Category Archives: Trends

Craft Breweries, Trends

Going Out Of Business

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Last September, one of the breweries in my town, Toledo, OH, closed. Black Cloister Brewing Company had opened its doors in March 2015. It was located in the heart of downtown Toledo, and was one of the many businesses contributing to the vibrancy of our city center. The announcement that it would close was sad news. In closing Black Cloister was not alone. While we do not yet have data for 2019, we do know that in 2018 a total of 213 breweries closed across the United States. Breweries, like other businesses, close for a variety of reasons. These include a poor location, cash flow problems, expanding too quickly and aggressively, etc.

Black Cloister Brewing Company in downtown Toledo closed in September 2019

To examine the closure of craft breweries from a national perspective, I used data available on the website of the Brewers Association. The data I examined was only for craft breweries producing 15,000 barrels of beer or less. So it did not include the so-called Regional Breweries that produce more than 15,000 barrels of beer annually.

As you can see from the first graph below (green bars), the number of breweries that closed increased each year between 2010 and 2018. In 2010, fifty-four breweries closed. In 2018, the number of breweries that closed was two hundred and thirteen. Indeed 2017 and 2018 seem to have been a bad year for breweries. In addition to the 2018 closures, one hundred and ninety-five breweries closed in 2017. These raw numbers suggest that, year after year, breweries are finding it tougher to stay open.

However, part of the reason why the number of breweries closing increased each year was because there were simply more breweries. So to asses whether breweries were finding it harder to survive, we really need to look at the number of breweries closing as a percentage of breweries that existed. For example, there were 1,525 breweries in the United States in 2009. In 2010, fifty-four breweries closed. The fifty-four breweries that closed in 2010 represent 3.5% of the breweries that were open in 2009. Looking at the second graph, it is clear that the year-to-year variation in the percentage of breweries that closed was very small. The percentage ranged from 2.4% in 2012 to 3.6% in 2017. These data show considerably less variability from year to year.

Another way to look at brewery closure rates is to compare them with similar businesses. This, of course, begs the question as to what is a “similar” business. Many craft breweries are, after all, part manufacturer, part bar/restaurant. A 2014 study of 81,000 full-service restaurants over a 20-year period by Tian Lou of the U.S. Bureau of Labor Statistics and Philip B. Stark of the University of California, Berkeley showed that 17% closed within twelve months of opening. The same study found that the median lifespan of restaurants to be approximately 4.5 years. So it seems that craft breweries are faring quite well compared to full-service restaurants. Having said that, it is probably an unfair comparison. Full service restaurants are a mature industry, in contrast to craft breweries which are still in growth mode,

As a geographer, my interest lies in detecting the existence of any spatial patterns in brewery closures. Along with my colleagues Isabelle Nilsson of the University of North Carolina, Charlotte and Oleg Smirnov and Matt Lehnert of the University of Toledo, we examined craft brewery closures in Chicago, IL, Denver, CO, and Portland, OR between the years 2012 and 2016. One of the things we were interested in investigating was whether being geographically isolated versus being part of a cluster of breweries impacted the chances that a brewery would close. There is evidence from a number of different industries that being part of a cluster (a brewery district) is beneficial. To craft beer drinkers, geographic clustering of breweries inside a city is attractive because it makes it easier for them to brewery-hop, and visit several breweries within the space of an afternoon or an evening.

Our study showed that the brewery closures do not appear to occur where a concentration of breweries exist. Rather, they tended to occur in more residential areas, outside of downtowns. Closed breweries had an average of one other brewery within a one mile radius, while those that were still open as of 2016 had an average of 2.5 other breweries surrounding them. Of the breweries in our analysis that closed, 58% had no other breweries within a mile. Of the breweries that remained open, 26% had four or more breweries within a mile, while 9% had ten or more breweries within a mile.

Bakersfield, CA has an evolving brewery district. Source: Bakersfield.com

Whenever a craft brewery closes in a community, it is not unusual for a local newspaper to run a story that asks whether the local market has hit saturation point with respect to the number of craft breweries. Has the craft beer bubble bust is another commonly asked question. In fact, as I was thinking about writing this blog entry the Virginia-Pilot newspaper reported the closure of Coelacanth Brewery in Norfolk, VA. And the story’s headline read, asked the question – Is the craft beer bubble bursting?” It is a question that has been asked for several years now, in markets ranging from Cleveland, OH to Grand Rapids, MI. More often than not, however, the feeling is that in most markets there is still room for growth. In a piece in Crain’s Business Chicago, Dalton Baker wrote about craft brewery closures and declining craft beer sales in the city of Chicago, IL. Baker describes the Chicago craft beer market as mature, a characteristic that it shares with Denver, CO, San Diego, CA, and Seattle, WA. I think there is no doubt that certain markets are nearer saturation than others. On the other hand, there are places where the market is under-served by craft breweries. The city I live in, Toledo, OH is one of them. It has, I believe, significant room for growth.

In a recently published end-of-decade piece published in Forbes, Chris Funari asked a number of brewers to gaze into their crystal ball and share their thoughts on what the next ten years might bring for the craft segment of the brewing industry. Kim Jordan, Co-Founder of New Belgium Brewing believes that industry will experience a shakeout, which will result in a significant number of brewery closures. The net result will be a smaller population of breweries. Daniel Kenary, Co-Founder and CEO of Harpoon Brewery seems to agree. He believes that the recent growth is “unsustainable” and that “the fast money will try to leave as quickly as it entered” . Tom Wilkes, writing in Beer & Brewing, believes that the future may be brighter for breweries at opposite ends of the size spectrum – small breweries and very large breweries. The small ones can focus on the local market and develop a loyal customer basis from the surrounding community, while the very large brewers have the capital to engage in effective marketing and distribution. But those in the middle, who are “attempting to fight for that retail and grocery and tap handles” may find the future challenging.

Of course, as I sit here today the world is in the grip of the Covid-19 (Coronavirus) pandemic. Across the United States, Governors have ordered bars and restaurants to close temporarily as part of the efforts to minimize the spread of the virus and flatten the curve. With their taprooms closed, craft breweries are offering curbside pick-up and home delivery. The impact on sales is potentially devastating. For some breweries, that were already struggling, this represents the final nail in the coffin, and closure has already been announced. Depending upon how long restrictions associated with Covid-19 last, 2020 could be a record year for brewery closures.

Further Reading:

Nilsson, Isabelle, Oleg Smirnov, Neil Reid, and Matthew Lehnert. 2019. To cluster or not to cluster? Spatial determinants of closures in the American craft brewing industry. Papers in Regional Science, Volume 98, Issue No. 4, Pages 1759-1778.

International, Low Alcohol Beer, Trends

Beer for the Modern Adult?

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“Beer for the modern adult” – that’s how Bill Shufelt, owner of Athletic Brewing Co. in Statford, CT, describes his brewery’s beer.  All of the beer brewed at Athletic is non-alcoholic. While non-alcoholic beer may seem like an oxymoron it, along with its cousin, low-alcohol beer, is trending in the marketplace. And not just in the U.S market, but in overseas markets as diverse and as different as Belgium and China. Before exploring the numbers and reasons behind the growth of low-alcohol and non-alcoholic beer let’s start with some definitions.

In the United States, the Alcohol and Tobacco Tax and Trade Bureau defines beer as “beer, ale, porter, stout and other similar fermented beverages (including sake and similar products) containing one-half of one percent or more of alcohol by volume, brewed or produced from malt, wholly or in part, or from substitutes for malt.” It is, in my opinion, a quirky definition, but let’s not get into that here. They key point, for present purposes, is that for beer to qualify as beer it has to have an ABV of at least 0.5%. So everything below 0.5% ABV is either non-alcoholic and low-alcohol beer. Technically, non-alcoholic beer has an ABV of 0.0%, although the Oxford Companion to Beer notes that, “technically speaking, there is no such thing as non-alcoholic beer because beer contains alcohol by definition”. For the sake of simplicity, and for the purposes of this blog entry, I will use the term low-alcohol beer to refer to all beer under 0.5% ABV, and 0.0% ABV to refer to non-alcoholic beer. One of the challenges I found in researching this piece is that lines between the two are often blurred – so for example the term non-alcoholic beer is sometimes used in such a way that it also includes non-alcoholic beer.

Low-alcohol/non-alcoholic beer is not a new concept, of course. During Prohibition, it was in fact legal to brew beer that contained less than 0.5% alcohol – so-called ‘near beer’.  In more contemporary times low alcohol beer has been produced in both the United States and Europe.  Those of us who live in the United States are familiar with O’Douls, a low alcohol beer (<0.5% ABV), introduced by Anheuser Busch in 1990. My European friends are probably more familiar with low-alcohol brands such as Kaliber which is brewed by Guinness and St. Pauli N.A., brewed by Beck’s (which is now owned by AB InBev).

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O’Doul’s – A low alcohol beer introduced by Anheuser Busch in 1990

When I was drinking mass-produced beer in the 1990s, low alcohol beer had a bad reputation. It wasn’t so much that it didn’t give you a buzz (it wasn’t meant to after all), but rather that it just didn’t taste all that good. Toady the low alcohol beer market seems to be booming, and those who prefer low-alcohol beers no longer are restricted to an awful tasting product.

Just how popular is low-alcohol beer. Globally, the market for low alcohol beer was $13 billion in 2016; by 2024 it is projected to be $25 billion. And it’s growing popularity seems ubiquitous. In Belgium, in 2018,  non- alcoholic lagers and wheat beers experienced a thirty percent market growth. Non-alcoholic and low alcohol beer is also gaining in popularity in China. In 2016, twenty-nine percent of new beers launched were in one of these two categories. Approximately eight percent of the beer produced by AB InBev is low or non-alcoholic. They project that by 2025, that will increase to twenty percent.

The increasing popularity of low and non-alcoholic beer appears driven by the consumers prioritizing healthier lifestyles. Why don’t they drink a healthier non-alcoholic alternative, I hear you ask. It is true that  some juices may provide healthy alternatives to beer. They do not, however, deliver the lifestyle image provided by beer. Beer projects a particular lifestyle image; consuming low-alcohol or non-alcoholic beer protects that image, while not compromising an individual’s health.

The recent upsurge in interest in low and non-alcoholic beer has prompted some of the world’s major breweries to launch new products to add to their existing beer portfolios. In January 2019, the world’s second largest brewer, Heineken, will launched a new non-alcoholic beer in the United States – Heineken 0.0 (pronounced zero zero). The new beer, first introduced into Spain in January 2017, is now available in over thirty countries. Heineken 0.0  has only sixty-five calories. It also goes a step further than its low-alcohol cousins, in that it contains zero alcohol. In other words, the ABV is 0.0%. In marketing the new beer, Heineken suggest that people drink it at times when perhaps they would normally not drink beer – such as during an office lunch or after a workout. Other potential markets for non-alcoholic beer include drivers of motor vehicles, pregnant women, people taking medication, athletes,  and those who abstain from alcohol for religious and other cultural reasons. Studies in Europe also show that avoiding a hangover and keeping in control are factors driving demand for non-alcoholic and low alcohol beer.

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Heineken Zero Zero was recently introduced into a number of markets, including the United States

The growing demand for non-alcoholic and low alcohol beer is part of broader taste shifts impacting the alcohol industry.  According to CNBC reporter Angelica LaVito, “consumers are increasingly shunning beer and instead drinking wine, spirits and hard seltzers, which they perceive as healthier than beer.” The shift away from beer and  towards wine can be clearly seen in the two graphics below. In the first graphic you can observe the general decrease in per capita alcohol consumption, particularly beer, in the United States in the post-1980 period. The second graphic shows that in 1993, 47% of American who drank alcohol stated that beer was their preferred alcohol of choice. This compared to 27% preferring wine and 21% preferring liquor. By 2017, the percentage preferring beer had fallen to 40%, while the percentage preferring wine and liquor had risen  to 30% and 26% respectively.

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This is a trend that is also occurring in other countries. A recent article on the BBC website was titled, “Under-25s turning their backs on alcohol, study suggests”. The article reported on new research at University College London which found that the percentage of 16-24 year olds who do not consume alcohol increased from 18% in 2005 to 29% percent in 2015. In Belgium, a recent survey revealed that sixty-two percent of Belgians felt that they consumed too much alcohol.

In the United States, we have observed the growing popularity of so-called session beers  – beers that are less than 5% ABV. A 2016 survey by Nielsen and CGA Strategy found that 45% of craft beer drinkers prefer session over beers with a higher ABV. Of the twenty-five fastest growing craft beer brands in 2016, thirteen were session beers. Almost every craft brewery produce session beers. Many have went to great efforts to ensure that from a taste perspective that they are an acceptable alternative to higher ABV beers. Thornbridge Brewery in Bakewell, U.K. disposed of four batches (sixty thousand bottles) of beer in their quest for a palatable low-alcohol beer. The end result was their Big Easy, a very drinkable Pale Ale with an ABV of only 0.5%. Athletic Brewing Co. of Stratford, CT is a craft brewery that produces only non-alcoholic beer.  Athletic Brewing’s flagship beers are an IPA and a Golden Ale, while season offerings include an Autumn Brown Ale and a Harvest IPA. Crafting a non-alcoholic beer that did not compromise on flavor was a challenge for Athletic’s owner Bill Shufelt. It meant producing over one hundred test batches on home brewing equipment, before he was satisfied.

Market signals clearly demonstrate growing consumer demand for low-alcohol and non-alcoholic beer. This shift in consumer preferences impacts every brewery, from the smallest microbrewery to  the largest multinational. And they are clearly responding, witness the seemingly growing number of non-alcoholic and low alcohol beers that are now available. Furthermore, breweries are working very diligently to ensure that those who choose non-alcoholic and low alcohol beers are not being compromised when it comes to taste. And it seems to be resonating with some consumers. Thirty-one percent of Germans between the ages of eighteen and twenty-four 18-24 agreed that non-alcoholic and low alcohol beer tastes just as good as ‘regular’ beer. More and more, we are seeing beer writers helping consumers navigate the  increasingly crowded low-alcohol and non-alcoholic beer market by tasting and rating the various offerings.

Further Reading:

Ng Fat, Linda, Nicola Shelton, and Noriko Cable. 2018. Investigating the growing trend of non-drinking among young people: Analysis of repeated cross-sectional surveys in England, 2005-2015. BMC Public Health, Volume 18:1090.

Craft Beer, Hops, Neolocalism, Trends

Craft Beer And Hops

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This is my third blog entry that deals specifically with the topic of hops. You can read the other two entries here and here.

Hops are one of the four essential ingredients of beer – the other three are water, malted barley, and yeast. As such, hops serve a number of functions. First, they act as a bittering agent. Second, they contribute to a beer’s aroma. Third, they have preservative qualities. There are three basic types of hops – alpha, aroma, and dual purpose. The primary function of alpha hops is to provide a beer with its bitterness, while aroma hops, as the name suggests, contribute to the aroma of a beer. Dual purpose hops combine bittering  and aroma characteristics.

I’ve been reading quite a bit about hops recently, as well as looking at some data, trying to identify how demand for hops might be changing in response to the growing popularity of craft beer. This interest stems from a project funded by the U.S. Department of Agriculture. The project, which includes colleagues from Rutgers University, Pennsylvania State University, and Simon Fraser University, is concerned with isolating the existence of what are termed agricultural clusters in the United States. As a piece of this much larger project, I have been looking at the impact that the growth of craft beer has had on the hops industry. In my research, I believe that I have identified three major impacts:

  • An overall incease in demand for hops
  • Demand for a greater diversity of hop varieties
  • The geographic expansion of hop production, out of the industry’s Pacific Northwest core.

Let me now examine each of these in turn.

Incresed Demand for Hops

Not surprisingly, the volume of hops produced and used in a given year varies. A number of factors impacts these volumes, including weather conditions and fluctuations in demand from breweries. The chart below shows the number of pounds of hops held by growers, dealers, and brewers on March 1, for each year between 1948 and 2018. What is particularly noticeable about this graph is the sharp increase in hop stocks held by these three groups, starting in 2011. This increase corresponds quite nicely with the significant increase in the number of craft breweries that started around the same time (see second chart).

So why might more craft breweries result in an increased demand for hops? Well, a major reason is that many of the styles of beer brewed by craft breweries use more hops than the beers produced by macro-brewers such as Anheuser-Busch. A typical craft beer (if there is indeed such a thing) contains up to five times more hops than a macro beer. The first chart below shows the number of pounds of hops used to produce a keg of different styles of beer. Lagers and pilsners, the most common type of beer produced by macro-brewers, use 0.19 and 0.31 pounds of hops per keg respectively. All of the other styles of beer shown (except Ambers and Hefeweizen) use more hops. For example, IPAs use a pound of hops per keg, while Imperial Stouts  and Imperial IPAs use 0.87 and 3.8 pounds per keg respectively. As the second chart below shows, IPAs (which tend to use a lot of hops) represent over twenty-five percent of the American craft beer market.

Source: USAHops

Demand for Greater Diversity of Hop Varieties

Another feature of craft breweries is that they tend to use a greater variety of different types of hops than macro-breweries. As noted above, there are three basic types of hop – alpha, aromatic, and dual purpose. Macro-brewers, such as Anheuser-Busch, use primarily alpha hops when brewing beers such as Budweiser. Craft brewers, in contrast, use larger amounts of aroma and dual purpose hops. For example, an examination  of types of hops harvested in the state of Washington (the country’s leading hop producer) in 2007, shows that 73.2% of the harvested acreage were alpha hops. By 2017, alpha hops accounted for only 26% of the harvested acreage in the state. In contrast, aroma and dual purpose hops accounted for 40% and 25.9% of Washington hops in 2017, respectively (the numbers do not add up to 100% here because data disclosure rules meant that there were some hops that could not be placed in one of the three categories). This represents a fundamental shift in hop production, which reflects a fundamental shift in demand.

Another way that I analyzed the hop data was to examine what I term the Four Hop Concentration Ratio. This is a simple number that indicates the percentage of hop production accounted for by the top four hop varieties. Again, I looked at data from the state of Washington. In 2007, the top four varieties accounted 71.1% of hops harvested in Washington. In 2017, the top four varieties accounted for only 39.1%. These numbers suggest that Washington farmers were growing a greater variety of different types of hop in 2017, than in 2007. When I examined the top four hop varieties in each of the two years, I noticed another important shift. In 2007, the top four hops harvested in Washington were Zeus, Columbus/Tomahwak,  Willamette, and Galena. Three of these four (Zeus, Columbus/Tomahawk, and Galena) are alpha hops. Only Willamette are aroma hops. In 2017, the top four hops harvested in Washington were Cascade, Centennial, Simcoe, and Citra. None of these are alpha hops. Cascade and Citra are aroma hops, while Centennial and Simcoe are dual purpose.

The demand for diversity in hops reflects the diversity of beer styles and flavors/aromas that craft brewers produce. Different styles of beer require different combinations of different hop varieties. Even within the same style (e.g. IPA) individual brewers will combine different hop varieties as they seek to attain a particular flavor profile. Particular hop varieties are suited for Brewing specific styles of beer. For example, Azacca hops, which are alpha hops and impart notes of citrus, mango, and pineapple are ideal for pale ales and IPAs.  Willamette, in contrast, are aroma hops that have floral, fruity, and herbal notes and are most commonly used in pale ales, bitters, and stouts. And of course, in the hands of a creative and innovative brewer, who knows what hop varieties will be combined with what other hop varieties, to generate exciting tastes and aromas. Craft breweries tend to be quite open in revealing the hop varieties that they use in a particular beer. In fact, displaying the hop varieties used in a particular brew, on the can or bottle, is not uncommon. My oldest daughter bought me a variety pack of beer for my birthday last month. Two of the beers were from  Platform Beer Company in Columbus, OH. One, Chasing the Horizon, was a Black New England IPA, while the other, Seeing Sounds, was a small batch IPA. On the cans were the hops used in the brewing of each beer. In the case of Chasing the Horizon, four hop varieties were used – Callista (aroma), Simcoe (dual purpose), Eukanot (aroma), and Mosain (aroma) were used. For Seeing the Sounds, the hops were Galena (alpha), El Dorado (dual purpose), Citra (aroma), and Centennial (dual purpose).

Platform Beer Company cans displays the hops used in each beer

Geographic Expansion of Hop Production 

A final trend that I have noted in my research on hops is the geographic expansion of hop production. The Pacific Northwest states of Washington, Oregon, and Idaho represent the heartland of American hop production. In 2017, these three states accounted for 95.5% of the acres of hops harvested in the United States. As few years earlier, in 2014, the three Pacific Northwest states had accounted for 97.7% of the acres of hops harvested. Gradually, in recent years, farmers in states outside of the Pacific Northwest have started to grow hops. Hops are now grown in twenty-nine states across the country. After, Washington, Oregon, and Idaho, the top three states for hop production are Michigan, New York , and Colorado. The map below shows hop growing States in 2017. Washington, Oregon, and Idaho are in red, and the orange states are the other states growing hops. The expansion of hop production outside of its core states is driven by demand from some craft brewers for locally-grown hops. At the same time, farmers see an opportunity to expand and diversify their portfolio of crops.

States Growing Hops in 2017

So, it appears that the increasing popularity of craft beer is changing the hop industry. Not only is there a demand for more hops, but there is a demand for a greater diversity of hop varieties. In particular, there is an increased demand for aroma and dual purpose hops, which, together, are now more popular than alpha hops. Finally, production of hops is increasing outside of the Pacific Northwest, as more brewers demand locally-grown hops.

Further Reading:

Schönberger, C. and T. Kostelecky. 2011. 125th Anniversary Review: The Role of Hops in Brewing. Journal of the Institute of Brewing, Volume 117, Number 3, pages 259-267.

 

 

Craft Beer, Culture, Trends

Craft Beer And Millennial Values

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It has been pretty well established that it is the Millenial cohort who are driving consumer demand for craft beer. According to Michael Dimock of the Pew Research Center, Millennials are those individuals born 1981 and 1996; making them between the ages of twenty-two and thirty-seven. We know quite a lot about Millennials. Thanks to market research firms,  public opinion researchers, and fact tanks such as Nielsen, Gallup, and the Pew Research Center, we have a lot of data and information about Millennials as citizens, voters, and consumers. Research on Millennials often compares them to preceding generations – Generation X (born 1965-80), Baby Boomers (1946-64), and the Silent Generation (1928-1945). And what we have learnt is that each generation has unique values and perspectives.

Different generations defined. Source: Dimock 2018

One study that I read recently, was published by The Boston Consulting Group (BCG). It was titled, How Millennials Are Changing the Face of Marketing Forever. The study report included a number of interesting graphics, including the one below (Exhibit 1). The graphic shows the relative importance that Millennials and non-Millennials attach to a number of different factors. These include patriotism, professional success, spirituality, and working out.

Source: Barton et al. 2014.

As I perused the findings of BCG’s research, I tried to identify connections between craft beer and Millennial values. Here is what I think I identified.

Status

BCG identify status as a value that is important to Millennials. A number of scholars have suggested that craft beer is a high status product. These include my good friend Tom Bell and his colleague James Baginski who, in a 2011 paper published in the Southeastern Geographer, refer to craft beer as a “high order prestige good”. Similarly, in a book chapter published in the same year, Victor and Carol Tremblay talk about the  “prestige factor” of drinking craft beer. In a 2012 paper published in British Food Journal, Douglas Murray and Martin A. O’Neill, published in the British Food Journal, suggest that the craft beer drinker is “sophisticated” and “discerning”. The same observations have been made with regard to real ale drinkers in England, where Karl Spracklen, Jon Laurencic and Alex Kenyon, in a 2013 paper in Tourist Studies, note that drinking “real ale is seen as a marker of good taste and distinction”.

Millennials enjoying a beer at Basecamp Brewing Company in Portland, OR

Luxury

According to BCG, luxury is another characteristic valued by Millennials. Craft beer, I would argue, is a luxury product. More specifically, it is an affordable luxury. To the French-American author, Mireille Giuliano, luxury means ”premium quality and that doesn’t always equate to known brands or mascs marketing”. Speaking specifically about the Millenial cohort, Max Montgomery defines affordable luxury as “achieving quality, tailored to our taste, at a price we can afford.” Craft beer, it would seem, qualifies as an affordable luxury. Compared to mass produced beer,  craft beer is relatively expensive. Of course, the price you pay for beer depends upon where you live. In 2017, the cost of a case of Bud Light or Miller Lite varied from $14.62 in Michigan to $21.98 in Pennsylvania.  In comparison, the average cost of a case of craft beer, nationwide, in 2017 was $32 – that’s $1.33 a bottle – definitely what I’d call an affordable luxury.

Craft beer is an affordable luxury (Backcountry Brewing, Squamish, BC, Canada)

Excitement/Adventure/Travel/Fun

MiIlennials like excitement, adventure, travel, and fun. All four can be experienced in the consumption of craft beer.  In 2013, A. J. Carpenter and his fellow students completed a term paper for their Marketing 6069 class (Buyer/Consumer Behavior) at University of Colorado, Denver. In it, they identified four types of craft beer drinker – novice, loyalist, enthusiast, and explorer. According to Carpenter et al’s study, Most craft beer drinkers are either enthusiasts or explorers. While there are some key differences between enthusiasts and explorers, one trait they have in common is their desire to try lots of different craft beers and to visit lots of different craft breweries. In other words, drinking craft beer is an exciting adventure; an adventure that takes the craft beer from tap room to tap room to taste the beer at its point of production. This idea that craft beer drinkers are excitement seeking adventurers is supported by the growing popularity of craft beer tourism. Annually, more than ten million Americans go on a brewery tour. Ale trails are increasingly common and help beer tourists strategically navigate a city or region’s craft breweries. The term ‘beercation’ has entered the lexicon of the craft beer drinker. Craft beer festivals (literally dozens of them occur every year across the United States) attract the craft beer aficionado and allows her to sample a wide variety of beers within the time frame of an afternoon, evening, or weekend. At the same time, the highly popular app Untappd enables the craft beer drinker to log the beers he consumes, while enjoying the fun of earning badges along the way.

Millennial beer tourists at Heist Brewery in Charlotte, NC

Charity

Brew Good Do Good is the motto of Black Cloister Brewing Company in Toledo, OH

With one of two exceptions, craft breweries are owned by people living in the community in which they are located. As a result, craft brewery owners tend to very committed to the well-being of their communities. To this end, they tend to be very supportive of local charities. The media is replete with specific examples of  craft breweries giving to and/or supporting good causes. Brian Yaeger refers to craft brewers as “liquid philanthropists”.  And craft breweries tend to be more generous in their charitable giving than the macro-Brewers. In 2014, craft breweries gave $3.25 for every barrel of beer brewed. In contrast, AB InBev, through its charitable organization, gave only $0.35 per barrel. As the motto of one of my local craft breweries in Toledo, OH (Black Cloister Brewing Company) proudly states – “Brew Good, Do Good”.

Change and Optimism

Change and optimism are Millennial values. Both are abundant in the craft brewing movement. Craft breweries are agents and representatives of change. From a handful of craft breweries in the mid-1980s, the number of craft breweries in the United States now exceeds six thousand. Craft breweries account for 12.7% of the American beer market by volume and 23.3% by dollar sales. These numbers represent change; dramatic change. But the change is not just found in the numbers. The change can be experienced with our eyes, our ears, our noses, and our taste buds. I experience  it ever time I walk into the taproom of a craft brewery and see it filled with young people; men and women, enjoying a beer that has been carefully and lovingly crafted by the brewmaster. I hear it every time I listen to two or more people discussing the finer points of an IPA or debating which craft brewery is producing the most innovative brews. I smell and taste it when I lift that an IPA to my lips and I smell and then taste the aroma and bitterness of the hops. More than anything, I would submit that craft beer’s success happened because its early pioneers had optimism – an optimism that hinged on the belief that there were enough Americans out there who wanted better beer. It is an optimism that resurfaces every time a new craft brewery opens it doors.

Enjoying the taste of optimism at Mad Anthony Brewing Company in Fort Wayne, IN

There are a couple of values that appear in the upper left hand (non-Millennial) quadrant of Exhibit 1 that surprised me. Surprised me in the sense that I would have perhaps expect them to be values that resonated with a Millennials. Two in particular are authenticity and craftsmanship. Authenticity is a particularly slippery concept. And I really don’t want to get into any of the authenticity debates here. Suffice to say, that at the 2017 Craft Brewers Conference, Brewers Association Bob Pease identified the four pillars of the craft brewing  movement – independence, spirit, community-mindedness, and yes, you’ve guessed it, authenticity.  As for craftsmanship, one might have also expected that to be more important to Millennials, than indicated by the BCG study.

Further Reading:

Barton, Christine, Lara Koslow, and Christine Beauchamp. 2014. How Millennials are changing the face of marketing forever. Boston: The Boston Consulting Group.

Dimock, Michael. 2018. Defining generations: Where Millennials end and post-Millennials begin. Pew Research Center FactTank, March 1.

Ownership, Trends

Certified Independent

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The beautiful Circuit of the Americas, where the US F1 Grand Prix is held

Jim Clark, one of my Formula 1 heros

I was in Texas last month. I went there for the U.S. Formula 1 Grand Prix. This was my fourth time in Austin since 2010, each time to attend the U.S. F1 GP at Circuit of the Americas, a race track custom-built for the event. This year, as last year, I flew into Dallas. My friend Mike lives in Dallas. I spent the day with Mike, stayed overnight at his place, and he and I drove the four hours to Austin the next day. In Austin, we stayed with another friend, Bill. The U.S. GP is a three-day affair, starting with practice on the Thursday and culminating with the race on Sunday afternoon. I have Continue reading Certified Independent →

Craft Beer, Marketing, Trends

Last Call?

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Jim Koch, who founded Boston Beer Company in 1984, is an iconic figure within the world of craft beer.  Forbes Magazine refers to Koch as a “founding father of the American craft brewery movement”. There can be little argument that the entire craft beer Continue reading Last Call? →

Community, Trends

Holy Toledo, I Went To Church In A Brewery

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I went to church last Sunday. Nothing unusual in that. I go most Sundays. What was unusual was that I actually went to church twice. The first time was to the church I usually attend – Augsburg Lutheran Church in Toledo, OH. The second time was to a church I Continue reading Holy Toledo, I Went To Church In A Brewery →

Beer Styles, International, Trends

Global Beer Trends in 2016

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The global beer industry has grown significantly in the past two decades, with global beer production rising from 1.3 billion  hectolitres (34.3 billion U.S. gallons) in 1998 to 1.96 billion hectolitres (51.8 billion U.S. gallons)  in 2014.   That growth has levelled off slightly in the past few years as consumption levels have declined in some developed countries.  Fortunately, that decline has been offset by an increase in Continue reading Global Beer Trends in 2016 →