Too many microbrewers sailed too close to the sun, and their wings melted, sending them crashing back to earth. Or more like flies getting too close to one of those electric fly zappers. Or something.
Many folks are drawing parallels between today and the mid-1990s. There are now almost 2,000 craft breweries with another 1,000 being planned. People are flocking into the industry. Bankers are lurking in hallways at the CBC.
Will we see a repeat of this as capacity grows and 1,000 new brewers come online? I don’t think so. First of all, we aren’t seeing the 40 to 60 percent growth we saw back then. More like 9 to 12 percent today. Craft beer’s Cameron Diaz legs of 1995 are today more like Sissy Spacek legs—still not bad, but they’ve got some maturity, and only serious fans find them attractive. That’s sustainable as more and more young people enter the market and prefer more flavorful beers. And we don’t have as many charlatans entering the space. Distributors have proved to be pretty decent gatekeepers. They are more careful about whom they take on their book. The beer must have a good story, somebody who is passionate about it and excellent quality to even get a seat at the table. Distributors today, many of whom were burned with worthless inventory in 1997, are more careful about whom they’ll do business with. Retailers, too.
But aside from the industry controls, there is also an important consumer component today that did not exist in 1996. They did not have the digital tools we have today. They didn’t have Facebook or Twitter. These are automatic controls that will keep what Jim Koch refers to as “science experiments” off the shelves.
In fact, I think that Charlie Papazian’s recent prediction of craft beer reaching a 10 percent market share in a few years is a pretty safe bet. With all the new brewing capacity coming online—not only with Sierra, New Belgium, Lagunitas, Oskar Blues, SweetWater, Dogfish Head, Ninkasi, Bell’s et al, and with new breweries being completed—I think more than a share point a year is a slam dunk. Brewers Association director Paul Gatza estimates 3 million more barrels of capacity is in the planning stage, and that’s just what’s publicly announced. Craft brewing grew 1.3 million barrels last year. So all that math adds up to capacity keeping up with demand for the next two or so years, provided demand keeps growing at the same pace it is today. In the near future, if the demand curve continues in its current trajectory, there will likely be even more investment in capacity, to the tune of more than $1.5 billion.
Bottom line: Yes, I think it’s definitely possible for craft to hit a 10 percent share by 2017, if not probable. The main impediment to reaching that goal in my mind would be the competing growth rates of the Big Brewers’ craft brands (Blue Moon, Shock Top, Leinie’s, Goose etc.), which are not in the BA’s definition of a craft beer. This craft-beer revolution is different. The people I see entering the industry, for the most part, are actually interested in the beer. They may be bankers or plumbers, but most of them are also homebrewers, or they really care about making good beer. Imagine that.
It takes me back to the lunch I had with legendary Belgian brewer Pierre Celis in 1994 in Austin. A genial man with a small frame, Celis was just glad to be back in the brewing industry. When his brewery in Belgium burned to the ground, he regrouped and chose Austin, Texas, for his next brewery and made an excellent wheat beer before it was popular. He told me, “Harry, this revolution in beer will only be sustainable if we make beer for the right reasons. And the only right reason to make beer is to make great beer that you’re proud to serve to your friends and like to drink yourself.”
