Massively Increased Beer Choice: Good, Bad, or Ugly?

Way back, around 1996/7, craft beer growth in the U.S. flatlined. It had long been predicted -- which seems weird and self-fulfilling, in retrospect -- as "the coming shakeout," and it arrived with force. When it did...we started looking for why. (Funny thing is, not many people talked about why before there was a shakeout (or why everyone referred to it as a 'shakeout') but they seemed certain there would be one...and there was! Amazing, what we do to ourselves.)

There were a multiplicity of factors -- under-capitalization, lack of brewing skill, market manipulation, industry in-fighting among them -- but one that got a lot of play was the thought that consumers were flummoxed by too much choice, and were standing in front of craft beer shelves in a fibrillating logic loop, like some Star Trek-era computer that had just received some verbal bullshitsku from Kirk and Spock (Kirk, out-thinking a computer, now there's quality plotting)...and then turning, zombie-like, to go back to Good Old Bud Light.

 

We were told this had happened -- you know, by marketers -- but I remember thinking at the time that it sounded crazy, that it was something the big brewery marketers had come up with to help the executives sleep better at night. Wine had that many choices, and more, and that was extolled as a great thing. There were more Scotch whiskies all the time: sales were going up. I remember getting too many bad beers -- lot of quality control issues back then -- but more choices was a good thing.

At least, I thought so. Then Barry Schwartz came out with his book The Paradox of Choice: why more is less in 2004, and that seemed to ice it. It was in a book, you nerds; more choice paralyzes consumers! End of speculation.

I like books, but...this is something that's always bugged me, and I just saw two pieces about it (thanks to Our Girl Tara Nurin at CitySearch.com Philly for that!), so here goes. The first piece, from February, is a short one from the always curious Harry Schuhmacher at Beer Business Daily. Harry notes that he'd heard Jim Koch speak about the phenomenon in today's market, about

"the great proliferation of choices in the beer aisle today, giving Americans the most choices and a wider variety of beer in any time in history. But he also warned that there is a law of diminishing returns, as too many choices can actually paralyze the consumer into buying less, or even buying none, because no matter what he/she chooses, the consumer is left with an unsatisfied feeling that they may have not chosen the best beer."

Classic Schwartz, right out of Paradox: choice paralysis comes from the 'fear' of not making the best choice, and Harry quotes Schwartz to back it up...on the subject of picking mutual funds. And Harry follows with examples of people paralyzed at the craft beer selection...and also inspired by it, and ends with "What do you think?"

Mostly, I thought, picking a good beer is not as hard or as crucial as picking the best mutual fund. I mean, what's the downside? You're out $15, as opposed to maybe $50,000 if you pick the wrong fund? Screw it, let's double down and get two sixpacks!

Then I read Jeff Linkous's Beer-Stained Letter blog post about it. After he speculates a bit, and notes the great 2010 numbers from the Brewers Association...he talks to Barry Schwartz, who, it turns out, "by and large gives the beer industry a pass from his premise that a plethora of choices turns consumers off..." Ha!

The reason beer gets an exemption: choosing a brew – sixpack or single bottle – from the wall of eye-popping labels, and picking one you're ultimately unhappy with, is an error that's easily [sic] to correct, easy to move beyond given the lower price than a car, computer or clothes. Plus, with those latter items there's the expectation of keeping them for a while.

Yeah, well...you look at my garage, fridge, and basement, you'll see I apparently have that expectation about beer, too! Anyway, Schwartz adds that the difficulty of making a choice may come out in ways other than walking away:

the hyper array of beer choices could end up favoring well-known or familiar brands (or beers that have the most engaging packaging or labels for that matter). Opting for the familiar is a way of dealing with a problem that seemingly can't be solved, steering away from a random choice. "Nothing will bring brand loyalty back faster than a proliferation of options," he says.

So...where's that leave us 14 years ago? I think Schwartz is eminently pragmatic about the price of the product making the "paradox" less pressing, and I believe that puts an unstoppable hole in the "overwhelmed by options" theory of The Shakeout. I put my money on the number of sub-quality beers in the day (packaging problems, largely), the angry quarreling among craft brewers and a couple of vicious smacks from the big brewers that had an outsized effect, and a rush into the market by people with more money than brewing passion.

Today's threat of choice paralysis is, I believe, greatly overstated by Jim Koch, and I can't help feeling that he knows that: after all, Boston Beer is cranking out a lot of new beers lately, hey? We're seeing more and more beers every year -- more beers and more breweries and more kinds of beers -- and yet the sales just keep going up and up along with it.

Hmmm...quality of beer is WAY up, there's next to no in-fighting (we have to make up squabbles about extreme vs. session beer just to keep from getting bored, apparently), and the rush of "stupid money" into the craft industry that I was concerned about four years ago never really materialized. I'm thinking there are much better ways to explain The Shakeout, and much more important things -- malt prices, tax increases, Four Loko lapover effects, price of capital for expansion, wholesaler consolidation -- to worry about...than too much choice. Give us all the choice you got, brewers; bring it on!