by Josh Pringle
VP of Business Development
I attended the biennial meeting of the World Brewing Congress (the sister organization to the Master Brewers Association of the Americas) at the Sheraton in Downtown Denver, CO. This meeting of brewers, brewery staff, and leading suppliers was an opportunity to unite for technical sessions that educate experienced and new brewers to every facet of the industry. Attendees had an opportunity to attend sessions like Yeast Viability, Commercial Enzymes, Sustainability, Taking Control of Flavor Impacts, and others.
For those who only drink and enjoy beer the process of creation may seem simple, it is not!
The phrase “it’s not rocket science” gets tossed around a lot these days. The science of brewing great beer is an ever adapting art form that is only perceptible sip by sip. These masters of brewing chemistry are honing their craft every day to bring you new, interesting, complex flavors that pair well with everything from prosciutto to Fig Newtons. Most of us just sit back and enjoy the fruits of these master’s flavors.
The buzz for most of the Expo was about consolidation in the craft brewing industry. There is a sense that public has reached critical mass for the number of craft beers and breweries that can be sustained. Too many Saison pale ales and Oktoberfest lagers imply a "watering down” of the beer scene. Like many other markets, brewers see that the rate of competitive expansion is outpacing the growth of craft beer consumption. This untenable economic position leads many in or near the industry to predict the contraction of breweries and small batch beer. While this “craft brew bubble” has been predicted for years, the impending doom of small brewers hasn’t happened yet.
A byproduct of this expected contraction in recent years is for small breweries to offload larger batch, more popular beers to contract brewers who craft the beer offsite but under supervision from the original brewer. Facilities like BrewHub in Lakeland, Florida (www.brewhub.com) have the capacity and expertise to take a smaller brewers creation and apply large scale brewing operations to allow the original brand penetration into mass markets like grocery and convenience stores. This allows the brand owner to focus on creating small batch successes for the future.
However, some breweries that were contract brewing are now taking all operations back in house. Terrapin Beer Company of Athens, GA (www.terrapinbeer.com) recently expanded brewery operations to “bring home” their own brands. Some brewers bring operations back in house because of quality issues or just because they see or want to take advantage of scalability in their own breweries. This is another form of consolidation in the industry.
The market will always have room for new and creative beers in the market. One economic given that has not occurred in the marketplace is the yearly removal of the bottom 10-20% of the marketplace. Under-performing breweries, whether economically (or flavorability!) challenged, have been lingering in the expanding craft beer marketplace. The consensus among insiders is that you will start to see the under-performing breweries fade away, that volume of business be absorbed by the larger or scaled brewers, and for innovation to continue to be the entry point in the marketplace.
This is not “Chicken Little” crying out nor is it a warning to go and stock up on your local favorites. It is an economically critical analysis of the beer market and a promotion for your favorite local brewer. If you like your local brewer and want to see him survive drink the beer more regularly, encourage your friends to do the same, and promote the beer and craft brewing on social media.
While brewing great beer isn’t rocket science it is damn close. The distinction is that craft brewing is as much an art form as it is science. In fact, it might be the ultimate cross functional relationship between science and art today.