Around the early 1990s, the golf industry, in anticipation of the soon retiring waves of baby boomers, assuming the boomers would have ample money and free time, would take up golf by the thousands. Investors started building hundreds of new golf courses. Many of them were designed by architects or professional golfers who got paid for their name or reputation and built courses that only players with PGA or LPGA cards could enjoy. Golf equipment manufactures did the same, new technology and line extensions based on the golfers ability, had those companies introducing new products annually. As a result, prices soared, as did their profits.
Then came the dot-com recession which slowed the rapid growth of the golf industry. To support this growth, colleges began to expand their golf degree programs to students. In fact, at the 2009 PGA show in Florida, about 20 colleges displayed their degreed programs, touting that when completed; the student would have multiple hours toward a PGA card. Even today there are some independent schools that offer associates degrees in golf.
Finally, the great recession of 2007, along with the now much higher costs of golf equipment and green fees, has caused the golf industry to collapse. Many more golf courses and real estate developments have closed, and there are only a handful of new courses opening. This past summer, Dick’s let go almost 600 PGA pros as they closed their golf departments. The golf industry is contracting.
Portland State University’s program, The Business of Craft Brewing, is heading into its third year. The one year program has a wait list for students with the current group of students coming from all over the US. Interestingly, 50% of the new students are female. More and more colleges are offering beer programs or schools to their students, some only one day, but many, as with PSU, are offering a more comprehensive program. A number of students are looking at distilling or producing cider instead of just beer. PSU is building the program to address the needs of the craft industry.
A number of publications continue to highlight the recent craft brewery closings, while at the same time discussing the possibility of craft consolidation. All this while the craft segment continues to show double digit growth, both in volume, and even more so in dollars. We all are aware of the huge number of new breweries and even more are being built or planned as I write. As a reference, just last week while in Astoria, Oregon, a city of less than 10,000 residents, there were three breweries, a distillery, and a winery. Every on-premise account visited only had crafts on draft.
The article from this blog entitled the Coming Tsunami written in the summer of 2012 highlights the large number of new SKUs being introduced and those coming in the future. While SIRI indicates a decrease in SKUs, we know more are on the way even though most of the new breweries are in the micro category.
There are parallels between the golf industry and the craft industry. High costs for certain products, line extensions, new products, and high interest. But there is one huge difference. While the golf industry over-built and is contracting, the craft industry is expanding and growing at double digit rates. The craft industry is a perfect example of the supply and demand model at its best. The tsunami is here.
Beer Fodder; http://youtu.be/eubWYPhcEEo