My apologies the one or two of you that might occasionally tune in. It has been some time since I’ve literally regurgitated but I suddenly felt the urge so here are my 11 beery predictions for 2017 in no particular order. Take them with a grain of salt, arsenic or whatever makes you thirsty. Why 11? Because I go to 11…
- Craft beer markets in the US will finally reach a saturation point as supply exceeds demand – duh, some of us have been saying this would happen for years. Now other pundits are finally chiming in when they can see the flaming 747 heading towards them. Only, we know it won’t be a clear cut apocalypse. Just as we suggested using more mature beer markets such as Portland, Denver and San Diego as examples as to how saturation develops, the level of saturation will vary greatly by geographic region. A short trip across the US Southeast late last year reminded me of how disparate each market really is. Aside from a few standouts, major metropolitan areas in places like Alabama, Mississippi, Tennessee and Kentucky are all at a stage of development similar to most of those in Texas one or two years ago (or for that matter where Portland was ten years ago J). So in other words if you are in places like California, Oregon, Washington, Colorado or Texas and you make beer to sell off site things are probably already getting difficult – there are just too many brands competing for a finite number of taps. In less developed states like Alabama watch for a large distribution oriented push and less relative competition in the near term (although your time is coming).
- In desperation many distribution oriented micros experiment with different styles and serving techniques. We’ve already seen large companies like Sam Adam who’s sales stalled a couple years ago delve into a nitro can line and more will follow in an attempt to be different and capture niche market share.
- Breweries looking at expansion decide to call off their plans to do so. It happens all of the time in the manufacturing sector when the economic landscape changes and while some breweries don’t seem to pay much attention to forecasting others might take a more conservative approach.
- Breweries with excess capacity will solicit contract brewing opportunities. Again, something we predicted and has already started in earnest among many breweries that just aren’t selling enough of their own product to keep their expensive brewery busy. TGI Friday brand Pale Ale? Why not, you’ve seen Landshark right?
- Brewpubs that ventured into distribution will pull back resources to focus on their taprooms. IN Colorado Twisted Pine already did it. In Texas the smart people at Jester King realized long ago it was better to make less, charge more and sell it out the door (sounds like a rhyming mantra everyone should memorize). When selling kegs through a distributor or even direct to a bar becomes highly competitive in terms of price and effort companies will realize their chances at survival improve when focused on selling beer on site.
- Both domestic and international breweries will extend into distribution channels that seemingly make little sense because there are few new avenues for growth. Will New Glarus move outside of Wisconsin? I will put money on it. Will Russian River Pliny end up on the shelves in places like Texas – again, I have no doubt. Will we see more Cantillon? Now that’s a tough one…
- Beer bars will also suffer as their pool of patrons fails to grow as fast as the number of similar beer oriented bars opening up. Also keep in mind a lot of hole in the wall dives that once had little interesting to serve beyond ice cold cans of PBR now offer local craft beer – so if you can go to an interesting bar AND have great beer…
- Beer industry personnel will flood the market. A lot of people are enticed into making their living in the beer industry because it seems like a lot of fun. In reality it’s often underpaid work involving long hours and being around beer when beer is the last thing you want to be around. I’ve met a lot of people in the industry and they are some of the best people know, but I am equally sure some would be making a better living applying their skills doing something completely different. Unfortunately if the markets within which they work reach a saturation point many will have to transition by necessity.
- It might come as a mixed blessing to beer snobs but it is less likely gigantic conglomerates like AB Inbev and MillerCoors are still interested in your regional brewery. There might still be a few acquisitions in the making but to be honest the big guys employ very smart people that realize they don’t need that many bands to dominate a given market once a saturation point is reached. They will however remain more profitable due to their economy of scale and relative buying power so it is conceivable some smaller independent craft breweries could decide to combine in an attempt to improve their relative economics with regard to raw material buying power or even distribution costs (by brewing each other’s brands in different parts of the country etc). We’ve already seen some of this.
- In addition to quality product, post saturation brewpubs and taprooms will need a healthy repeat walk in business focused on location. If you can walk to a place with beer just as good as one down the road why wouldn’t you (all other things being equal)
- Post saturation brewpubs will benefit from a niche. The trend lately seems to be a build out focusing on modern interiors with industrial fixtures, exposed brick or wood, open seating and eclectic art with perhaps some old neon thrown in. Once you have been to three or four they start to lose their own identity. I’m not saying we need to go back in time and resurrect Superhero themed restaurants with wait staff dressed as Batman and Wonder Woman, but when so many people hire the same designers to fashion a brewpub it gets monotonous. Those that are creative and think outside the box will probably fare better by comparison. At least they will stand out among the multitude of industrial boxes.
Anyway, those are my hastily scribbled stream of consciousness predictions for 2017. Enjoy, the one or two of you reading this.