Apr 252017
 

logo@craft brewers conThis year’s Craft Brewers Conference has just concluded, and once again, the event was well attended with over 12,000 industry people. While the attendance was impressive, the initial feedback from a number of attendees was not positive.  From those who attended, many mentioned that the overall excitement from previous years’ conventions was missing.

The early first quarter numbers continue to show a dramatic slowdown in crafts’ volume and dollars.  Longtime established crafts, including Sierra and Boston, have negative trends.  Only New Belgium seems to be ahead of the trends, predominantly due to their 15-pack cans of Dayblazer.  The downward trend was one of the main topics of conversation at the CBC.

Given the crafts’ downward trend, along with the recent announcement or more than 7,000+ active breweries, one can see why the conversations at the CBC centered on the future of the industry.  The two most talked about topics were consolidation and fallout.  Taking a page from Charles Dickens, it was the best of time, it was the worst of times.

Even those brewers that are currently successful are concerned about the industry and its direction.  Many have commented, though not publicly, that if given the opportunity to build again, they probably would not, knowing the standings of today’s industry. Soon the industry could see more brewery closings than openings. Not unlike what happened to golf courses after the 2008 real estate crash.

The question is: will 2017 be remembered as the year that marked the end of the craft growth?  Perhaps, 2017 will be the year that ends the wannabe craft brewers or more aptly stated: will this be the beginning of the amateurs vs. the pros?

Two additional issues always seem to surface: first, finding quality people; and, second, finding distributors for the craft beers.  Regardless of what happens, both of these issues will continue to play key roles in the industry.

In the future, three craft models will continue to be functional.  One is simply the corner brewpub with a restaurant; the second is the small distributor who self distributes; and third is the fully integrated brewery. The corner brewpub has obviously been a successful venture for years.  The small distributor model works given certain guidelines and expectations, as is noted by the many successful brewers around the country. Finally, there are those who have the means, ability, and willingness to achieve a fully integrated brewery. These are the industry pros.  The point that good people are hard to find, should be more in line with good people are hard to find for what I am willing to pay!  From brewers to top beer executives, good people are available; brewers just have to be willing to pay for top hires.

To find distributors, brewers have to understand that there is more to creating and building a brewery, and that hiring good staff requires good compensation.  A successful brewery must build branding, marketing, a sales teams, pricing, promotions, and on and on.  Those who will, and can, will have no issue in finding distributors.  If you build it, the distributors will come.

The craft segment is not dying, nor is it making the shift to consolidate. What the craft industry is doing, is changing to accommodate those who have a clear vision of what is needed in the industry to be successful.

An investment in knowledge pays the best interest….

 

 

 Posted by at 6:00 am

  One Response to “An investment in knowledge pays the best interest…”

  1. Great points Geoff. To me it appears that history is repeating itself. In the end we will sadly only have a few big regional craft guys left that can weather the new storm. Regional breweries that have been good with their money and have managed their finances correctly by not getting too into debt will be fine. A lot of these guys like Speakeasy Ales & Lagers thought that 15%-20% growth rates were going to go on forever. So, they went into debt big time to finance their expansions.

    I believe, like you said, Brewpubs that have their own kitchens will continue to thrive. Food trucks are great, but sometimes they are unreliable and consumers like predictability like having their favorite beers taste the same from batch to batch. If a brewpubs can make good beer, food, and self-distribute a little I believe there is room for a bit more years in this area.

    -Goose

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