“There’s a lot of bad press about craft beer these days,” Sierra’s Joe Whitney said at the [California Craft Beer Summit, organized by California Craft Brewers Assn in Sacramento last wk]. But “I don’t think it’s really that bad.” In fact, “a lot of people are blowing it out of proportion,” in his view. That said, he and other speakers openly remarked upon the complexity of today’s marketplace, while looking back at the history and development of craft in Calif and across the US. Two intensive days of these presentations and discussions revealed much about craft’s sometimes cyclic growth patterns. In particular, the tactics taken to participate in periods of strong growth can be the same ones that cause trouble during periods of slower or flat growth. In the same way that expanded capacity and distribution footprints, openings, innovation, investment and M&A all fueled outsized craft growth, they also led directly to the lapses in quality, build-up of inventory and consumer confusion that cumulatively slowed the segment down.
Joe directly addressed “what’s caused those ebbs and flows” in craft growth over the last 4 decades. In broad strokes, he painted a picture of US craft history in 4 major stages: “the first start,” “the first finish,” “the second start” and “the second finish, which is where we are today.” The first stage happened slowly, as small breweries took hold during the 80s and early 90s. The “first finish” happened when those brewers “lost direction of what our initial mission was,” which was “better beer.” Breweries “started shipping beers to markets they had no business being in” with “no people in the market, no support for the brand.” Retailers loaded up shelves and floor space with these beers because “everybody heard how hot craft was.” But those beer sat and got old. M&A also played a role, Joe argued, as larger brewers tried to satisfy demand and participate via stakes in brewers like Redhook and Widmer.
The “thing that almost killed us” was “poor quality and out of code” beer; the “thing that made us was great quality and freshness.” The “second start” began when those issues were addressed combined with “another piece,” in Joe’s view. And rather than the inherent qualities of the beer, it had everything to do with the “personalities of these breweries.” As he sees it, “independence” is “really central to who we are as breweries.” That combined with the drinking experiences offered by small breweries drove their “unprecedented rise.” Now, you “don’t have to look too far to see what’s caused” this “second finish,” because it’s the “same thing that caused it last time,” Joe said. There are “too many SKUs” and after a period of intense M&A, it’s “getting really hard to understand what ‘craft’ is.” He argued that “quality is still there, but who we are as brewers has really become muddled.”