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.
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!
Interesting piece. I do find that I'm less adventurous in some ways than I used to be. At a certain point in the dark past I had to try every new craft brew that came into my field of vision. Now I don't think that I could do that unless I had a full time job like yours. I have also noticed that it really is a relatively small number of brewers who are consistently delivering the quality and choice that I crave. Do I need to sample every single Amber, DIPA, Bourbon Stout that comes out? With notable exceptions, I tend to drink the local/regionals in the style I like and round out my drinking with Imported old masters I always liked.
Hell, I can't even keep up. I find myself sticking to local/regionals mostly, but then, I get to travel, so that gets broad, too. Carpe diem.
I think the choice paralysis is a truth that can be taken too far.
I was an intern with a girl who had strict Korean parents. She told me she had a mental breakdown in college because it was the first time in her life where she had to make choices for herself. So the phenomenon is real.
I think the solution is to have people to help. I was hired by a liquor store to help people figure out what beer they want. We have wine people who do the same. And from my experience there are people who are stuck in a rut, there are people who are interested but overwhelmed, and there are people who want to try everything, and everything in between.
However, let's not overstate the problem. This choice problem is one every segment faces. How many macro beers with different permutations of packaging are there? But it doesn't seem to be a big deal. It may limit growth. But as people learn and grow the number of people it affects gets lower and lower. We get a lot of people who get educated by going to Philly/South Jersey bars.
Agree with Kelly. I find myself burning out on the newness and seeking out the old familiar. At home I drink pretty much what I did 10 or 15 or 20 years ago and often that which is not available at the thousand-tap in the neighborhood.
Speaking of the thousand-taps I find myself seeking the old familiar there. at 6, 7 or 8 bucks a pint (or snifter) I dont need to try the hop bombs that i dont really care for, or the fruit beers. I've been in this game for 20 years and have tried everything. Now I just go local/regional and, like Jack has said, crave "just a beer."
Comparing investing to beer purchasing seems ridiculous to me. Investing is all about risk tolerance/aversion; when an investor, faced with too many decisions, chooses to stand pat, they receive the benefit of guaranteeing they WON'T lose money.
Until Dogfish Head comes up with a beer that can actually consume all other booze in your house (and I wouldn't put it past Sam) there's no such risk when buying a six-pack. As such, the main motivation to stand pat when faced with overwhelming investment choices (i.e. risk aversion) isn't a factor when faced with overwhelming beer choices, and the analogy falls apart.
I'd say the biggest problem with too many choices is lack of loyalty leading to beer consumers jumping from one brand to the next without really supporting them.
However, the market doesn't really hold this up as a number of brewers I talk to always say their flagship beers are what keeps them afloat and the specialties are really just to get their name out or for fun or whatever.
I have read before that the crash in the late '90s was mostly caused by lack of quality and the explosion of money being invested in shoddy brewpubs, etc. Similar to the Dot Com boom basically.
Something keeps nagging at me about this feeling of boredom when I see several hundred beers arrayed before me, from all over America and the world, and the first thought I have is: Which one's the freshest?
The nagging feeling might be the creeping doubt that growing by shipping further and further from the source rather resembles the problem we once resolved to fight by brewing locally.
Couldn't agree more, Russ; the mutual funds analogy is ridiculous.
And you know, Roger, I see more and more love for the local beer (while I'm still seeing serious geeklust for beers "from away": no one ever said this was rational...or monolithic) and the brewpub-fresh beer. The burst of nanobreweries seem sure to help that along, assuming the beer's good.
I agree fully, I don't believe an embarrassment of choice would threaten a flatlining of the craft brewing industry; au contraire. I agree again with the factors you outlined Lew for the stall some 15 years ago. Most craft beer then wasn't nearly as good as it is today, and the choice of styles today is (again) much greater. There were too many indifferent "blondes", "ambers", "darks" then, that is what led to the initial fall-off in sales and new ventures in my opinion.
Lots of choice in the single malt field, and the numbers just grow every year. Ditto the American whiskey market. Ditto wine. Tons of wines out there, more than ever, and wine (e.g. in Australia) has outpaced beer in terms of real growth for the last generation.
Folks: the definition of "a good day blogging." You make a thoughtful post, and Gary Gillman says "I agree fully." That's how you know you're on-target.
Cheers, Gary; I do value your checking on me!
"I find myself burning out on the newness and seeking out the old familiar."
I agree with that to about 90%. I'm still interested to look at new beers on the shelves (maybe it's a holdover from when there wasn't much variety in my youth), but new is relative as most of the bottles I see are just variations on two or three themes anymore.
I can still remember when discovering a store with Merchant duVin labels was a thrill. Nowadays, I'm happy to see the latest seasonal from Goose Island or Capital when the calendar turns.
I agree with the New Albanian it's almost a catch-22 where the (intial) cry for local beer has been surpassed by hop bombs and big beers from California, Colorado, Michigan. At least where I live the amount of PA taps (and surrounding states) in a multi-tap is still small compared to the major craft brewers. Lew, I hope you are right about the nano breweries but I have found that the smaller the brewery is (especially within PA) the harder it is to find it on tap. Victory, no problem, east end or roy pitz-- much harer.
Gary is right on with the styles, there was even a big porter boom in the mid-late 90's I remember going to a stoudt's beer fest where everyone brought a porter. I think the mainstream-type styles was part of the attempt to appeal to the masses and cash-in. Hence the blondes and ambers that didnt challenge the drinker.
massive beer choice does not bug me in the least its your thing do what you want to do, although I cannot be bothered with most of it, I completely undrstand why some people are on a quest for the latest and greatest. For some people its the jounrey for others its the desitnation. I was lost in the desert for far to long and am happy to have found my home (beer wise) that is
It's going to be harder to find the nanos by definition, Leeb; they don't produce much, and they also tend to stay close to home. But the ones I've had so far have been good, so I hope we're okay on that.
Hey thanks Lew! When are we going to see you next? Perhaps at KBF Sampler upcoming? It is always great to see you when you can stop by the Gazebo. I will be there (the SB gazebo gatherings) at the end of April.
Good point Lew. You really have to seek nanos out, by defintion. But that begs the question-- do nanos really stay nanos? I dont know too many businesses that are going to turn their backs on growth and I've seen many committed "small" breweries (troegs, berwick, north country) expand greatly and continually.
Hopefully enough local folks will drink enough local beers and we'll see more representation at the multi-taps
But that begs the question-- do nanos really stay nanos?
Key question. Depends on several things, primary one being: are they any good, and do they know how to run a business? Then there's the question of what kind of beer they make, whether they have any money, and -- a surprisingly big one -- why are they in it in the first place? The nano scenario is still in early stages.
Here are my thoughts about the shakeout Lew.
While I believe that beer in general is better today...there are an awful lot of breweries spewing forth a plethora of 'limited release one-off beers' without achieving consistent quality within their lineup of regular offerings. Quality control will be the name of the game for those who wish to thrive...not just survive.
In my opinion, the elephant in the room is the lack of code dating on beers from smaller brewers who are hopscotching their expansion across the US. Without fail, many of these beers sit on shelves for weeks, months and even (gasp!) years.
The brewers who thrive and expand will be those who recognize the need to:
1.) Code their products with a bottling or pull date
2.) Have distribution agreements with wholesalers which holds distributors responsible for product freshness both in the warehouse and on retail shelves
3.) Have brewery representatives in areas where their beer is sold in order to train, assist and follow-up on wholesaler personnel
Only then will the masses achieve the level of faith they currently exhibit with other products they currently consume.
No arguments, Ed...and I think the breweries who are doing just what you say are the ones who are doing well in the larger market: Sierra Nevada, Boston Beer, New Belgium, Boulevard, Deschutes, Goose Island, Harpoon...
If you took the top 20 craft brewers' volume out of the market...what you'd have left, with a few exceptions, would be a wild mix of everything from hand-to-mouth crazyshops to brewers that are on their way up because they have QC buttoned down -- in the brewery, and in the supplier/retailer chain. Gotta do it all if you really want to be a sustained brand. You bet.
Throwing your beer across the country without a net can only work for so long.
To me as a consumer I love choice, variety, new products, competition but if i was a brewer I would rather have a portfolio of stable products. the beer business has become IMO a fad driven business. To operate in an industry with high capital costs, commodity prices which can fluctuate wildly and ever costilier distribution costs a lot of brewers are headed for trouble. When I go to my distributor, I see beer from all over country and world. i for one would rather sell a lot of beer locally than sell a few cases accross the USA. Sometimes I wonder how a brewer can make it.Just my two cents.
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