A decade and a half ago, a prominent national newspaper announced on the front page that the craft beer industry was undergoing a “shakeout.” The immediate reaction to this pronouncement was a lot of backlash with prophecies of the end of craft beer, of the bubble bursting, of doom for beer lovers.
Craft beer continues to deepen its role in the American beer industry. Getting access to beer wholesale channels? Done. Breaking into chain supermarkets? Done. Filling coveted convenience store shelves? Done. Available on planes, at ballparks, at the beach? Done. Opening at a rate of nearly one a day? That, too.
With all of these exciting achievements, including possibly breaking 3,000 breweries by year end, the buzz on the street is once again about a shakeout. The causes given are too numerous to list but range from bad beer to a lack of access to capital to finance expansion. Each has compelling logic. All are predicated on the belief that capacity is exceeding demand.
Perhaps. However, I think otherwise. Consider that during the shakeout of the late 1990s, leading craft brewers recorded consistent double-digit growth throughout that whole three-year period. Also, consider that a majority of the failed enterprises were less than 5 years old. A lot of discussion has revolved around other nonstatistical causes, such as lack of craft-beer passion.
Shakeout led to a questioning of an industry that was fundamentally sound. Bad beer, bad business, bad choices could have doomed a lot of fledgling enterprises, but not the whole industry.
As I scan the landscape of breweries, several things are readily apparent. There are a lot of new brewery owners who lack what is needed to run a successful business in the food and beverage industry. It’s a tough industry, no doubt about it. It takes brains and stamina to succeed in it. There are, having maxed out their capacity, a lot of businesses poised to make dramatic changes. Again, no easy feat jumping to the next level. There are also a lot of individuals who have labored long and hard without the rewards they deserve.
As these breweries leave a crowded field, does this mean a shakeout? Not at all. What we all need to be mindful of is the backbone of this industry: great, imaginative, exciting, dramatic beer and an ever-expanding, clamorous, enthusiastic customer base.
The first has always been part of our heritage, although it keeps shifting, moving wider, as our industry grows. Where the noble pale ale used to be the great leap, now sours and barrels and style mashups are the vogue. The second seems endless, with new recruits coming from all areas. From the globalization of craft beer to recruitment in the next generation, this industry continues to rack up raving fans. Don’t forget brewers’ innovative approach to making that connection. From nano breweries to gypsy breweries, models are evolving to hit that sweet spot of beer/customer passion.
I have no doubt that our industry won’t look the same in five or 10 years. Many players will have vanished. Yet we will continue to have this passionate craft-beer world with underpinnings in a bedrock of stable brands paired with innovation. And the customers will love it.