Looking Back, Looking Forward To A New Year Of Beer…

End of the year predictions have become de rigueur in the beer world. I’m not much for prognostication, especially in an industry as diverse as the increasingly international world of craft beer. It’s better to reflect on where we’ve been over the past year to get a sense of what is to come. Reviewing the past year, I’m struck by how much American craft brewers remind me of students just completing their sophomore years of college. Having secured their footing, they understand how things work but remain unsure of what their futures hold; excited to experience the wider world but still nervous about making their mark.

2011 brought an awkward mix of maturity and growth for the American craft beer industry. It began with a seemingly revolving door of explosive sales numbers and ended with many breweries trying to figure out where to go next. This latter question continues to daunt breweries, both big and small. While most breweries continue to experience extensive growth opportunities, managing their budding popularity is proving difficult. While the prospects for expanding by double or even triple digit numbers exists, the costs of meeting such explosive demand are substantial and expensive. The prospect of incurring massive debt loads to feed stainless steel cravings is a stark concern even for many younger brewery owners. Such trepidations leave many breweries rethinking strategies and returning focus to their home markets.

After years of deploying their forces to battle fronts far from home, however, some craft brewers are returning to their native bases only to find a crop of newcomers setting up new encampments. The nano brewery trend continues to germinate, with many developing steadily from one and two barrel systems to seven, ten, and 15 barrel operations. If these players stabilize their products and can survive to grow to a profitable level, this new generation of craft brewers will inject both excitement and a touch of fear into more established operations.

Craft brewers weren’t the only winners in 2011. Both Anheuser-Busch InBev and MillerCoors scored substantial successes and in ways that leave craft brewers with much to ponder in 2012. A-B’s Shock Top and Coors’ Blue Moon continue their tear, wedging their way into many new craft beer channels. Whether the big brewer craft-style beers are true competition or mere door openers for craft brewers is a big, unanswered question open to great debate. What is undeniable, however, is that their success suggests a continuing shift in the American beer drinking palate. Whether the big brewers can branch out beyond their infighting over dominance of a single style (witbier) also remains unclear.

Besides uncertainty over their futures, craft industry players are showing greater poise and better judgment in their decisions, both signs of a widening maturity. After years of substantial price creep, we’re starting to see signs that craft brewers and bar owners recognize there is a ceiling to what consumers either will or should be expected to pay. While some crafts and nanos continue to charge ridiculous prices for specialty bottles, and a niche of beer super nerds continue to line up at midnight or 3 a.m. for new releases, many markets, including New York City, have begun to level off and even become affordable. As crafts gain increased scale and local focus, prices will hopefully continue to stabilize and perhaps even improve for consumers.

Finally, with a few years of education behind them, craft brewers have developed greater appreciation for the larger world, maybe having spent some time abroad, and appear less bent on throwing wild, extreme beer ragers. As hundreds of new breweries open across the United States, a larger percentage seem satisfied to explore the nuances and challenges of brewing lager beer and lower alcohol session offerings, both very welcome departures from the excess of recent years. With their emergent wisdom and experience, I look forward to seeing what comes in the next school year.

-Article appeared in Issue 60 of BeerAdvocate Magazine.

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The Good Old Days of Craft Beer…

A new era of craft beer is dawning before our very eyes. While craft brewers celebrated continuing good fortune at their annual conference in San Francisco, brewery owners, executives, and accountants in St. Louis, Chicago, and Belgium were putting the finishing touches on a deal that would send shock waves through the beer industry. Whether you think the headline should be “The Killing of the Golden Goose” or “A-B InBev Signal Defeat,” we can all be sure that things won’t ever be the same again for craft beer.

Passionate enthusiasts often have a difficult time accepting that, at its core, craft beer is a business. While the community aspect of craft beer is a wonderfully inviting quality, brewers ultimately run their operations, not as non-profit beer funhouses, but as companies with bills to be paid. Brewing remains an incredibly capital intensive business and one grows more expensive as the industry’s production numbers continue to explode.

Two years ago, I warned in these pages that the expanding reach of small craft brewers into far-flung regions of the United States was not sustainable. While beer lovers from Indiana to Rhode Island were understandably elated at the chance to sample beers from Dogfish Head, Great Divide, and the Shelton Brothers’ international portfolio, few appreciated what such an incredible selection actually signified for the industry.

Sending a few pallets of beer far from home to little known distributors in distant states was easy money. As local demand continued to soar and popular beers ran short in key markets, many craft brewers were left with the disheartening but necessary prospect of pissing off a lot of newfound fans in these remote states. And while Three Floyds and Dogfish Head may be the biggest names in the market withdrawal game, it’s time to brace yourself for the inevitability that many of your favorite brands will eventually have to pack up and move back home, leaving you with nothing but distant memories of hops and malt and a taste for the past.

I know it’s not a popular view, but the Great Beer Retreat is actually going to be good for the industry. We are entering a new era of craft beer, one in which selection around the country may shrink but where local beer will grow increasingly strong and entrenched roots. And that is exactly what craft brewers need to compete in the cutthroat world of beer.

This kind of strategic retreat is a sign of strength and not weakness for craft beer. Look no further than New Glarus Brewing of Wisconsin for reassurance of this point. Founded in 1993, the brewery grew steadily, expanded into neighboring Illinois and even sent some of its specialty releases to a few other states, including Massachusetts. By 2002, the brewery decided to exclusively focus on its home market. Nearly a decade later, New Glarus still only distributes beer in one state and it’s grown to become one of the nation’s biggest craft brewers.

While we’ve been blessed, perhaps even spoiled, with unbelievable selection, consumers should actually appreciate losing a few brands. Dedication to local markets will define the next generation of craft beer, which will result in lower shipping costs, fresher beer, more direct attention from the brewery and its staff, and deeper and stronger distributor relationships. So while disappointment is understandable, craft beer will be better for it.

One brewer recently told me that these are the good old days. And indeed that’s true. Unless you live in major cities on the Eastern Seaboard, change is coming for you. Craft beer will never be the same again so enjoy this golden era. Even with the inevitable advance of major change, one thing remains clear: great, local craft beer isn’t going anywhere.

-Article appeared in Issue 51 of BeerAdvocate Magazine.

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A Brew Masters Clarification and the Crazy Beer Week That Was…

With many brewers, bar owners, and writers just settling in from a long week at the annual Craft Brewers Conference in San Francisco, the week was supposed to be relatively quiet. We of course now know that this past week was destined to be one of the craziest that craft beer has experienced in a long time. It started with the news that Anheuser-Busch InBev planned to fully purchase the Goose Island Beer Company. The consumer and industry hand-wringing that followed closely thereafter was as visceral as it was split.

The increasingly hostile debate was, however, abruptly cut short by a rumor from food writer and television show host Anthony Bourdain, who tweeted that the Discovery Channel program Brew Masters, which follows Sam Calagione and the staff at Dogfish Head Craft Ales, was facing internal pressures by a big brewery advertiser.

Immediately, craft beer enthusiasts lit up Twitter and the beer website forums with angry rants against big brewers, mainly Anheuser-Busch InBev, for their perceived interference with their favorite beer show. A few hours after Bourdain’s tweet was noted, I reported via Twitter while in attendance at the annual NERAX fest that the Discovery Channel had canceled Brew Masters.

I’ll be the first to admit that breaking such news via the 140 character limited forum of Twitter, and in the environs of a crowded beer festival, was less than ideal. So after a busy week and weekend, I now have the opportunity to correct some of my language. I initially had tweeted that Discovery had ‘canceled’ Brew Masters. I then followed it up with the text of an email I received from a Discovery Channel media source which stated that the show was not renewed. In a Delaware business journal, Dogfish Head’s Calagione told a reporter:

“It wasn’t canceled,” he said Friday as he returned from celebrations for Wilmington’s new Queen Theatre. He signed up for six episodes, and six episodes will run into the summer, Discovery Channel confirmed to him Friday. “What happens after that has not been determined,” he said.

As I have now learned from talking with people more familiar with the parlance of the television trade, Brew Masters was not ‘canceled’ but was instead not renewed. This ostensibly means that the final sixth episode of the program will foreseeably be aired at some point in the future. I expect that any confusion, to the extent there was any, was clarified by my posting the text of the email I received from the Discovery Channel on the show’s non-renewal.

Now, with this said, the future of Brew Masters appears to be in dispute depending upon whom you speak with. Calagione and Dogfish believe it may come back in some form. The executives at Discovery Channel, however, were clear. Laurie Goldberg, the Executive Vice President for Public Relations for TLC and Discovery Networks told me in an email on Wednesday:

BrewMasters was launched with a lot of marketing support and garnered widespread media coverage, but unfortunately the series did not find a large enough audience so it was not renewed.

In the Delaware business journal article, Calagione acknowledges that the network was “underwhelmed as far as the numbers,” but noted that the program did as well as many other regular Discovery offerings.

Whether the show was canceled due to less than favorable ratings as Discovery suggests, but Calagione disputes in the Delaware journal article, or due to concern or interference (depending upon your point of view) from an advertiser remains to be flushed out. Despite the near complete absence of facts regarding the decision not to renew the program, loyal craft beer enthusiasts, perhaps still infuriated by the Goose Island news, have been exceedingly quick to lay the blame for the demise of Brew Masters squarely on the doorstep on Anheuser-Busch InBev. I haven’t been able to find anyone who has been able to recall whether Anheuser-Busch InBev even advertisers on the network, let alone on the program. But the script already seems to be written for ABI despite any supporting evidence.

What we do know, beyond not much at all, is that MillersCoors advertised its popular Blue Moon product line on the program. So if MillerCoors was the corporate voice behind the hazy Bourdain-veiled threats to Discovery, this begets the question of why the company chose to advertise on the program in the first place, if such programming was otherwise objectionable. And why would it decide to pull its ads after the near-full run of the program?

Whatever the final reasons, which by contractual obligation we’ll likely never know, it seems a bit of a jump for consumers to conclude that Bourdain’s minimal, 140 character Molotov cocktail should be believed, let alone being able to assign blame to a particular brewery. The whole affair has simply provided those so inclined with the opportunity to slag the larger breweries and to revel in the safe insularity of their respective passions. It has also been a loss to level-headed craft beer fans, consumers who have never seen how a craft brewery operates, and for craft brewers and Dogfish Head in particular.

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