Craft Beer Needs an Attitude Adjustment

“Don’t insult your customers” is not the sort of business advice you typically have to say aloud. But the American craft brewing business being what it is these days, Bart Watson decided it was time to state the obvious.

“Don’t denigrate where consumers are entering craft,” the Brewers Association’s chief economist said during a presentation to the New England Craft Brewers Summit earlier this month. “I hear brewers sometimes say things like, ‘Oh, that lacto-smoothie sour’s not really a beer. … If I’m the consumer and I hear that, [I’d say] ‘OK, I don’t like beer,’ and go search out something else.”

His comments caught my attention for two reasons. First, in the eight years I’ve known him, the taciturn Watson hasn’t often made this sort of prescriptive critique of the BA’s members, not publicly at least. He seems more comfortable providing brewers with solid data and letting them draw their own conclusions, rather than telling them how to operate. So his warning, mild though it was, rang out. Second, I think he’s exactly right.

The general idea animating the American beer business for the past century has been: Brew things that people want to drink, then sell those things for money. There are nuances, of course — the three-tier system, economies of scale, the vagaries of national television advertising, and so forth — but those are a distraction from the general idea, and also boring. The point is: You can’t sell the American drinking public things they don’t want, not for long.

For the first decade and a half of this century, the American craft beer industry was on the right side of this equation. Underwhelmed by the offerings from increasingly corporatized and consolidated macrobreweries like Anheuser-Busch, Miller, Coors, and the like, the first generation of craft brewers used quality ingredients to make full-flavored beers that were demonstrably better than the bland adjunct lagers Americans were then stuck with. Their denigration back then was reserved for the “fizzy yellow beer” that poured forth from faraway firms’ massive factories like any other commodity. It was a powerful message (so powerful, in fact, that sorta-insulting your customers actually did sorta-work, for a time), and in delivering it, craft brewers opened a lot of American drinkers’ minds and wallets to the glories of good beer made well.

But! But! It is your humble Hop Take columnist’s considered opinion that the craft brewing industry got high on its own supply. Industry leaders and brewery owners (which was basically the same group of people, until workers began organizing and using social media to carve out influence of their own last decade) conflated mainstream drinkers’ thirst for new and novel things to drink with a shared revolutionary zeal. All of which was fine, until those mainstream drinkers, as they’re wont to do these days, lost interest in craft beer and went looking for things — hard seltzer, hard tea, spirits-based canned cocktails, whatever — that craft brewers did not make.

“Wait! Stop!” cried the craft brewers. “That stuff is corporate and corny and Not Craft™!” But the drinkers, tired of David-and-Goliath morality tales, increasingly homogenous aesthetics, and those B.O.L.A.s (Boring Old Lagers and Ales) they once loved, went anyway. Some craft breweries have followed, using their knowledge of brewing and branding to roll out unconventional new beer-esque potables — fruited kettle sours, pastry stouts, milkshake IPAs, and a river of flavored malt beverages — to stay in tune with changing tastes. The general idea! But others have clung dogmatically to styles and stories of craft beer that once dazzled, framing the newer, weirder, and sometimes-cornier concoctions, and the people who enjoy them, as an affront to, well, the craft.

At a time when the American drinking public has more alternatives than ever, Watson worries that the condescension the latter group has for their colleagues and customers is enough to make drinkers feel unwanted. Hence, his new, more insistent recommendations. “I actually don’t like to get on my soapbox very much,” he tells Hop Take in a phone interview a few days after his presentation at the New England conference. “That tone shift is [because] now is a time when craft needs to collectively innovate more than it ever has. … If every brewery is taking shots at every other brewery, that’s a scorched earth battle. It’s not going to end well. And frankly, craft needs all the volume it can get right now.”

Not everyone agrees. A week after Watson’s appearance in New England, Dave Walker, a co-founder of industry pioneer Firestone Walker Brewing Company, took the stage at the California Craft Brewers Association’s annual conference in Sacramento with a much different message. “I look at some of these beyond beer elixirs, it’s like a chemistry experiment chasing numbers,” he told the audience, according to Brewbound’s Jess Infante. “They just don’t align with the values that we set out to propagate when we started brewing beer, and I just don’t feel comfortable in that space.”

Firestone Walker, founded in 1996, was acquired by Dutch mid-major brewer Duvel Moortgat 19 years later and will brew nearly half a million barrels of beer this year. Younger, less established U.S. craft breweries (around 90 percent of them, by my calculations) don’t necessarily have the same luxury to sit back and get comfortable with the “elixir” space before diving in. (Firestone Walker did not immediately respond to Hop Take’s request for comment from Walker.)

Watson isn’t entirely sure how craft brewers will claw back that volume, but he’s convinced it will be a “real uphill battle” for the nation’s roughly 9,500 craft breweries if they reject popular-but-unorthodox new styles in favor of “shift[ing] the deck chairs around.” Dismissing smoothie seltzers or hard juices as anathema to the category isn’t a winning strategy when so many drinkers are starting their journeys there. It doesn’t mean a brewery that set out to make German-style lagers should abruptly pivot into pastry stouts; just that sneering at them probably isn’t going to convince people to drink more German-style lagers, and may scare them off entirely. Rather than an entry point, that’s an exit ramp — and Lord knows the category doesn’t need any more of those.

“Ten or 20 years ago, people entered [craft beer] through light lager, then traded up to something a little fuller-flavored, and eventually they made their way to IPAs or fruited sours” or more advanced beers, Watson says. Those days are gone, and they ain’t coming back anytime soon. College kids are trading kegs of cheap swill for hard seltzers, High Noons, and borgs! High schoolers are making fun of their millennial dads for using Untappd! Fireball is one of the biggest “beer” brands in the country! The landscape, Watson argues, “has fundamentally shifted, and if brewers don’t recognize these shifts, [they] risk alienating the next generation of customers.”

The data underpinning his warning — with Watson, there’s always data — is sobering. He’s still working on assembling the BA’s 2022 year-end figures, but as it stands, it looks like craft brewing volumes stayed just about flat last year compared to 2021, a significant miss on the 5 percent growth he’d projected. According to Brewbound’s Zoe Licata, Watson also told New England brewers that excluding non-alcoholic craft brewing volume from the overall total would turn the category’s growth negative on the year.

Slow-to-rebound draft volume, a channel where craft beer has historically over-indexed, is compounding the category’s struggles. (Though, owned-and-operated taprooms, which many breweries build or expanded during the pandemic, are a bright spot.) Whether you’re talking about existing offerings or more experimental ones, on-premise performance is “going to be one of the keys if those volume trends are going to turn around in the next decade,” Watson says. Good bar and restaurant experiences can lead to trialing and conversion, but only if customers return to them — and only then if craft brewers have furnished accounts with appealing “entry points” to stanch spirits’ encroachment on the channel.

Despite the moment’s discouraging numbers, the BA’s chief economist is hopeful that brewers will heed the warning and seize the silver linings. “Flavor and variety are two of the top reasons that people pick craft, so I think there’s a huge opportunity here,” he says, pointing to the segment’s recent success with single-serve packaging in convenience stores as “an example of a kind of a new place that craft is growing, that wasn’t really craft’s space before.” Following, say, New Belgium’s lead into the c-store won’t work for every craft brewer, of course. But scorning the formats and styles they like because you don’t brew them… well, that probably won’t work at all.

🤯 Hop-ocalypse Now

Let’s keep the good news rolling, shall we?! VinePair writer-at-large Aaron Goldfarb published one of the most searing indictments of craft beer’s falling star in the American zeitgeist last week with a harrowing report about what he calls “Dads Untappd” — a genre of TikTok videos in which kids gently roast their Gen X and aging millennial fathers for being really into IPAs, brewery tours, and, of course, the ubiquitous ratings app. As one participant in this devastating new phenomenon noted, “[U]ntappd might be my dad’s most consistent social media.” Oof! Given that parents’ arrivals are typically considered a death knell for social media platforms, this is not, strictly speaking, good news for Untappd. But it also isn’t the best look for craft beer, which seems to be catching strays from an entirely new generation of critics on the biggest digital stage imaginable. All right, now for some actual good news…

📈 Ups…

Just months after opening its Philadelphia taproom in December, Two Robbers Seltzer Co. is getting into hard juice… If enacted (and it’s close!), Virginia’s new self-funded self-distribution system would cover the first 500 barrels for every brewery in the state… Beers by Ale Asylum, an O.G. Wisconsin craft brewery that closed mid-2022, will join the portfolio of fellow Badger State brewer Karben4 in an intellectual property acquisition… Constellation Brands’ red-hot Modelo brand family outsold that of Corona (no slouch!) by almost 50 million cases last year… Athletic Brewing Company storms New York City with the non-alcoholic juggernaut’s first-ever kegs…

📉 …and downs

Two craft-focused distributors abruptly shut down in Washington after PepsiCo bought their parent company… Yuengling’s expansion push into the Midwest with partner Molson Coors is already ensnared in supply-chain issues… Mega-wholesaler RNDC hits former partner/sneakily big-time “beer” producer Sazerac with a countersuit…

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