recovery. And since the craft beer community seems unified against the global mega brewers, the enemy of my enemy is my friend seems to apply here. But how many new breweries can the industry sustain before the craft brewing fraternity no longer considers the new guy a fellow craft beer evangelist, but another guy trying to take their money?

The success of craft brewing has inevitably and unavoidably created larger and more corporate entities entering into the business, especially as the older brewing pioneers ride off into the sunset of retirement. And while many of these corporation organizations seem committed to continuing the legacy and quality of craft brewing, they do have investors to answer to, who are not as driven by concepts like “support your local brewer”, as they are on things like “return on investment”, and it’s hard not to conclude this warm fuzzy feeling of “we’re all in this craft brewing thing together” will invariably end.

When will all these feel good vibes within the craft brewing industry be lost? Who knows. The current levels of growth may be sustainable for a long time to allow new breweries plenty of elbow room. And maybe there is something about brewing great beer that minimizes a sense of cut throat competition. But craft brewing is a business. And there are plenty of brewers who are demonstrably true to their craft, while also being shrewd, ambitious, and in some cases, ego-driven businessmen working hard to grow their small empires, and delivering a few bruises as they fight for tap handles, shelf space, and mindshare comes with that territory. I’ve already heard of a few grumblings from smaller craft breweries about strong arm sales tactics of the larger craft beer players. Call me a pessimist, but my guess is that 5, 10, or 20 years from now, the craft brewing industry won’t be nearly as friendly as it is now.

The craft brewing industry is indeed a welcoming industry. Enjoy it while it lasts.

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ramblingsofabeerrunner

Writing about beer from the California's Silicon Valley.

3 thoughts on “The Session #43: The craft brewing industry is indeed welcoming. How long will that last?”

  1. This is a good question, Derrick, because it does seem like this we're-all-friends-here vibe can't last forever.

    I think part of it has to do with the fact that at this point almost no craft brewery has demand as its limiting factor; instead, the limits are cash and capacity. When the market is big enough for everyone, rivalry makes no sense (I wrote a bit about this in my contribution to the session today).

    We may see this happening in small oversaturated markets first. Austin, TX and certain towns in the Northwest seem to be approaching a number of breweries that just HAVE to be more than the market would support. Or maybe the breakdown will cut across sizes; a town can support lots of brewpubs, but maybe only one or two production breweries.

    But maybe not; Durango, CO has 20,000 people and 3 decent-size breweries. Likewise with Williamsport, PA. The fact is that so many breweries need capacity,and the market continues to outstrip supply so dramatically, that I wonder if we're anywhere close to the tipping point.

    Still, the businessman in me knows that you're right; it has to come some day. And when it does, we'll see if the happy-go-lucky attitude is rewarded with loyalty, or if a cutthroat approach is ultimately more successful.

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  2. Beernews.org recently had a series of articles that talks about this in relation to increasing craft beer sales and how it might lead to the “winofication” of beer.

    The industry is concerned about brand erosion because the consumer is always looking for the next new thing. He suggests that the big players don't want to see this happen and may start pressuring distributors to shut out the little guy. Distributors and retailers may have a reason to do so due to limits in shelf space for beer.

    It's an interesting read.

    Tipping Point Part 1
    Tipping Point Part 2
    Tipping Point Part 3

    Jay Brooks recently published some interesting stats the support this diversification of beer sales as well.

    More Craft Beer Sales Data

    He says, “The craft mix is more diversified; the top 10 craft brands account for 41% of the craft total, whereas the top 10 imports account for 68% and the top 10 macro brands 73.5%.”

    Interesting stuff.

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  3. @Greg – In the Bay Area, which has no shortage of breweries, I attended a beer dinner where a brewery representative was promoting his beer by urging people to “drink local”. As he said this, he stood a block away from a “rival” brewpub, I counted about 7-8 more “local” breweries than his at the location of this dinner. There's only so much self space and tap handles for all the breweries, as I see plenty of places support there local brewers, and still leaving plenty of prominant names out.

    @The Rabid Brewer – I was not aware of the beernews.org articles, thanks for bring them to my attention as they were interesting reading.

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