Less is More? Are There Too Many Beers?

(Left to right: Harry Schumacher - Beer Business Daily, Dale Katechis - Oskar Blues Brewery, Steve Hindy - Brooklyn Brewery, Jim Schembre - World Class Beverages)

Plenty of great discussion took place at last week’s “Beer Industry Summit 2010” in Phoenix. One of the surprising topics that has reared itself repeatedly at the Beer Summit is the proliferation of brewers and products in the beer industry as a whole, including and especially in the craft beer category.

Are there too many brewers in the US? Are there too many beers? It sounds a little bit like crazy talk, but there are a fair number of brewers who seem to feel that this may be the case.

Right now, the Brewer’s Association will tell you that there are almost 600 breweries in the United States that bottle, can, keg or otherwise distribute beer. That number doesn’t count the many hundreds of brewpubs that brew beer for sale in their restaurants. In most markets, there are only 2 or 3 beer distributors that will carry and sell craft beer, which leaves a theoretical total of 200 to 300 brewers per distributor in any particular area, not including the wide array of import brands that are currently available.

The problem becomes this: no one really believes that any single distributor can properly handle 100, 75 or even 50 breweries. Even the best salesperson doesn’t have the time or opportunity with their retail customers to make proper presentations for that many breweries. For a distributor with such a large portfolio of brands, the larger volume brands are going to get a lot of attention, but the rest will suffer. In theory, the top 10 breweries out of 50 may flourish and the remaining 40 will get neglected.

World Class Beverages of Indiana handles about 25 different US based craft brewers and even we get criticized by brewers for having too many brands. Many other craft distributors carry even more brands than we do.

One brewer I spoke to this week worries that his brand doesn’t get enough attention and becomes “clutter.” That means he’s concerned that his beer gets stale on the shelf and that shipping and logistics become troublesome and expensive due to small volumes. Yet another brewer has suggested that distributors should focus only on their top 10 (or so) craft brands, thus streamlining their operation and making it possible for them to make more frequent and more in depth presentations for those remaining brands.

Those brewers are absolutely right to be concerned. They need to protect the integrity of their products and help us to maintain freshness and selection, but I know that most of our consumers seem to prefer that we increase our selection and product list.

Are there too many beers?

According to the Brewers Association, the craft beer industry grew 7.2% in 2009 over the previous year. However, the total number of “craft breweries” grew from 1485 in 2008 to 1542 in 2009, representing a 3.8% increase in the number of craft breweries. In addition, many of the existing craft brewers in 2008 expanded their capacities in 2009, some to dramatically higher levels. And while statistics on overall capacity growth are not readily available, it is hard to imagine that the 3.8% increase in the number of craft brewers plus the expansion of production capacities by existing craft brewers couldn’t have accounted for all of the 7.2% growth in the craft category in 2009. Perhaps there was no actual growth in 2009 at all?

Growth in the overall beer market was actually down in 2009 from the previous year, but that drop in overall sales volume is represented entirely by the major, non-craft, brewers who saw significant declines in consumer demand. However, there were no new brewery entries into the major brewer category either and no significant expansion of capacities for the major brewers in 2009.

In the end, most brewers and wholesalers would love to see the market continue to grow and I believe strongly that the craft industry will continue to grow. But might we already be at a point where the industry itself is growing faster than consumer demand, and if so, what does that mean for many established, quality brewers who may find that their share of the craft beer pie is shrinking, even as the pie continues to grow overall.

The Beer Summit is a terrific gathering of brewers and distributors that is organized by Beer Business Daily, one of the pre-eminent trade publications in the beer industry. Visit Beer Business Daily at www.beernet.com.