One of the lightest-hitting takes in the craft beer community is that Jim Koch, founder of the Boston Brewing Company (i.e. Sam Adams & Angry Orchard), may have grown out of touch with the industry he helped build. On Friday, April 7, the New York Times published an op-ed piece written by Koch titled “Is It Last Call for Craft Beer?”. In it, he points out that growth in beer sales overall has stagnated and suggested that growth in the craft segment may soon do so as well.
Obviously, the titular question is hyperbole; Koch may not even have written the title himself, as it’s a fairly common practice for an editor to do that. The thesis of the article, which is the specter of competition from the macro duopoly looms over any future projections for craft beer, is unarguably true. And when taken as a way of throwing his support behind the Craft Beverage Modernization and Tax Reform Act (currently winding its way through congress as HR 747 and S 236), or perhaps as a call to action for the modernization of Beer Franchise Laws, the article makes a certain amount of sense. However, when taken at face value, it’s false advertising.
The fundamental issue with his essay is that Koch seems to equate “success” with “retail distribution”. (More accurately, he seems to equate “success” with “being Sam Adams”, but retail distribution is a huge part of what made Sam Adams into Sam Adams. That and getting into airport bars.) He talks at length about the laws around alcohol distribution (a.k.a. Franchise Laws) favoring distributors over small breweries, which is absolutely the case. I’m not going to deny that retail distribution is an important milestone for any fledgling brewery; however, the paradigm is shifting, and craft enthusiasts are moving past retail. We’re buying our beer directly at breweries and taprooms, filling pint glasses and growlers, or waiting hours in line for limited release beers – and we’re happy to do so! An extreme example is Tree House Brewing Co., which has cultivated a reputation as one of the best (if not the best) breweries in the country, churns out roughly 2,000 cases of canned beer per week and has no difficultly whatsoever selling out. This is despite having no retail distribution, no marketing to speak of, strictly enforced purchasing limits per customer, and a fairly remote location in Monson, MA. Trillium’s recently announced beer garden is another example of a brewery successfully subverting retail; obviously, not every brewery can be Tree House or Trillium, but the point is that it’s possible to be successful without retail distribution and in the face of increasing competition from macros. And as big as the “big two” are, throwing money at the problem isn’t a sustainable solution when a single acquisition can cost upwards of $1 billion.
Another thorn in the side of retail is that craft beer enthusiasts are realizing the benefits of drinking fresh beer. Most commercially released beers are filtered and pasteurized; this allows them to keep longer, which is a concession to the inherent inefficiency of the retail sales model (i.e. that beer has to go from the brewery to a distributor to the store shelf to your fridge, a process that can potentially take weeks or even months). Unfiltered beer is dramatically more flavorful when fresh, but it also falls off quickly. However, that becomes moot when beer is purchased and consumed within a short period of time, like for instance when the consumer buys direct from the brewery. The rise in popularity of unfiltered beers, such as the New England-style IPAs that Tree House and Trillium have become famous for, is attributable to the willingness of the craft beer consumer to head directly for the brewery – which, in turn, allows brewers more freedom to innovate and brew better beer! This relationship cannot be understated; it’s whatever the opposite of a vicious cycle is, and it’s hugely important to the future of the craft beer industry. (Google tells me that’s called a “virtuous cycle”, so there you have it!)
With the beer-consuming population becoming less reliant on retail, a small tweak to laws around alcohol sales and consumption could dramatically alter the relationships between brewers and distributors. Here in Massachusetts, the committee responsible for issuing liquor licenses generally draws a distinction between selling alcohol to be consumed ‘on premises’ (e.g. bars/restaurants) and ‘off premises’ (e.g. package stores). But what if they didn’t – what if your favorite local bar could sell you take-out beer? Technological advancements have made crowler machines (a portmanteau of “can” and “growler”, it’s essentially just a machine that seals a lid onto a 32 oz. can) more affordable, which opens up a potentially lucrative sales channel for craft brewers and bar owners alike. It’s already happening in places like Vermont and Texas, and there’s no reason why Massachusetts couldn’t follow suit.
It’s easy to point to the challenges facing craft breweries – and rest assured, there are many – and say that there’s a dim outlook for the industry, but to do so is to sell short the passion and resourcefulness that brewers and enthusiasts have for good beer. Realistically, there probably won’t ever be another Sam Adams, but why does there need to be? I’d say we’re still a few hours away from last call.