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Is Craft Beer In Decline? Jim Koch Thinks So.

Is Craft Beer In Decline? Jim Koch Thinks So.

by Ed Morris

A year ago


By Editor In Chief/Lord Of Words Ed M Morris

I am going to fit as much Shiner in here and launch

In an April 7th Op-Ed, Jim Koch (co-founder and chairman of the Boston Beer Company, the producers of Samuel Adams beer) titled "Is It Last Call For Craft Beer?" voices his concerns for the decline of Craft Beer.

Mr. Koch lists the following issues that is effecting Craft Beer:

1.  After several years of growth at 15%, craft beer growth is in the single digits.

2. Big Beer mergers and purchases of some of the larger craft beer brewers. Now 90% of US beer production is owned by overseas entities.

3. Lack of government anti-trust oversight. Prime example is the merger of SABMiller and AB InBev.

4. Smaller distributors who were protected by laws passed in the 1970's are now near extinct as distributors have gone from 4600 in 1980 to 3000 today. These smaller distributors were key to getting craft beer out to the public when craft beer brewers were making inroads from the brewery to the consumer. 

Mr. Koch, also mentions that there is also a "who cares?" element creeping in as craft brewers who have been bought by Big Beer, and uses Goose Island as an example, are still making good beer that consumers are buying.

Also, he is concerned that as smaller breweries are being purchased, it means less jobs for the communities that the now Big Beer owned breweries were located. Less jobs is not only bad for the former employees, but for the local towns, as less taxes are coming in to support the municipality and the people who live there.

If you agree completely or not with Mr. Koch, things are changing in the Craft Beer industry, and it will be important to support your local brewers to ensure that craft beer lives on and thrives.

 

1 comment


  • Disclaimer: I am a beer importer.

    Although craft is certainly competition to imports, we do not consider craft to be a direct competitor; imports have maintained modest yet consistent gains over the years whereas mainstream US brewers have certainly felt the “craft effect” for the last decade.

    Crafts cannot expect 15% annual gains year on year ad infinitum. There certainly will be a point of saturation, slowing annual growth to mid-single digits which should be sustainable.

    The main issue facing crafts in my opinion is that many craft brewers are trying to market too many of their own SKU’s in an attempt to gain market share.

    I do not understand the logic for a craft brewer to produce five, ten, fifteen or more SKU’s for the following reasons:
    1) It becomes a logistical nightmare for the distributor.
    2) It places intense shelf space pressure on the off-premise retailer. The shelf space for crafts in many cases not commensurate to actual volume.
    3) It is simply not possible for on-premise retailers to inventory vast portfolios from the same brewer. This eliminates the ability for on-premise and off-premise exposure to play off each other
    3) It causes confusion for the consumer and fragments their own craft brand.

    It seems most want to blame the slowdown in crafts on the mainstream US brewers limiting competition. In my opinion, the main issue is over-saturation within the craft industry itself; less is more.

    Levis Minford on

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