The Holy Rollers of the beer scene may strike me down for this, especially during such an auspicious occasion, but I know this question’s been eating away at the back of your minds: is the American “craft” beer market becoming saturated?
(Note: the term craft is in quotation marks because it is still an amorphous concept, not because I’m trying to be a jerk.)
We’ve all probably asked ourselves this very question at some point or another, but it’s one that has to be nagging every brewer, distributor, bar owner, and retailer in the country – whatever their motives may be. We’ve been the land of light lager for who knows how long, and this is the prevailing perception of the United States. But it’s not entirely off the mark. Industrially-produced lager is still King of Beers in America in terms of sales, make no bones about it. “Craft” beer, as it were, is still a niche market.
But the American “craft” market is becoming more diverse by the year, and our palates more refined. You’ve heard the statistics that have been bandied about – the “craft” beer market growing by ten, eleven, twelve percent, while the largest brewing congolmerates operating inside our borders are seeing their sales go stagnant. In context, the growth of the “craft” market is peanuts compared to what A-BInBev and MillerCoors have amassed. Yet it does represent a threat to their market share.
Keep in mind that due to the inconsistency of what it means to be a “craft” brewer, we’re also including beers that the geeks might find pedestrian. It’s not all Double IPAs and Imperial Stouts, but a recent IRI study has shown the steady growth of the IPA in supermarket sales. Nevertheless, the styles of beer involved are not just limited to the “extreme” contingent.
Looking at it from a consumer’s standpoint, we see shelves. Those open-refrigeration shelves at the supermarket, the lonely aisles in the specialty beer shop, the wall of bottles in cases at the local beer bar. It must be quite surprising to visitors when they discover that there are actually havens of better beer in the US if you know where to look. Regardless, it’s that precious, finite real estate brewers and distributors are after.
I would argue that this country boasts perhaps the most diverse beer market on the planet. Yet that’s only a sliver of what the drinking public actually buys. So while the number of smaller breweries grows by the month, and distribution increases, they are all still pursuing the same relatively small slice of the proverbial pie.
Now more than ever it would seem that the “craft” brewers must appeal to a niche audience while attempting to find approval from mainstream beer drinkers. But that’s all marketing. Be it word-of-mouth or flashy advertisements, it’s about getting the message out there and letting the product itself do the rest of the work. When you hit a saturation point, you must rely on population growth or consumer conversion to another product.
So while the products coming out of the “craft” beer line-up appear limitless, they must occupy a limited space – those aforementioned lovely shelves. Often times it can come at the cost of another “craft” brand, as it must get to the market through a distributor who is tending to several of these from breweries of all sizes. This includes the “mock-craft” selections as well, which again depends upon your definition.
When a distributor is looking to stock the shelves with a beer, and a business is looking to cater to its customers, both parties will go with what will sell in that particular retailer’s context. If you’re going after the majority, then the big lagers will battle it out for supremacy, and if you’re lucky you may find a similar “craft” offering close by. But in a specialized beer store or bar, there are only so many taps and shelves that can be stocked.
How many styles of beer appear in the marketplace to confuse the average consumer, let alone the serious beer shopper? If an unknown brand comes into your market with mediocre beer, does it deserve a space on the shelf? It seems that curiosity alone can drive initial sales, but its fate ultimately depends on the whims of the customer. If a beer gains traction in the beer community, but also brings some lesser-known, less tasty offerings, what about all that unsold, out-of-date beer? I can’t be asked to keep buying mediocre beer just because it calls itself “craft,” so I can’t say I’ll miss some of these brands when they’re gone.
Just some things to consider during American Craft Beer Week. Sorry if I put a damper on your celebration, but I do my part by drinking American “craft” beer every week.
9 comments
Comments feed for this article
May 16, 2009 at 8:42 am
Pivní Filosof
What a good post!
It will be indeed a problem when the craft beer market gets to the saturation point (if it’s not there already, I have no way of knowing). The natural thing will happen and micros will start competing with each other and killing each other probably.
But do they really have to appeal to a niche market? How many niche markets are out there? Why not brewing more mainstream or “entry” beers to try to catch a wider range of consumers? I have read several times already people complaining about the lack of quality session craft beers in the US. Can it be that some brewers are afraid of the fanboys and don’t want to be called sellouts?
May 17, 2009 at 1:46 pm
E.S. Delia
Thanks, Pivero. That’s a good point about the lack of quality session beers here in the US, but they can be found if you really seek them out. And I think some breweries here use the “entry beer” strategy to varying degrees of success. But when I see brewpubs and breweries creating a Budweiser clone to appeal to their customers, it’s a little disheartening because I think they could make a truly great lager in its place.
May 17, 2009 at 2:39 pm
A Good Beer Blog: What Did Crocodile Dundee Teach Me About Beer? | Drink Alaska
[...] E.S. Delia over at Relentless Thirst (a photo contestant) has some very interesting thoughts about where craft beer might be right now – heading to [...]
May 17, 2009 at 10:24 pm
Edmond Medina
Honestly, Eric this week has had me reflecting the same thing. However, my approach has been a little different. I believe that we have hit a saturation point for the bottle beer and self space. I believe that in order the envelope to be continuously pushed by the craft brewer then what needs to happen is a big push in to draft sales. How many times have you gone into a bar/restaurant and really wanted a great beer but the options are Bud, Miller, Stella, Heiny and Corona? Even Sam Adams has become too common place for me to enjoy any more. If our bars and restaurants would open themselves for local brewers imagine what that could do local craft beer scene? That is the next frontier to be tackled by brewers.
Now what choices themselves? OK here I think we definitely have hit our saturation point. How times can you take a DIPA and change it to make yours? The “extreme” brewer is few and even then they don’t have many options on what they can successfully. I can appreciate what many of these brewers are doing with their product and I’ll continue tasting and reviewing many of their products but it is a rare that I run across something new and daring.
May 18, 2009 at 2:04 am
Velky Al
Excellent post, and very timely. I wonder if the reason that some brewers achieve cult status with us beer geeks and make barely a ripple in the mainstream is that the average joe just doesn’t care for IBUs, styles of malts and carbonation levels. I am convinced that the average consumer has two simple criteria when buying a beer. Does it taste good? Is it reasonably priced?
I also wonder if there isn’t a certain level of jealousy (not sure that is the right word) when it comes to guys like Sam Adams. Making it big means you have done something right, and good luck to them, but how many people when they see that happening immediately assume that they have “sold out” or changed the brewing methods to make more money?
May 18, 2009 at 5:15 am
Pivní Filosof
Perhaps is about time some American micros took a closer look at what, for example, Czech micros do.
Some of us complain a lot here about the lack of variety in the domestic beer scene, and rightly so. But on the other hand, many of the micros scattered around the country can produce outstading pale lagers that are beautiful in their simplicity, and that even the most hardcore macro drinker will like.
Oh! And I agree with VA. The attitude of some beer geeks sometimes resembles that of of indy bands fans. Once they have acheived mainstream recognition they are accused of selling out. Why is that I wonder?
May 18, 2009 at 11:56 am
The Professor
A terrific and thoughtful post that expresses so much of what I have been thinking for quite some time. Putting the term “craft” into quotations is absolutely appropriate since a lot of the product out there labeled as such really demonstrates very little craft in the making.
When the movement started (can it really be 30 years ago?) it was rather exiting to explore some of the new beers and occasionally find a real gem. These days, I tend to look at many of the products out there with their corny names and cartoony labels with more suspicion than excitement, having been burned too many times buying lackluster products that sell for inflated prices. There are some good ones, to be sure. But nowadays you do have to wade through a LOT of drek to discover them. I think that the micro industry’s marketing hype that “craft” brewed beer is _always_ a better choice is more wishful thinking than fact. It’s more like a crap-shoot…but I suppose that truth in advertising isn’t always the best way to sell a product or concept, is it?
May 18, 2009 at 3:32 pm
E.S. Delia
Ed – you may be on to something with your take on the draft issue. I believe that some smaller breweries are making the effort to get their beers available on tap, but it’s an uphill battle. Since those taps are so few and precious, it’s probably harder for them to get their beer featured on draft. Not only that, but I’m sure that working with distributors and establishments to keep the beer (and lines) in proper condition is of concern as well. Still, it’d be great to see better beer on tap on a wider scale. But it’s important to remember that Sam Adams has mastered the art of filling that gap by providing an widely-available alternative to light lagers with a Vienna lager and several seasonals.
In regard to your point about how many Double IPAs you can offer before it becomes old hat, I’m right there with you. It’s almost like finding five good beers in a style and calling it a day. For instance, I had a Steamworks Conductor Imperial IPA that was much better than expected. But who else is going to buy that particular beer if they’re already hooked on 90 Minute, Steelhead, Ruination, Stoudt’s, etc.? Does it have that staying power, at least in this market, to warrant wider distribution in other formats? If it does, does it take over a tap or shelf space from any of the aforementioned? Lots of questions that evolve from this one topic.
Al – the problem is determining where the “craft” and mainstream markets intersect, and who is able to sell what (see the Sam Adams reference above – then think of those “extreme” brewers). I think you’re absolutely correct: the average drinker cares not for these stats, but a growing minority does. However, they in turn are a smaller segment of people who are “craft” beer drinkers – people that opt for Starr Hill instead of Budweiser, as opposed to the beer drinker who prefers (or demands) Stone Ruination. In essence, in terms of size it’s: Mainstream Drinker > Casual “Craft” Drinker > Beer Geek (with none of those monikers meant as insults). They’re fluid concepts, but valid generalizations you could say.
Pivero – I agree that the dichotomy of good vs. evil (or small vs. large) you speak of is too black-and-white. Issues of this complexity often involve shades of gray. Granted, certain bands or breweries might make concessions to increase their profit margin, but there are so many others out there that garner attention through the integrity of their products. Some consumers are driven by the desire to try something new, others by an economic ethic of supporting smaller producers or specific brands, and others just want a quality product. The question for producers is: which market(s) do you actively pursue?
I ponder those questions you posed myself, and wonder what will play out in the US beer market’s future.
June 12, 2009 at 10:21 am
A Word With New Century Brewing Company « Relentless Thirst
[...] Recently, I posted on this blog about a potential for market saturation when it comes to the specialty beer market. Do you feel that New Century has potential to overcome [...]