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Is craft beer a bubble? (The Session no.80)

Logo of The Session, Beer Blogging FridayThe Session is a monthly event for the beer blogging community, started by Stan Hieronymus at Appellation Beer. On the first Friday of each month, beer bloggers write about a predetermined topic. Each month a different blog is chosen to host The Session, choose the topic, and post a roundup of all the responses received. For more info on The Session and the upcoming topics, check out the Brookston Beer Bulletin’s archive page.

This month’s Session is hosted by Derek Harrison of the blog It’s Not Just the Alcohol Talking. His chosen topic: Is craft beer a bubble?

“It’s a good time to be in the craft beer industry. The big brewers are watching their market share get chipped away by the purveyors of well-made lagers and ales. Craft breweries are popping up like weeds. This growth begs the question: is craft beer a bubble? Many in the industry are starting to wonder when, and more importantly how, the growth is going to stop. Is craft beer going to reach equilibrium and stabilize, or is the bubble just going to keep growing until it bursts?”

A banner photo showing listings of beers available at the Garage Project brewery
“It is not the spoon that bends, it is only yourself.” – The Matrix

Is craft beer a bubble? Yes and no.

I say a bubble is not a real thing. It’s a matter of perspective. Hence, I believe there can be no wrong answer to Derek’s question. Everyone wins!

Unless you are under a physical bubble-like dome, such as the characters in Stephen King’s novel-cum-tv show, then a bubble has a loose or adaptable definition…I think.

(Is there a definition for a bubble in economics or market analysis? I don’t know, economics has never been my area of interest…oh, look…Liam of DrunkenSpeculation has shown me there is, via his Session post.)

Aside from the economic, a bubble could also be a cultural trend or fashion. I don’t believe that this type of bubble firmly exists around craft beer yet, it’s still far too niche.

Within that niche, beer loving Aussies often place a “craft beer bubble” around my home city of Melbourne, due to the rapid rise of small bars, breweries and retail outlets specialising in craft beer over the last decade. It’s a trend that is fervently spreading all across Australia, soon to be matched by most major cities (we hope). However, as I’ve often said before, the bubble here itself is actually very small and somewhat disjointed.

You don’t have to stumble far from the city to find countless bars and pubs that sadly pour only lagers from one of the two major multinational brewers (Lion/Kirin or SABMiller). Furthermore, those bubbling areas of craft beer fashion and culture tend to be concentrated in regions dominated by what seems to be craft beer’s biggest demographic – 25 to 40 year-olds of the upper-middle class.

Many beer bottles lined up on a barIf craft beer is your unadulterated focus, then a bubble will form around it, and that will be dependent on how you define “craft beer”.

But craft beer is also beer, which has been an industry for hundreds of years. It will continue to be an industry for thousands more years. Encapsulating a niche segment of the market in a bubble will only hold back brewers who fail to evolve and adapt.

If anything, a bubble that may be bursting at the moment (hardly, but I’m trying to stick with the analogy), at least in Australian and the USA, is the massive bubble surrounding mass-produced adjunct lagers that have dominated our market for the last century. Bland, pale, heavily filtered beer made from processed ingredients seem to have reached their market capacity and sales have been slowly deflating for a couple of years now. The demand is dissipating.

Then again, in Australian at least, the current growth and popularity of craft/boutique/microbrewed beers has been seen before. Microbrewries spread like wildfire across the country during the 1980s. However, the growth was extinguished by the late 80s and 1990s fashion of corporate takeovers and capitalism with mega companies absorbing and deflating smaller brewers. Go back to the early 1900s and you will find the same thing again. (Grab a copy of Breweries Of Australia: A History by Keith M Deutsher and you’ll discover how versions of this perceived bubble have existed her for over 100 years.)

What we see today may just be history repeating. So, how do you put that intp a bubble? The important thing will be to learn from the cycles of history to help sustain the supply of the beers we love.

Many discussions around the current concept of a craft beer bubble seem to be initiated by people wanting to answer the question: when/why will the bubble burst?

A dark beer in a tulip glassThat is, when does the market saturation of “craft beer” hit a point of…err…what exactly? Too many hops and IPAs? Too many non adjunct lagers? Too many beers…no…no, the could never happen…there will never be too many beers for me!

Ultimately, any market sector is unpredictable in the long term. An analyst can make a good educated guess, and an operator can work hard to penetrate and sustain their piece of the market. However, your guess is as good as mine as to how long the current good times will last.

My lazy thinking on this is: if craft beer is a bubble, its bursting is so far off and/or so unlikely to end the supply of a range of good beers that it’s hardly worth discussing on a thirsty Friday afternoon.

Let the good beer flow!

5 thoughts on “Is craft beer a bubble? (The Session no.80)

  1. Interesting point – even made in jest! – with hops/IPAs. One of the things I think craft beer has going for it is the variety of styles that seem to ebb-and-flow. Here in the U.S., hops are king, but there was regular IPA, then the double IPAs and this summer session IPAs became the rage… That’s in addition to other styles that have increased in popularity like wild ales/sours/etc.

    Interest is going up and the variety is widening. I suppose that could be a good or bad thing as businesses try to grow quickly, but it’s great for us beer drinkers right now!

    • I’m convinced it’ll all settle out until breweries have their line-ups pretty set in stone. The current market promotes experimentation; everyone wants the buzz surrounding an odd, ambitious brew. But when it all settles and it’s about beer-out/dollars-in, I think a lot of people are going to have to focus on doing a few things well.

      My hope is that the “experimental” beers will remain as limited releases or pub-only casks. That way we can still get the experience without it really hurting the core of the brewery.

  2. “That is, when does the market saturation of “craft beer” hit a point of…err…what exactly? Too many hops and IPAs? Too many non adjunct lagers? ”

    The term you’re looking for is the craft beer Minsky Moment, which will be when Mikeller collaborates with Nogne to produce a beer so sour, so bitter and so high in ABV, it kills everyone who drinks it.

  3. Pingback: Session #80 Round-Up: the Undecided | It's Not Just the Alcohol Talking

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