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).

 


Why "Beer For Women" Marketing Won't (and Maybe Shouldn't?) Die

Let's get this part out of the way first: women want out of beer what anyone wants out of beer.  Specifically, something that tastes good, offered at a reasonable price, with a modest dose of alcohol.

Yet every few months I have to read about yet another brewery designing and marketing "beer for her."  

Don't get me wrong, there are all kinds of products out there where I can see a clear and obvious value in focusing on gender as a differentiating factor, since biological differences between men and women are real and substantively significant.  Exercise equipment.  Pharmacy products.  Guns. 

But beer?  Not really.  I'm pretty sure that the things anyone enjoys (or doesn't) about beer are more or less gender-neutral.  

That doesn't mean there isn't some logic behind it, though.  Biscuit, my Goldendoodle, does all kinds of stupid things (because she's, you know, a dog) that still make logical sense in her walnut-sized Doodle brain.

I'm not going to bother with the "they're so patronizing" angle here, though, because that's a waste of your time.  I'm sure there are a dozen such pieces posted every week, especially when some new "beer for her" like "Arousa" (real name) hits the market.    No, what I'd like to do is talk through what the repeated attempts to do this actually suggest about beer culture, and whether that's a good or bad thing.

The "Big Tent" Theory

If we're inclined to be generous here, there's a way to look at this not as (merely) a sexist, patronizing marketing gimmick.  After all, it's a reality that men are more than twice as likely to declare that beer is their preferred alcoholic beverage (in the US, at least, and a shrinking global "gender gap" in alcohol consumption doesn't track to increased beer consumption, which suggests that the finding is at least generally true, internationally and in the aggregate as women drink more of something that isn't beer).  That means that there's a demographic target to be exploited to fuel market expansion, if you can find ways to particularly encourage women to buy beer.

That's not a bad thing.  Hell, it's arguably a good thing for a market segment that's watching its growth slow.  

Yes, the methods and approaches seem to be almost caveman-esque in their blunt and un-nuanced approach ("Put it in a champagne glass!" "Pastel colors and ribbons!"), but as I noted to a friend recently, I HAVE to believe that there's some kind of really compelling market research that actually supports this kind of nonsense. Otherwise, it's so patently silly and potentially offensive as to be an obvious no-go.  Again, I'll refer you to the many other such critical pieces for that argument. 

The generous view here is that this is just an attempt to bring more folks into the "beer" tent.  We notice these because they combine ongoing debates about equality/social identity and beer, but they're really just a symptom of beer's broader shotgun approach to selling beer to all under-participating parties.  

Balancing Act

Another theory is that marketers are just responding to a "dude"-heavy culture in craft beer by turning hard into the "chick" skid at the other end of the spectrum.  If selling beer to men seems to work by marketing to the most obvious cliches about what men like (a cavalcade of sexually-suggestive imagery/language peddled by lumberjacks who talk sports), then why not take a stab at wrapping a bottle in marble-patterned plastic, stick it in a pink six-pack, and call it "Let's Go Shopping Session IPA?"  After all, selling other products via "girly" stereotypes seems to be pretty effective.

Offensive?  Probably.  Over-the-top?  Definitely.  Irrational?  No, not really.

After all, it's no less sexist than selling sets of tools with pink handles, yet we don't see massive social media backlash to it.  I'm pretty sure a 16-ounce head on a hammer is 16 ounces whatever color the handle is, just like I'm pretty sure that a good Kolsch is a good Kolsch no matter what kind of bottle you put it in.

From that point of view, then, it seems appropriate-but-selective that we get up in arms over "beer for women" but not "tools for women."  

What they share in common, though, is a perception (and reality) that the space in question has a gender disparity, and therefore a more-direct appeal (even a clunky one) seems logical.

Reason v. Result

Whether these are just the most-visible examples (by virtue of their in-artfulness) and not really representative of beer marketing strategies and/or simply the contrapuntal gender-invert result of a deliberate effort to "hyper-feminize" the granitic masculine approach to beer marketing (at least in terms of what a patriarchal culture sees as stereotypically "feminine"), I can't say - could b both, and of course I could be completely off.

What I am will to assert, though, is that I don't find these efforts illogical.  I think that the two theories posited here provide at least a reasonable rationale for the why and the how of this phenomenon.  

I'm also aggressively agnostic on whether these sex-based approaches are a waste of time or not, whatever we think of their appropriateness.  

On the one hand, beer drinkers I know - whatever their gender - care about what's in the glass more than anything else (except maybe who owns the brewery, but that's a topic for another day).  I don't know any (except in the Alehole-fringe) who buy beer because of its label or name.  

On the other, though, I know for a fact that there are women out there who refuse to drink beer because it's "for men."  It comes up when I offer them a beer, and nothing I say changes them from that perspective.  If seems-to-me-sexist marketing is what gets them out of their traditionalist attitude towards "appropriate role behavior" and into the beer game, am I OK with the ends justifying the means?

I just don't know.  I welcome you thoughts.

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).


A Year of Unique Beer: Halfway Home

Well, we're officially halfway through the Year of Unique Beer, and things are starting to get interesting.  Running tally: 217 beers, plus about 15-20 homebrewed beers (mine and others').

For those who need a refresher, I accepted a fun challenge to drink no "repeat beers" this year.  The rules are pretty simple: if I drink more than six ounces of any beer, that's the only one of that label I get for the year, and I can't just keep drinking small pours of everything indefinitely - that would need to come from a sample-oriented interaction, like a beer festival.

Bottom line up front?  It's been both easier and harder than I expected, and while I haven't had to resort to wine-drinking yet, the pitfalls are starting to get wider and more numerous...

Smooth Sailing

On the one hand, this has been remarkably easy.  With more places than ever carrying craft beer, there's no shortage of good taps out there.  On the list of places where I can get local craft beer are less-likely locations like two local movie theaters, soccer matches, and school receptions.

It's also helped that new breweries keep opening up near me - three so far this year just in my immediate vicinity, and maybe as many as a dozen in the larger metro area.

Even at local brewpubs that I visit regularly, there are always 2-3 seasonal beers, collaborations, and/or differently-"gassed" variations (those count as unique beers if they exist separately in Untappd) to choose from.

And I also have the greatest beer friends in the world: whenever they travel, they haul back singles from their travels for me.  Great stuff.

Choppy Waters

It's not all beer and roses, though.  

I'm still having a tough time, of all places, at home.  My kegs are full, I'm running low on bombers, and I haven't even really hit the busiest of my brewing seasons (fall) yet - I'm starting to get concerned that I'll either need to chop back my brewing or use this as an excuse to buy more kegs!  OK, so maybe that's not ALL bad...

Visiting with friends and family continues to present a challenge.  I just finished my Unique Beer Year Waterloo: almost a week at the New Jersey shore with my extended family.  That trip chewed up all of my existing single reserves, and required trips to two bottle shops to fill out the haul, and at that I only came home with two cans.  Why two bottle shops?  Because one is a local supermarket and their "mix your own six-pack" selections are both narrow and static.  The things you learn in a challenge like this...

Finally, just like there are "crafty" beers (that aren't really), there are "crafty" beer bars.  The beers might be craft, but the bar isn't: it's the same eight craft beers on tap every time.  I've had to start weighing when it's time to pull the trigger on those macros, and as we'll see in the update below, two have now bitten the dust.

Did I Drink That?

As we reach the turnaround, I've just about reached the point where I can no longer rely on my memory to tell me if I've had a beer before.  I had one misfire - ordered a brown ale I thought I'd never heard of, was wrong, and had to give it away and order another - and a few more close calls.  Untappd has become my crutch and my cross.

Two macros are now off the list: PBR and, just this weekend, Yuengling Lager.  I'm treating those macro lagers like gold: they're ubiquitous and might save me in a pinch, so I'm trying to hoard them.  If I make it through the entire year with nary a Bud touching my lips, I'll consider it a victory, but it'll be a victory born of cowardice: I'm not avoiding it on principle, I'm avoiding it because I might need it someday, like a shady relative you can't stand but might need to bail you out of jail so you don't have to call your spouse.

I still maintain, though, that all it takes is to make it to September.  At that point, I'll be able to ride a rising wave of Oktoberfests, pumpkin beers, and Christmas beers right on through to 11:59PM on December 31st.  

What will I drink one minute later to toast in the new year?  Your suggestions are welcome.  

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).