Why New Breweries Shouldn’t Expect to ‘Beat the Odds’ When it Comes to Expansion
2018 is quickly turning into the year craft beer got cautious. After nearly a decade of freewheeling growth, last year, things began to significantly slow down, especially for midsized brewers. The smallest breweries have been one of the few bright spots in the craft beer industry, but now, craft beer trade group the Brewers Association (BA) is even warning these success stories to not get overzealous about the future.
During this week’s Craft Brewers Conference in Nashville, Brewbound’s Justin Kendall reports that the Brewers Association’s Chief Economist Bart Watson offered up some pretty sobering data and advice for brewers both fresh-faced and experienced. For months now, the BA has stated how the largest growth has been coming from the smallest breweries, but Watson added some hard data to that assertion: Breweries founded after 2014 (which are ostensibly smaller) saw 52.6 percent volume growth in 2017 over the previous year; meanwhile, breweries founded before 2014 saw just a 1.3 percent gain in production.
The lesson would seem pretty clear, but Watson chose to drive the point home further, encouraging brewers to have “realistic expectations” moving forward. “While you’re growing fast now, don’t expect that you’re going to beat the odds when so many older or experienced breweries were not able to,” he was quoted as saying. “Craft share is at an all-time high … but at the same time, it’s more competitive than ever out there, in particular with competition from the world’s largest brewers and not to mention wine and spirits.”
The natural follow-up question is two-fold: Why are new breweries outperforming established breweries and why should they be worried that they too may find a similar fate? In many industries, it’s the old established guard setting the pace for struggling startups, but craft beer has always positioned itself differently. It’s an artisan trade, and the idea of being hand-“crafted” is inherently incompatible with major growth. As a result, even if the quality remains high, growth can undermine a craft brewery’s image.
And speaking of image, craft brewing has increasingly become a personality-driven game. Rockstar brewers churn out the hottest styles with impeccable swagger from their hand-drawn can art to their taproom playlists. But much like literal rock stars, the beer industry is increasingly driven by the idea of fresh blood, and though, yes, some brewers will emerge as the beer equivalent of U2, plenty of today’s hip breweries will likely see their fans jump ship for the next big thing, sometimes for no better reason than they’re following the trend of what’s new and cool.
Obviously, beer is still a business, and clearly, as an economist, Watson can speak to current brewers through the lens of growth statistics. But his advice also invokes the uncertainty of “the odds,” as if running a brewery is like a roll of the dice. It implies that brewers also have to be aware of the many factors that may be more out of their control than they’d like to admit.