Future of Craft Beer

[Gillman]

I put some questions in another thread initially to Oscar since he is in the beer wholesaling business I believe, but also to any interested. I'd like to elaborate here in a series of questions (but answer however you want).

1) When craft beers first emerged, did you like them? Did it take a while to get the taste? (Or do you still not like them?).

2) Regardless how you felt about them, did you think craft beers would attract the market they now have, where e.g., you often see craft beers in outlets in big (and smaller) cities and airport bars?

3) What is the future of the craft beer segment? Will it become (from a current circa 7% national share) the majority of beers sold? What will the national beer market be like in 10 years? Will the Bud Light kind of beer always be the predominant type sold?

4) How do imports figure into the picture?

Gary

[DeanSheen]

1.) Yes.

2.) Yes.

3.) In ten years I expect market share to double to 15%.

4.) Imports should do well along with craft beers. I'm assuming that the American palette is maturing and that the rise in Micros will also benefit the more quality imports as people become more accustomed to and seek out different styles.

[HP12]

I put some questions in another thread initially to Oscar since he is in the beer wholesaling business I believe, but also to any interested. I'd like to elaborate here in a series of questions (but answer however you want).

1) When craft beers first emerged, did you like them? Did it take a while to get the taste? (Or do you still not like them?).

2) Regardless how you felt about them, did you think craft beers would attract the market they now have, where e.g., you often see craft beers in outlets in big (and smaller) cities and airport bars?

3) What is the future of the craft beer segment? Will it become (from a current circa 7% national share) the majority of beers sold? What will the national beer market be like in 10 years? Will the Bud Light kind of beer always be the predominant type sold?

4) How do imports figure into the picture?

Gary

1. I loved the craft beers from the very beginning once they started to emerge. I remember Anchor Steam being my first introduction to the trend in the early 80's and saying "it's about time we got some beer with flavor and depth". I haven't let up exploring them since and are my beer of choice over the mass marketed beers.

2. The craft beer segment of the market grew fast and furious. I thought from the beginning there would be a niche market for these micro-breweries. Once Goose Island Brewery opened it's doors in Chicago and read about all the micros opening up throughout the country, I figured it would only grow in popularity.

3. The future of micro-breweries/craft beers is alive and well with no signs of letting up. Dogfish Head can't keep up with demand and recently announced cut-backs in distribution to 4-5 states. Dark Lord Day at 3 Floyds is a huge event. Market share will continue to grow but always in a niche way...hopefully. Too big is not always good, especially with consumables.

The big boys, Bud, Miller will always prevail with the vast majority of market share and when regionally threatened , they will just buy the brewery in order to get a piece of the action. I.E. Leinenkugel (Miller). The future of craft beers is bright and I would hate to see them getting much larger a market share than they have now. Quality and uniqueness could/would suffer.

4. Imports, like craft beers will always have a niche market. Certain brands will come and go, fall in and out of vogue. Changes in tastes, marketing and generational identity (i.e. "I'm not drinking that, that's what my old man and his friends drink").

I see the micro/craft distilleries going the same way as the micro-breweries did in the 80's. Explosive growth with cult followings and offering flavor profiles and spirit producing techniques that will push the envelope of status quo. We are seeing the beginnings of the distillery trend now.

So that's my $0.02 FWIW. I'm interested to see what others have to say.

[DrinkyBanjo]

1. Yes, in it from the late 80s early 90s and liked them when I first tried them.

2. No, I thought it would stay small but am very happy it spread.

3. It will get bigger, the big boys will not be happy.

4. Good imports will be okay, adjuct lager imports will suffer big time. I think the better beers from overseas will be sought out especially the big Belgian beers and the better German and English brews.

[Gillman]

Thanks for this input, most largely consistent. My own experience is in accord. I would say that imports provided a bridge to the (usually) more assertive craft beers.

Some people have not accustomed to craft beer though. A friend recently admitted he could not finish a can of pale ale due to its "bitterness". The beer was one that would be regarded by most beer buffs as a starter beer.

Gary

[CorvallisCracker]

1) When craft beers first emerged, did you like them? Did it take a while to get the taste? (Or do you still not like them?).

[Gillman]

Most imports, excepting some Belgian beers and the odd English or other one, are not as good as craft beers in fact. Imports usually are pasteurized, which takes away some quality. Also, they often use grain adjuncts which can (not always) reduce quality. But people go for the name so often, it is silly, but there it is.

Even in my case (who has "studied" such things), I really only became committed to craft beers when I finally went to England and tasted real ale. I saw that they were in fact the same thing for all practical purposes. It took that to show me that craft brewing - the best of it and not e.g. malt extract beer - was in fact true to the roots of brewing.

Of course, that doesn't mean all craft beer is great, even all-malt beer. Some is bad because not made right, or not stored right. Some commercial imports are pretty good. I had a very fresh draft Newcastle Brown ale recently, which was better than many craft beers I've gotten down in my day.

Mass market light beer will probably always rule the roost. It makes sense to a point because given that there used to be a 1000 beers that tasted very similar, a shakeout was bound to occur and one or two lights would end up dominating the field. This left room for those committed to good beer, to choose from what is now a wide range of craft beer and some great imports.

Gary

[HP12]

Which is not to say there aren't many good imported beers. There are. It's just that 35 years ago when I wanted a good beer, I had to go with an import. Now I don't.

[Gillman]

Agreed, except some of those green bottle beers are actually better today because not skunked. In the old days, with long supply chains and limited technology, some of those beers had a distinctive wet dog taste. That's mostly history now.

Gary

[HP12]

Agreed, except some of those green bottle beers are actually better today because not skunked. In the old days, with long supply chains and limited technology, some of those beers had a distinctive wet dog taste. That's mostly history now.

Gary

[craigthom]

1) When craft beers first emerged, did you like them? Did it take a while to get the taste? (Or do you still not like them?).

[Bourbon Boiler]

I started getting into beer in the mid '80s, so it was imports and Anchor Steam. As new ones came along, I started picking them up.

No. I was disillusioned early by all the crappy extract brewpubs that started popping up. The ones that made decent beer were in the minority. The rest were trying to cash in on a trend.

The first few small regional craft beers I tried were lagers and were just slightly better than mainstream American Pilsner.

I have been shocked (and thrilled) at the proliferation of regional craft brewers that are doing a wide assortment of styles.

The market share may rise, but it will still be dwarfed by the watery light beers with massive marketing. Most beer drinkers want something cold they can chug to get drunk. Craft beers are not that.

I've have the occasional Belgian beer, but most imports don't do anything for me, and I admit to having a bias toward American beers, especially those that are produced within a state or two of my location. I try to drink as locally as possible, especially when I travel.

Leinenkugel is a bad example, because they were a regional brewery making the same watery American Pilsner that all American breweries were making after Prohibition. They are not and have never been a craft brewery. Miller's involvement is what led to them making all their flavored and seasonal beers and their being marketed as a craft beer. They were no different than Old Style or Point or Huber until Miller decided to use them to get some of that craft beer action.

And that's what I think the future of the segment is: the big breweries producing fake craft beers. Sure, A-B has sunk their teeth into Red Hook and Goose Island, but I bet they sell a lot more Shock Top and Land Shark. Coors has done phenomenally with the pseudo-craft Blue Moon.

Most beer drinkers just want to get a buzz and do so drinking what they think is cool, so they'll drink MGD Lite regularly but splurge on occasion with a Blue Moon or a Heineken or a Beck's or a Corona (or, now, a Stella Artois), which give them that upscale feeling without challenging their taste buds.

Once while driving along a country road we passed a dead skunk, and my uncle said, "Who opened a Heineken?" I believe you that it's gotten a lot better, but that didn't stop Heineken from becoming the number one import thirty years ago, back when I never had one that wasn't skunked. People thought that's the way it was supposed to taste, so they pretended to like it, because drinking Heineken meant you had class.

I think you nailed it with the big guys going after the craft market with acquisition and making some new products with high volume techniques but craft-style marketing. The product is slightly better than the typical American beer, but most drinkers think their drinking a much better prodcut than they are.

[Gillman]

"Once while driving along a country road we passed a dead skunk, and my uncle said, "Who opened a Heineken?" I believe you that it's gotten a lot better, but that didn't stop Heineken from becoming the number one import thirty years ago, back when I never had one that wasn't skunked. People thought that's the way it was supposed to taste, so they pretended to like it, because drinking Heineken meant you had class".

Very telling anecdote and commentary!

Gary

[HP12]

Leinenkugel is a bad example, because they were a regional brewery making the same watery American Pilsner that all American breweries were making after Prohibition. They are not and have never been a craft brewery.

A bad example only if considering that Leinenkugal is a craft beer which it never was. It is and was a watery niche market beer with a regional market presence that Miller swallowed up. By doing so it increased the bottom line and help them get into the "craft beer" arena under a veil of slick marketing to the unsuspecting.

[OscarV]

I don't know about the future but the present here in MI sucks.

Have you tried this year's Bell's Oberon?

It sucks.

So starchey.

[craigthom]

I don't know about the future but the present here in MI sucks.

Have you tried this year's Bell's Oberon?

It sucks.

So starchey.

But Founders is in Michigan!

I once visited a microbrewery in Frankenmuth. Their beer was mediocre, but they appeared to be doing well contract brewing Bad Frog or something like that. I didn't try the Frog beer, but i assume it was mediocre, too, and only sold because of the frog graphic.

[Special Reserve]

I don't know about the future but the present here in MI sucks.

Have you tried this year's Bell's Oberon?

It sucks.

So starchey.

Oscar,

I realize that you are in the wholesale big market share beer business, but I disagree with you about the craft beer available from MI breweries.

Now I must admit I have not gotten into the Summer beers yet (I try to stall that as long as possible) but there are several very good beers available from Founders, Acadia, Dark Horse, Shorts, Atwater Block I'm sure I'm missing some.

I have not had Oberon yet this year, I won't pass judgement on it until I've tasted it.

Will

[imbibehour]

I put some questions in another thread initially to Oscar since he is in the beer wholesaling business I believe, but also to any interested. I'd like to elaborate here in a series of questions (but answer however you want).

1) When craft beers first emerged, did you like them? Did it take a while to get the taste? (Or do you still not like them?).

As a big beer imbibing enthusiast and a fan of beer, I think this is sort of a wrong statement to be making while not entirely incorrect. Good beer matters whether it comes from a big producer or a small one. I wouldn't call LA Choufe or Samuel Smith or Aecht Schlenkerla craft beer, they've been doing that stuff for decades. The small brewery movement has grown from leaps and bounds because people are suddenly starting to understand what REAL created beer tastes like, and it's not a mass produced generic thing that is bland. 20 years ago my dad handed me a bottle of Anchor Steam, I said WOW this tastes like baked bread.. There was no "craft" movement per se.. there was either beer that was good, or beer that was not. You seeked it out. Now there are so many breweries and choices and brews and so much good stuff (plus bad on the craft side) that it's not a question of switching over it's just a question of is the beer good or not.

2) Regardless how you felt about them, did you think craft beers would attract the market they now have, where e.g., you often see craft beers in outlets in big (and smaller) cities and airport bars?

What is a craft beer? Is Sam Adams craft? Is Sierra NEvada? Many people don't think so cause they are large. I will admit what is happening is there is a growing movement towards taste and more importantly variety, choice, and buying local. IF there is someone who is making good beer that is from city/town and has a bar to serve it at, or a place to buy it, people are understanding this is important. People want to support their community and get the good beer that comes along with it. It makes me want to move to Grand Rapids Michigan ... (ok well maybe not but I made my point )

3) What is the future of the craft beer segment? Will it become (from a current circa 7% national share) the majority of beers sold? What will the national beer market be like in 10 years? Will the Bud Light kind of beer always be the predominant type sold?

No it will never be a majority it will always be a niche market. In many ways the main jugernauts are tapping into it already making so called "craft beers" or buying up other breweries (look at Goose Island). There is also my personal feeling that people don't want their tastes challenged, and that's all fine, so a regular BMC will do the trick.

4) How do imports figure into the picture?

Gary

Some are good, some are bad, but most Americans can't get past the language barrier or more importantly incredibly different styles from other countries (like lambic, gueze, Belgian strong dark ale, etc...) that will just turn their world upside down. It will remain a niche market as well here in the US.

and that is my... 2 centavos... :grin:

[Gillman]

All well put (by all as they see it).

By using the term "craft beer", I meant primarily the products of the emerging small breweries of the last 30 years. Definitely that includes Sam Adams and Sierra Nevada. I agree some imports are in the same class and I referred to some Belgian beers and some English including real ale as made in England (some of it is made by big companies). Certainly I'd include anything from Schlenkerla in Germany, a great brewery.

I think it's fair to say though that most beer fans who dig the products of small breweries would not place any product of the big American and Canadian brewers in this class, then (circa-1980) or now. This doesn't mean mass market beer is inferior - it is different. And at the same time, a lot of small brewery production is average or worse!

I'm talking really about where the trends are going.

Gary

[OscarV]

Oscar,

I realize that you are in the wholesale big market share beer business,

Thats only commerence, it's for a paycheck and ain't got nothing to do with my palate.

[Special Reserve]

Thats only commerence, it's for a paycheck and ain't got nothing to do with my palate.

O,

That's why I commented as I did I know it's for a paycheck. I trust you know I meant no offense.

W

[imbibehour]

Long story short for myself, taste wins overall now matter who makes it.

To some degree I also begin to think and wonder that mass production and quality are a declining relationship many times.

Sometimes I think you can't mass produce something and create superior quality. It's a theory I am working on

[craigthom]

LSometimes I think you can't mass produce something and create superior quality. It's a theory I am working on

That may be true, but I don't think it is. I think, with the technology they have at their disposal, A-B and Miller could make incredible beer. They don't, though, because that's not what their target audience wants. Budweiser is the best-selling beer in the world. They are doing what they want to do, and they are doing it very well.

Not that many years ago I went to the Miller lab for work and asked a lot of questions. For development purposes they had a brewpub-sized setup and a 40 liter one, which I wanted to take home. They could easily run test batches of whatever they wanted.

I also learned that they use special hops that lack the skunk gene so they can use their clear bottles without worrying about light damage. I also learned that, even though they have fancy lab test gear, some people have a sensitive enough sense of smell that they can detect skunk at concentrations too low to be detected by the equipment.

[DeanSheen]

That may be true, but I don't think it is. I think, with the technology they have at their disposal, A-B and Miller could make incredible beer. They don't, though, because that's not what their target audience wants. Budweiser is the best-selling beer in the world. They are doing what they want to do, and they are doing it very well.

Not that many years ago I went to the Miller lab for work and asked a lot of questions. For development purposes they had a brewpub-sized setup and a 40 liter one, which I wanted to take home. They could easily run test batches of whatever they wanted.

I also learned that they use special hops that lack the skunk gene so they can use their clear bottles without worrying about light damage. I also learned that, even though they have fancy lab test gear, some people have a sensitive enough sense of smell that they can detect skunk at concentrations too low to be detected by the equipment.

[craigthom]

I'm really not sure what AB or I guess now InBev is doing well other than marketing, market penetration, market saturation, advertising, and sponsorships. They do a pretty good job at tying up shelf space in retailers with the help of their reps and distributors to protect their market share. So yeah, they do a few things well. Making beer is not one of them.

Help me understand about the skunk detection equipment. The skunk must be caused by a chemical strong enough to give off an odor and the equipment is not sensitive enough to detect it? That sounds like a nice line they cooked up for the tours. I'm just not sure how that is possible.