Craft Beer’s Abundance of Small Breweries Enable Continued Evolution

Last weekend I found myself without access to my cell phone for the first time in over two years. Over the first few days, I found it a harrowing experience, described by an innocent bystander as “what it might feel like to have a phantom limb.” You’re so use to it being there, but when it’s gone, you feel almost helpless in certain situations.

Our reliance and thus expectations from technology – especially in terms of the internet and mobile apps, is a parallel similar to the expansive growth of breweries since the early 80’s. While there were definitely some great craft beer offerings in those fledgling days, these small enterprises were still akin to dial-up AOL and it’s instant messenger – just as today’s hazy and pastry beers are to Snapchat, Instagram, and Facebook. Those early days required patience with what was available, now it’s all about variety and choice.

Today’s craft beer market is filled with so many shiny silver 16oz cans, each with a different method of being made, colorful artwork, and unique nomenclature. Our zero-attention span culture has spawned a wealth of one-and-done beers from every brewery than can afford a canning line, or at least rent mobile canning for a few hours.

Just as entrepreneurs adapted in the wake of the Dot-Com Boom (and bust), so too have breweries learned from others mistakes, and continue to satisfy a broad audience. But how?

Much of the growth occurring over the past decade has taken place in the realm of small, localized taprooms and brewpubs. It’s the regional, hyper-regional, national, and international breweries that have seen slowed growth and declines, as detailed by the Brewers Association’s New Brewer and reported by Brewbound.

It was only a matter of time before the broader public would learn that locally made beer simply tastes better, now that “more than 80% of adults of legal drinking age live within 10 miles of a brewery.” And as a result, smaller breweries are now grasping the market share once owned by Sam Adams, New Belgium, Full Sail, and even Deschutes.

Yes, there are 100’s of new breweries opening each year, but just like every other “free market” industry in this country, it’s all about the Survival of the Fittest. If people want pastry stouts and juicy IPAs, that’s what the hottest breweries are making; just as those who don’t diversify their offerings may fail because they only follow fads, are reliant upon interstate distribution, and/or only make flagships.

Yet with such diversity now, it’s the locality of the industry that sustains it. Breweries can now better control their earnings by selling draft and cans to customers from their own taprooms – they’re no longer forced to only subject themselves to the Three-Tier System. Many of the beers made today that inhabit 16oz cans don’t travel beyond the area they were brewed in or even outside the state.

Now that the US has over 7,500 breweries, they can make a few regular styles, yet also become more specialized with multiple seasonal offerings and regularly rotating options, such as those ever-loved varieties of IPA.

Take, for instance, the continued success being seen at Ex Novo, Wayfinder, pFriem, and Baerlic. Each of these breweries have regular flagships you can crush on draft and in packaged cans, yet they all have constantly changing new tastes that appeal to all. If you can make great beer, sustain the margins needed to enable steady and measured growth, plus continue to keep the public guessing with new ideas, then you’re not only a great brewery, but a well-run business.

Those who preach doom and gloom about the “beer bubble bursting” are viewing the entire industry through the lens of those producing at the macro (non-ABI/Coors) level of craft. Many breweries producing in excess of 80,000 barrels annually are struggling because they lack the nimble nature of their smaller counterparts and it’s far more expensive for them to invest the time, human-power, and cost of ingredients (on 50 to 250 barrel systems) to compete with those putting 5 to 15 lbs of hops per barrel in each 5 to 20 barrel batch of another new hazy every week or two.

Therein lies the formula. If you’re big and unable to make new and exciting products the general public is interested in, nationally, the struggle is real. If you’re small, you have a decent chance at success, as long as you maintain steady business practices, keep up with trends or find a niche, and keep the taproom flourishing. A big part of that equation is balancing how much beer will leave your taproom, and of that, what’s going in cans vs. kegs.

For the record, I think it’s fine if brewers want to make cereal puff stouts, lactose-laden tropical fruit drinks, as well as under-conditioned NE IPA’s. I generally steer clear of them, but to each their own. Don’t like beer flavored beer? Go for it. Don’t like Snapchat? Don’t use it. Don’t like Neapolitan Ice Cream Sours with Lactose? Neither do I…

What I do find solace in is the greater amplitude of options now available as a rebuttal to these whimsical creations. Today there are phenomenal brewers across the nation continuing to experiment and fabricate new plays on traditional styles – like utilizing new hop strains, using only locally sourced ingredients, and different methods of fermentation. And many are successfully able to go beyond the fancy packaging and social media hype.

Diversification has created is a new kind of freedom within the entire craft beverage market. You won’t find me worried about the industry slowing down or about the largest independent breweries failing. It’s the natural ebb and flow of capitalism. We now collectively decide these things with our dollars and our willingness to support local business.

The evolution of craft beer in America will continue to be led by smaller breweries as their steady, measured success now feels like a paradigm shift in the industry. Almost like going back to dial-up… but tasting way better.