Marketing Hype vs. Reality: Large Breweries Struggle While Craft Breweries Flourish

Posted on 30 September 2010

If you listen to the Big Boys (AB Inbev, MillerCoors, etc.) then the beer industry in America is in trouble. Despite going merger-crazy and leveraging economies-of-scale, macrobreweries in the US (and around the world) are in trouble. For example, Budweiser is having to give away free beer and “freshen” its image while the number of smaller craft breweries in the U.S. continues to climb. According to the Brewers Association report, “the US now boasts 1,625 breweries — an increase of 100 additional breweries since July of 2009 — and the highest number in 100 years.”

But is everything going as wonderfully for the craft brewing industry as the numbers would have us believe?

As a homebrewer and lover of craft beer, I’d like to believe that the brewing industry will continue to favor craft breweries, especially those that reflect regional tastes and brewing styles. As an observer of economics and trends over the past few years, I doubt that the system can sustain itself much longer. We’re in an era of brewing-related “irrational exuberance” — at some point in the near future we’ll start to see the smaller (nano- and micro-breweries) start to disappear until, eventually, an equilibrium will be reached. I liken it to the brewpub fad of the late 90s when they were popping-up all over (Hops, John Harvards, Rock Bottom, etc): some of the nano- and micro-breweries will survive but, unfortunately, most won’t make it. The ones who make high-quality and original beers will likely be acquired by a larger brewery or go on to grow into a larger brewery themselves. Either way, consumers will vote with their tastebuds and wallets by forcing the successful craft breweries to increase their production capacity while the other, less successful breweries and brewers, find their marketshare dwindle.

Regardless of what the future holds, this is a wonderful time to be an American beer lover. Free from “traditional” styles and out-dated laws, brewers and breweries are free to experiment with ingredients and brewing styles, resulting in some unique and one-of-a-kind beers. Beers that I’m more than willing to part good, hard-earned cash to enjoy — I’d rather have a quality-brewed craft beer for $12 a bottle than drink a single Budweiser for free…

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