So, I’ve been out of the game for a bit – more than a bit actually. My appreciation for craft beer never waned, but the past few years I really haven’t had the time to dig in the way I did in the past. I haven’t been homebrewing and I haven’t reviewed any beer whatsoever. Truth be told, it has been refreshing – sitting down simply to enjoy a beer is a beautiful thing after all. But that’s changing this year and I’m stepping back up to the plate…I mean glass.
I can’t think of a better way to do that than by chatting about the state of craft beer in 2020. Luckily for me, just today I stumbled across a Facebook post discussing just that from the owner of Mikerphone Brewing, Mike Pallen. I wasn’t sure that his feelings as a brewer would align with mine as a consumer, but I have to say that I was pleasantly surprised. Read what Mike had to say below.
“So there is a lot of discussion right now about how ‘craft beer’ is dead. I really think we need to look again at the definition of craft and start sub-dividing craft. To be craft, you need to produce 6 million barrels of beer or less. 6 MILLION BARRELS! In 2019, Mikerphone produced 1,300 barrels. That is a huge difference. Not really comparing apples to apples here are we now? I think we need to have Macro Craft Brewers, Mid-Level Craft Brewers, Micro Craft Brewers, and Nano Craft Brewers.
Where I see craft dying is on that much larger scale where you need to distribute locally and maybe even nationally, have marketing teams, fight for draft lines, fight for shelf space, fight your fellow craft brewers. Craft Beer is thriving with the smaller craft brewers. They are servicing their local community. They are selling 100%, or close to 100%, of their product direct to consumer. They are nimble. They are innovative. They can adjust to trends. They can give the consumers what they want when they want it, and fresh.
Do I see struggles out there…YES. Breweries who got into this to solely make money or make large amounts of beer are going to have a tough time in a landscape of 8,000 breweries. They might have to lease some of their tanks out to other breweries. They may have to join forces with non-traditional partners. 2020 will be the year of closures, but I am not seeing it on the Nano sector.
Craft beer is not dead. It is just figuring things out, but killing it at the small, local level! Maybe I am wrong, [this is] just my gauge of the way things have played out the last few years.” -Mike Pallen, Owner of Mikerphone Brewing
It’s always great to hear from the people who live this day in and day out. In my experience, craft brewers tend to have a solid grasp on what their customers and communities want in a way that many business owners do not. That being said, I want to take a moment to provide my two scents on a few of Mike’s points as someone outside the industry.
When it comes to segmenting craft beer further, I believe there are really two angles to consider – the way these classifications might impact breweries from a business perspective and whether or not consumers care. As long as the big boys don’t dominate the conversation, I could see some really creative ideas being brought forth regarding the way we tax and regulate breweries based on their production numbers. That could be great for business, but I think the harsh reality is that most consumers don’t care if breweries produce 1,000 barrels a year or 1,000,000 barrels a year – with the caveat that the product is solid obviously. To most, it’s semantics and their main concerns are whether they like the beer and how much it cost.
However, I think the idea of servicing local communities is where Mike is 100% spot on. In my opinion, there is nothing that says “craft beer” more than grabbing a few pints at your local watering hole brewed by folks you could call your neighbors. In fact, the majority of Americans now live within 10 miles of a craft brewer per the Brewers Association. Accessibility has never been better and it’s only improving. As Chicagoans, we’re lucky to have amazing options throughout the city and suburbs. I hope in the near future virtually everyone in the country can say that.
As for larger craft brewers, I, like Mike, think the pinch is coming. The number of taps to occupy are definitely not increasing as quickly as the number of brewers trying to put their handles on them would like. And, there are a plethora of expenses they have to take on if they want to remain competitive. Chasing tap handles across state lines requires large marketing campaigns and field reps as well as cutting in distributors. Those expenses can add up quickly, cutting deeply into the bottom line. Look no further than the meteoric rise and subsequent fall out at Ballast Point as proof. They’re still alive and kicking, but only time will tell if they’re a example of what’s to come or a one-off situation.
So is craft beer dead? Absolutely not, like Mike said, “it is just figuring things out.”
Let me know what you think about where the craft beer industry is heading at the moment. Has your favorite regional brewery been bought out? Has your favorite brewpub been growing or have they had to close up shop? Let me know in the comments.
Mikerphone Brewing is owned and operated by Mike Pallen and located at 121 Garlisch Drive Elk Grove Village, IL. You can find out what they currently have available in their taproom here.
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