Some of the best Hoosier Beer Geek content never makes it to the site, as we regularly have very lengthy email conversations about any number of topics going on in the world of beer. Here is one such example.
So Goose Island is saying that they'll be making bourbon county stout year-round.
That got me to thinking about Matt's theory that the big guys will ultimately be the winners of the craft beer explosion. What happens when the big guys figure out how to make better beer than everyone else at a cheaper price?
Is it possible that the increased production of BCS is a bad thing?
I think the increased production of BCS is a great thing, an amazing thing. There are a lot of economics behind why smaller brewers create such limited batches of things like Dark Lord, Kate the Great and KBS, but they favor the brewery and not the consumer. I'd love to have a barrel-aged imperial stout (and one of the best ones, at that) available year-round. Complaining about Goose Island doing that is like complaining that Russian River releases barrel-aged beer year-round. It's not going to drop the market out for 3 Floyds or Founders or anyone else. 3 years ago you could pretty much buy BCS year-round anyway. Beer snobs are going to decide that BCS has "changed" and is of lower quality and move on to praising the harder to obtain things like they always do. Everyone wins.
Although to be fair, Goose Island has been producing BCS year round for the past few years. Coffee, Vanilla, Rare and other one-offs make their way into the market throughout the year. Goose Island is always brewing/aging the stuff, it just gets released in batches. I realize that by doubling their production they can afford to stop releasing in batches, but again, I think that's a good thing.
I'm with Rod here. There will be lots of carping about this, particularly given AB/InBev's stake in the whole thing. But I look forward to having more frequent access to BCS, particularly because GI has the barrel-aged imperial stout style down so well.
As to Matt's contention that the big guys will ultimately be the winners of the craft beer revolution -- I don't know about this. I think it all depends on how you define "big." While I don't have any facts to back this up, it seems to me that it's extremely difficult to do a truly artisanal product on a national scale, albeit perhaps not so difficult on a regional scale. Of course, this doesn't prohibit an InBev or a MillerCoors from purchasing several regional brewers to ensure that the company has a national reach, but with different "craft" brands, so maybe that's what we'll see more of. I wouldn't be surprised to see the big beer conglomerates increase their efforts to buy smaller, good quality brewers.
All in all, it'll be interesting to see how the craft beer industry will develop over the next decade. The whole thing reminds me of how indie rock fans react when their favorite band gets "too big." They all sit around talking about how the band was great back in the day but has now sold out, even when some of the bands they criticize continue to make good music.
I just finished the entire article and it's an excellent read. I think the most shocking thing to me is that the AB buyout allowed them to double their capacity. To 230,000 barrels. 3 independent craft breweries have announced expansions this year that are twice the size of Goose Island's entire operation, post-expansion. Stone, Dogfish Head and Bell's are all way bigger. I guess it's just an intriguing contradiction - AB is the largest in the world, but Goose Island isn't even in the same ballpark as the largest craft breweries.
My favorite part of the article is Laffler's attitude, and it's what I believe is the correct attitude to have. If AB screws up Goose Island and ruins the beer, there's no reason to be loyal to them and pretend like everything's ok. But it hasn't happened yet, so keep drinking the beer.
I think there's already a form of "big guys undercutting little guys" happening in the market but it doesn't seem to hurt the little guys much unless they suck. I mean, who's selling quality six packs under $10? Just big craft guys like New Belgium, Goose Island, Sierra Nevada, etc. Are we worried that AB/InBev is going to start selling a quality product for $7 per sixpack and no one will buy Sun King anymore? Seems unlikely to me.
As for BCS, I'll be ecstatic if they make that available year round. I haven't had it -- other than an aged bottle here or there -- in two years because of scroungers/hoarders.
I still strongly feel that the craft beer revolution will benefit the largest brewers in the long run. Economies of scale and consumer demand long term is always the same. People want what they want, when they want it, at least cost. Craft beer is at a golden opportunity right now where demand outpaces supply. This won't always be the case. Companies will either be major regional players or major national players. I harp on cost often (sorry everyone) but it matters when perceived products have the same intrinsic value but different cost points. I think you already see it with places that can't keep cans of Sierra Nevada, New Belgium, or Sixpoint on the shelves - high quality product at a lower price point. Local bottling breweries are up against stiff competition. Liquour stores put it next to Bells and people see a $3 dollar per sixer price difference and won't support it.
The Goose Island buyout really shows you that beer geeks will still strongly support a place as long as quality doesn't suffer even if owned by the evil empire.
Over the next decade I think a brewery is going to have to be something special to truly survive and support their bloated payrolls.
Just my two cents.
I'm was waiting for Matt to weigh in (and he did right before I hit the send button), but did you see that the guy from Cigar City is worried about availability of raw supplies? (See the last question in the link)
I think that's going to be another 'big vs little' issue. We can already see that certain varieties of hops are hard to come by, but what happens when it's barley? Or bourbon barrels? Obviously it makes more sense to sell all your barley or barrels to one big guy instead of twenty little guys. Just because you're not big compared to Budweiser doesn't mean you're not big compared to Black Acre (for example).
If anything, I think mega-craft breweries will actually prevent a shortage of raw supplies. Now if you just have a bunch of small breweries requesting ingredients, it takes a clever business person to put the numbers together and realize and overall growth in the market - which is realized eventually, but more slowly. When Sierra Nevada steps in and needs enough barley to brew 500k more barrels of beer, the industry takes notice and reacts immediately. Farmers will grow enough barley and hops to support the market. If there's money to be made, people will make it. If guacamole becomes popular, there isn't an avocado shortage - they just grow more avocados.
What Cigar City's brewer should really be worried about is the price of raw ingredients going up - that is a very real concern and will happen soon. The only hops that are in limited supply are the ones that are being grown in limited quantities and small brewers are buying up. Once they catch on, there will be plenty of them. CTZs are the prime example. When it comes to Bourbon barrels, we're a long way away from a shortage on those. Alcohol is a pretty huge industry, and barrels can only be used once. Jim Beam alone goes through hundreds of thousands of barrels every year.
I think Matt is spot on with his assessment that the larger brewers will profit more from the craft beer growth. The more beer you make, the more you can sell, and the lower price you can sell it at, which sells your product faster. I think the craft beer market is going to split into small and large craft. Essentially $7-9 six packs and $10-14 six packs. Small will be assumed to be of higher quality and artisan workmanship and large will be the mass market alternative to macro. Lower cost will sell more, but both will see growth. Liquor stores need to be smarter with their marketing and put all the Indiana beer together instead of pitching local stuff against Bell's if they really want to sell it. All Indiana brewers are selling at a pretty similar price point.
That certainly doesn't mean that you're going to see $12 4-packs of BCS. Barrel-aged beer takes a lot more labor, space and time to create, so it will continue to carry a higher price tag.
We also need to keep in mind the distinction between production breweries and brewpubs. While the big guys will probably benefit from the craft beer boom, I think that brewpub-brewed beers will continue to be in high demand locally, particularly when the beers brewed by local brewpubs and the general atmosphere and experience provided by local brewpubs are unique to their particular locality (did I say "local" enough there?). Brugge is a great example of this. No one else in Central Indiana--hell, no one else in Indiana period--is brewing many of the beers that Brugge is brewing, and people will continue to visit the brasserie just to get those beers.
It may come as a surprise to most of you, but I don't drink beer that frequently. Honestly, I may drink one or two days a week. I don't generally drink beer at home unless I have guests. And then I'm opening up bombers or a bottle from a mixed six pack. I don't have a regular, everyday beer. I keep Miller High Life around for boiling bratwurst, but absent that, I do not have a go-to beer at home. So the discussions of six pack pricing doesn't really concern me. I'm interested in trying a variety of beers and satisfying my beer-drinking desires which change direction with the wind.
So having GI BCS available anytime I'm in the mood for a barrel-aged stout is a win for me. Will it ruin other breweries? Doubtful. How many geeks keep barrel-aged stout in the house as their "go-to" beers.
Otherwise, I rarely buy the same beer twice for home, so the $8 vs. $12 six pack argument does not really impact me. But I am be the exception.