2011 State of the Six Pack - Part 1: The Growing, Changing Craft Beer Market

My fellow beer geeks:

The year 2010 has gone down in the history books as a landmark year for craft beer in Indiana. Between growth in craft beer sales, the opening of new breweries, and changes in legislation, Hoosiers have reasons to be optimistic. More restaurants and bars have craft beers on tap. More liquor stores are stocking craft beer. More people are looking at Indiana breweries and beers as a source of pride.

When you look at the numbers, despite falling overall beer sales, craft beer sales continue to rise…

“Our [growth] numbers are above the national average. That tells me that Hoosiers are catching up with the west and east coasts as far as learning about, appreciating, and consuming craft beer.” –Mat Gerdenich, President, Cavalier Distributing

“Indiana craft, as defined by the BA, is headed towards a 1.9% share with a .3% growth rate for the state. It looks like consumers are drinking less, but better; and the word “local” has added value at retail, especially as it relates to on premise consumption.” –Jim Schembre, Manager, World Class Beverages Indiana

“Craft beer’s Hoosier market penetration is considerably less than 5% overall [national average]. We have ample room for growth, and those 10% increases [in craft beer growth] soon will come to accumulate into genuine social change.” –Roger Baylor, Carnival Barker, New Albanian Brewing Company

So what do these numbers tell us?

“I believe the numbers are showing that people want more value for the dollar they spend.” –Dan Valas, President, Great Crescent Brewery

“People are starting to realize that there is a whole world of flavors, brands and styles out there…we think that the attention being paid to existing and new brewers in Indiana will be to the benefit of all of us who are interested in craft beer.” –Bob Mack, World Class Beverages

“There is more momentum in the craft beer segment in Indiana than ever before. More people, locally and nationally, are being exposed to and, subsequently, switching over to craft beer. Craft beer is still in its infancy in Indiana, so the growth potential here is huge compared to many other states.” –Greg Blackman, Sales Manager, Cavalier Distributing

The change in consumers preferences has a direct impact on local businesses.

“[Growth in craft beer] helps us focus on how to brew more beer tomorrow than worry about selling the beer we brewed yesterday.” –Doug Dayhoff, Upland Brewing Company

“Although our business is young, I can see a change in the customer base from two and a half years ago compared to today. When we first opened, our customers consisted of home brewers and the already established local craft beer community. Today, we still have many of those same customers, but many people are recently converted macro drinkers. People now read about local breweries from mainstream sources like local newspapers and travel magazines. Beer drinkers are no longer limited to industry literature for information on the local craft beer happenings.” –Chris Stanek, Manager/Co-owner, Crown Brewing

“We have a very broad range of customers and a lot of them are eager to try new and different beers. Some come in every week to get their usual beer and don’t stray too far from what they know they like; they stay loyal to their old favorite. We [also] get beer drinkers from all over the tri-state area (IN, OH, KY) and they are usually attracted by a new beer we have or want to try another one they haven’t purchased before.” –Valas, Great Crescent Brewery

Along with growing craft beer sales in Indiana, the number of breweries are growing. And it is viewed as a good thing for craft beer in general.

“[More brewers] adds a feeling with the general public that the breweries already in business are part of a legitimate segment (i.e. not a fad or the latest new thing). Some of the state with huge craft beer markets didn’t get that way by having one or two breweries.” –Valas, Great Crescent Brewery

“I think that home-grown beers are the best possible thing for the Indiana beer culture.” –Mack, World Class Beverages

“I believe that people want to support their local businesses…craft breweries in Indiana should continue to flourish.” –Tom Uban, Owner, Figure Eight Brewing Company

But it should be noted that not every brewery will be successful. Success is not guaranteed, but there are ways to avoid the pitfalls and continue Indiana’s craft beer growth.

“If [brewers] sacrifice quality for quantity, then we are in for a bumpy ride. But as long as they maintain that quality, I think they will all do in their own respect.” –Schembre, World Class Beverages

“I fear that small brewers rely too much on packing their excess capacity and shipping it so far way that the local story ceases to matter. I think a local brewery should dominate craft beer sales in its own home market. We need to educate incessantly within 10 miles of ground zero, move drinkers into a craft beer comfort zone, and then export from this enhanced local field position.” –Baylor, New Albanian Brewing Company

“The industry had a shake out in the mid-90’s as more and more breweries opened and product became suspect. However, today’s reality is that quality and process information is widely available online and in print. All the brewers talk about issues and help each other out, especially here in Indiana.” –Jeff Eaton, Owner/Brewer, Barley Island Brewing Company

“Cooperation and collaboration are key in craft beer and one thing to always be leery of is aggressive, potentially negative competition between local breweries. Over saturation of breweries could potentially lead to this.” –Blackman, Cavalier Distributing

“[Indiana breweries] need to focus on Indiana customers. Another concern with many breweries opening is that they are inexperienced and need help of established breweries. Remember that when someone gets a bad beer from a local brewery, they might blame all the microbreweries.” –Kwang Casey, Owner, Oaken Barrel Brewing Company

To be continued…

Coming up…craft beer in popular culture…trends in craft beer…legislative impacts on the industry and its consumers…and a look at 2011 and beyond…