Thursday, April 26, 2007

Good beer is good business

While I'm pointing out good pieces, check this one by "Uncle Jack" Curtin. Jack's done a very nice piece for Mid-Atlantic Brewing News on the wave of good new beer bars in the western suburban reaches of Philadelphia. It's more than your standard "there's a good bar here with this stuff on tap and food on the menu, then there's another bar here with this stuff on tap and food on the menu" kind of story that all too often passes for "beer writing" (hey, I'm guilty, sometimes it's what the editor wants). Jack does more than tell you about these places, he tells you why they've opened and why they're succeeding. The piece is called, appropriately, "The Tipping Point."

Jack's put his finger on something I've been thinking about (and writing about). Craft beer has reached a level of sales, interest, and visibility that could be likened to a critical mass. As it moves more into cool bars, restaurants (both indie and chain), and supermarkets, it's going to be in front of more and more people as a viable, respectable alternative, and more and more of them are going to make that choice. The toughest problems for the industry in the next five to ten years are going to be keeping up with demand -- expanding production fast enough to make the beer that people want -- and getting access to the market in the face of continued wholesaler consolidation that often makes getting beer on the shelf a business of 'Eliza on the ice,' hopping from wholesaler to wholesaler as they merge, go under, and pop up.

There's one more problem looming, but that's the topic for the May Buzz on my website. It could be the worst one of the lot, and it's one we've seen before. See you there, next week.

9 comments:

Jack Curtin said...

I am verklempt. Or something.

Stan Hieronymus said...

Just to support what you've already said:

Dan Kopman of St. Louis Brewery put together a panel for the Craft Brewers Conference that addressed the matter of getting to 10% volume share and - as important - raising the money to do it.

Dan pointed out that there's capacity to produce 8 million barrels right now and 10% share would be 20 million, meaning 12 million needs to be added. At a cost of $2 billion - minimum.

Sam Calagione was on the panel and at the end he said, "It might be more courageous to go from 30% growth to 5%" (than continuing to ramp up at a break neck pace).

Lew Bryson said...

Absolutely, Stan. Getting to 10% volume share is doable on the sales and acceptance side, I firmly believe that. But getting to 10% on the capacity side is going to take a LOT of stainless. As Dan quotes Dan Kopman, we'd need 12 million in capacity...that's adding about 13 Sierra Nevada-size plants to the mix.

Or would it be more like adding 100 Harpoon-sized outfits to the mix, or maybe 200 Dogfish Head-sized breweries? I know which scenario I like better.

Alan Newman at Magic Hat opines that what we actually need is fewer breweries making it bigger so that they can reap enough money to go to real marketing and advertising. I'm not so sure about that. I didn't see America's wineries doing it that way.

Stan Hieronymus said...

Practically speaking, Newman is right. Small is less efficient.

But isn't that part of the appeal?

Just look at the Wall Street Journal today and a story about Screaming Eagle and its 400-500 case run.

There's a general agreement that talking about dollar share instead of volume is good, but it is harder to get newspaper business sections to do that. At least when it comes to beer (vs. wine).

The best metric is public acceptance - back to Jack's point - and for some reason the daily/weekly print press is fixated on volume to measure that. We're pretty sure there must be a better way.

Lew Bryson said...

"The best metric is public acceptance - back to Jack's point - and for some reason the daily/weekly print press is fixated on volume to measure that."

We're guilty as well: all the BA's metrics are based on barrelage. It's not a good focus, but it's easy to grasp. It is a problem.

bill mc said...

So, do you think beer is getting "sexy" again?

I've heard (unsubstantiated) rumors that there will be brewpubs or microbreweries in Hudson and Catskill, NY very soon. Of course this is the sort of stuff that goes on in small towns with an upswing economy. Unfortunately, the shops are high end bathroom and kitchen stuff as well as art galleries and antique shops. When the economy turns down, and it will, these shops will shut down and you'll have not crappy looking closed stores but nice looking closed stores and sadly, the beer stores/breweries will follow.

I remember in when i lived inTennessee, there were about 10 microbreweries/brewpubs/beer bars within 100 miles of my house. iwent looking the other week on the weba nd i think there are like 2 left (in 6 years).

So, while this is great news, it is also sad that there will be more casualties as well as the loss of some damn good beer and disillusioned brewers.

P.S. I was at Keegan Ales the other day and the restaurant portion is open. The beer is still as good as ever and the food is good too.

Jack Curtin said...

>Sam Calagione was on the panel and at the end he said, "It might be more courageous to go from 30% growth to 5%" (than continuing to ramp up at a break neck pace).<

Well said.

Not exactly on point but in the ballpark: Ommegang has just announced that it is reducing the number of tickets sold for its Belgium Comes to Cooperstown event to 800 (there were 1400 last year) and tightening things up in general to benefit both the attendees and its own staff. There are people out there who "get it" and there are more of them every year.

LandmarkBeer said...

I hope Alan's idea of less breweries but have the remaining be larger never happens. I love what all the small breweries bring to the beer world. I always get excited to try the local brewer's offerings when out of town. Wouldn't want to have a Magic Hat sitting in a bar in LI, much rather have a Blue Point.

Kiernan

Lew Bryson said...

Kiernan,
I love local, but I also simply like difference: I like to see every bar with a different tap-set, not the same one the wholesalers talk them into everywhere else.