Ding’s Beer Blog

Session #80 – The Craft Beer Bubble

The first Friday in October ’13 brings us Session #80, where Derek Harrison at It’s Not Just The Alcohol Talking asks, ‘Is Craft Beer a Bubble?‘.

I’m no economist, and in any case economics is a soft science at best, so I guess it doesn’t matter, but here’s my take.

No matter what the relative competence of a brewery in terms of what they brew, or indeed competence in terms of their business plan, infrastructure, finances and strategies, as long as their beer actually SELLS, then it’s entirely possible for incompetent, ‘bad’ breweries, to survive. In some cases, in particular in America, these breweries even thrive. So, that brings us to the American craft beer market.

The ‘craft‘ beer drinking public in the USA is still a pretty ignorant one, and much more importantly an incredibly non-discerning one. Despite many years of hysteria, I see no let up in the appetite for ‘the latest, biggest and most brash‘ beer, nor any restraint being applied to the accompanying excessive praise for every new brewer and brewery that pops up. Fads happen by the minute here, with sours, barrel-aged, saison, ‘session’ beer (as opposed to real @sessionbeer), Wild Ales etc., all taking turns to be the flavor of the month.

I think there is a reason for this and it’s a pretty simple one. The American psyche is built on optimism, a can-do attitude, and a generally upbeat approach to EVERYTHING. This is especially true in the home of rampant capitalism when it comes to business of ANY kind. Americans love nothing more that a ‘local start-up’, with its ‘roots in the community’ using ‘local ingredients/labor’ and a story of ‘boy done good’. So many breweries operate out of this genesis that it catches the eye of the American craft drinker, and they seem to oblivious to mediocre and bad beer and are willing to prop up and support these brewers by buying product.

Normally one would expect the market to correct this but for now the ignorance in the market, rules.

One Comment

  1. There is absolutely a bubble in domestic draft, but I think it will pop sooner than you think.

    The fact is that a number of the very small outfits are little more than ramped up homebrew, essentially hobbyists who WILL hit a wall after a couple years. (Just like most bloggers.) Others who have made jump to say canning and real distribution have to find a consistent market, because — as you note — chasing the fad of the month is not a long-term business plan. Either you deliver consistent quality or — given the competition created by the bubble — you will fail.

    Outfits that do stay focused will create economies of scale that the storage unit brewers will not be able to match. That, more so than uneducated palates, will start the weeding out process. And once it starts, once it is seen as OK and natural for a craft brewer to fail, the process will accelerate. Don’t forget get that the crafty counterattack is still in its early stages and it will reclaim some market share at the margins in some locales.

    Ultimately the question is this: Are there two or three craft brewers close to you that you would not miss if they went away? If most craft drinkers can answer yes to that, then we are on the downside of the bubble.