The term “bubble” has been used loosely to describe the over-growth of craft beer and new breweries. Will a huge, game-changing, over-hyped technology disappoint masses of investors like fiber optics in telecom, Web 2.0 in 1999, or financial instruments in the mid-2000’s? No.
First, there are disagreements among industry moguls about a “bubble”…
From Enterprisenews.com, [Jim Koch of Boston Beer Company] spoke about the craft beer bubble being near a popping point. He thinks the market share could grow to 10 percent by the end of the decade, but he thinks that most stores have reached their limit for all the new breweries.
From CNBC.com, Homebrewing legend and Craft Beer Advocate, Charlie Papazian says “There are a lot of people that think we’re in a bubble and it’s going to burst but we’re not in a bubble. We are knee-deep in foam (laughing) and it’s rising all around us. By 2017, [the Brewers Association] anticipates pretty confidently that we’ll have 10 percent of the volume, and at that point, the momentum will take us pass that.”
If we break this down into simple business concepts, craft beer demand is growing rapidly, and brewers are creating businesses to fill that demand. As with almost any product or service, the market will create enough options to fill that demand, and then some.
What happens after that demand is met and the supply surpasses it?
The breweries with great beer, a strong local presence, and memorable customer experiences will win and the losers will close up shop. Simple. There won’t be bailouts or stock market drops. There will be slower growth, consolidation of smaller breweries, outstanding talent, local market share, and shelf space.
So what does this mean for breweries now? Get your marketing act together now. How?
- Make really good beer. First and foremost. Inferior beer will go by the wayside, especially in distribution.
- Anchor your home base. Focus on the brewpub, restaurant, or tap room experience.
- Stay in touch with your base. Newsletters, events, appreciation days, community involvement, Facebook and Twitter updates, text specials and contests, etc.
Just as wine had impressive growth in previous decades, craft beer is on track for sharper growth curves. However, if you wander into any fine liquor or grocery store, you’ll see the shelf space that wine consumes – rows and rows dedicated to varietals, countries, premium brands, and specials. How much shelf space is a liquor store willing to dedicate to wine before they cut off the supply for other drink types?
Beer is fast-approaching a critical mass of maximum shelf area. Liquor store managers have to make challenging decisions on how many different types of beer to carry before they start pushing out spirits, wine, and other alcohol styles.
Will your craft brewery make the cut? There is a lot of a great beer out there, just as there is great wine, but the growth will slow and leave the naive, start-up brewers in the dust. Put your savvy marketing strategies in place now, or your local tap room experience will be one of the few that customers encounter with your brand.