FIRST MOVERS

Craft beer, like any other consumer movement, started with a group of passionate prosumers who wanted more out of their market. But these weren’t just aficionados These were contributors. To get what they wanted, they either made their own beer or travelled extensively to secure the best of what the world had to offer. Many breweries that began in the late 80s and early 90s were founded by men who were stationed on military bases in Europe where they experienced incredible and rare Belgian beers that inspired them. Returning to the states, they had a choice. Drink watery, yellow fizz. Or, start making beer.

Meanwhile, President Carter passed laws enabling the average American to start homebrewing again, and an entirely new wave of nerdy basement dwellers got busy cooking. These people formed homebrew groups, shared recipes and essentially removed themselves from the mass market as beer consumers. This was a serious DIY culture.

Out of this confluence of passionate consumers-turned-makers, dozens of small breweries were born, such as Sprecher in Milwaukee, and Boulevard in Kansas City. And that was just the early arc of a much longer story.

AN INDUSTRY, NOT A NICHE

Craft beer, built on the backs of hombrewers-turned-entrepreneurs, has always been part of a swell rather than a succession like many other niche trends and craft movements. This wasn’t about replacing the leather wallet you got at J.Crew with a better leather wallet you bought from a hipster in Brooklyn at a higher price. Craft beer was a fundamentally different product. All the markers of “craft” in the larger sense (made local, better quality, personal) were all necessary assumptions in the production of the product, not mission statements or differentiators.

Small breweries have limited distribution range. They can’t ship it or sell it on the internet. It’s better quality by definition because it’s using better ingredients, making smaller batches, controlling the product from start to finish, and making room for experimentation And it’s personal, not because that’s a marketing advantage (have you seen most of these guys?), but because brewers were also the owners, and there was no money to hire faces that weren’t also hands.

But beer is an industrial product in America. In our lifetimes, it’s always been produced at scale. So while craft beer may have similarities in the artisan realm, it’s rare that it’s ever thought of that way. The discussion is always “how many barrels are you producing” and “how far are you distributing.” No one’s asking people who make their own cheese or hand-made scarves these types of questions. This perception has a lasting effect on the market in terms of what a brewery is and should be. It shapes minds and business plans.

The result is that it’s taken a long time for beer as a craft movement to rein in expectations and make room for small, even tiny ventures that aren’t focused on growth alone.

THIS TOO SHALL PASS

When the bubble bursts on craft beer, as so many people are now predicting, it’s not going to be so obvious. It’s true that grocery stores like Jewel, and even smaller format liquor stores, are literally out of shelf space for new beer brands. But that’s like saying that there’s literally no room on an iPhone for another app. Competition has a way of weeding out the weaker players and replacing it with new hotness. If you told me there’d be another Words for Friends-like game so popular it’d bring down Apple’s Game Center, I’d have laughed. But here’s Letterpress killing it simply by upping the ante on aesthetics, interaction and game dynamics. In other words, just because shelf space is limited doesn’t mean it can’t be disrupted, or offerings re-imagined.

The bigger problem for beer competition is an historical one. While a few laws have changed to protect smaller breweries and diversify distribution models, the game largely remains unchanged. Big beer dominates and makes most of the rules. That means that as long as craft breweries aim to take away market share from AB In-Bev and MillerCoors (which they are steadily doing) then those corporations are going to play the same cards they did decades ago — buy up, consolidate, eliminate.

We’re likely to retain a larger number of regional labels that we did in beers’ past. Certainly some will refuse to sell, choosing to battle it out over distribution channels, resources and talent. But many big names in craft are likely to continue falling under the knife. Goose Island, Terrapin, and minority stakes already in place for breweries like Widmer.

What’s encouraging is the diversifying of craft brewery ownership, and the self-organizing of the ecosystem that makes it more resilient to assault. Many craft breweries are now being started with investment, guidance and resource sharing from other small brewery startups that are only years, or months, ahead. Long-standing contract breweries are acting like incubators for brands still looking for space. And still others are scoping their plans for sustainability, focused on fortifying a small, defensible footprint instead.