Back in the late 1970s, when a weak economy was raising the budget deficit to worrisome levels, President Jimmy Carter’s Pabst-swilling younger brother Billy came up with a beer-based plan to pay down the deficit: Billy Beer. It was packed in red, white and blue cans, and promised to devote some share of the proceeds to paying down the deficit. The brand’s slogan: We can drink our way out of this mess.
That exhortation sometimes pops back into my mind when I read about the huge increments of capacity – and new entrants – coming aboard in craft beer. The craft business is booming, but to a growing number of observers, the recent and planned additions reflect an irrational exuberance, the sure sign of a looming bubble.
At the company I work for, primarily a publisher of beer newsletters, we’ve been worrying about irrational exuberance for a couple of years now. Most of our staff has been around long enough to recall the last bubble, in the early 1990s. Things got ahead of themselves, the nation found itself awash in too much craft beer (and too much bad craft beer at that), even as the major brewers, struggling to get a foothold, resorted to their usual slash-and-burn tactics on the pricing front. The result wasn’t pretty: confusion reigned, the price umbrella collapsed and a bunch of players got shaken out. At the recent Craft Brewers Conference in Washington, several craft veterans alluded to that history in warning of a looming shakeout.
Of course, during every bubble, the optimists can offer a host of reasons why references to past debacles are misguided, why this time really is different. And there are differences. One is the identity of the people opening the new breweries. Back in the early or mid-1990s, I recall attending a craft brewers’ conference whose ranks of aspiring brewers included quite a few lawyers and doctors who demonstrated no obvious interest in beer except coveting what they perceived as a cool lifestyle and easy buck. Uh-oh, I remember thinking. These days, the launch teams of new breweries invariably include passionate, knowledgeable home brewers. And what in the 1990s was a pretty exclusively U.S. phenomenon now appears to be a global phenomenon, with the Europeans, remarkably, often imitating American innovations, and several American brewers actually developing meaningful export businesses. Also, this time around, the quality of the beer is rarely in question.
Most of all, though, the ranks of craft beer drinkers have vastly expanded, both domestically and overseas. In theory at least, if the pool has widened enough, the new capacity, or a lot of it anyway, will be safely absorbed. We’ll be able to drink our way out of this mess, as Billy Carter memorably put it.
In my role as a regular contributor to our Craft Brew News letter, I’ve tried to test this hypothesis systematically, and have been encouraged by my findings. For instance, at the Great American Beer Festival in the fall of 2011, I made it a point to prowl the aisles devoted to geographic regions that historically have been behind the curve on craft beer, like the Southeast and Great Plains states, particularly their rural areas. I found myself visiting with brewers like Toasted & Tapped of tiny Flowery Branch, Ga., to hear that a ginger tiptoeing into IPA territory was greeted by customers who demanded to know why the beer wasn’t hoppier, and that the local women were gravitating to an 8% ABV Belgian-style trippel. I heard similar stories from brewers in places like Papillion, Neb. (population 1,000), and Oklahoma City. It seems like Whole Foods and the Food Network have become great levelers now, and we’re all foodies. That’s great for the prospects for craft beer.
Then there’s the woman thing. In New York, several of the craft beer meccas I frequent offer a promotion where, if you drink 100 different beers, you get a tiny plaque on the wall or similar token of recognition. I’d begun to notice that more and more of the plaques had female-seeming names on them – even though I’d assumed that swilling a vast amount of expensive beer for the sake of obtaining a dubious trinket had to be a guy thing. Yet at George Keeley the front-runner was an Oklahoma-born young woman who’d tried around 800 different beers in a handful of years, all this after hating beer growing up in her (then) light-lager-dominated hometown. A regular at Pony Bar had stopped counting when she hit 780. Women definitely are in the craft franchise en masse these days. Except for my wife (God love her!), that certainly wasn’t the case in the early 1990s, before the last crash.
The next frontier may be ethnic Americans, whose beer preferences to date have been mainly limited to easy-drinking lagers and Guinness. I swear I’m beginning to see some glimmers of progress there. Heck, ethnic kids lately have picked up skateboarding from their white suburban peers, so why can’t their dads pick up the craft beer habit? I’d like to think pungent food lovers can learn to enjoy pungent beer. We’ll see.
Will this all be enough? Maybe to absorb the new capacity that we already know about. If the frenzy keeps up? Then I don’t see how. For worrywarts like me there are plenty of troubling signs. On the macro side, New Belgium’s sales are eroding just as that Colorado brewer gets ready to break ground on a 400,000-barrel brewery in North Carolina. Ulp! On the micro side, I noticed that my friend at Flowery Branch in rural Georgia ultimately didn’t make it. He may have had some serious hopheads and Belgian beer lovers among his patrons, but apparently not enough of them. It makes me wonder whether, for any but those looking to open up a small brewpub or nano, the train has left the station. Personally, I like the solution adopted by Van Havig and Ben Love, local brewing stars in Portland, Ore., who certainly could have gone big if they wanted to. They’ve teamed up on an operation ironically called Gigantic that’s big in name only. Let the other suckers overexpand, is their reasoning, we’ll keep it modest, manageable and fun. So let’s hoist a glass of their End of Reason quad in the hope that the wonderful craft industry hasn’t lost its.
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