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Thread: Macro vs Micro War...What's on the horizon?

  1. #1
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    Macro vs Micro War...What's on the horizon?

    What do you guys think of the macro vs micro war? The sales figures obviously show that macros continue to lose marketshare to the mircos. The acquisitions seemed to have come to an abrupt halt with the SAB Miller/InBev Merger...is that because of the size of the merger or maybe because they recognized the futility in trying to buy out microbrewers? Maybe they were after the distribution channels provided by the merger rather than the beer brands themselves? I've heard of the macros getting into some trouble trying to bribe distributors by offering incentives to only push their beer brands, but wasn't sure if the merger included any actual distributors/distribution centers or not. We're starting to see the effectiveness their billboarding in retailers in certain markets. Hell, even super retailers like Total Wine are having trouble finding shelf space these days for all the craft beers. It would seem that unless craft brewers have a good relationship with a chain of distributors across the USA, they may be relegated to regional markets? With the influence macros have over distribution, what other roadblocks could they throw up to impede competition?

    What do you guys think...Are my ideas more along the lines of chicken little or the ant and the grasshopper?

  2. #2
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    I think anyone who believes they can be a national craft brand like Boston Beer or Sierra Nevada are deluding themselves.

    The future of craft beer looks like the past: small, local breweries and brewpubs embedded in their community, with a very small number of statewide/regional breweries.

  3. #3
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    Quote Originally Posted by sjcarter View Post
    I think anyone who believes they can be a national craft brand like Boston Beer or Sierra Nevada are deluding themselves.

    The future of craft beer looks like the past: small, local breweries and brewpubs embedded in their community, with a very small number of statewide/regional breweries.
    I agree very much with the comments above. I also think that there seems to be a lot of debt out there with many of the new start ups. With so many breweries and overall increased competition, only so many brand new 15bbl+ microbreweries with half a million to over 1 million dollars in debt can survive moving forward. While I agree that the macros are playing their part to limit the micros, I also believe that many micros will be doing themselves in soon by having insane amounts of debt in order to get started or expand. I cringe when I see new breweries start out with state of the art 30bbl systems and $1million+ in debt. There's just not that much shelf space (or tap accounts that will continually keep you on) and there are so many other breweries right now all doing the same thing. Don't know if a craft beer bubble will pop hard or if just a minor market correction will happen soon, but if either one happens it wouldn't surprise me at all.
    Last edited by Catfish002; 02-25-2017 at 08:24 AM.

  4. #4
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    Re

    To begin, “Craft” is a term created by the Brewer’s Association and the definition changes often. In effect, the “Craft” market share of production is made up by the BA. Recently, breweries like Yuengling, Steven’s Point and August Schell (once outcast adjunct breweries) are now accepted in the “Craft” numerator. Be skeptical of this calculated share.

    The tactics of MillerCoors and ABInBev are obvious: Consolidate, Confuse and Billboard shelf space and handles. As they continue to buy up even more regional concerns they welcome the competition.

    At some point, brewery growth must slow down. When that will happen is anybody’s guess. If sales of “Craft” continued at 2015’s rate of 12.8 percent (again calculated by the BA), the entire U.S. beer market would be completely “Craft” in 17 years. That’s simply not going to happen. Some of the breweries are in good shape, but too many are undercapitalized or overextended. There is a lot of money flowing into the industry, but not all of it is backed with solid due diligence. For example, note all the new 15, 20 and 30 barrel production breweries! Most will not make it.

    Breweries that will survive will have some common traits. The winners will be deeply enmeshed in their local markets and locked in with their communities. Equally important-if they bottle or can-their beers will still taste great at least three months after packaging. They won’t degrade. When they come out with new beers, they will be leaders, not followers (e.g. the haze craze), with innovative, original ideas. Good luck to us all.
    Last edited by mkunce; 02-24-2017 at 07:53 PM.

  5. #5
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    Quote Originally Posted by Catfish002 View Post
    I agree very much with the comments above. I also think that there seems to be a lot of debt out there with many of the new start ups. With so many breweries and overall increased competition, only so many brand new 15bbl+ microbreweries with half a million to over 1 million in debt can survive moving forward. While I agree that the macros are playing their part to limit the micros, I also believe that many micros will be doing themselves in soon by having insane amounts of debt in order to get started or expand. I cringe when I see new breweries start out with state of the art 30bbl systems and $1million+ in debt. There's just not that much shelf space (or tap accounts that will continually keep you on) and there are so many other breweries right now all doing the same thing. Don't know if a craft beer bubble will pop hard or if just a minor market correction will happen soon, but if either one happens it wouldn't surprise me at all.
    Can't agree more, so many start ups just accept an insane amount of debt thinking it's what you've gotta do to get a brewery; then end up with small margins doing a production brewery, Kinda hard to pay off debt when you don't have a lot of profit coming in.

  6. #6
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    Jameson, SK, Canada
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    I've thought about these things a lot in the planning of our brewery. I worry that there has to be a saturation point coming soon - yet more and more micro's keep popping up all the time, and more and more people keep getting even more excited about them and drinking them dry every week. Here in SK we've gone from a few crap brewpubs 4 years ago to 9 or 10 really legit micro's, and there is no sign of a cap. I know that the Saskatchewan market isn't exactly Portland or Vancouver or Green Bay, but that's just what I see.

    Not arguing with you guys at all, I submit to your intergalactic brewing authority, but you don't think that the right micro with solid product and good marketing couldn't be Sierra Nevada or Red Hook or Rogue?? Another Sam Adams might be a pipe dream, but having said that, who thought Trump would be president or oil would hit 30$ a BBL again???

    The debt part worries me too. There's one micro here in town that went very aggressive right from "go". They're alive and well, but the first 12-18 months must've been un-nerving.

    What I find amazing is how many SS tank/equipment suppliers there are out there!!! There's dozens!!! I know that not all of them are Grade A1, but still.

    Just my thoughts ( and questions)....

    Cheers!

    -J.

  7. #7
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    Go back a few years and the prevailing wisdom was "if you're not 7bbl or bigger system you'll never make it." Now the "tasting room and serve your local market " is the sage advice. I think you need to know your market, understand the distribution channels and make great beer.




    Sent from my iPad using Tapatalk
    Prost!
    Eric Brandjes
    Cole Street Brewery
    Enumclaw, WA

  8. #8
    Join Date
    Dec 2015
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    Canada
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    Quote Originally Posted by mkunce View Post
    To begin, “Craft” is a term created by the Brewer’s Association and the definition changes often. In effect, the “Craft” market share of production is made up by the BA. Recently, breweries like Yuengling, Steven’s Point and August Schell (once outcast adjunct breweries) are now accepted in the “Craft” numerator. Be skeptical of this calculated share.

    The tactics of MillerCoors and ABInBev are obvious: Consolidate, Confuse and Billboard shelf space and handles. As they continue to buy up even more regional concerns they welcome the competition.

    At some point, brewery growth must slow down. When that will happen is anybody’s guess. If sales of “Craft” continued at 2015’s rate of 12.8 percent (again calculated by the BA), the entire U.S. beer market would be completely “Craft” in 17 years. That’s simply not going to happen. Some of the breweries are in good shape, but too many are undercapitalized or overextended. There is a lot of money flowing into the industry, but not all of it is backed with solid due diligence. For example, note all the new 15, 20 and 30 barrel production breweries! Most will not make it.

    Breweries that will survive will have some common traits. The winners will be deeply enmeshed in their local markets and locked in with their communities. Equally important-if they bottle or can-their beers will still taste great at least three months after packaging. They won’t degrade. When they come out with new beers, they will be leaders, not followers (e.g. the haze craze), with innovative, original ideas. Good luck to us all.
    You make excellent points.

    Don't get me started on the haze craze, the word from California brewers is that some breweries are adding flour to the beer to add haze. I was in San Diego last week. I ordered an IPA, it was almost milk hazy. I asked the bartender this isn't a flour beer is it? A belligerent husky lady (customer) at the bar heard and gave me the gears (I think she was related to the tap brewery come to think of it). My girlfriend said the bartender and the lady were bad mouthing after I walked away too. I just asked the question, I thought it was fair? This was my 3rd trip to San Diego. I will tell you this; San Diego has a 137+ breweries now. 5 years ago they were a leader in IPA, now they are so diluted with bad beer I left with mixed feelings. I feel customer demands are driving the styles over the breweries leading them in some cases. I am not a sheep and I don't want sheep beer.

    Quote Originally Posted by Brandjes View Post
    Go back a few years and the prevailing wisdom was "if you're not 7bbl or bigger system you'll never make it." Now the "tasting room and serve your local market " is the sage advice. I think you need to know your market, understand the distribution channels and make great beer.

    Sent from my iPad using Tapatalk
    Yup a lot of shelf and tap competition. I remember seeing those threads as you mentioned. Not to mention some of these known craft bars are starting breweries too with their "in house beers" (produced elsewhere) which pushes out the craft product they used to carry. The problem is I liked these places for their wide variety craft selection now the beer selection is below average as taste like they are made from "chain brewpub" breweries.
    Last edited by Jedi; 02-27-2017 at 09:46 PM.

  9. #9
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    NEPA
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    I had the privilege of brewing for a Macro "Craft" brewery and also a small local micro brewery. From my time at the large craft one you can feel the general uneasiness from management and higher-ups. The trend is now drink local. Like stated in many post above it gets to the market being over saturated. The chance that some will become the next Jim Koch is slim.

    That being said, When I was at the smaller local brewery they just started to get good distribution to some local states but the tap room had kegs being tapped daily. They made there bread and butter from events and keeping the tap room open with a great vibe and great beer.

    I know some guys at the "Marco" brewery still and they are the slowest they have ever been and everyone is scrambling to keep handles and shelf space.


    I think the real push for craft is just trying the "new" brewery out. Everyone knows what a Boston Lager or a Yuengling taste like, but if you see XYZ brewery opened up down the street everyone is gonna flock to it.

    just my 2 cents...regardless...I love the beer and love brewing it! CHEERS!

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