beer business

Some thoughts on the craft beer bubble

craft-brewed-clothing-beer-bubbleOne thing that gets talked about in beer geek circles is the craft beer bubble. Maybe that’s because it means two different things.

Definition one: The phenomenon of beer geeks surrounding themselves with other beer geeks, talking to them, reading their blogs, listening to their podcasts, mocking their Untappd check-ins. The result being a skewed impression of the size of the ‘‘craft beer’’ market

Definition two: The idea that the growth in good beer can’t go on forever and, eventually, some rationalisation has to happen. The bubble bursts, in other words.

Here I wish to talk about the latter definition, especially after reading this article from Joshua M Bernstein, in which Sam Calagione is quoted as saying ‘‘There’s a bloodbath coming’’, in reference to the growing craft beer market.

Some beer geeks want to call the Craft Beer Bubble a myth, as if to say that growth can go on forever and everyone wins. I’m no economic genius (I only studied one economics course during my university days – but I did pass it) but that viewpoint seems relentlessly naive. In fact, some of the comments left underneath Bernstein’s article take that view and call the author out for being pessimistic.

But I don’t see it as pessimism, rather realism. I really cannot see how the market for craft beer – or any market for that matter – can just grow and grow and grow and never ever stop. It’s just not possible. At some stage it has to find a level where growth is no longer possible – and that time will come because you can’t convert every single person to a craft beer drinker.

And when that level comes – or even before it – there will be blood. No matter how cuddly, soft and lovey-dovey we want to think of the craft beer scene, not all the brewers will survive. There will be winners and losers.

The naive view has it being the shitty brewers losing, those who make dull beer. Those who ‘‘got what they deserved’’. But really, it’ll be some good brewers too. It’ll be those guys who can’t really compete with the ‘‘big’’ guys, like your Ferals, your Stone and Woods and your 4 Pines. Those guys who get the ‘‘craft beer’’ shelf space in places like Dan Murphys.

It’ll be the guys who were pushed further and further into niche brewing until they discovered, all too late, that they couldn’t sustain a business making beer for an steadily declining market (which will happen the more ‘‘niche’’ you go). It’ll be the guys who end up making beer for the local market with no hopes to ever grow their business.

It’s interesting that Bernstein’s article highlights a number of brewers who are diversifying into other areas – Dogfish Head has a record label and Victory is making cheese spreads. To me, that signifies a business looking for ways to protect itself should part of their operations experience a bit of a downturn.

Maybe these guys have worked out which way the wind is blowing.

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2 replies »

  1. There’s already been craft beer casualty – Pinchgut Brewing. He couldn’t get on enough taps. Shady Lady didn’t last long, but that was because it was utter crap.

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