Liquor Biz

By Paul F. Vang

Reprinted with the permission of the Montana Tavern Times (this article first appeared in the Montana Tavern Times – May 2018)

Looking over highlights in beverage industry news for the past month, beer seems to dominate the news. But, don’t worry, there’s still room for whiskey and wine.

Crafts ups and downs

Craft beer sales grew another 8 percent in 2017. In contrast, the number of breweries that closed grew by nearly 70 percent.

A Denver Business Journal report indicates that the growth of the craft sector also means that there’s a lot more competition for those sales. Craft beer now, according to a trade group, Brewers Association, reached $26 billion last year, and 23.4 percent of the beer market, not counting sales from former craft breweries owned by Anheuser-Busch InBev and Constellation Brands. At the end of 2017, there were 6,260 breweries operating in the U.S., a 16 percent growth from 2016.

On the other hand, 165 craft breweries closed last year. Some preliminary findings for closings indicate that issues with landlords seeking different uses for property, particularly in crowded and high cost markets like Denver, was a big factor. Some small and relatively new breweries shut down after operators realized the amount of work it takes to compete.

Another view of the craft beer scene is that America’s craft beers, in one way or another, are taking over the world.

The online newspaper, The Daily Beast, suggests that American-style craft breweries are growing around the world. The author tells of sampling and judging American-style IPAs at a brewfest in Chile.

American-style brews are also being made in the U.K., and a Scottish brewer, BrewDog, makes dozens of different beers every year, though its mainstay is Punk IPA, a brew that BrewDog will be bringing to the United States in the near future.

Even in Germany, home of some of the world’s oldest and most respected brewers, has new “kraft” brewers making American-type brews. A San Diego brewer, Stone Brewing, opened a brewery in Berlin, and the owner said an older man recently approached him and said, “Your beer tastes like I used to remember. Thank you!” He wasn’t necessarily talking about the IPA he was drinking as much as he was bemoaning the loss of quality and flavor of mass-produced German beers.

Another aspect of craft beer growth is exports, which grew 3.6 percent in 2017, according to Beveragedaily.com.

Canada is our largest market for our craft beers, accounting for over half of total exports, followed by Asia and Pacific countries. In addition, Goose Island, originally a Chicago craft brewer, one of the first craft brewers to be acquired by AB InBev, has been opening brew pubs abroad, and by the end of the year will have pubs in Shanghai, Sau Paulo, London, Monterrey, Toronto, Melbourne and Seoul.

Finally, the Washington Post reported on the slowing of craft beer growth, even if the craft sector is still growing.

“Craft beer tastes better than macro-industrial lagers, which have gotten by for decades using bikini-clad women and famous sports figures,” said Matt Simpson, a beer consultant. “They’ve made some really touching or funny ads, but that doesn’t make their products better.”