1) The Taproom Era
If the category has so much more
room to grow, then did taprooms save craft beer?
It’s an honest question. Not long ago the biggest concern with craft
beer was whether retail shelves could ever hope to contain all these new
brands. Consumers were struck with paralysis by analysis. Overwhelmed
by all those different cans and bottles, how could people make a choice?
And how was that
not a sign of a
bubble about to burst?
Now in 2020, consumer choice is
easier because they just pick breweries and taprooms.
With retail shelves still brimming
with brands, many newer brewers forgo broader distribution, and instead focus
on taprooms sales. They might self-distribute locally, but the bulk of their income
occurs onsite.
“The taproom model definitely isn’t going away,” says Hendler. “It’s
the lifeblood of a lot of breweries. The vast majority is now
taproom-only, with little-to-no distribution. These people are doing
really fun things. At this point, they’ve become a critical part of the
overall health of the brewery community.”
This industry shift has understandably
worried beverage alcohol retailers. Rather than buy what’s local at stores,
consumers spend those dollars at taprooms. But is that necessarily a bad thing,
in the long run, for retailers?
“We have three taprooms, and in the surrounding areas around
those, our sales to retail accounts have actually increased,” says Clay
Robinson, co-founder of Sun King Brewing in Indianapolis. “Yes, there were some
accounts in those areas that took us off their shelves because they thought we
were competing with them. But we’re finding that people who are already on the
Sun King train will keep buying our products, both from our taprooms and from
those retail accounts.”
Taprooms may not be as bad for retailers as previously
imagined. The businesses that have likely lost the most traffic from taprooms
are the local bars and mall.
“We’re in the age where people
don’t go to malls anymore because everything is on an app,” says Hendler.
“Breweries are now the place where people are going on Saturday afternoons to
see and engage with friends and have a good time.”
Larger, established brewers like
Jack’s Abby have also benefitted from this development.
“Taprooms have become a great
proving ground for our beers,” says Kyle Fitzsimmons, general manager of
Elysian Brewing Company. “That’s where our new Contact Haze IPA came from.
That’s where consumers can get more of our small-batch stuff. It’s a great
opportunity for us to introduce more consumers to the craft beer category, and
trial new brews to see what works.”
The taproom movement has also
given rise to broader tourism, as brewery centers emerge.
“Five years ago, your brewery was a destination,” says Tim Brady,
founder of Whetstone Station Restaurant and Brewery in Vermont. “Now,
communities of breweries have become the destinations, where people can
visit four or five breweries at a time that are close to one other.”
2) Hazy is Here to Stay
After taking root in New England, Hazy IPAs have expanded
across the country. In terms of their category impact, there are pluses and
minuses.
On one hand, their juice-forward, easy-drinking profiles
have brought many new consumers into the craft beer category. If you do not
like the bitterness of beer, especially West Coast IPAs, then these “juice
bombs” are the perfect brew for you. And with their opaque, orange juice-like
hue, they photograph well in glassware, making NEIPAs a natural fit for social
media.
On the other hand, their ubiquity, especially in New
England, has somewhat dampened innovation. A fair number of breweries in recent
time have turned into “haze houses,” producing a disproportionately large number
of NEIPAs in lieu of a more-varied portfolio. For craft beer aficionados, this
lack of diversity can be frustrating.
Or have Hazy IPAs diversified just fine?
“You are now seeing the same bifurcation that we saw in traditional
IPAs starting to happen in Hazy IPAs,” says Dharma Tamm, president of
Rogue Ales. “There are now Hazy Pale Ales, Hazy Imperial IPAs, Hazy
Session IPAs — and yet the core Hazy IPA style is still growing.
Batsquatch, our Hazy IPA that was
released in the beginning of 2019, quickly became our second-best-selling beer.”
In the near future, there’s no reason to think that the haze
craze will ebb. Longer-term, however, one wonders whether consumers might grow
tired of all these similarly flavored juicy beers. Thus, you might see more
breweries attempt a balance between modern juicy flavors and the classic hop bitterness.
3) Core Craft Comes For Big Beer
Craft beer’s share of the overall U.S. beer market is around 12%.
This percentage has plateaued in recent years as craft beer sales
settle into single-digit yearly gains.
Still, there is potential for large market-share growth in
the future. This relies on the habits of younger consumers.
“Craft beer is so much more interesting to consumers than the
mass-produced beer once drunk by masses of people,” says Walker of Firestone
Walker. “I am not sure, other than price, what these traditional-branded beers have
to offer a modern consumer.”
“I am not knocking their quality or heritage,” Walker
continues. “I’m simply saying consumers want to have dimension in everything
they do, which doesn’t lie in doing what their parent’s generation did. I think
craft beer has a chance to win those consumers, and the big brewers still
service the majority of them with their aging proposition. We are a long way
from craft beer saturation.”
Many younger LDA consumers have always drank craft beer over
macro. Why would they do differently as they get older?
4) Low-ABV is a Big Deal
The health movement has reached craft beer. Although few
people would mistake brews as nutritional, that does not mean the category has
to be so loaded with calories.
Enter low-ABV beers.
These fall into two camps. Either their ABVs are lower than
normal — under 5% for styles like porter or double IPA — or they are considered
“non-alcoholic” with ABVs under 0.5%.
Sufferfest Beer Company, launched in San Francisco in 2016,
is the former. Their lineup includes craft staples like kolsch (3.5% ABV) and
stout (4.3% ABV). Last year, the company was acquired by Sierra Nevada.
Like other breweries making these kinds of beers, Sufferfest
markets towards active-lifestyle consumers.
“Alcoholic beverages are following the natural progression we’ve seen
in the ‘Better for You’ food movement at grocery,” says Sufferfest
Founder Caitlin Landesberg. “As today’s Millennial generation takes on
the buying power at grocery, today’s shoppers are looking for food and
beverage products that provide additional benefits, but without settling
on taste or quality.”
5) CBD Beers Emerge
Legal cannabis is spreading across America, and with it come
CBD beers.
They are made with the non-psychotropic components of the cannabis
plant. (CBD won’t get you high, of course.) And now these beers have an
easier path forward thanks to the federal legalization of some forms of
hemp
at the end of 2018.
“I would expect more innovation and new products including
CBD in 2020,” says Tamm of Rogue.
The Long Trail Brewery of Vermont already has a limited-edition
lineup of IPAs and APAs, called Medicator, which is brewed with hemp oil and
terpenes.
On the West Coast, Coalition Brewing has released Two
Flowers IPA, infused with cannabidoil. Like Long Trail, Coalition plans a
series of CBD beers if the concept proves popular (and legal) in the long run.
The government has not necessarily made it easy for CBD beers. Years
before the 2018 Farm Bill legalized hemp, Dad & Dudes Brewery in
Colorado got TTB-approval for a CBD-infused beer, only for the DEA to
block it. And in 2018, Down the Road Beer Co. of Massachusetts was
rejected by the state’s Alcoholic Beverages Control Commission when
applying to add CBD into beer.
Given the relentless (it not sloppily executed) rollout of
recreational cannabis — plus the growing market for CBD — these governmental
headaches might just be early growing pains for CBD beer. More breweries will
likely explore the idea in 2020.
Though not all brewers agree.
6) Sours Enjoy Wide Appeal
Sour beers have seemingly found a solid niche in recent
years. While nobody expects these funky, fruity, tart brews to suddenly blow up
in sales, they have become reliable mainstays on beer menus.
“Sour beers will continue to outperform other styles in
growth on a percentage basis, but not in absolute volume of styles like IPA,”
says Safarik of Dogfish Head.
Sour beers have become increasingly diverse, and appeal to a
large demo of consumers.
“Sour styles like gose and Berliner Weiss meet the
increasing desire among consumers for products that are flavorful, yet low in alcohol/calories/carbs,”
Safarik says. “Sours also have crossover appeal among wine and cocktail
drinkers who have yet to discover this part of the beer spectrum.”
Sours can be light and smooth, or bold and fruity. They can
satisfy wine drinkers who occasionally dabble in beer, or the hardcore beer
nerds. Barrel-aged sours, while perhaps overproduced in recent years, are still
a fan favorite among craft aficionados.
“We think sours will be very popular and just added three
90-barrel foeders to our Eastside Pub in Portland, which has now become our
official sour house,” says Tamm of Rogue.
But while beer geeks may gawk at the size of a brewery’s
coolship, don’t expect this to translate into massive retail sales.
“Three-to-four years ago, sour beer was supposed to pop,”
says Stevens of Founders. “A lot of people were parroting that, but we never
did experience a full pop. But we have experienced a slow-burn build up. Sours
resonate with a lot of people who are not traditionally beer drinkers. It may
never pop as people had prognosticated, but it’s steadily growing.”
7) High-ABV Becomes Niche
Once upon a time, customers lined up outside of breweries
for the release of limited-edition barrel-aged beers.
Nowadays, when people queue up around the block, most likely
they’re waiting for a trendy brand of New England IPA. The “white whale” stouts
have fallen out of fashion.
“The days of those unicorn beers are likely over,” says
Stevens of Founders. “KBS was one of the first of those beers in the early
2000s, along with about half a dozen other breweries doing similar things. Now,
there are more than 7,000 breweries, and everybody is doing barrel aging. You
don’t have to wait in line anymore because there are now more than six
breweries doing this stuff.”
Visit any retailer now and you’ll see plenty of high-ABV
stouts collecting dust on the shelves. Beyond the oversaturation of barrel-aged
beers, there’s also the consumer trend of healthier living. A 15%-ABV barrel-aged
monster hardly fits into the lifestyle of a calorie-counting drinker.
Breweries have adjusted. Founders last year announced the
discontinuation of CBS, one of the original unicorn beers. But the brewery will
not stop making KBS. Instead, Founders extended the line in 2019 with a new KBS
espresso variant. And don’t expect the brewery’s popular
barrel-aged line to tail off, or stop innovating.
“You really have to pick and choose which barrel-aged
bottles you produce now,” Stevens says. “We’ll probably put out less volume of
KBS, but more brands of it. You’ll see four-to-six brands of barrel-aged beer
come out, but at lower volumes.”
And in different formats.
article from beveragedynamics.com