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The Growth and Future of Craft Breweries

Upper Lip Symposium Growth Future Craft Beer pFriem Festbier

Over the past few years, much has been postulated and hypothesized about the status of the craft beer industry. Growth is slowing, shelves are crowded, tap handles are tough to secure, the number of SKUs are crazy, and competition has become more pronounced. I’ve written about it more than a few times, though getting the chance to hear a few veterans of the local beer scene weigh in on it was an intriguing discussion to witness.

The third installment of The Upper Lip’s Beer Symposium series, one focusing on “Growth and the Future of Craft Beer,” was the most interesting yet of their Sunday afternoon talks. The roundtable featured Van Havig (Master Brewer at Gigantic Brewing) Jeff Alworth (author and writer of Beervana: The Blog), Sarah Pederson (owner, Saraveza), Jon Brodie (Shelton Brothers Oregon), and moderated by Ryan Spencer (Advanced Cicerone).

Having such a diverse panel on hand – a brewer, a writer, the owner of a retail location, and a distributor of imports, enabled every aspect of today’s craft beer environment to be explored. Though much of the discussion didn’t focus on what’s going to happen, but upon historical precedence, and how to survive as a new or legacy brewery, despite the prevailing winds of change.

Upper Lip Symposium Growth Future Craft Beer Jeff Alworth

While there were only 3 or 4 questions asked prior to the Q&A session to conclude the event, each topic ultimately digressed into deeper discussions of the root causes or finite details surrounding each premise.

The first topic of discussion focused around debunking national sales numbers (beer sales down 1% versus craft beer growing at 5%) by noting that on-site sales aren’t included in either figure (Sarah) and that Oregon craft beer sales have a 30% saturation rate (Jeff). Additionally, many states are still recovering from Blue Laws that restricted brewery production and on-site sales for decades (Jon).

Turning next to the difficulty of opening a brewery today, the consensus seemed to be that it’s easier than ever (money, equipment, and consultation are prevalent, noted Van). Despite this, the lifespan of a brewery might be getting shorter due to the debt incurred upon start-up, the competitive nature of the industry, and what might be a lack of connection with consumers, distributors, and retailers.

Conversely, the recent trend of legacy brewers attempting to embrace new trends and adopt the taproom model hasn’t quite reversed declining sales concerns, which was specifically noted by Jon. There were also comments raised by Sarah that the youngest customers in the market are weighing other options (i.e. seltzers, cider, etc.), thus brewers should always be aware of which demographic they’re intending to curry the favor of.

For the next topic of discussion, the panel weighed the question of how breweries can stay relevant in today’s market. Jeff of Beervana alluded to the relationship between breweries, brands and customers in Germany – they create demand by focusing on specific styles in each town or region that the locals know and love.

Overall, the general feeling was that brewers need to sustain great business practices and that “innovation happens in fits and starts” (Van), that breweries are often forced to follow trends they may not like to stay relevant (Jon), and that establishing relationships in your neighborhood is central (Sarah). There was also debate about conforming to or knowing what the “next big style” may be, which really went into the weeds about the popularity of hoppy beers and the return of the adjunct lager, among other things.

The last question Ryan had of the panel concerned the impact the taproom model might have upon neighborhood bars or taprooms. A taproom owner herself, Sarah discussed the difficulty of getting certain beers from hot breweries because they’re sending fewer kegs out to taprooms, but also feels that the more breweries and taprooms there are, the better. Jeff went on to discuss how tough it is to keep up with the wealth and variety of new beers being offered by distributors and the tensions that lie between producers, distributors, and retailers. One big reason why many breweries have turned to self-distribution.

With consumers becoming more conscious of packaging dates, brewers want to have more control of their beer, stated Jon. There was also mention made by Van that distributors may not have the best interests of consumers in mind, for they’ll often offer something less expensive to get the sale. Lastly, it came back around to Sarah who explained how hard it can be to purchase beer for her taproom. It’s difficult to purchase something that everyone wants, so it’s “tough to satisfy and stay relevant at the same time.”

The Q&A session was a bit shorter due to the length of the panel discussion, but it was mainly spent fleshing out points already brought up, not examining new terrain.

Overall, there seemed to be a consensus about the growth and future of craft beer. There are no easy answers; there needs to be strong communication between customers, distributors, and retailers; breweries need to focus on best business practices; marketing and community engagement are key; your taproom, cans/bottles, and outgoing kegs are still important methods of steady engagement with customers; neither following trends, nor relying upon flagships will keep you in business.

Also of note: there was at least one instance where beer quality was called into question as being a central element of the buyer’s experience. One panelist mentioned that many consumers, even those who claim themselves to be savvy drinkers, still may not know off-flavors or what “good beer” is. Not so much that they don’t know quality, but that they can also be swayed by good marketing and a lower cost. It was also stated separately that “local beer isn’t always the best beer.”

While I’m certain every panelist would agree that selling great beer is of central importance, there wasn’t a lot of time spent talking about it, which I found interesting. I was intrigued by all of it and found the heightened and honest discourse a refreshing change.

In the end, I found that there isn’t an a clear answer as to what the future of craft beer holds. But for those who focus on staying relevant, engaging, innovating and maintaining the best business practices, they will be the ones who keep the industry strong.

Upper Lip Symposium Growth Future Craft Beer Group
Thanks to Ryan, Van, Jeff, Sarah and Jon for taking the time to have this discussion

To see the entire discussion, check out The Upper Lip’s recorded Periscope of the conversation.

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