I love going to small craft breweries and sampling their beers.
But I’m beginning to wonder if the fast-growing popularity of these small-batch breweries and their products is more a fad associated with a decent economic expansion rather than a true change in the American beer drinker’s taste buds.
Too often, I’ve seen economic gravity catch up to fast-growth consumer-centric industries. I don’t want to say the beer bubble is here, but I’m skittish. For example, how long do you think the number of breweries in California can grow at an 18 percent annualized rate?
There is no doubt craft brews are the hot slice of the beer business. They put the fun back into beer drinking with wild flavors and exotics mixes sold often with silly names. (For the record, I prefer stouts and porters. I am no fan of the current fashion favorite, American IPAs!)
Compare that imagery to the predictable tastes of the big traditional breweries that seem to spend more on brand advertising than brewing. Plus, craft beer is a remarkable growth story in an era where beer sales around the globe are fizzing out.
According to the Brewers Association, California had 623 craft breweries last year – the largest collection of any state in the nation. That was up from 518 in 2015 and more than double the 270 in 2011.
Those California craft brewers produce 3.2 million barrels a year, second in the nation only to Pennsylvania. Not bad for a state better known for its wineries and vineyards.
Of course, California is atop many rankings just due to its sheer size. On a per capita basis — 21-year-old-plus adults — California has 2.2 breweries for every 100,000 adults in the state (23rd among the states) and its craft beer production is 3.7 gallons per adult (ranking 15th).
This growth tale is a contrast to the decline in alcoholic drinking globally and nationally, especially for beer.
According to International Wine and Spirits Record, global alcohol sales fell 1.3 percent last year, pulled down by a 1.8 percent drop in beer production. Nationwide, alcohol sales were essentially flat with the beer category off 1.5 percent, and down 2.8 percent — minus craft beers.
Craft breweries have claimed their impressive stake — 1-in-8 gallons of beer consumed and 1-in-4 of dollar spent on beer — in relatively solid economic times. That makes perfect sense, considering the premium price they charge, double or more the price of mainstream brands.
The big old-line breweries have economies of scale. Thus, they’ve got a lock on the budget-minded consumer and those who prefer their milder flavors. Craft breweries, some run by not much more than a group of friends like a small restaurant, create a very hand-crafted, unique and sometimes inconsistent product with the predictably higher costs.
Craft brewer advocates saying their industry is benefitting from a period of changing consumer tastes with a renewed appreciation for quality foods over quantity products. They can point to the evolution of coffee from simple drink to retail game-changer.
Let’s just say I’d like to see how the craft brewing industry does in the next economic downturn before I’m willing to say the beer-drinking game has changed for good. Don’t get me wrong. Craft beer will continue to be an important part of the beer business.
But it’s my rough impression from visiting numerous tasting rooms around the region that there’s a wide variance of retailing skills in play and a significant shakeout is a risk in any young, premium-priced industry niche.
