Gold in the Glass

It’s looking like heady times again in the craft brewing business. Maybe too heady?

Certainly the numbers are impressive, with the segment roaring into the new year up well into the double digits as consumers glom onto pale ales, porters, hefeweizens and other styles not long ago viewed as too obscure for primetime.

There’s little question that the influence of craft styles is far more pervasive than a dozen years ago, when the first craft boom crested. Back then, only a tiny minority of taverns and restaurants offered a range of draft styles, and if you stopped into a strange place and found Sam Adams Boston Lager or Sierra Nevada Pale Ale on tap, that was enough for you to count yourself blessed. These days, multi-tap houses seem to be the rule, certainly among new openings. That’s all testimony to the increasing culinary sophistication of Americans, and certainly suggests that the image of beer itself remains exceedingly healthy, even if the marketers of some major brands may perceive the segment to be in trouble (hint: look at your TV ads, guys).

So we’re living in this exciting period when brands are proliferating, styles are adventurous and everyone, from big Boulevard in Missouri to tiny Saint Arnold in Texas, has embarked on an expansion. It’s great for consumer choice, and if you subscribe to the trendy “long tail” theory, there seems no reason that the good-beer segment can’t continue to profitably splinter into ever-tinier and tastier niches.

Still, some of us with longer memories are haunted by the spectre of the first microboom’s unraveling a decade ago (even if, contrary to many impressions, the shakeout didn’t result in an overall decline in craft beer sales, just a flattening). Certainly, there are parallels that make me wonder whether history may be about to repeat itself: the not-quite-rational exuberance, the ratcheting up of capacity, the headlong rush into new, far-off markets. It’s reassuring to note that there are some differences from that experience.

First, we haven’t seen a proliferation of mediocre and novelty beers (anyone remember Wanker Beer?) offered by opportunists who’d gravitated to the business for its perceived cachet and get-rich-quick potential (they’re too busy making energy drinks, I suppose). Nor have we seen misguided and perhaps intentionally confusing entries from major brewers – remember “stealth” brands like Plank Road Icehouse and “fake” imports like Azteca? – or the marketing assaults on contract-brewed craft beers and “bitter beer faces.” Those trends left store shelves cluttered with brands of dubious provenance and stoked a consumer backlash that tarred the segment for years. To their credit, the major domestic players have focused on allying themselves with authentic craft brewers (Anheuser- Busch), carefully nurturing their in-house craft brands (Coors, with Blue Moon) and not giving their wholesalers grief over their efforts to be represented in this thriving segment.

Still, I worry that some of the lessons learned last time around are being forgotten. The shakeout left many of the survivors swearing to put aside national expansionist ambitions and instead tenaciously defend their regional base, expanding only where they could adequately support their brands. Not everyone, they acknowledged, can be a national or super-regional brand like Sam Adams, Sierra Nevada or Fat Tire, nor is that necessary in order to prosper.

So when I see terrific brands like Stone and North Coast (from California) or Goose Island (from Chicago) showing up in my New York market, the consumer in me exults even as the businessman in me worries. Though I certainly believe the current resurgence is sustainable, I do wish craft brewers would take it a wee bit slower. While I don’t expect American consumers to roll back their tastes, there is a limit to available shelf space, not to mention truck space in a wholesale segment that is consolidating, not expanding. Nor is it out of the question that an economic correction could cause people to cut back on splurging. In that environment, with shelf space shrinking and pricing under pressure, not everyone can be a winner. Since most everyone out there today is brewing interesting beers that deserve the local loyalty they’re winning, I’d sure hate to see the land grab’s losers jeopardize their core business.