Barley Mowat 

The Path To Glory

with 2 comments

Every few months the LDB publishes their Quarterly Market Review, and every few months you see a few stories appear in the paper about how liquor sales are effectively flat year-over-year, except for craft beer, which has shown a 20% annaul growth for years on end. This article invariably makes the rounds of the beer blogs, is discussion with great pleasure at bars and at house parties by people with large beards, glasses, or both. And then we forget all about it.

Seeing that March is done, we can expect another such report shortly and another good round of “feeling-good-about-craft-beer-itis.” Yes, craft beer growth at 20% is a good thing, even I can’t argue with that, but that’s not what the report actually says. It says that breweries producing less than 150,000 hl are growing at ~20% annually. 150,000 hecto-litres is 15,000 kilolitres, or 15 mega-litres. That’s a shit-tonne of beer.

As previously discussed here, that number includes an awful lot of larger breweries you wouldn’t normally let in the same room with the word craft (for instances, Granville Island makes 7 mega-litres, so they absolutely qualify). There’s a good chance that a large amount of the growth is concentrated on the uppper end. We just don’t know, but I have a strongly biased pre-formed opinion, and that qualifies as objective journalism around these parts.

But let’s assume the little guys are doing just as well. Heck, on my recent tour of Victoria it seemed like every brewer I talked to had plans to knock out a wall and take over a recently vacated neighbouring spot. Add to that the fact that a brand new brewery operating in the area was seen as positive thing rather than more comptetition and we are painting the picture of a rapidly growing sub-industry.

We’re also painting a picture of a string of bankrupt businesses near breweries. Please.

But what does 20% actually look like? A 20% increase in sub 150,000 hl domestically made beer sold in BC means 7,000,000 litres more produced, per year. Granted, that’s production across Canada, but that’s not too shabby. That’s the equivalent of a whole new Granville Island Brewery per year.

Of course, compared to the big boys it’s nothing. The Molson’s and Labatt’s of the world are looking at a 5% year over year growth. Or about 9,500,000 litres. Yup, even with growth that most people consider “stagnant”, they’re growing faster in terms of sheer volume than the little guys. And sheer volume means people. For every 7 new people that reached for a (potentially) craft beer these past 12 months, 9.5 new people reached for a mass market brew (or maybe 8 normal people and 1 pregnant woman?) Of course, these numbers could also mean that 9.5 macro drinkers are now drinking twice as much. It’s hard to say with any certainty.

What is certain is that people just love their light beers. Macro beer outsells micro 6:1, and a good chunk of that :1 is lighter beers like lagers, pilsners, honey lagers and… uh… honey pilsners? I guess?

This creates an interesting dilemma for brewers. Imagine you’re setting up a new brewery. Do you brew the beer you want to drink but won’t sell, or do you brew the beer you can’t stand but will pay the bills as the mouth breathing masses consume it out of funnels after bouncing ping pong balls into it?

True ladies squat to funnel. And don’t wear pants.

I know which one the bank wants them to do. And the company president. And the LDB, who seem rather irked by this whole “good beer” thing and rather hope it would just go away already.

Brewers manage to make this more acceptable to bear by compromising. “Fine,” they say, “I’ll brew idiot juice for the masses, but I’m going to do it my way. Quality malt, interesting yeast, and maybe some slick hop blends.” And thus is born the best boring beer you can imagine.

The beer goes out, it sells well, and profits come in. The business guys in charge of the brewery look at this, smile, and instruct you to take this new money and… brew even more of the same shit. You, of course, want to branch out and try something new, perhaps something weird that appeals to a smaller, more select audience.

The MBA running the place, though, just hears you spewing insane nonsense. Your bold new business plan is to not brew the product with a proven customer base, brand recognition, and solid profit margins. Instead, you want to do something totally new that may or may not actually sell. This goes against everything the MBA learnt in business school.

I thought that idea sounded familiar.

Even Driftwood isn’t above this. Their launch line-up included an amber ale, a pale ale, and a wheat ale. Yes, I know they’re very good examples of those styles, but that’s sorta my point. Only after they’d established a fan base and gotten a steady revenue stream did Jason start fucking around with new (to BC) styles like barrel-aged stouts and barley wines. And that’s in a brewery RUN BY A BREWER.

If it took that much effort for Driftwood to make solidly interesting beer, imagine how hard it must have been for places like Lighthouse, Phillips and Russell to start pushing out interesting one-offs. It requires some serious balls to take the profit from one pallet of hot-selling insipid beer and use it to create anything but another pallet of the same old stuff, but they’re doing it. And holy shit, these weird new beers selling. And not just to me.

Every brewery that produces a specialty line of one-off beers makes it easier for the brewing crew at the next brewery to convince management it’s a good idea. And every release that we, the beer drinking public, consume with manic fervour only fuels that fire.

Together we’re creating a mature market for high end beer, and demonstrating the profitability of competing in that market. The market is mature enough that Driftwood is contemplating ditching some of their lower-end beers to free up space to pursue the high-end. Crooked Coast and Driftwood Ale, we hardly knew ye.

So there you have it. The best way to fill the shelves with a broad selection of beer of increasingly complexity is to make it profitable to do so by going out and drinking what’s out there now. We’ve finally reached the point where every beer you take off that shelf will be replaced by something better, and I’m game for leading the charge to perfection.

Written by chuck

March 31st, 2012 at 1:58 pm

Posted in Breweries

2 Responses to 'The Path To Glory'

Subscribe to comments with RSS or TrackBack to 'The Path To Glory'.

  1. Not Crooked Coast! I just discovered it and it’s brilliant!


    2 Apr 12 at 08:18

  2. @Matt – Keep in mind there’s nothing official here. Just hearsay. It’s a very tasty beer, and I seriously believe it’s the best amber ale in BC. I also believe it’s probably the worst beer Driftwood makes. I’d happily leave the production of amber ales to other capable breweries and let Driftwood go nuts. Would you rather more Croaked Coast, or one more unique one-off beer like Son of the Morning per year? You can’t have both.


    2 Apr 12 at 08:35

Leave a Reply