musing

10 Reasons Craft Beers Sales Are Hot

A post at Beerdata.org conjectures about why craft beer sales are up 11% so far this year.

Brendan Picha gives a lot of credit to imported beers, starting the with UK icon Samuel Smith. Yes it’s true that dam was opened in this order:

– Michael Jackson wrote the World Guide to Beer.

– Charles Finkel read the World Guide and called Jackson in London to praise the book. They quickly became friends, and soon Finkel’s company – Merchant du Vin – was importing beers Finkel had read about in the World Guide, including Samuel Smith. Imports were an inspiration for American brewers and an introduction to classic flavors for American drinkers.

Anyway, Picha then outlines what he summarizes this way: “This is a short snowball effect theory that I think may be responsible for craft’s current marketplace presence and demand.” Give it a read.

That got me thinking. The result is “10 Reasons Craft Beers Sales Are Hot.” (Disclaimer: This is a list is not the top 10 – and order is random after the first two).

1. These beers have more flavor.

2. Michael Jackson. The reasons listed above are just a start. The next list should be 10 Ways Michael Jackson Saved The World From Bad Beer. He’s shown here with Jeff Bagby and Tomme Arthur of Port Brewing/Lost Abbey.

Michael Jackson

3. Hops. OK, zealously defending hops has been known to get me in trouble. It’s just that innovative use of hops helped set American craft brewers apart from the start. (Before you send that e-mail, innovative use of hops does not mean using enough to take the chrome off the back of your pick-up truck. Firestone Walker innovative will do.)

4. Brewpubs. When craft sales were up 9% in 2005, brewpub sales grew less than 3%. That’s not the point – they put the roots in grassroots, because they are still the place many people are introduced to flavorful beer. Some of the most innovative (there’s that word again) beers, which literally inspired new styles, were and are first made in brewpubs.

5. Cult producers. When you look at the numbers, “accessible” beers that lots of people drink are driving growth. But extreme beers generate excitement.

6. The Internet. News travels quickly these days and the online communities are huge.

7. Importers. The sale of imports also remained strong in the first half of 2006, but IRI mostly measures beers sold in grocery stores – such at Heineken and Corona. I’m talking about the smaller importers, the ones who continue to find new and exciting beers (see Nos. 5 and 6).

8. What goes around comes around. A few months ago in England I had a wonderful 4% abv cask-conditioned bitter spiced with American Amarillo hops. Innovation is a two-way street. Some American brewer is going to taste a beer like that and say: “Hey, we can do that at home.”

9. Great retailers. Meaning bars/taverns/pubs as well as stores (both independents and the likes of Whole Foods – just think about when Costco starts to offer beer that rivals its range of wines).

10. Niches are good. In the mid-90s megabrewers invested in smaller breweries and experimented with specialty styles. Interest that waned then seems to be returning, but no matter how good of beer they decide to make there are some things they will never choose to do. That leaves an opportunity for those willing to do a little bit more.

Consider what Vinnie Cilurzo of Russian River Brewing has to say about his beers that may spend a year aging in wood before they are ready to sell: “These beers reflect a slower pace of life. Americans are so into ‘I want it all and I want it now.’ That’s why I don’t think many brewers will get into aging. They aren’t going to commit the time or the space.”

Is craft beer bucking a trend?

Two news stories from yesterday:

– The Wall Street Journal reported reported that the trend toward “trading up” is slowing for many consumer products.

– The Brewers Association reported craft beer sales roared ahead at an 11% clip in the first half of 2006.

Craft beer

If the former trend continues through the coming months how long can the latter trend go on?

Any answer is a guess. For instance, Information Resources Inc. (IRI), which takes most of its data from grocery stores and supercenters, reported craft sales grew 12-13% in the first half of the year and dollar sales were up 15-16%. Those numbers don’t include beers from many smaller brewers, and certainly not from brewpubs, but they indicate the inroads craft breweries have made.

Also, the WSJ story notes that because they are less likely to “trade up” that “middle-income families visiting more mass merchants and grocery stores than specialty outlets.” Since they are more likely to find great beer in those stores than before they may consider that beer more necessity than “affordable luxury.”

Plenty of reasons remain to be cautious. The Journal reports that Starbucks, Whole Foods and specialty-sandwich chain Panera Bread Co. all recently reported disappointing sales and pointed to higher gas price. Restaurants catering to middle-income consumers are seeing a sales slump too.

WSJ concludes by consulting Michael Silverstein, who co-authored the book Trading Up. He said middle-income shoppers are still trading up for high-end items, but are “‘making much more deliberate choices and being much more tough-minded about what they want. . . . The investment thesis has to be: Are you generating heat? The companies that aren’t are in trouble.”

For now at least, craft brewers have plenty of heat.

Man Laws vs. Here’s To Beer

It’s fair to say that Anheuser-Busch’s “Here’s To Beer” campaign has not exactly been embraced by the craft beer community, and certainly not blogs (like this one) that have commented on it.

But compare it to Miller’s “Man Laws” commercials and website. Which is about beer?

First, in defense of both “Man Laws” and the “Here’s To Beer” spots like the one with Mike Imperioli and Bogey, these commercials remind us that when you drink a beer it’s not always just about the beer. For instance, I have an uncle who considers Beck’s Dark about as good as it gets – and by golly it happens to taste pretty good to me when I have a beer with him. My father, rest his soul, didn’t ask me to drink Miller Lite with him. That might have been the real test.

But when I watched the “Man Laws” commercials or visited the website (with the most obnoxious age verification ever seen) I see no mention of flavor [although it appears that Miller with be attacking A-B on that front using another set of commercials.]

At least the “Here’s To Beer” site is about beer. On the last visit – speaking of age verification, how come the site can’t rememeber me and I have to log in every time? – I saw a suggestion to serve an imperial stout with a chocolate stout. Last time I looked A-B didn’t brew an imperial stout, to they weren’t just pimping their own beer.

Now here’s why I’m writing about this. The Milwaukee Journal Sentintel (yes, Miller’s hometown newspaper) had a story about the success of “Man Laws” that’s appeared in several newspapers.

It reports that since being activated in May, www.manlaws.com has recorded nearly 14 million visits, including more than 542,000 unique visits.

Meanwhile, a press release from A-B in late July stated that since February www.herestobeer.com received “more than 300,000 hits.”

Looks line “Man Laws” is a pretty clear winner. Can’t see why I would think that is good.

Beer is back in the news

Gee, I’m not sure the article was that bad.

Both Jay Brooks and Beercraft Blog take a piece in the Pittsburgh Post-Gazette to task for an article headlined “Beer sales falling flat as wine, other beverages grow in popularity.”

Granted, the story had its problems, but having just returned from a couple of weeks of grabbing newspapers and magazines I don’t often read I was impressed by the amount of positive attention craft beer is getting. I didn’t see anything comparable for wine or spirits.

In Champaign (Illinois) a local newspaper story offered kudos to the Blind Pig, an old/new bar who owner has shifted his emphasis from music to beer.

In St. Louis, Sauce Magazine’s Readers’ Choice 2006 poll featured the results of Favorite Local Brewery (Saint Louis Brewery/Schlafly beers) and Favorite Beer Selection (Growlers Pub) on the same page with Favorite Butcher and Favorite Coffee Roaster.

In Chicago, Where Magazine – stocked in hotel rooms throughout the metropolitan area – reported on “Beer, Glorious Beer.” It included four breweries and four brewpubs.

The Chicago Reader, a leading alternative newspaper, supplemented a feature on ice cream floats with a piece about beer floats.

In Milwaukee, Travelhost Magazine, another hotel supplement, reviewed several beer friendly restaurants.

That’s a lot of positive coverage.

And it’s not on the business pages. Business writers have long grouped big beer and little beer together when it comes to spotting trends or comparing beer sales to sales of spirits. That’s not going to stop.

Business stories report on what has (or is) happening. These other stories help influence what (is or) will be occuring.

Beer: Simple or complex?

French wine philosopher Pierre Boisset once said:

“Wine is at the same time simpler than people say and more complex than they think.”

Pretty easy to plug in the word beer for wine and make as much sense.

The quote comes from Hugh Johnson’s delightful memoir A Life Uncorked and he bring it up to make a point.

“Any fool can make a subject complex and any fool can say it is simple. But how much do you have to understand to grasp the essentials?” Johnson asks.

He goes on to write that most people try either too hard at wine or not hard enough, that it is an all-or-nothing passion.

“So what does the reasonable, perfectly balanced person need to know? That wine is not one thing, but many. To appreciate it you don’t have to swallow an encyclopaedia, but you do have to pay attention.”

Again, the analogy holds up well, just as it would for cheese, jazz or … pick your passion.