After a lot of pitching, discussing, researching, writing, editing, and planning, my book Great American Craft Beer, is now available for purchase. Available at on-line bookstores (clicking the link above will help direct some more of the money back to its author), the book will be making its way to bookstores around the country over the next few weeks. I actually just received my author’s copies yesterday but reviewers have had theirs for a day or two earlier and we’re already starting to see some reviews. I’ll set up another page to collect those reviews as they come in but for now, I just wanted to address one issue that has come up so far: the selections in the book.
There are around 1600 breweries operating in the United States today, a number that continues to slowly grow every year. Many of these breweries, especially the brewpubs, produce 10, 20, 30, or even more individual beers during the course of a year. No one has an exact estimate as to how many individual beers all American brewers produce but the neighborhood could be somewhere from 5,000-15,000. But considering that more than 2,200 beers from only 462 breweries will be served in the festival hall at this year’s Great American Beer Festival (more than 3,500 will be judged), I’d venture to say the total number of beers produced is probably north of 10,000.
With those numbers in mind, let’s talk about what is in the book. The heart of Great American Craft Beer includes profiles and tasting reviews of nearly 350 beers drawn from several hundred American craft brewers in dozens upon dozens of styles. I also profile 25 great American beer bars. These reviews are detailed and attempt to capture the essence of the beers and establishments, all while attempting to create a grander narrative about the importance of taste and flavor. So even if we take a conservative estimate of the total number of beers produced in America today, the entries into a book such as mine is always going to be to exceedingly small, probably less than five-percent of all beers produced.
So it is along these lines that I note early in the book that the process of selecting beers for inclusion was anything but easy. I addressed the issue because I was concerned that readers and reviewers might understandably take umbrage if their favorite beer was not selected. Beyond mere flavor, I also wanted to create some balance between the beers I profiled. Often was the case where I was faced with choosing from a dozen or more excellent style examples, knowing I had to whittle the number down to only six selections. In making my selections, I had to take care in assuring some geographic diversity (of course San Diego, Portland, or Seattle could have whole chapters dedicated to their famed IPAs), some balance between production breweries and brewpubs, and some consideration of how easy it would be to find a particular beer. Accordingly, I wrote the following in the section preceding the reviews:
Creating a list of the best beers from the litany of great American craft brewers turns out to be a pretty daunting and restless task. While the tasting part certainly has its moments, the winnowing process leaves a substantial number of excellent brewers out in the cold. In this guide, I’ve endeavored to present you with the very best beers from the top breweries in the selected styles. While not always resolute in my devotion to the doctrine of style guidelines, I have attempted to shadow their widely-accepted framework. You’ll find several levels of balance, ranging from geographic diversity to a representative equilibrium between beers produced by small and local brewpubs and regional and national craft brewers, whose beers are generally much more widely available. Along these lines, you may find that a beer from your favorite brewery has been left out. In reviewing more than a thousand beers from several hundred breweries, be sure to understand that this is not necessarily a reflection on the quality of breweries that don’t find their way into these pages. The reviews remain a snapshot of several excellent beers in a style, not the final word on the only acceptable options.
As it can be frustrating to read about an unattainable beer, I’ve tried to restrict the numbers of beers that you’d have a better chance at seeing Sasquatch than trying. I’ve also tried to create a balance between the beers produced by production breweries, whose products are primarily purchased and enjoyed off-premise, and brewpubs, whose beers are generally enjoyed in-house. As brewpub beers rarely get distributed too far from their central base of operations, beers from production breweries tend to outnumber those from brewpubs in the following pages. While a great deal of work went into crafting a balanced list of beers—with some consideration given to geographic diversity and product availability—it’s important to keep in mind that breweries frequently change their lineups and some beers may occasionally get dropped from portfolios, while others may transition from seasonal to year-round release. If your heart is set on trying a particular beer that you can’t quite seem to find, feel free to give the brewery a call for some assistance.
I hope that readers will keep these points in mind when considering my selections. Many hundreds of other beers certainly could have found a home in the book and I would have loved to include all of your favorites, but the realities of publishing don’t allow for that. Maybe we can work on a second volume next time. Cheers
Charlie Papazian, founder of the Brewers Association, has a column and poll up asking readers to weigh in on the debate continuing over the definition of craft beer and craft brewer. I’m not going to wade into that whole mess again (read all of its links for my views) except to say, with regards to the present poll questions, that I have no idea what most of the selected definitions even mean. Take for example the presently leading definition:
Any special beer with real and elevated flavor profiles more distinct than typical light American or International lagers made by ANY BREWERY large or small.”
Special beer? Real flavor? Elevated flavor? I can’t say that this particular contribution is doing much to clarify the debate and discussion over the growing use of the term craft beer. I address the topic a bit in my upcoming book, Great American Craft Beer, one which, I might add, includes a couple excellent beers from brewers the Association would not classify as craft brewers.
Tags: Brewers Association, Charlie Papazian, Craft Beer, Defining Craft Beer
In a small industrial park near downtown Tampa, a buzz continues to grow louder, emanating from the stainless steel tanks of a tiny Florida brewery. The hype about Cigar City Brewing started long before the brewery even brewed its first batch. Run by a beer columnist for a local Tampa newspaper, Cigar City’s founders started a blog in which they expounded about all things related to getting their operation going. They talked about their eclectic test recipes, posted about their plans for unusual beers, complained about local industrial regulations, and generally built a connection with their audience, especially with beer geeks around the world. By the time the brewery released its first beer a little over a year and a half ago, the buzz was a full-blown primal scream and expectations were high. As could be expected, some geeks complained that the beers did not live up to their incredibly elevated expectations, while many others lavished praise on the little brewery.
With a year of brewing under its belt, I sat down with brewery founder Joey Redner to discuss experimentation, how beer markets around the country compare with one another, and the value of using scarcity as a marketing tool.
Andy Crouch: How did you get your start in beer? Was it through your writing for the local newspaper?
Joe Redner: No, actually my real start in beer was that I owned a little beer on Davis Island here in Tampa that was sort of a traditional English pub. I started bringing in a lot of craft beer, starting with six or eight when I bought it and then expanded it up to 22. This was in 2003 and 2004 and when I left, I think we were carrying 120 different kinds of bottled beer and had twenty-two taps and in this area at the time, that was almost like being a multi-tap. There wasn’t a lot of places like that here. After I left the pub, I then started writing the beer column, since about 2005. I then worked for Dunedin Brewery doing sales and some special events with Shelton Brothers, mostly on a volunteer basis. I answered a lot of emails for them and helped people find beer and then I worked at a local beer specialty store, Beverage Castle. I was just trying to stay in and around the beer industry.
AC: How did you transition to the idea of starting your own brewery?
JR: I just kept thinking, “Man, how come no one has done this yet?” You go to any major city, especially a city the size of Tampa, and there are four or five breweries. And we had only one brewpub here and because of the laws here, the beer that you make has to be served on site. So Tampa didn’t really have a craft brewery. The closest thing we had was Yuengling, which is over near the university. It has been in the back of my mind since I owned the pub but it was something that financially I couldn’t make happen.
AC: How did you get hooked up with your brewer, Wayne Wambles?
JR: I had been interviewing a lot of people, trying to find the right person. I find one woman but she ended up taking another job and she told me about Wayne. I had already interviewed dozens of people and was still trying to find the right person who could do some of the things I wanted to from my homebrewing but I knew I didn’t have the requisite skill set to do in a larger brewery. So I was introduced to him and we did an hour long interview that ended up being more about music and philosophy and I just felt really good about it. So I gave him an offer and he loaded up his truck and came down. And we basically built the brewery together, spending a year working side by side just the two of us.
AC: What were you looking for in a brewer?
JR: I had actually had a very good idea of what I was looking for. I needed someone that was very process oriented but who was either willing to jump off a cliff or could at least understand what I saw in wanting to leap off that cliff and figuring out a safe way to get me down there to get what I was after. As a homebrewer I was very experimental. The first beer I ever tried to make was a saison. So you need someone who is both detail and process oriented but who also believes that my crazy ideas have some merit but can realize them better that I can do. And I also wanted someone who could bring really cool ideas and recipes of their own. And Wayne did that. He has done things here that he tried to do for other employers and couldn’t. And I just thought, “That’s awesome.” So I wanted someone who could make my dabbling as a homebrewer a reality but also make that as a reality, but also could make classic styles really well. I needed someone who could do a little bit of everything but who was also not scared off by some of the wackadoo things that I had in mind.
AC: How many barrels did you make last year on your fifteen barrel system?
JR: We were right around a thousand in our first year and we expect 2500 this year.
AC: What markets are you in right now?
JR: We are pretty much in all of Florida, most strongly of course in the Tampa Bay area, except the Panhandle. That’s just because Florida is such a large state that it is difficult to get distributors who can cover the whole state. We have three distributors for the state and that covers most of the state. We’re also in Pennsylvania, but primarily around the Philly metro area. We’re also in New York, all five boroughs, and pretty far out into Long Island.
AC: How has the expansion been for these new markets?
JR: Very good. The cool thing about the Philly and New York markets is that they are so much more mature than anywhere in Florida. And where we’re at here in Tampa is sort of the core of the craft beer scene in the state. Even though Tampa is the best beer market in Florida it still pales in comparison to what you have in a place like Philly in particular, but New York as well. We just did an event at a bar in New York and even though Tampa is our home base, I’m not sure that we could get as many local people show up as we did for that New York event.
AC: Are you looking at expansion into any other markets or are you planning to play it a little closer to home?
JR: We’re really looking to lock Florida down at this point. Going into those markets has been great but it has taken away from the beer that we should be selling here. It took our local market a while to respond, but when we went into New York and Philly, the demand was there immediately. It was strong, intense, and never wavered. It took a while for us to build up some momentum locally. But it’s definitely there now and it’s to the point that we don’t have enough beer to give to our local distributors.
AC: What are the flagships that you are focusing on, basically the Maduro Oatmeal Brown Ale and the Jai Alai IPA?
JR: Those are the only two beers that we have done year-round so far. We are going to start doing out our Humidor Series IPA year-round, which is our regular Jai Alai IPA aged on Spanish cedar. The demand for that beer has been very intense and has never gone away and we won a Great American Beer Festival medal for it. It’s a beer people want and it will be available year-round in 750 milliliter bottles. Far and away, we brew more IPA than anything else and have almost become an IPA only brewery. In the off season, we tend to brew a lot of higher gravity dark beers. As we grow, we hope to fill out that line-up a little bit more.
AC: Tell me about the Humidor series.
JR: I actually got the idea from another local homebrewer. And he used cedar inserts from cigar shops and he let me try one of his beers and I was blown away by the flavor. I had three or four of them before I told him, “Man, I’m stealing this.” I love that this has a local feel to it and is an organic flavor point that stands on its own. I knew that if I ever opened my own brewery, I would use the idea.
AC: Cigar City is known for doing some more experimental beers and has used these beers to build hype for the brand. Talk to me about how that approach developed and what your aim has been.
JR: The core craft consumer likes variety and likes to see breweries playing around with different ingredients. You really never know what is going to stick and you look at what has succeeded and some of it is pretty non-standard. The entire sour category for example, where most people look at it and think, “There’s something wrong with that.” They have now been embraced. Coffee beers are big sellers now but five or six years ago, they were nothing. Even high gravity beers are a fairly new phenomenon. I am a beer geek and I know what appeals to me and I think, “Well, what if we tried this with this beer or did that to that beer, how would it turn out?” For everything we put out, there is some stuff that doesn’t work out and is straight crap and we either try and drink it at the end of the day or we dump it. But it definitely appeals to the person who wants a lot of variety. But everything we do, we’re generally working with a base beer. I think we do four different versions of both the Maduro and the IPA. A lot of it is experimenting and we let the market tell us what it likes and it has responded very favorably. With that said, I think we’re going to move away from that approach. The first year was about experimentation and it was a calculated thing. We put beers out there and had people tell us what they liked. But now we’re now going to be busting out a new treatment every week. We’re going to get away from some of the experimentation, not to the delight of a lot of the people who like to stop by and find out what we’ve got that is new. Well, that’s not true, we’ll probably still do these beers, they just won’t see the light of day. We’ll still experiment but the problem with doing five to fifteen barrels of a particular beer is that a lot of people won’t get to try the beer, and some people take that personally. And that was a real shock to me. We’ll probably keep some of our experiments a bit more behind the scenes.
AC: Scarcity is starting to become a bigger issue for the craft beer industry. In New England, we recently saw the release of the Kate the Great Russian Imperial Stout by the Portsmouth Brewery and people lined up on the street over night to get access to that beer. I know your brewery has also had to deal with, as you note, having limited amounts of certain beers. How have you dealt with this issue and what has been the public response?
JR: I took a vacation recently, the first since I opened the brewery, and I took my wife up to North Carolina. We went there because the Sexual Chocolate release [from Foothills Brewing]. So I took my day and went in there and I hang out and enjoy it and be the beer geek I used to be. I understand that because I am that guy and will still continue to do those type of things. When I take a vacation, it’s going to be beer oriented whether I’m selling beer in that market or can time them around happenings that are going on. So if I can make it up to Dark Lord Day [at Three Floyds Brewing], I’m going. We have a Hunaphu’s Imperial Stout release and I’m really trying to take what I’ve learned from other events and make it less of a hassle for the people. I don’t want people waiting overnight. With some of our special releases, we don’t really announce when they are available. With Hunaphu’s, I didn’t want to have a release until we had enough that we could hopefully service everyone. If more people show up than we have beer available, I’m going to be upset because I don’t want that. If people want to come and spend a lot of money on your beers, I think you should be able to help them out.
-Article appeared in a July 2010 issue of Beverage Business Magazine.
Tags: Cigar City Brewing, Florida Beer, Hunaphu's Imperial Stout, Joey Redner, Tampa Beer
Despite offering more than 1,000 events, word out of Philadelphia was quiet during its recent beer week. And then came the grumblings, first through some errant Twitter and Facebook posts, culminating in a critical editorial by the local City Paper. It appears that all is not well in the much celebrated beer town. The take away is that local brewers are beginning to feel as if they’re getting a bit of the con by supporting the local beer week. From City Paper:
Some bar owners have independently recognized the strain PBW puts on local breweries and have taken steps to rectify it. Clark Newman of Lucky 13 programmed Yards and Philadelphia Brewing Co. nights and kept a draft line open for each throughout the week. But not all bar managers feel quite so much sympathy. Mike McKee, who handles purchasing for the Pub on Passyunk East, says PBW provides an opportunity to see what customers like. “Local brewers get to spend 355 days a year on most bars’ taps,” he says. “This way, for 10 days, other breweries get a chance.”
These are points brewers and other local industry insiders readily concede. However, that doesn’t change the fact that PBW, for all of its benefits, puts a short-term hit on many balance sheets. “Brewers across the region work so hard all year long to put on the circus,” says Victory president Bill Covaleski. “But when the circus leaves town, somebody’s scooping up some pretty big heaps of elephant shit.”
Ouch, that has to hurt the organizers.
Here in Boston, we’re in the final days of our first beer week and it is perhaps difficult to judge the quality and merits of the event. Things, from my vantage point, have been pretty quiet here. There are certainly some events happening around town, but nowhere near the crush of 1000+ events that PBW imposes. And, for the most part, brewers appear to have not yet taken to another Northeastern American beer week. Following directly on the heels of SAVOR in DC and Philly Beer Week, it’s easy to understand their reluctance. They do, after all, have breweries to attend to. That of course will likely change with the annual American Craft Beer Festival, which opens tonight in Boston.
It is perhaps time to rethink beer weeks. They have spread all over the nation and it’s almost as hard to judge their effectiveness as it is their purpose. Are they a celebration of local beer and brewers or are they just mini traveling beer circuses, in which participant brewers from around the country travel to each market they are in and cruise from bar to bar, package store to package store. Does a place like Philly really need this sort of front lines effort? Perhaps it’s better suited to a place like Tampa. And with so many events, many ill or not attended from accounts I’ve heard, size is another issue that should be considered. For my money, having hundreds of repetitive liquor store tastings seems like a waste of everyone’s time. More well-considered (and reasonably priced) brewer events, often targeted at the non-beer geek constituency, might make more sense.
And getting back to local makes sense as well and it is perhaps a trend we are beginning to see. I’ve recently heard that the communities north of Boston will be hosting a North Shore Beer Week, one that celebrates and focuses on local brewers, stores, and bars. This may be a better model going forward.
Tags: Beer Week, Boston Beer, Boston Beer Week, Philadelphia, Philly Beer Week
If you read the end of the year reports for any major beer producer, the song remains the same: 2009 was a challenging and complicated year in the beer industry, stemming from a depressed economic environment, tightening credit markets, and continuing cost pressures. Overall, beer sales in the United States were down 2.2 percent, a loss of $101 billion, for a total of more than 205 million barrels.
Anheuser-Busch InBev’s Wild Ride
The combined operations of the world’s largest brewing company remains a case study in enormity. When the two companies joined forces, the possibilities for synergy and cost savings were massive. Sure enough, A-B InBev accrued more than one billion dollars in synergies in 2009, from consolidating some brewing operations to merging administrative and marketing efforts. The company expects to benefit from an additional cost savings in the amount of five hundred million dollars in 2010.
Despite the economic downturn, and in light of the cost savings, Anheuser Busch InBev’s revenues increased organically 2.5 percent in 2009, with the company’s “focus brands,� Antartica, Brahma, and Skol in Brazil, the Bud Light family in Canada, Budweiser and Harbin in China, and Stella Artois in the United Kingdom, growing 1.9 percent. With that said, production volumes dropped nearly one percent, with greater growth in the fourth quarter. In the United States specifically, volumes dropped two percent in 2009 and 2.2 percent in the fourth quarter, with sales to retailers falling nearly two percent.
The company’s recent product releases, including the Bud Light brand extensions of Bud Light Lime and Bud Light Golden Wheat, continued to show relatively strong growth, as did Budweiser American Ale, but each suffered substantial downturns in the final quarter of 2009.
Overall, the company expects to see continued declines in 2010, at least until the second half of the year. In his letter to shareholders, A-B InBev’s chief executive officer Carlos Brito reassured employees and others that the company “either met or exceeded the commitments we made at the time of the combination, and our sense of ownership drives us to continue delivering. We accomplished these milestones in spite of a challenging global economic environment, as well as the complexities of uniting two major companies, divesting assets and deleveraging the balance sheet.�
The Molson Coors Experience
As with all big brewers, 2009 was a challenging year for Molson Coors. Five years after the merger of brewing giants Molson and Coors, the breweries are beginning to enjoy real benefits of scale in their operations. For the full year 2009, Molson Coors achieved $92 million of cost savings as part of its now-completed Resources for Growth cost savings program. The company has enjoyed more than $270 million in cost savings through this program, with $24 million in the fourth quarter. Over the entire year, worldwide volume dropped 3 percent.
While the company enjoyed a rise in earnings due to a one-time tax issue, its leadership acknowledged hurdles in the business. “Behind the headline number, our results were affected by weak volumes across all markets, cost inflation in the U.S. and U.K. and brand investments in Canada,� said Peter Swinburn, Molson Coors president and chief executive officer in a press release. “Overall consumer demand remains sluggish, and we see these conditions continuing to impact volume and mix in the near term. Our strategy remains consistent, however. We are focused on investing in innovation and our brands and ensuring we maintain a strong balance sheet, so that when market conditions improve we are better positioned to accelerate our growth and capitalize on opportunities.�
With respect to the future, Molson Coors is hoping to see an uptick in business. “Looking to 2010, we expect volume to remain challenging, especially in the first half, but we are focused on continuing to establish a strong brand base to our business that ensures we not only manage the current market but that we take full advantage of revenue upsides when momentum improves,� said Swinburn.
The Performance of MillerCoors
The separate division of MillerCoors, now two years old, achieved significant additional synergies in 2009, to the tune of $245 million, with a total of $273 million since beginning operations. The company plans to “continue to aggressively optimize production across its breweries over the next few months to realize synergy commitments,� with expectations of achieving $750 million in total synergies and other cost savings by the end of 2012. Sales to retailers declined 3.6 percent in the fourth, due in part to the economic downturn and industry conditions, and were down 1.7 percent for the entire year. The company’s total net revenue dropped 1.6 percent to $1.7 billion compared to 2008 and net sales revenue decreased 2.1 percent to $1.5 billion.
“It’s tough out there, and we saw the effect of ongoing economic pressure and unemployment on beer sales, especially in the fourth quarter,� said MillerCoors CEO Leo Kiely in a press release. “But we stayed focused on our strategy and invested to grow four out of our six national focus brands in 2009. Our people made it happen, delivering strong profit growth and exceeding our synergy commitments in the midst of a recession.�
In a review of the brands at MillerCoors, the fourth quarter saw drops in the biggest flagship offerings for both partners, with Miller Lite and Coors light experiencing mid-single digit declines. The below premium portfolio continued to drop, despite the economic downturn, with losses from Keystone Light, Miller High Life, and Milwaukee’s Best. The company reported slight losses in its craft and imported beer portfolios, with significant drops in Miller Chill and Killian’s Irish Red. On the positive side, Blue Moon continued its growth pattern, with high single digit growth.
Imports
Imprted brands continued their declines in 2009, with a drop of nearly ten percent and on a loss of 2.8 million barrels. Category leaders Heineken, Corona, and Guinness all took single-digit hits as the brands struggled to maintain their price points against less expensive domestic brands and to stanch the growing success of the craft brand competitors.
The Craft Brewers Alliance
Primarily comprised of the Redhook Ale Brewery and Widmer Brothers Brewing Company, along with subsidiary brands Goose Island Beer and partner Kona Brewing, the Craft Brewers Alliance managed to turn a profit after years of sustained losses, especially on the Redhook side of the ledger. As expected, the company’s main sales and profits were led by an increase in shipments to Anheuser-Busch, which acts as the primary distributor for the company. The Craft Brewers Alliance shipped 573,200 barrels to A-B in 2009, which represents 61 percent of its total production capacity of 939,000 barrels.
Craft Beer Continues To Surge
Despite the economic downturn and the topsy turvy marketplace, craft brewers managed to maintain the only bright light in the beer category. The volume produced by craft brewers rose more than seven percent in 2009, with an impressive ten percent growth in dollar sales compared to the previous year, all on sales of more than nine million barrels. Craft brewers now enjoy 4.3 percent of the beer market by volume and 6.9 percent by dollars. Craft beers continued to do well in the convenience and grocery store channels as well, accounting for nearly 6 percent of total sales. Craft beer sales rose 12.4 percent in these channels, according to IRI data. The 1,595 craft brewers, the highest total since before Prohibition, accounted for an estimated seven billion in sales in 2009.
“Beer lovers continue to find great value and enjoyment in fuller flavored craft beers,� said Paul Gatza, director of the Brewers Association, in its annual release. “Americans have an increasing appreciation of craft beers, and the growing number of brewers behind them. They’re eager to try the latest seasonal release and to sample a variety of beers from different breweries.�
Craft beer leader Boston Beer Company saw revenues increase in the fourth quarter on a year where the company enjoyed a 4 percent increase in revenue on approximately two million barrels of a beer, a slight decrease from the previous year. The brewery’s success was in part due to continuing increases in the Samuel Adams Seasonal collection and the Brewmaster’s Collection, which helped to offset decreases in Samuel Adams Boston Lager and Sam Adams Light. According to industry data, Boston Beer has also managed to bring nearly 95 percent of its production in-house at its breweries around the country, including Ohio, Pennsylvania, and Massachusetts.
Jim Koch, Chairman and Founder of Boston Beer, told his shareholders in a letter accompanying the annual report, “Looking to 2010, we are excited about the introduction of our new spring seasonal, Samuel Adams Noble Pils, a hoppy pilsner beer brewed with a recipe that calls for all five varieties of Noble hops, which has initially been well received by drinkers, retailers and wholesalers. While it is too early to judge repeat consumption, we believe that its introduction and our twenty-fifth anniversary celebration are helping us start 2010 strongly and our challenge is to maintain this momentum as we continue to face increased competition from expanded distribution of domestic specialty brands and regional craft brands. We continue to explore ways to improve our sales execution, our brand strength and our position within the craft category and remain positive about the future of craft beer and our potential for future growth.�
Martin Roper, the Company’s president and chief executive officer, similarly commented that “[s]ince the end of the first half of 2009, we have seen an improvement in the trends of our brands. The brands may have responded positively to the redesign of our packaging and the increased investment in media advertising and our sales force, but it is also possible that some of the drinkers of the competitive variety introduced in the last twenty four months may be returning to our beers. Looking forward, we have no certainty that these trends will continue, but we feel we are in a good position to compete effectively through the strength of our brands and our sales force.
Closer To Home
Frank Anzalotti, executive director of the Massachusetts Package Stores Association remains on the fence about the prospects for the beer industry in 2010. “I think in general sales were flat last year due to the economy and its decline caused most of that,� he says.
“I’m starting to see a trend downward in excise taxes which tells me that the flow of alcohol through the system has declined somewhat. I can’t rule out that the economy is not good and consumer confidence is not good. There are a lot of contributing factors here. What will continue to happen is really a crap shoot.�
At Liquor World in Cambridge, beer buyer Joe Grotto has seen some ups and downs in recent years. “We’re up but have definitely slowed from the year before,� he says. “While we were up quite a bit two years ago, we’re up a little less last year. We’re not seeing as much growth as 2007 and 2008 though.�
Overall, Grotto cannot point to the economy as the sole factor in the slowing of sales
“I am not sure how much the economy has to do with it because we usually do better when things get kind of crappy,� he says. “But people might shift from buying a thirteen dollar six pack to buying a fifteen dollar twelve pack. So maybe the more elaborate and expensive stuff does not sell as well. For example, I don’t remember the last time I sold a Belgian four pack because they are close to twenty bucks a pack.�
While Grotto sees a slight shift in consumer buying habits, they have not abandoned higher quality products and remain focused on quality. “I think people are perhaps drinking a little more pedestrian in terms of price but not quality,� he says. “Our mixed twelve packs have been doing really well since last fall and that is an indication of the bad economy. The Victory, Troegs, Smuttynose twelve packs are way up. Smuttynose especially, people know it is a quality beer at a reasonable price and they are just trying to find that craft bargain.�
With respect to beer in particular, Anzalotti believes that the category has taken a stronger hit than others due to a combination of the sales tax increase and the economy. “Beer has taken one of the more significant hits perhaps because we have a deposit on it,� he says. “Pretty much, across the board, the consumer has probably traded down a bit. A lot of customers are telling me that the same dollars are going into their cash registers but six and a quarter percent of it is not there any more, it’s going to the state. Where the consumer may have bought a fifteen dollar bottle of Brand X, now he is buying a thirteen dollar bottle of another brand so that he is not spending any more than fifteen dollars.�
The Lingering Effects of the Sales Tax
In addition to the problems caused by the economy, Anzalotti also pointed to the extension of the sales tax to beverage alcohol products as a contributing factor in the decline of sales. “When the sales tax hit in August there was a considerable drop off in business, attributable to a number of things, including the economy,� he says. “The other being this knee-jerk reaction to an additional six and a half percent being applied to the sale of alcoholic beverages. The effect of the sales tax had wider effects across the state. “Most of the stores at that point in time suffered some level of dropped sales,� Anzalotti says. “It varied depending upon the geographic location and the demographic but for the most part, sales dropped over all. When we hit November and December and holiday times, the reports I received were that sales were down even more significantly.�
As for 2010, Anzalotti believes the sales tax increase will continue to hurt retailers. “While the knee-jerk reaction in 2010 may not be so significant, the customers are coming back for the small sales, almost to a person, my retailers are telling me they are losing the big sales, the weddings, the events, the holiday purchases. That kind of sale is shifting northward or south to Rhode Island.�
The Outlook for 2010
Overall, Anzalotti has not seen any return to normalcy yet. “When it comes to the beer industry in particular, a lot of it is going to be driven by the weather and the weekends and just the general mental state of the consumer and how free he is going to want to be with his money. I think that question is yet to be answered,� he says.
On the package store level, Grotto also sees a leveling out in the consumers after getting used to higher quality products. “In the last few years, we have focused on getting higher quality wines, better cocktail ingredients, and higher end craft beers in the store,� he says. “At some point in the future, we expect that to cap off with our consumers. Unless you can continue to get a new audience involved, that is expected to happen. Those people continue to come in but it is harder to draw in new people.�
Grotto also plans to continue the store’s focus on brewers from around New England. “People have been very willing to support their local market lately,� he says. “I think there is a lot of local loyalty. We have done really well with Mayflower this past summer and fall and with Pretty Things.� For their part, local brewers have continued to perform well even in a down economy. Fresh back from attending the Craft Brewers Conference in Chicago, Jon Curtis, head brewer at The Tap Brewpub in Haverhill is looking forward to 2010. The brewery has continued to expand its operations beyond the walls of the brewpub and into off-premise and on-premise accounts from Boston to Amherst. “We have been pushing this year to get more on-premise accounts but we’re also starting to sell more in Worcester and western Massachusetts,� he says. Brewing more than 53 styles nearly six days a week, The Tap is considering opening a production facility in the future to keep up with the demand. “We keep having better years every year in the pub but it is incremental,� he says. “We are presently working on getting a better bottling line so that we have more flexibility with our bottle sizes.�
Despite the local loyalty, consumers also remain interested in products from further away, Grotto says. “I have sold almost fifty or sixty cases of the Troegs Nugget Nectar in a month and have only one six pack left. I have sold more of that than Harpoon IPA even.�
Grotto also believes that breweries may have to shift their thinking when it comes to releasing certain beer styles and packaging types. “There has been this trend in recent years towards the big twenty dollar bottles of beer,� he says. “I think it will get more popular with the breweries and less popular with the consumer. Once people have bought their sixth four pack of Kentucky Breakfast Stout, they may not be so keen to take two hours off of work to come pick up their seventh for twenty five bucks a six pack. That is especially when there are many other breweries doing these high priced, limited release beers.�
Along these lines, Curtis also plans to continue its production of reasonably priced specialty releases. “We’ve had good success with our twenty-two ounce packaging,� he says. “Our six-packs having taken off a lot in the last year but beers such as our imperial stout have taken off. It’s a little bit of a shot in the arm to sales every other month. I like having the six packs out there but also have the brewpub brewer mentality of letting people try new beers every few months. We’re trying to share more of our unusual beers with the public including beers that can age a while.
Liquor World is also trying to assist consumers transition into different styles of beer. “I have been starting to notice that people who have grown up with these big, crazy, blown out beers have really started to mellow out in the last few years,� Grotto says. “I am hoping that starts trickling down to newer craft beer drinkers so that they think that just because something is a session beer that it is not interesting or good. I think Mayflower is a good example of that. I have customers who have been walking out with a twelve percent alcohol crazy beer in one hand and a Mayflower Golden Ale in the other hand.�
–Article appeared in the June 2010 issue of Beverage Business Magazine.
Tags: Anheuser-Busch InBev, Beer Business, Boston Beer Company, Brewery Consolidation, Craft Brewers Alliance, MassPack, MillerCoors, Molson Coors, Redhook, Widmer
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