We Need a New Yardstick
The beer industry as a whole is currently, and arguably, in the throes of its most dramatic period of evolution since it became a real industry in the United States. Change is good. Change is hard. Change is necessary. Very briefly, here's what's going on:
- We will have 7000 breweries in the country in a few short months. 7000. That's three zeros, and it's almost 3000 more than our previous high in the 1870s. If you're wondering whether that's a lot of breweries...that's a lot of breweries. It's not more than we can handle, as we have a highly populated and geographically enormous country, but it's still quite a few.
- At that point, roughly (at least) 90% of the people in the country will live within 10 miles of a local brewery. You would have a hard time making that claim about most business categories (like...a post office) in this country. Breweries are fast becoming the de-facto community anchor and local public house that they used to be 250 years ago, and the people seem to be demanding it.
- Large, multi-national breweries are, on balance, selling less beer in the U.S. There are many, many reasons for this. Some of these multi-nationals are selling significantly more beer, and some of the multi-national's specific brands are doing really well (I'm looking at you, Mich Ultra), but the numbers in most of their books aren't getting noticeably less red as time progresses.
- Consumers are drinking less beer - Whether we like to admit it or not, wine and spirits are taking up a larger and larger portion of the overall alcoholic beverage pie, so to speak. In 2006, 65 percent of males listed beer as their go-to drink in the beverage alcohol category. Fast forward to 2016 and that figure has dropped all the way to 43 percent. Headwinds are popping up across all demographics, ages, and geographies.
- More and more states are amending and updating their beer laws to make it more comfortable for breweries to open up, and more importantly, grow. Taproom laws, direct-to-consumer sales at said taprooms, and self-distribution (forgoing the requirement to use a distributor to sell to their customers) are all becoming more ubiquitous.
- The zeitgeist around beer is strong - Awareness of beer, and its subsequent trial rate, is at an all-time high. We're drinking less beer, but we are at least willing to try whatever's in front of us. More people are more emotionally connected to the product of beer than ever before.
There are countless other factors influencing this period of evolution in beer. Alcohol and beer categories like imports, FMBs, hard seltzers, CBD and THC-infused beer are growing and changing. Legislation is changing outside of taproom laws too. Environmental factors. Growing diversity. The list goes on...
But...I highlight this industry overview because something has been nagging me. Something is bothering me in the beer business, and I think we need to address it sooner than later.
Given all this change, and given the incredible level of competition and diversity present in the modern day beer business, I think we're not measuring the health of the category correctly, and I think it's time we put together a new formula for the modern age of brewing.
Measurement and Evaluation
In its most basic form, the "health" of a particular consumer category can be broadly measured on coattails of the following factors: