The Next Big Thing

December 18, 2014 By Harry Schuhmacher

I had my first tastes of beer as a child early on Saturday mornings. My grandfather—whom we all called Poopsie for some reason—was a prodigious beer drinker. And when I say prodigious, I mean he started drinking beer on Saturday mornings at around 7 o’clock. He’d wake up at 6, eat a big pile of eggs and bacon and biscuits with enough butter on them to sink a battleship and grab a cold brew from his dedicated beer fridge. He’d then head outside to water the grass with a hose. He had automatic sprinklers, but he claimed that watering with a hose made the grass happier than a sprinkler could and saved on the water bill. (He also never turned on the A/C in his car, even when it was 100-plus degrees, as he was always “saving it.” The Great Depression really screwed with that generation’s collective psyche.) As a kid, I was dumb enough to buy this line of poppycock (a word he often used). I now suspect he used the activity of watering the grass with a hose to make his morning beer drinking halfway legit. And to get away from my grandmother, who was a real piping shrew.

But Poopsie was a gem of a person. I adored him because he adored me, and so I would follow him around for hours like a shadow, and he would let me take sips of his beer. It wasn’t until I got older that I learned that drinking beer in the morning outside of Germany was generally frowned upon by the conservative burghers of Texas. But, as Poopsie used to say, “If they can’t take a joke, screw ’em.”

When I was a kid, Poopsie drank Lone Star. As I became a teen, he switched to Budweiser. When I was in high school, he switched to Miller Lite. His beer choices reflected the tastes of the time, although I note for the record that he skipped the clear-beer craze (He used to say that the only thing he knows about Zima “is that it zucks). If Poopsie were alive today, I suspect he’d be throwing back a Lagunitas IPA or a Modelo Especial.

When I think of all the trends in beer throughout my 45 years, we’ve been through quite a few iterations. When I was a child, regional brands like Lone Star, Rainier, and Old Style dominated the landscape. Then cheap transportation and national television ads ushered in the era of big brands like Budweiser, Schlitz and Miller High Life. Then the health craze ushered in the greatest trend of them all, light beers like Miller Lite, ­Coors Light and Bud Light. All along, like an old man with gout, there were little flare-ups like ice beer and dry beer and, yes, clear beer. But the one thing that always remained consistent, until today, is that beer IBUs and alcohol content got lower and lower.

Thinking back on the beer industry of the last 45 years, there have been three distinct eras:

1969-1981: Rotary phone era. This post-war period of the expansion of the American middle class is characterized by rapid volume growth in the beer industry and the rise of national brands and the squeezing of local breweries. The number of Americans turning 21 rises each year dramatically as baby boomers turned of age and beer sales rose accordingly.

1982-2007: Era of the brick mobile phone. Here we see the decline of full-calorie premium domestics, completely and almost identically offset by the rise of premium lights. Total beer volumes start to flatten out as the number of kids turning 21 still grows but moderates.

2007-2014: Era of the smart phone. This is a big shift to a new time in our industry, as premium lights flatten out and start their decline (losing 135 million cases over the last six years) and a new type of drinker is coming of age: millennials. Overall volumes start declining as the number of new drinkers turning 21 flattens out. This trend will likely continue unabated through 2025, suggests Bruce Jacobson, vice president of sales—beer division for Constellation Brands (importer of Corona Extra and Modelo Especial). Bruce estimates that by 2025, 200 million cases of beer will bleed away from domestic premiums like Bud and Miller Lite and will be up for grabs. While the number of 21-year-olds entering the market will be flat, the number of Hispanic consumers will increase by 36 percent. Millennials and Hispanics will drive the beer industry.

Given these facts, what will the beer industry look like in 2025? As you know if you are reading this magazine, the growth in the beer industry today is in craft beer. It’s all about local; it’s all about more flavor and higher alcohol (even session crafts have more alcohol than light beers). From 80 breweries in 1985 to 3,000 today, the industry is going back to its local roots. Taps on the typical back bar today resemble an elaborate Chinese fan. It’s a good thing.

But there is still a large segment of the population who prefer lighter pilsners, to the tune of 70 percent of the population if you’re going by market share. Next to craft, the fastest-growing segment of the beer industry is Mexican imports. The rise in the Hispanic population will only serve to maintain and accelerate this trend.

When future Harry goes into a bar in 2025, with a full head of flowing hair and buff as a swimmer because they will invent a double-sided pill by then to accomplish both, and the robot barmaid with the simulated raspy smoker’s voice and simulated frizzy blond hair asks me for my order, what will I be drinking? Will it be whole-grain mead? Kale cider? Or will the beer be instantly brewed to taste in the guts of the robot waitress? (Now that’s hyper-local.)

I suspect it will be one of three things: a local craft, a national craft from a big brewer, or a Mexican import. I’ll add a fourth option: a light beer if I’m feeling ironic. My grandfather will be up in heaven, watering the clouds with a hose to get away from my grandmother, drinking a Dos Equis.