There’s talk – always talk – about a bubble in the “craft beer” industry. Heck, even Greg Koch calls this a time of “irrational exuberance”.
The Stone founder, always quick with a metaphor, compares the craft industry to a young San Diego tree, one that came of age during one of those rare years when the usually fierce Santa Ana winds fail to materialize. “There’s no headwind at all,” he says. “In order for a tree to grow strong, there has to be wind. Otherwise, when we have a season of severe Santa Anas, there will be toppled trees all over the place. A lot of small brewers right now are growing up with no headwind. Chain stores are asking them before they open if they can get in line to buy some of their beer. This is an unusual thing that they think is normal. This won’t continue.”
But really is there a bubble? Are our breweries operating in an environment devoid of any headwind?
I’ve already written my thoughts on the addition of 3 Daughters Brewing capacity to our fair local market. One of the things I missed was the impact of tourism – the transient population will drive up the volume of beer consumed here. Here’s a few more thoughts in the form of predictions for Tampa’s local beer economy, triggered by Koch’s doomsday premonitions. In my opinion – we’re gonna be just fine, but there may be some growing pains.
We will lose some local breweries
The growth in craft beer is not coming because people stopped drinking wine or other spirits, or because there are a lot of new beer drinkers in the marketplace – it’s coming at the expense of other breweries – you know, the big three.
There will be a point at which the market of early adopters and people who like beer but not “that beer” has been “tapped”, and without significant growth in the overall market of beer drinkers or Joe Sixpack upping his beer budget by 50%, one doesn’t have to wonder long to know what the result will be: a bunch of small businesses which are highly leveraged and/or under capitalized will likely get tapped out.
Established breweries with better financial footing will likely survive this culling – think Cigar City with its debt-averse owner Joey Redner, big new heavily capitalized breweries like Motorworks or Coppertail, or little guys with tiny capital footprints that are still bootstrapping but are beer purists and dedicated to the craft – call them artisinal breweries, like Three Palms.
Mind you, at last count there are about 30 breweries open or planned making beer for sale either on or off-premises. That’s a lot of breweries and a lot of beer. Among these 30 there are some unique concepts serving sub-markets of the beer industry – and they will likely be just fine – like Saint Somewhere and their unique blend of beers (not to mention that most of their distribution is outside of the state!). But the breweries that are focusing on just plain old ales with nothing special about them – they’ll likely find an untimely end. I’m not naming names, but I suspect there are at least a dozen that won’t make it in their current format. Maybe they’ll be merged into brewpubs. Maybe they’ll be consolidated and their equipment merged into other small breweries or brew pubs, or gasp! it may go to a brewery in another part of the state or country.
We will grow to be a Mecca on the East coast for beer
We continue to surface brave, creative, and intelligent people into this industry. We have a fantastic local home brew club circuit, numbering at least 8 counting only Hillsborough and Pinellas counties. We’re getting a world-class contract brewing facility in Polk County. Our local breweries are getting national and international attention for their creativity and style. And, we have two father-figures in Cigar City and Yuengling. We may not be Asheville, but what they have in volume we make up in charm. We have a theme park that was built on beer for crying out loud.
Look for groups like Tampa Bay Beer Week, Alan C. Shaw, Florida Beer Guy, Tom Scherberger, and yours truly to keep pushing the local angle and upping the tourism ante. One way to grow that demand for Tampa Bay Brews is to get people here drinking it and having a good time doing so. We already have a signature non-brewery event – Tampa Bay Beer Week – and one more that is brewery specific – Hunahpu’s Day. Other parts of the state will look to us for distribution and representation we build up the critical mass of eyeballs and visitors required to become a beer destination. Heck, San Diego did it.
Furthermore, there are talks among the local beer geeks that we need to do a better job of publicizing what we’re all doing around here: making great beer and building a great community. Look for some action on this side – a new organization representing local breweries and doing their charitable good deeds. I suspect at least one more of these will open in 2014 in addition to the great work that Tampa Bay Beer Week is doing.
Big beer will fight hard
The efforts of those representing the current three-tier system will come to light this legislative session and the next. Something has to be done – everyone is looking for resolution to the tasting room loophole and whole the #growlergate thing just makes us look dumb. Big Breweries will continue to use the tools at their disposal – no silly, not their research labs and incredibly bright brewmeisters, I’m talking about their lobbyists and deep pocketbooks – to maintain their dominant position on grocery store shelves. Without access to shelf space, growth beyond beer geeks for little guys will be hard to come by. (Did you ever wonder why we have dozens different varieties of watery lager, but only a handful of ales on the shelves, even with such incredible local variety?) This is where I believe the battle will be fought and won. Retailers can’t carry beer except that which has traversed the distributor networks. Distribution contracts are opaque, one-sided, and not always in the brewery’s favor.
With local breweries like Intuition Ale Works stepping up to the lobbying plate and additional pressure coming from the likes of the Florida Brewers Guild, I suspect that we’ll see some forward motion but not a resolution in 2014.
Its all about the gemutlicheit
We’ll soon realize that there are a lot of really great breweries around here, and taking the time to drive to one and sufficiently enjoy their offerings makes for a long unwinding time before you can actually drive home. Getting people into your tasting room for more than an occasional pint will require something more than the latest imperial sour double-dry-hopped goodness – it will require mug clubs, cornhole, dart boards, board games, shuffleboard, pinball machines, good food, and … dare I say it … a sense of community and warmth. You’re not just selling beer here folks, you’re selling a state of being. Breweries that focus on this – on being a destination – will succeed, in this guy’s opinion.
But it really doesn’t matter
… because these kinds of predictions are only worth the bits they’re written in, and these days that’s worth less than a cup of coffee. These predictions are my own – your mileage may vary. I hope that you at least have a good chuckle at them and that you convince your officemate, roommate, mother-in-law, or postal worker to drop by your local brewery for a pint and a growler to take to that New Year’s Eve party you’re hosting.
Happy Holidays from TBBN.