While attending the California Craft Brewers Association 2019 Spring Meeting last week in San Diego I was struck by the number of people attending this conference. It felt well-attended and the sessions really tried to give something to everyone. There were beginning, intermediate, and advanced sessions. I finally got quantitative proof proving my point that the craft beer market is really a craft beverage market.
Customers Decide What is Craft
Living in the craft beer bubble, we forget that it is the customers who define what is craft and what is not. We in the craft beer space tie ourselves in knots trying to define what is independent, what is craft and what is local. But that’s kind of a waste of time considering the customer has the final decision on these questions. It’s important to understand how the customer is responding to the marketplace. Then it is our responsibility to serve that marketplace and adapt and adjust as needed.
Business Decisions Have Multiple Sides
In Tomme Arthur’s section on business planning, he talked about the decision to purchase a silo. Silos are wonderful things as they allow the brewery to purchase base malt at a large discount. Normally when a brewery starts out, they purchase 55lb bags of base malt at a high price, then they might do a supersack of malt (a whole pallet of malt in one bag instead of 20 bags that have to be opened), but most people jump to a silo. A silo costs a bit of money as you have to obtain approvals from the landlord and the city, install a concrete pad capable of handling the weight, and ship the container to hold the malt. The cost can add up to $60k or greater. In the past, I would always push for the cheaper malt price. That means that you will save on every batch of malt. But how do you afford the $60k capital outlay? You will have to pay for the silo well in advance of achieving the savings on base malt. Can your brewery afford to tie up capital while you brew the cheaper beer?
‘Better for You’ is Driving Decisions
It is not that customers are walking away from beer; they are walking away from sugar. With beer being the most caloric beverage, there is an image problem. In fact, I learned about a seltzer manufacturer who has a calculator showing (incorrectly) how much weight you will lose once you give up beer. That should concern any beer manufacturer. See the photo at right: seltzers had equal billing in my hotel. The soda manufacturers see this change and have teamed up to “reduce sugar”. That is a bit difficult if you are a sugary soda, but the effort is certainly worth noticing.
Customers are making ‘better for you’ beverage decisions. That includes lower (or no) alcohol, lower calories and fresh ingredients. Those beverages that fill that demand are the ones growing in the marketplace. In fact, yesterday I learned about a non-alcoholic distilled spirit. Just take a minute and think about what that means . . .
What Will the 20-somethings Do?
The alcohol beverage market has always been driven by the decisions of young people. They can handle a larger amount of consumption. Also, they don’t want to do what their parents have done, so you will see large swings in preferences as they try to differentiate themselves from their parents. Here’s a fun fact: under-age drinking is way down. Now before you panic, studies have shown that once they come of age, they start drinking like their parents. But what if that isn’t true? What if they take to these new non-alcoholic options and decide not to switch to alcoholic drinks? We need to have an option for them also.
The Expert-Is-In Was a Success
I was available during a chunk of time at the conference to answer the questions of brewers. In 90 minutes, I was able to help a 900bbl brewery and a 6,500bbl brewery. It just goes to show you that even though the needs vary, everyone can use a bit of advice to make things better.
What did you take away from the conference that will influence your brewery operations?