For craft beer enthusiasts and brewing industry insiders, the past few years have been a chaotic whirlwind. At some point, craft finally reached its tipping point and spilled completely over into the mainstream. It’s now written about at length in prestigious newspapers and magazines and discussed on the evening news. High-end restaurants offer dozens of craft beers, beer bars are sprouting up everywhere, and breweries are proliferating at an insane pace.
No one wishes to return to the drab, desolate beer landscape of the 80’s (except for AB InBev and MillerCoors), but there’s also a distinct sense of anxiety today. It’s almost as if the wildest dreams of Alehead Nation have been realized…but perhaps we should have been a bit more careful about what we wished for. I wouldn’t say we’re living on Shakedown Street, but I can’t help but wonder if maybe we had too much too fast.
It’s not that I’m troubled by the myriad of new breweries, new offerings and new styles. Sure, there are some obvious quality control problems now (who hasn’t had a skunked sixer or a band-aid flavored can of craft beer in the past year?). And there are certainly a few breweries that have no business being IN business…but those kinds of issues arise in any growth industry. The bigger problem (to me at least) seems to be that, just like the recent dot-com and real estate booms, greed and avarice are starting to infiltrate an industry that was remarkably free of such vices.*
*Sure, there have always been craft beer folks more interested in making money than a quality product. We saw that with the flame-out of upstart, VC-backed craft breweries in the mid-90s. But overall, the craft world has been dominated by thoughtful, product-first visionaries who have become successful in SPITE of their business instincts, not because of them. Jim Koch notwithstanding, of course. That guy’s a helluva businessman.
Whenever an industry explodes, people wish to capitalize…it’s only human nature. But in this difficult economic climate, the incredible growth of craft has been like a siren song beckoning to those with some invesment capital. The Aleheads have spent (wasted?) however many thousands of words analyzing the involvement of Tenth and Blake (MillerCoors’ “craft” wing) in the all-malt realm, but it’s more than just the big boys swooping in to snatch up a piece of the craft pie.
Musical acts are developing proprietary beers with “celebrity” brewers. Contract breweries are creating private label offerings for chain stores like Costco, Whole Foods and 7-Eleven. Investment groups and banks are buying up chunks of craft breweries (or snapping them up outright). Hundreds of amateur homebrewers can smell the dollar signs and are scaling up to production levels whether or not they have the experience, business acumen, or quality recipes to do so…
All this growth is wonderful…welcome even. Who wouldn’t want hundreds more options on their package store shelves and tavern taps? But there are warning signs that must be heeded. We can’t simply sit back and hope it will all end well.
For one, the craft brewing industry doesn’t operate in a vacuum. It involves many other ancillary industries that dramatically affect how beer is produced and sold. One needs only to read about the hop shortages of the past few years to understand these concerns. The pace of craft brewing has greatly outstripped the pace of hop cultivation in the US, and seemingly every year, we read about a shortage or outright exhaustion of one or more hop varietals. Then there are water rights issues. Water is, of course, THE key ingredient in beer. And water resource management may be the biggest environmental story of the next century. Already breweries in California and Texas are feeling the pinch of water rights issues. And as climate change and the potential subsequent droughts start to affect the West, South, and Southeast, breweries in those regions (and beyond) will be devastated.
Then there are distribution issues. The three-tier system has dominated the brewing industry since Prohibition, and while there are those that speak eloquently in its defense, it could be argued that it has greatly restricted the industry’s growth and has given wholesalers far more political capital than manufacturers. In today’s craft beer world, distributors hold most of the power and can make or break a small brewery. We’ve read stories about distributors bribing retailers to carry bigger name products over smaller competitors. And we’ve read about distributors lobbying to restrict the growth of craft in certain states to make sure that those same bigger clients remain dominant. That flies in the face of true “capitalism”. If a manufacturer makes a superior product, but is crippled by a distribution system that puts the power in the hands of the middleman, isn’t that a serious problem?
On the retail side, there simply isn’t enough shelf space in package stores or tap handles available in bars to accommodate all the wonderful new craft beers being produced. One unnamed macrobrewery (OK, AB InBev) even suggested shelving craft beer with wine in the unchilled, light-flooded central aisles of package stores (which would be death for the delicate, subtle flavors in many craft offerings). Clearly that was a self-serving suggestion, but it does speak to the problems that retailers face in trying to stock all of their customers’ favorite craft options.
In short, the explosion of craft has also created a plethora of concerns that need to be addressed. With close to 2,000 production breweries and brewpubs in the US, many of whom are expanding their operations or even opening secondary brewing facilities, these problems will only continue to mount.
I’m not suggesting a course of action to solve these issues. I’m not even suggesting that anything really can or even SHOULD be done. I would MUCH rather have an overcrowded, messy, problematic craft beer market than the beer wasteland many of us grew up with. But I am suggesting that we…all of us…pay attention to the industry as a whole. Pay attention to hop shortages and water management issues. Pay attention to the breweries that are growing 10, 20, or 30% a year. Pay attention to the dozens of new breweries that open every month. Be informed.
Like everything else, craft beer WILL shake out. It happened with the savings and loan industry. It happened with dot-coms. It happened with a vengeance with real estate. It will happen with beer. I hope…I sincerely hope…that craft beer won’t self-destruct like all the rest. But when money, corporate interests, and human nature start wheedling their way into growth markets, the end results are seldom pretty.
So keep a weather eye on our beloved craft beer industry, Alehead Nation. You have the power to shape what’s to come, but you have to be diligent. You have to be aware. You have to be smart. We got what we wished for, but now craft beer is at a crossroads. It’s up to us to lead the way.