The number one question I get about crafts is: “How large will the craft segment become in the US?” Of course no one knows that answer, however, I do tell those questioning the future of crafts to look at Oregon and Washington to understand what the potential is for crafts. Maybe the question should instead be: “How much business are AB and MC going to lose in the next 10 years?”
While SIRI, Neilson, and Guestmetrics all indicate a slowing of the craft segment, interest in crafts has never been higher. We all know there are over 4,000 operating breweries and more than 6,000 brewing licenses in the US. What is really behind this number is the large amount of micro or brewpub size operations.
These small operations, most frequently started in the back of a garage or in a small warehouse with limited funding, have experienced some degree of success. All have taken advantage of the expansion of the craft segment and have leveraged their local roots to their advantage. Smart brewers have grown and even some sold getting multiplies that are crazy. Good for them.
While there is nothing to indicate a slowing of this model, the industry will soon see a different model which will change the craft segment. Karbach Brewing Co., located in Houston, was started by the CR Goodman team. Goodman was a longtime distributor in Texas and an importer who sold part of their great portfolio to Glazers and later sold the remaining brands to Ben E. Keith. Funded by these sales, Goodman started a brewery in Houston, leveraging their experience and contacts as distributors. Karbach brought in experienced and highly respected brewer, Eric Warner from Colorado. Aggressively priced, Karbach is on fire in Texas which is not a surprise.
Wild Acre Brewing, located in Ft. Worth, is headed by a former Ben E. Keith executive, John Pritchett and has as its brewer, former Lagunitas alum, Mike Craft. Wild Acre plans on shipping over 6,000 bbls. the first year out of a brewery with a 10K bbl. capacity. Their main packaging will be cans with unique designs. The DFW market is a 63+million case area, only five percent share, which is highly underdeveloped in the craft segment.
In Fredericksburg, Texas, the Scripps family is leveraging their media expertise in building what will be one of the most unusual breweries in the country. Headed by highly respected master German brewer, Peter Boettcher, a former MC brewer who has designed and built a state of the art 10,000 bbl. operation.
Altstadt Brewing is targeted entry into the market sometime in October. It has been built and designed to be a destination brewery, with the brewpub an actual 200+ year old German brewery refurbished and shipped to Fredericksburg. The production brewery consists of the most technically advanced equipment available today. The brewery will have a world class restaurant, beer garden, and meeting hall. Initial brands will be a Kolsch, Lager, Alt and a seasonal Wit beer; all under five percent ABV and highly seasonable. Branding has been created by Brandwrx, a highly acclaimed agency in Austin.
Breweries that are this well-funded and managed by highly experienced brewers and industry professionals are going to be successful. As pundits predict when the craft segment consolidates, those built with these key characteristics will survive and prosper. Those who do not, or will not, invest in the highly experienced brewers and industry professions will be gone. Perhaps such near-do-wells will experience something similar to what AB, Miller, and Coors did to the regionals brewers between 1970s-1990s.
In Texas, it will be Remember the Alamo….