Elephants and Grasshoppers: Thoughts on 2012

I'm a little behind. I was away for a week while everyone was putting together lists highlighting the significant beer themes of 2012. It's an amusing concept, despite the fact that 2012 was not really amusing on a number of counts. But I digress.

In beer blogland, there's the best and worst of 2012. It's all about polls and geek opinions and perhaps it's a worthy exercise...as long as you don't think too much about the potential conflicts of interest with info coming from industry-connected folks with axes to grind and brands to boost.

The truth is, stats like best new brewery, best new brewer, best new beer in a bottle, best IPA, etc., are meaningless in the greater scheme of things. What they are is marginally entertaining factoids...perfect for the beer version of Trivial Pursuit if that's what turns your crank.

The big elephant in the living room for 2012 was the continued proliferation of new breweries, along with the expanded retail presence of craft brands. All the other stuff is just subterfuge. Trust me on that.

Let's look at brewery growth. There are now more breweries (certainly more than 2,200 at year's end) in this country than we've had at any time in our history. That's useful to consider when you think back to simpler times, when most American cities and towns had several small breweries.

You don't need fancy stats to see that craft beer has made huge inroads in retail and related settings. Just open your eyes. Bottle shops are popping up all over the place. Dive bars that once served nothing but sludge are now pouring craft beer. Big box grocery stores and convenience stores alike have figured out that craft beer is good business and good for business.

Somehow lost in the conversation is the fact that overall craft beer growth is horribly uneven. States like Oregon and Colorado are far ahead of the curve while others, particularly most of the old Confederacy, are so far behind the 8-ball they will likely never catch up.

Of course, state-to-state comparisons obscure the real story...which is that specific areas have experienced off-the-hook growth and are probably producing more beer than they can consume or sell elsewhere. Portland is a prime example, though we are not alone. We now have more than 50 breweries. And counting. How many can we support?

Most beer people would rather not talk about it, but I wonder if we don't already have too many brands competing for a pool of customers that is expanding slower than brewing capacity. The signs of an overcrowded marketplace are already out there for anyone who cares to look.

First there's wacky. In a overcrowded marketplace, brands must work hard to differentiate themselves. Around here, we see this represented by the escalating number of strange concoctions...brewers using fruit or spices in IPAs. It won't be long before someone invents Grasshopper IPA, dry-hopped (obviously) with organic grasshoppers. Sounds yummy! (If you see this on a future episode of Portlandia, remember you heard it here first.)

Then there's price. I've watched prices for craft beer in stores and pubs steadily increase over the past couple of years. In a shitty economy, no less. I realize craft dollar volume is growing slightly faster than production volume (15 to 13 percent for 2011, according to the Brewers Association). But rising prices in an ultra-competitive market during bad economic times? This can't be a supply and demand issue because we have more than enough supply. Are prices rising to make up for lagging sales volume? Hmmm...something to contemplate.

For now, though, I'm gonna kick back and enjoy a pint of (experimental) Grasshopper IPA.

Happy New Year!

Numbers Show Solid Craft Beer Growth for 2011

If you spend any time in stores or pubs, you probably know the craft beer market is healthy and growing steadily. Recent figures from the Colorado-based Brewers Association, the trade association representing small and independent brewers, are eye opening.

There's a lot of information compressed into a short press release. No need to go through all of it here. If you'd like to delve into the detail, be my guest. You'll find it here.

Upfront numbers
One of the trends craft gurus watch is volume share. This is the portion of the overall U.S. beer market occupied by craft beer. Craft's share has been increasing steadily over the last few years. In 2011, it surpassed 5 percent for the first time, eventually hitting 5.68 percent. That's up from 4.97 in 2010. Production volume increased to 11.5 million barrels, a 13.2 percent increase. Not bad.

Perhaps most importantly, craft's volume and share of the market increased at a time when volume as a whole declined...by 1.32 percent. Why is it important? It means craft is in growth mode while large brewers like Anheuser-Busch and MillerCoors are losing market share.

The retail bump
The BA estimates craft retail sales of $8.7 billion in 2011, up 15 percent from 2010. This is a substantial increase, but you have to look at what's happening in stores to see the full picture.

Have you noticed that craft brands are taking up more shelf space in your neighborhood grocery store? It's happening. Craft is the fastest growing beverage segment in supermarkets nationally and it earned 10.8 share for 2011. The number is expected to hit 12 percent in 2012.

Some of the growth is being fueled by the increasing popularity of large format (22 oz) bottles, which generated $44 million in revenue, up 35 percent from 2010. 6-packs still dominate (to the tune of $470 million in 2011 sales), but large format bottles are selling well in grocery stores, bottleshops and smaller stores, which I'll get to shortly.

Craft cans are on a shocking growth trajectory

Another area of big growth is cans. Indeed, canned craft beer is catching on. Can sales generated $11.5 million last year. That's a 35 percent increase over 2010. Sales of large format (16 oz) 4-packs increased by a jaw-dropping 97 percent. Cans, which accounted for just 40,000 cases sold in 2008, reached 358,000 cases in 2011. That is scary growth.

Craft canned sales growth is ominous. Cans are far more convenient than bottles and actually do a better job of preserving beer than bottles. Until recently, cans were the haven of the big boy brands. People headed on an outdoor excursion would settle for lousy beer because convenience was more important. That's no longer true. You can take good beer with you. This is bad news for the biggies.

Finally, retail growth is spreading itself around. Besides supermarkets, craft beer is invading drug and convenience stores. For the first six weeks of 2012, craft beer sales were up 20 percent in drugstores and 25 percent in convenience stores. Supermarkets showed a 10 percent increase. Wow!

Larger picture
If you're in the beer business today, one of the places you don't want to be is working for a large brewer. MillerCoors and Anheuser-Busch are desperately trying to come up with new marketing schemes to stem the rising tide of craft beer. And they keep rolling snake eyes.

If you want a comical take on how the big brands operate, read Silver Bullets: A Soldier's Story of How Coors Bombed in the Beer Wars, by Robert Burgess. Burgess, a market research analyst at Coors in the mid-1980s, details how the company botched new product launches and wasted millions of dollars trying to market crappy beer and coolers. Great reading.

A convenience store bomber selection

The typical big boy response to market challenges has been to create shoddy new products and support them with expensive marketing campaigns. It once worked, but no more. You wonder what would happen if they simply decided to make good beer. Not much chance of that happening.

The increasing momentum of craft sales in stores of all kinds is a significant force of change. You don't have to visit a pub to enjoy a good beer. Consumers are demanding craft choices and stores are delivering, thus taking shelf space away from the big boy brands.

Trickle down
The craft theme is extending beyond just stores. Restaurants and other places where people gather to socialize are jumping on the craft bandwagon. They can't afford to stay on the sidelines any longer. It's embarrassing and bad business when customers want something more than macrobrew.

Small restaurants are a good example. When I go into a small restaurant and see an antiquated beer list, I'm amazed. A place I know has bottles only and serves beers that were really popular 10 years ago. The owner is leaving money on the table and annoying customers who want decent beer. He knows it.

Another great example is my athletic club. For years and years, they offered Bud and Bud Light, along with a couple of (typically) Widmer beers. Now they are getting pressure to remove at least one of the Budweiser taps and add a third craft beer...probably a second IPA.

Part of the problem for owners and club managers is they cannot keep up with changes in craft beer. The number of breweries and styles is growing like crazy. Those of us who follow things know it's tough to keep up. My message to business owners: Ask someone who understands your business and knows craft beer for help. You won't be sorry.

Big Trend for 2011? Event Craziness

I've been reading a lot of year-in-review posts on various blogs. We all feel the need to share what we think were the most significant developments of 2011. Ezra posted a review in photos over on The New School blog and Jeff shared his view of the trends on the Beervana blog. All well and good.

While I'd love to talk about the growing popularity of barrel-aged beers or the changing pallet of Oregon beer drinkers, it seems to me the runaway trend for 2011 was the frenetic number of special events that graced the calendar all year long. Seriously off the hook.

One of many

I've mentioned this before. The pace of events and special beer releases got to the point last year that most of us couldn't keep up. There was talk of event fatigue as summer waned and the beer scene became a blur. Things didn't slow much into the fall.

I leave it to readers to decide if the virtual tsunami of special events, brewer's tastings, mini-festivals, etc., is good for the craft industry. I realize the power of social media is growing and that breweries and beer fans feel the need to use it. Everyone wants to promote their brand. However, I think there's a bit of ADHD involved.

One more...

One of the offshoots of the special event craze is that everyone feels the need to brew special beers for these things. This has gone far beyond the seasonal concept. Breweries are producing special beers often with eclectic ingredients and unrefined recipes to support special events.

All these special beers, whether they are summer beers, fresh hop beers or strong winter beers, typically share the fact that they are produced for events. It is no longer cool to pour one of your house beers at a special event. Nope. You've got to create excitement and buzz by creating something truly unique and possibly reckless. Toss in some pumpkin rind, cloves, vanilla beans, coffee beans, peppermint, bacon, wet hops, cranberries, chilies, dandelions, etc. Whatever it takes.

And one more

Let me digress for a moment. On a recent road trip, I visited several breweries. These are all well-known establishments with great beer lists. My conclusion was that the standard house beers were far more refined than the seasonal offerings.

I started thinking about it. Why wouldn't that be the case? Brewers spend a lot of time and effort refining their house beers...often over many years or decades. Seasonal beers don't generally get the same sort of attention. Gee, I wonder where special event beers appear on the priority list?

So our ADHD-inspired special event calendar may well be creating a playground for experimental brewing, but the beers produced are not always particularly good. In fact, my experience is that the beers are often half-baked and not ready for prime time. I'll let you decide the meaning of this.

Flying the Unfriendly Beer Skies

Despite the growing popularity of craft beers, you don't have to look far to see how the macros continue their efforts to program people into accepting lousy beer. The evidence is everywhere...on TV, on store shelves, on billboards.

The principle is pretty simple. If you bombard people with enough messages associating your beer with good times, you won't have to worry about making decent beer. Anheuser-Busch (InBev) and MillerCoors have been taking this philosophy to the bank for years, and are official proof that this strategy is alive and well.

So it really shouldn't surprise anyone that the reach of the beer conglomerates extends to the airlines. If you want to drink a decent beer while you're in the air, you'll probably have to smuggle it aboard. Terrorist.

Elevating my spirits with this beer list is problematic

First, let me say that I've warmed up to Southwest Airlines. I've gotten used to the cattle call otherwise known as boarding. I actually like the no frills aspects of the airline. They are obviously one of the more efficient air carriers out there. I have nothing against them...well, almost nothing.

A flight to the Bay Area for Thanksgiving gave me a chance to see the current drink offerings on Southwest. That's the booze portion of the in-flight menu you see above. Not a pretty sight. Five bucks for a Bud Light, Coors Light, Miller Lite, Michelob Ultra, Corona or Heineken! Yikes! Standards are obviously pretty low here. 

To me this is just another barrier that needs to be broken down. There's no excuse for any airline to be offering such a shameful list of beers. I'm not suggesting that Southwest should be pouring Pliny the Elder, but it seems to me they could offer a decent pale ale and maybe even something a little darker. A couple of craft choices would be cool.

You hate to assume anything, but my guess is Southwest and other airlines offer what they do because that's what big beer wants them to offer as part of programming. I mean, how can you possibly fly anywhere without the chance to bolster your experience by consuming a tasty Bud Light? Mission impossible.