Fast moving changes in the craft beer world

Even if you are not an ardent beer or more specifically craft beer enthusiast it is difficult not to recognize the rapid growth the industry has seen in recent years. In a small town like Coeur d’Alene you can easily see the small breweries popping up seemingly overnight, add in the new pubs focused on beer more than any other beverage and it seems there is one on every block. Similarly, all of us, even those of us not in the food and beverage industry know someone entering the brewing business.

The numbers are staggering to be sure, there are over 5,000 craft breweries in the U.S. now! Changes are coming to the industry, and they are coming fast. Growth of craft beer sales here in the US are slowing rapidly. In a recent report from Marvin Shanken of Wine Spectator growth in the craft beer market slowed to just 8 percent in 2016, after 23 percent growth just a year earlier. Some of the really big players in the craft industry have seen domestic sales slow from the midteens over many years to gains in just the single digits.

Anecdotal information abounds as well pointing to further slowing of sales. We heard as long ago as 2 years now that commercial banks are no longer lending on new brewery projects. Their feeling that there are just too many breweries to make it over the long term leading them to restricting lending. In a recent chat with one of our local distributors we learned they are likely exiting the keg business as it is simply impossible to make money at selling kegs and managing the logistics. They also related a story to us that came from one of their well-established providers saying that for breweries if there is not some additional incentive for customers like an affiliated restaurant with the brewery it is tough to survive.

The industry to some extent appears to be a victim of its own success. Growth has been so rapid in recent years and the reception by consumers of new breweries and new products from existing favorites so robust that consumers are now getting overwhelmed by the choices. Even for someone in the business we have watched this craving for the latest greatest and newest beer with mild confusion. How long can this “chase” for the hot new item go on? At some point don’t all beer enthusiasts just want to enjoy their favorite? There simply cannot be that much differentiation and at some point, the market as a whole and in individual areas become overwhelmed with choices.

We appear to be at that point or approaching it fast. Many of the largest brewers in the craft world are choosing not to enter new domestic markets. Others are taking this pause in growth to merge with the mega brands, and others are seeking growth outside the U.S. All of which seem to be prudent steps as the industry starts to shake out.

Locally consumers will no doubt continue to see plenty of choices new and more established to quench their beer appetites. There will no doubt even be new breweries with new concepts both locally and across the country to add to your choices. It won’t be at the same rapid-fire pace though. Additionally, not all that are out there will survive, and frankly they probably shouldn’t. Any industry that grows so swiftly goes through consolidation, it is necessary for the long-term health of that industry and its participants. It looks like we are now on the cusp of that consolidation for craft beer.

If there is a topic you would like to read about or if you have questions on wine, you can email George@thedinnerpartyshop.com, or make suggestions by contacting the Healthy Community section at the Coeur d’Alene Press.

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George Balling is co-owner (with his wife Mary Lancaster) of the dinner party, a wine and table top décor shop located by Costco in Coeur d’Alene. George worked as a judge in many wine competitions, and his articles are published around the country. You can learn more about the dinner party at www.thedinnerpartyshop.com. Be sure and check out our weekly blog at www.thedinnerpartyshop.com/home/blog-2. You can get all of these articles as well as other great wine tips by friending us on Facebook at www.facebook.com/#!/dinnerpartyshop.