Beer Market

Seeking Clarity on Hazy Objections

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I swear this isn’t another piece about “Haze Craze” or its attendant controversy.

Haze is part of it, but it’s really more about our reaction(s) to it.

A Question of Definition (I Know - Ironic, Right?)

I have a healthy skepticism of hazy beers, but before you navigate away let me elaborate a little on my specific "hazy" objection. It isn't because I object to new directions in beer, and it isn't because I don't think good hazy beers exist. I frequently order them when I'm out, because I want to see what's out there.

I have two concerns, neither of which is postmodern "don't want to like what's popular" fluff: one is philosophical and one is pragmatic. I'd like to start with pragmatic.

The pragmatic objection I have is that we don't know what NEIPA and other haze-identifiable styles really are yet. They're new and developing, and as such you get lots of beers that say they are X, Y, or Z by nomenclature but it's hard-to-impossible to draw a through-line that connects them because the market and brewers and beer drinkers and the intrepid beer style guides haven't yet coalesced around a commonly-held set of descriptions. That's fine - it's why we should keep drinking, brewing, and discussing them. The Brewers Association added “Haze/Juicy” beers to their guidelines, but they don’t meaningfully differ from the descriptions of hoppy beers we’ve had all along. That doesn’t preclude them from being a distinct style (lots of beers overlap, sometimes to the point of towering redundancy), but it certainly should give us a moment of pause in so “young” a style.

Here’s where I get prickly, though: it’s when people also try to tell me what a "perfect" or "great" example of the "style" a certain beer is - how is that possible when there's no common language or parameters for them yet? You might really like that one beer, but, well, if what that style represents is (forgive the wordplay) kinda…HAZY, then how can you call Generico-Juicy IPA a great example of the style? It seems like a practical impossibility to both claim that there's no style definition for something and claim that something is a perfect example of it. Hence, I find that people end up overpraising the "style" or particular proto-exemplars of it, which just creates a mis-fit in my ear. Let’s wait and see before we break out the “classic example” or “great style” language, eh?

A Distinction With a Difference?

To pivot to objection #2, the philosophical objection I have is that "haze" as a market-popular term and/or feature seems oddly chosen, like when one local brewery described a particular porter as having "tons of pale malt." OK, so what? Don’t most beers have a ton of pale malt? What’s next? “Now made with water?

Haze being present makes a beer distinct - I’m just not sure it makes a beer different. Haze isn't a flavor or an aroma. It's just an appearance attribute, and I don't know why it should be a particularly desirable one. It might or might not indicate certain beneficial/desirable flavor or mouthfeel properties like high hopping and young age and softness, but it could also indicate incomplete fermentation or bad water or contamination. So rather than celebrating it as an end in itself, why don't we at least highlight what's good about it? That's where I think the BA guidelines, imperfect and over-broad as they are, made a decent point by calling the categories "Hazy or Juicy." If I make a Crystal NEIPA that’s juicy as hell and soft on the palate, would it really be problematic that it’s clear? Does the distinction make a difference? What even is the key distinction?

Celebrating haze - whether as a brewery acknowledging it's chasing people who value the term/appearance (as a different local brewery did recently, per their own explanation, when promoting their “Hazy Lager”), or as a drinker that throws it out as a defining attribute in the absence of any other context - makes about as much sense to me as celebrating "medium-rare" as a food preparation outcome. Yes, it's great on a ribeye. But what about on hash browns? Pork? Ice cream? Can you imagine if we treated mid-rare the way some treat "hazy?" You'd have restaurants posting an ad for "35% COOKED MEAT!" If I saw that, absent any context, I'd react the same way as I did to the aforementioned brewery’s "Try Our HAZY LAGER!" ad. Maybe it’ll be a great beer, and maybe it won’t (update: I wasn’t a fan), but I can’t get to a point where I think how it looks is what really makes it so (or not).

Don’t Wish Your Beer Life Away

If your objection to NEIPA or any new/different beer is just that you want to be able to look down on newbs who will buy any new-ass thing, then that's your prerogative, I guess. That’s not my position, though. I just want to be able to have productive discussions about beer.

A discussion isn’t as productive if you argue something is the gold standard of something for which there’s no particular standard.

A discussion isn’t as productive if you lionize a term that is only tangentially related to the aggregate sensory experience that a beer is.

We can drop it here. But I just wanted to make it clear (gotta love all the accidental puns here), from this beer drinker’s perspective, that the problem isn’t with “new.” I love new. And jumping to the end of the page on what’s great and what thing makes it great means you’re doing the beer equivalent of wishing your life away, and frittering some of what’s really fun about new beers, new styles, and beer experimentation in the first place.

Don’t get off my lawn. Stay on it. And let’s discuss this new breed of grass for a while rather than rushing to declare who grows the classic examples of it and then moving on to that next new breed of grass.

Keep it Simple.

JJW

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Sunset on the Beer Savanna: More Beer, Fewer Mouths

How much beer is too much beer?  I don’t know (and I don’t think anyone does), but I can confidently state that it’s at least possible that we’re approaching that point when it comes to craft beer.  I know it seemed like there could never be too much craft beer.  Every new brewery on the tap list was a joy to see, and we could simply enjoy this new beer wonderland we were living in.  A huge and diverse Beer Savanna was ours to relish.  How could we ever feel crowded on it?

This is the third and final installment in a three-part series about the proliferation of craft breweries.  I want to thank you for reading this far, from the plea to stop opening new craft breweries, through last week’s discussion of the elbow-bumping that’s changing the beer and bar scene’s collegial attitudes, and now to this week, where we’re tackling a question that usually comes to me as an objection when I raise this issue.  The objection looks like this:

“We had thousands of breweries before Prohibition, and we have only a little more than that now.  But our population is three times what it was then – so what’s the problem?”

The problem is that “number of breweries” isn’t the right metric.  The right metric is production per capita, especially when we factor in overall rates of alcohol consumption, and consumption of beer, particularly.

If we want to know if a “crunch” is coming in the craft beer world, we need to assess how much beer we’re making per person, and how much beer those persons are drinking (or could be drinking, if we market well).  Bottom line up-front: it's more than ever, for a smaller relative audience.

Comparing Points in Brewing Time

Pre-prohibition, we had a lot of breweries.  What we didn’t have were massive production breweries.  You had lots of local and super-local breweries, but not many big-time regional breweries and few real “national” breweries.

Today, we have a lot of breweries.  Most craft breweries are locals, as in the heady days of 1919.  But in addition we have regional craft and non-craft breweries, and of course we also have the mega-breweries of our macro friends. 

So, even with the same number of breweries, we can’t say that the number of breweries compared to the number of people gives us a good sense of whether we’re overproducing.  Let’s go to my preferred metric: production per person (PPP), measured by the ratio of barrels produced (or in the market) to population.

In 1919, the year before Prohibition, the US had a population of 105 million.  It also had a little more than 1,000 breweries, down from a peak of about 4,000 in the late 19th c. (Brewers Association “Historic Number of Breweries,” Beer Advocate “History of Beer in the US”).  This contraction was due in large part to improvements in refrigeration, allowing for and, indeed, leading to some brewery consolidation.  In that year, US beer production was approximately 68 million barrels (Beer Institute – Statistics).  That leads to a PPP value of 0.64 (barrels per person).

Fast forward to today.  True, our population is larger – approximately 320 million (2016).  Production, however, has increased to 216 million barrels, which means that our PPP measure for 2016 is 0.67, which slightly exceeds our pre-Prohibition number.  And as we know, the number of breweries opening each year is growing, and existing breweries are increasing their capacity.  Production is growing faster than population growth, and faster than any fall-off in macro beer consumption (in case anyone was going to claim that craft was simply taking up the slack being lost by macro beer).  And, as one final objection head-off response, “what about exported beer?”  The US Department of Commerce report for 2016 shows that the US imports more than six times as much beer as it exports (roughly 33 million barrels imported, against 5 million exported).  Factoring in total “beer in the market,” then, we add a net 28 million barrels and the PPP ratio rises to 0.76.

I don’t know how much beer is too much.  I do know that, per capita, we’re looking at more of it in our market than ever.

More Beer – Fewer Mouths

We now have, on average, an extra beer in every six-pack as a percentage of beer-to-population, as shown by the PPP measure (0.64 in 1919, 0.76 today).  If the beer-buying public has grown, though, then that may not really matter.

Unfortunately, it doesn’t seem like that’s the case. 

Yes, the growing popularity of craft beer has led some who previously shied away from beer to jump back in.  That rapid, double-digit growth has slowed, though, and at an inopportune time: more than 1,000 new breweries are firing up their kettles this year alone. 

From the high-altitude demographic perspective, beer is in a bit of a hole.  It’s looking down the barrel of a bad population pyramid, given the preferences of each demographic group vis-à-vis its alcohol preferences.

When asked by Gallup their first-choice preference for alcoholic beverages, about 70% of people 50 and older chose beer.  Twenty years ago, that was also true of those age 18-29.  Today, though, that number (while still at about 70% for older drinkers) has dropped by thirty points among younger drinkersFewer than half of younger drinkers are choosing beer (around 40%).  That drop has hopefully hit its floor (with a slight increase last year), but a dramatic recovery to the 70s seems unlikely.

Then there’s this: fewer Americans are drinking alcohol at all.  The percent that are at least “occasional” drinkers has dropped from a high of 71% in 1978 to 64% in 2014 (the last year available in Gallup’s time-series data).  The difference, again, has a significant age-related component: the drop is nearly entirely accounted for in the younger demographic groups, with those 50+ showing consistent drinking habits.

The short version, then, is that we have a grayer, drunker population than we used to.  Given the size of that group – baby boomers – we have something of a buffer in terms of consumption.  However, that group is going to start undergoing what we politely term “generational replacement” – it’s going to start dying.  When it does, who will pick up the stein and carry on?

I Don’t Know

I don’t know how much is too much.  Maybe we can carry on like this for a while yet.  Maybe beer – especially craft beer – will keep finding new customers and bringing them over to its side.  Maybe existing beer drinkers will happily continue paying a growing premium for “good” beer, keeping profits high and smaller, local breweries solvent despite declining unit sales and static (or shrinking) markets.  Maybe we’ll enter a period of correction where breweries will sort themselves out, consolidate, and transition to a more-sustainable model.

Maybe not.

I mean it, though: I don’t know.  I’m not claiming that we’ve hit a saturation point for craft beer.  I do know this, though: there’s more beer out there that I want to drink than I can in any given year.  There are entire breweries that I’ve never or only intermittently tried, even when they’re fairly local. 

I’m sure that beer observers have said this very thing once a week for years, but it genuinely feels to me like we’ve reached a tipping point. 

A Train Leaves San Diego at 55 MPH…

To bring home and synthesize the parts of this argument from these three pieces:

·      We have an ever-expanding craft beer community that is populated, in significant part, by brewers of dubious qualification creating a product of dubious quality

·      As the brewing environment begins to “fill in” its negative space, breweries and bars are going to see an erosion of the amity and cooperative spirit that many think of as being intrinsic to craft beer, thanks to good old-fashioned competition

·      As the beer train hurtles down the tracks, there’s a demographic train humming up the same track in the opposite direction

Those trains may be further apart than I think.  It’s possible they’re not actually headed for a collision, and the market will rationalize rather than convulse.  I suppose it’s also possible that the questions about craft beer quality are both overstated and that breweries will mature and improve, proving this to be just a temporary blip caused by a sudden influx of new players coming into the market.

I don’t buy that, though.  I think that brewery investors should start looking for outs.  I think that brewery employees should start thinking about other industries that can use their hard-earned skills.

I wonder if we have forgotten that the free market is a Darwinian place; there was so much room out there on the beer savanna for craft breweries to romp and play, with few predators in sight and hops fields as far as the eye could see and rivers of wort pouring, seemingly endlessly, to the horizon.  Who wants to think about a time when we’ll have to fight it out for resources, customers, and our own survival?  Who wants to ask if that day is soon to come?  Who wants to ask if it’s already here?

Now, though, the free market hyenas may well be at the door.  I don’t know what will happen next, but if nature is any guide, this may get messy.

Keep it simple.

JJW

Please help support BEER SIMPLE by visiting the Support page and saving the links there as your bookmarks, especially this Amazon link!  Every dollar you spend will help keep BS coming your way, and more often (which is at least as much a threat as a promise).


Bar Brawl: Tap Rooms, Brewpubs, and the Coming Clash of Craft

Craft brewers come across as a surprisingly cooperative lot.  Stories abound in and around the industry of breweries working collaboratively, sharing hard-to-find ingredients, even providing start-up loans to new breweries (which seems a little bonkers, from a capitalist perspective).  Likewise, having known my share of craft beer bar owners and operators, you'll often see close relationships between breweries (not just distributors) and the bars that stock their products.

Call me cynical, but it seems to me like the camaraderie is starting to wear a little thin, and for a very simple reason: markets evolve, the negative space is starting to fill in to a significant degree, and changes in the law are incentivizing different behaviors.  Big breweries, craft breweries, and bars are all starting to bump into each other, and there are only so many customers out there.

We may be in a Prisoner's Dilemma situation, too.  It's entirely possible that collaboration and cooperation could continue to be viable avenues for success among craft brewers, but that individual defections will limit the probability of it.

For sure, though, it's a dynamic situation.

Brewpubs, Taprooms, Beer Bars, Oh My...

Take in, if you will, this mind-blowing statistic: 60% of new restaurants close within their first three years, but for brewpubs that number drops to 46%...over 35 years.  It isn't hard to understand why.  Brewing and selling on the same premises creates incredible cost savings (no packaging, no delivery) and you're selling to a basically captive audience (once they're in the door, they're buying your beer).

"So what?," you might ask.  "There aren't huge new chains of brewpubs in the market."  That's true.  If you look at the Brewers Association's statistics on brewery openings, the ratio of brewpubs to microbreweries/regional breweries hasn't increased.  However, recent changes in state laws and market approaches have seen production breweries opening tap rooms, or tasting rooms, or sales locations that are brewpubs in all but name.  They're pouring pints, filling growlers, and even the ones that don't serve food often bring in food trucks or cut deals with local delivery restaurants.  They're brewpubs in all but name (and sometimes in name, too).  This creates tensions between breweries, distributors, and craft beer bars, and we're already seeing pushback.  

Then there's the actual incentivizing of brewery establishment.  Cost of a basic commercial brewing system has come down dramatically; the push to service the equipment demands of more-radical homebrewers has blurred the line, and a functioning professional brewery now might have a smaller system than a particularly-geeky homebrew club (mine, the Stoney Creek Homebrewers, owns and operates what is essentially a 2bbl system.  I'm pretty sure we've accidentally created the 25th-largest brewery in the state).  Moreover, in many states (I'd say most, but had trouble verifying cost in all states) a brewery license is significantly cheaper than most liquor licenses, sometimes dramatically so (in PA a brewery license can be had for $1,425, whereas liquor licenses sell at auctions for anywhere from $5,000 to $400,000), and once brewing, you can often sell directly.

Add that all together and you create unavoidable conflict.

"Split Up!"

Then there's the fact that this is all happening at a time when it makes perfect sense to split up and "go local" as a survival strategy.

For years, craft brewers could afford to cooperate because they weren't actually competing with each other: they were competing with macro breweries and carving out chunks of their market share (small chunks as a percentage of what the big breweries sold, but of sufficient size to sustain and grow the micros).  One successful microbrewery buoyed the reputation of craft beer, thereby helping the others, so why not help out if you're a "competing" brewery?  Everybody wins.

Once "big beer" started to sit up, take notice, and fight back, the calculus changed.

Macros start buying up craft breweries, driving down the price of craft beer and directly challenging the business model of the remaining craft breweries.  The logical response is for craft breweries to turn into the skid and target local communities in lots of locations rather than relying on a traditional centralized production/distribution model.  Big beer will always be able to undercut price on the shelf, but over the bar a small brewery selling for itself has a relative advantage, especially if they can lean on "drink local" sentiment (which they can).  

This "scatter" effect is a great way to create more targets than big beer can smash, but also puts breweries-with-brewpubs in much more direct competition with each other, and with the bars that were their direct customers.

The Wars to Come?

It's not universally held, but it is commonly speculated, that there's an impending "correction" coming in the craft beer market.  Too many breweries chasing not enough customers with the giants stomping around gobbling up "real" craft breweries and driving down profit margins (plus some quality concerns) will mean a "big crunch" in the craft brewing universe.

Maybe so.  Craft brewing's share of the market is still growing, but that rate of growth has slowed significantly.  Still, it's not realistic to think that we'll ever end up back in the bad old days of huge national breweries and no craft options.

What seems most logical to me is that the small brewpubs will survive - after all, they have that built-in "brewpub advantage" we discussed earlier.  I also tend to think that the larger craft breweries will survive, leveraging their economies of scale to a sufficient degree to remain profitable even in direct competition with the macros.

No, what worries me is what happens to those caught in the middle: the highly-successful but not-quite-national craft breweries.  Where do they go?  Private capital can't be relied on if the market actually starts to contract.  Macros will only buy up so many craft breweries.  Maybe the Victory Brewing Co./Southern Tier "merger" model will be workable for others.  Maybe mid-sized breweries will be able to use brewery-owned brewpubs to float their production operations.

I suspect, though, that what we'll see is that the total number of breweries will remain fairly static, but that some significant number of medium-sized breweries will take the hit for the rest.  

Here's hoping your favorite survives.

Keep it simple.

JJW

Please help support BEER SIMPLE by visiting the Support page and saving the links there as your bookmarks, especially this Amazon link!  Every dollar you spend will help keep BS coming your way, and more often (which is at least as much a threat as a promise).


For God's Sake, Stop Opening Breweries - The Normals Are Noticing

This isn't for all of you.  Some of you should be opening breweries.  But it's for most of you (and me, for that matter).  For God's sake, stop opening breweries.  You might be OK to ignore this if you live somewhere where there isn't a decent brewery within, say, 25 miles.  And you've worked in an industrial setting (do you even weld, bro?).  And you have extensive brewing experience.  And you have a working knowledge of chemistry and biology.  And you have some experience in marketing and sales.  And/or you're rich or have access to a lot of slack credit.  If you don't check these boxes and you're contemplating a brewery business plan right now, I'm talking to you.

Because lately I keep reading about and/or visiting breweries that fail on these basic, obvious things, and it's starting to piss me off because I'm now having to hear my macro-drinking neighbors tell me that they picked up some local brewery's beers, but didn't like them...and they're 100% right.  This isn't, "oh, they usually drink Coors Lite and can't handle real beer."  It's "oh, that beer legitimately doesn't taste good for a variety of reasons."  You're always going to have differences in taste, but this is actually just poorly-made beer, and believe it or not (my palate-trained friends) while it might be hard to pick out the great from the good in terms of beer, picking out the terrible is pretty easy, and lots of people can do it.

The normals are noticing our quality problems.  We need to get our shit together, and quick, and step one is to stop opening shoddy brewing operations.

You Don't Want To Do This...

I weighed in on this a while back, and noted that I don't really want to open a brewery, and maybe you shouldn't either.  I'm taking that a step further now: this isn't a "maybe" anymore.  You don't want to do this.  And maybe you can't.  And maybe you don't know that.

When I wrote that earlier piece, I was coming at it from the perspective that many people were well-meaning and would simply find that the brewing and non-brewing work involved didn't match up to their expectations.  That they could do the job, but just might not ultimately want to.

I've abandoned that perspective.  I'm now wondering if the people opening these breweries even know what they don't know.  It's not a question of incentive and effort anymore: I'm more and more thinking it's a question of skill and ability and awareness.

I'm sure by now many of you have read this piece in Forbes about a trio of new brewers out in California.  I don't mind that they seem a little douchey ("...when I walked into the bar to meet him I noticed we both wore Lucchese ostrich boots, and we became best buds ever since.”), or that they're riding some serious parental coattails, or that they're self-congratulatory.  

It's that they don't seem to know obvious things about beer and brewing, and are repeating their misconceptions confidently to a writer for a national publication.  Among their pearls of brewing wisdom: 

  • 30 days is actually a long time to lager a beer (Spoiler: IT ISN'T)
  • There aren't any American-owned breweries making...Pilsner
  • Showing commitment means to show up at accounts and shake hands with the people who buy and serve your beer
  • Beers use an "array of different malts and hops" and that, apparently, has something to do with monitoring the beer's temperature?

I hate to pile on, but they're either VERY poorly quoted, or they have no business running a brewery.  Maybe owning one...but, no, I can't even say that.  I've known people who invest in breweries and bring in staff to run them because they lack those skills, but even THOSE people are intimately interested in and rapidly come up-to-speed on the basics of the market they're entering and the products they're producing.  

And I wish this was atypical, but as I've noted before, I'm often shocked at the things brewers don't know.  It's possible I've reached a tipping point where I can name as many less-than-competent brewers/owners than competent.  

Airing Our Dirty Beer

Maybe you live in a good beer desert.  I know this is true for some of our international readers, and surely many within the US despite the 6,000+ licensed breweries in our midst.  

If so, then maybe any craft beer is better than none at all.  

That doesn't seem like the norm, though.  And it's concerning to me that when I look at the batting average of breweries opening here in the Northeast, it's pretty low.  Used to be that when a new brewery opened the only question was whether it would be only-as-good or better than the other craft breweries in the area.  Now I need to wonder whether it's as bad as the worst macro beer, and in addition I now need to question whether they know it's bad and are trying to fix it.  Maybe it's different elsewhere in the country, but my communication with those in other regions suggest it isn't.

So if you're thinking about this, please, don't do it.  And if you've already done it and think to yourself, "wow, I run a brewery!  My beer is awesome and anyone who says otherwise is a crank!," then at least make sure you have a lab, a QC program, and are constantly seeking to improve your product.

As it stands, this used to be something that we'd only need to discuss as a niche community.  But as I said, the outsiders are starting to notice.  Craft beer isn't a fad, but lots of people still think it is, and if you think it's bad news when growth slows, start thinking about what will happen when the fad craft drinkers bail and the market actually contracts.

Out will come the knives.  And I can't guarantee my or your favorite good brewery will survive.  

I beg you: stop opening breweries.  And for the rest of us, start steering your friends and neighbors to the good ones...maybe literally.  Yes.  Drive them to the breweries.  Offer to pick up their beer for them from the distributor.  Print your own redeemable coupons.  Buy entire rounds for the people at the bar, but only if you get to pick what they drink.  

Because they're starting to notice.  And that's not the good thing it once was.

Keep it simple.

JJW

Please help support BEER SIMPLE by visiting the Support page and saving the links there as your bookmarks, especially this Amazon link!  Every dollar you spend will help keep BS coming your way, and more often (which is at least as much a threat as a promise).