Industry Matters/News, Marketing and Sales

Is There a Bubble in your Craft Beer?

March 4, 2014 No Comments

Will the growth of craft breweries continue? Or, will the bubble burst?

There’s lots of press lately (Time, USA Today, Beer Business Daily) with both pro and con as to whether the craft beer industry is here to stay or if the bubble will burst.

Bubble? What Bubble? Take a look at this chart:

According to the Brewers Association, the number of breweries at the end of 2013 reached over 2,700, the highest level since the 1870s. Despite the growth, American craft brewers account for only 9% of the beer category in the US. But, Craft beer production was up 9.6% in 2013 while overall beer production fell 1.4% according to CNBC as reported by Buffalo Trace Newsletter.

What’s a craft beer?

According to the Brewer’s Association — “An American craft brewer is small, independent and traditional.” They go on to describe some concepts related to craft brewers such as: small brewers, emphasis on innovation, made from traditional ingredients, among other things.

I’ve got a better definition — craft beers are more flavorful, with more unique styles and brands and just taste better than mainstream beers.

Even the big boys see the “beer handwriting on the wall” and have been getting into that segment with what can only be called “crafty” beers, according to a recent article in Time. Check out these brands and who owns them: Blue Point, Goose Island, Shock Top and Red Hood (AB-Inbev) Blue Moon, Leinenkugel and Killian’s Irish Red (Miller Coors).

Among the definitions of a craft beer, mentioned above, is size. And in this case, size matters — a brewer must be independent, which means that less than 25%of the craft brewery is owned or controlled by an alcohol industry member who is not themselves a craft brewer. In other words a wolf in sheep’s clothing can’t be a craft brewer member of the Brewers Association. But, it can be crafty.

What are the market segments of craft breweries?

Making beer — Craft brewers doing their thing

Here’s where it gets interesting. Half (50%) of the craft breweries in the US are Microbreweries and another 44% are Brewpubs. (Here are some precise definitions.) So, in effect, and by definition, the vast majority of craft brewers are small businesses perhaps akin to Mom and Pop operations.

But, they are much more than that. They are entrepreneurs with a passion for making quality, flavorful beer without the restrictions that large organizations impose. They understand how to meet the needs of changing taste preferences among consumers. In fact, a recent article in Beer Business Daily had this as a headline in their Nov 13, 2013 edition — “Wine and Craft Beer now in Direct Competition.” It’s based on a report by a consulting firm that compares craft beer to wine.

What about that bubble?

The study reported by Beer Business Daily suggests continued growth for craft beers based on: “shifting demographics (the rise of the Millennials), consumers’ desire for quality, diversity and authenticity as well as unprecedented innovation in brewing, marketing and packaging.” They further predict that the craft beer market will double since it is still early days in the “premiumization” of beer.

Hey, what about all those brewpubs that comprise the craft beer market, won’t many of them fail? I suppose many will but I also suppose that there will be others to take their place. According to Business Insider the majority of New York restaurant startups fail in five years. Does that mean that the restaurant “bubble” will burst?

Finally, Bart Watson, Economist at the Brewers Association, has an interesting article that gets at the heart of the so-called bubble issue. His central argument, in my view, is that craft beers at roughly 10% of beer consumption have a long way to go. That is, of course, so long as consumers continue to favor full flavored beers over light lagers. I don’t know about you, but I’m on board for the long run.

Second, remember that earlier I mentioned the inroads into craft by the big multi-national brewers? Here is what Bart has to say on the subject: “The fact that global players are diversifying into their own full-flavored product lines and investing in or buying up regional brewers proves the solidity of the consumer base on which craft sits.”

So far as I can tell, the only bubble in craft beer is in the glass.

(Many thanks to the Brewers Association for allowing the use of the chart and to Bart Watson for his insights.)

Best Alcohol Ad I Ever Saw

February 26, 2014 7 Comments

In a world of ho-hum, same old-same old, this ad stands out.

My friend Jackie Summers at Jack From Brooklyn who owns and produces Sorel Liqueur, brought this ad to my attention on Facebook.

I love this ad on many levels — the story touched me; it’s extremely creative; the brand sell was subtle but powerful. I found it on Mobiledia and here’s what they said about it:

“Finally, an alcohol commercial that says, ‘Let’s celebrate this wonderful thing,’ instead of, ‘Drink our booze and get sexy women.’ The buildup is slow, but at 1:37, the punch to the heart is worth it.”

See what you think. (Here’s the Youtube link.)

Mary Jane’s Primo Hemp Vodka: Booze Meets Grass

February 12, 2014 3 Comments

What do you think about Vodka made with hemp?

Well, there is one, and it’s called Mary Jane’s Primo Hemp Vodka™ on sale in Canada.

With the legalization of marijuana in Colorado and Washington many wonder which state will be up next in going pro-cannabis (Speaking of “going pro” the outcome of the Super Bowl suggests Washington might handle their grass a bit better than those Coloradans– but I digress).

Let’s look at another approach.

What is the story behind Mary Jane’s Primo Hemp Vodka?

An entrepreneur in Canada named S.R. Collier (founder and CEO) developed a vodka brand with a 4.20% infusion of Hemp, which is introduced during distillation. That negligible amount of THC (the chemical responsible for marijuana’s effect) and the distillation process do not affect the buzz but rather give the brand some “fun, naughty and interesting marketing hype,” according to Mr. Collier.
I have not had the opportunity to try it yet but from what I am told it provides a distinctive and unique taste with overtones of hazelnut. Collier explains that the Hemp oil yields an “ultra smooth” profile.

Are you wondering why this Mary Jane Vodka isn’t available in the United States? Enter the alcohol regulatory authority.

The product was submitted to the Alcohol and Tobacco Tax and Trade Bureau (TTB) for formula and label approval. The formula was approved but due to the label containing the image and phrase ‘Mary Jane’ (slang for marijuana) the product was ultimately rejected. Who knew the TTB are so hip?

But wait a minute. This is the same regulatory agency that approved alcohol labels with such names as Fokker Ale, Fuchen Liqueur, Chockin’ Chicken, Fat Bastard, Big Dick Beer, along other classy names. Never mind, Mary Jane’s Primo Hemp Vodka cannot be sold in the US under that name. But, the product itself is okay. Check out Robert Lehrman’s blog for more information.

Enter Washington’s Revolution Spirit.™

It turns out that our founding fathers (Washington and Jefferson included) grew Hemp on their farms. The crop was useful for rope, paper, and clothing. Hemp was long promoted in Virginia as an alternative cash crop to tobacco. According to some sources, Washington, not only grew Hemp, but also actively promoted its growth. It’s claimed that in letter to his plantation field manager, he wrote: “Make the most of the Indian hemp seed, . . . and sow it everywhere!”

So, Mr. Collier has changed the name of his product to Washington’s Revolution Spirit.™ for US distribution. The TTB approved that label and it uses the Mary Jane’s Primo Hemp Vodka formulation currently used in Canada. Same recipe, different name.

Very clever idea, eh?

By the way, the brand is for sale including the brand names, websites, intellectual property, glass molds, inventory, and so on. Let me know if you’re interested.
Check out the different labels: