Some analysis of the microbrew sector

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Uncle Bobby
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Some analysis of the microbrew sector

Postby Uncle Bobby » Sat Aug 31, 2013 2:18 pm

Not comprehensive analysis by any means, but the business columnist from the Star (who is generally pretty even-handed) does identify a few key trends threatening micros with this back-of the envelope SWOT analysis.

http://www.thestar.com/business/2013/08 ... olive.html
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Postby S. St. Jeb » Sun Sep 01, 2013 2:56 pm

Saturation It won’t be long before there are too many brews chasing too few beer lovers.

I can see this. I don't expect all of the 100+ Ontario breweries to be around in 5 years, but I hardly see it as the demise of craft beer.


Falling consumption. ...and the recent continent-wide crackdown on campus binge drinking...

I don't think this affects the craft beer market.



Sell-outs. The macros also have the clout to simply buy a craft brewers’ hard-earned success.

An industry now increasingly ripe for yet another round of consolidation has seen this phenomenon before. In the 1950s and 1960s, Toronto tycoon E.P. (Excess Profits) Taylor — or, more accurately, his able hired hand George Black, Conrad’s father — pressured dozens of independent breweries to sell to his Canadian Breweries combine, becoming for a time the largest brewer on the continent.

There has, in short, been a pleasing abundance of choice for beer lovers in the past. But each of those golden ages has culminated in scores of breweries being swept into combines.


I wasn't around drinking beer in the 50s and 60s. I know there was lot's of choice, but I don't think the situation was the same as today.
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Postby Steve Beaumont » Mon Sep 02, 2013 10:02 am

David Olive is usually much closer to the mark in his analyses. In this story, I believe he betrays a serious lack of familiarity with the topic at hand. There are many, many holes in his take.
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Postby Cass » Mon Sep 02, 2013 10:42 am

Agree with Stephen. This isn't a strong article.
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Postby northyorksammy » Mon Sep 02, 2013 2:51 pm

41 per cent of Americans aged 18 to 29 citing beer as their preferred beverage alcohol, down from 71 per cent in the early 1990s. And that number is down to 43 per cent among those aged 30 to 49

that, and the declining consumption of all alcohol in restaurants over the last few business quarters (not brought in the article), with the biggest fall being from beer sales
give pause for new and future entrants

Tastes do change
However, overall I agree that the article's analysis is not otherwise strong
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Postby saints_gambit » Tue Sep 03, 2013 9:56 am

S. St. Jeb wrote:

Falling consumption. ...and the recent continent-wide crackdown on campus binge drinking...

I don't think this affects the craft beer market.




Actually, I've suspected for a little while now that the craft beer movement is helping to drive decreased consumption. There was a time not so very long ago where people would just go and pick up a 24 of whatever for the weekend. It wasn't necessarily buying whatever was cheapest, but buying what looked the most promising in a large format. A 24 is what? 8 litres of beer? And people were going through that over the course of a weekend?

If you go to the LCBO or a brewery now, you're buying higher priced growlers or bottles at a much smaller volume. You might get through a weekend on two litres of beer. That's a pretty significant drop off in consumption patterns.

I'm making some assumptions there, naturally, but I don't think I'm wrong in saying that by changing the mode of consumption, craft is actually starving out the big guys whose business is modelled on volume sales. The only problem is that eventually that might come back to bite 'em.
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Postby Kel Varnsen » Tue Sep 03, 2013 10:56 am

S. St. Jeb wrote:
Falling consumption. ...and the recent continent-wide crackdown on campus binge drinking...

I don't think this affects the craft beer market.


I think it would. I mean not all people who buy craft beer are fanatical about it. Some people just buy stuff like say Steamwhistle or Lug Tread because they like something that has more flavour than coors light. If people are cutting back their beer drinking for diet/health reasons it is going to affect the casual bud light drinking the same way it effects the casual steam whistle drinker. I mean there is a reason molson developed molson 67. It wasn't for fun. And they still sell it so there is obviously a market for a low calorie beer.
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Postby Mike-KBCo » Tue Sep 03, 2013 4:49 pm

Pretty weak, alarmist garbage.

•Saturation.

Same argument we've been hearing for 20 years in the States - if not more - and I've never been convinced.

•Falling consumption.


I suspect the craft beer segment is driving an overall decrease in consumption. Already noted somewhere in this thread is the idea of purchasing quality of quantity. Yeah this may be more anecdotal and less scientific, but from my experience this appears to be the case.
•Davids and Goliaths. The macros have gotten into the “small” beer niche themselves, of course, with brands that are passably flavourful. These include Shock Top Belgian White (AB InBev), and Six Pints Beer Academy Kölsch (Molson Coors), or Blue Moon (Molson Coors). The craft-brew lobby has failed to enforce labeling of these “faux craft” beers as such.


This is a legitimate threat.

•Sell-outs. The macros also have the clout to simply buy a craft brewers’ hard-earned success. Molson Coors alone snapped up Ontario’s Creemore Brewing Co. in 2005, and the esteemed Granville Island Brewing Co., Canada’s second-oldest craft brewer, five years later. Toronto pioneer Upper Canada Brewing Co. sold out to Guelph’s Sleeman Brewing Co., which soon enough slipped down the gullet of Sapporo.


The success paradox. This is directly related to the "David & Goliath" point in that multi-nationals getting crafty represents a real challenge to legitimate small breweries with limited budgets. But let's not kid ourselves, there are already larger, let's call them "regional breweries", that exist in Ontario now that operate just like the much-maligned macros. Life goes on. We continue to flourish.

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In my opinion I think what we are seeing is a structural shift in the purchasing patterns of the average consumer. In greater numbers than ever, people are looking for quality beer that offers a unique experience. The data supports this. People want a story. They want passion that can't be found in a bottle of Blue or Bud Light.

Ask yourself this: have you ever seen anyone who has liked craft beer go back to macro?
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Postby MatttthewGeorge » Tue Sep 03, 2013 6:10 pm

Mike-KBCo wrote:Ask yourself this: have you ever seen anyone who has liked craft beer go back to macro?


Good points. But to this last remark, yes I have, purely due to price, and that would be my father. My old man introduced me to craft beer (Creemore & Neustadt) 10+ years ago, and still buys craft on special occasion, however now retired, he just can't afford craft beer all the time and frequently buys James Ready, Laker, Lucky, etc.
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Postby Kel Varnsen » Tue Sep 03, 2013 11:03 pm

MatttthewGeorge wrote:
Mike-KBCo wrote:Ask yourself this: have you ever seen anyone who has liked craft beer go back to macro?


Good points. But to this last remark, yes I have, purely due to price, and that would be my father. My old man introduced me to craft beer (Creemore & Neustadt) 10+ years ago, and still buys craft on special occasion, however now retired, he just can't afford craft beer all the time and frequently buys James Ready, Laker, Lucky, etc.


My dad is the same way (my brother in law too). They appreciate the flavours available in good beer (both live in Victoria where the selection of good beer is crazy compared to ontario). But for both of them beer is just a cold drink that is supposed to give you a light buzz with minimal flavour. And since that it all it is to them, they go with Lucky because it does the job just as good as bud or coors, but is cheaper.
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Postby Kel Varnsen » Tue Sep 03, 2013 11:16 pm

Mike-KBCo wrote:
This is a legitimate threat.

The success paradox. This is directly related to the "David & Goliath" point in that multi-nationals getting crafty represents a real challenge to legitimate small breweries with limited budgets. But let's not kid ourselves, there are already larger, let's call them "regional breweries", that exist in Ontario now that operate just like the much-maligned macros. Life goes on. We continue to flourish.



It is kind of strange to me how small producers in the beer industry more than pretty much any other industry I can think have adopted this us vs them mentality when talking about the big players in the industry to the point where they have to come up with terms like crafty and refer to them as a threat rather than competition. I mean I have never been into a small bakery and heard them trash Dempsters, even when their bread is better. Hardly ever hear independent movie directors trash people like Steven Spielberg. Hell many small brewers are also getting into the soft drink business, yet I have never heard one of those companies take shots at Coca-cola. So why is it so different in the beer industry?

I mean I guess you could talk about sneaky industry practices, but I would say that a company like Inbev probably looks like a church thrift store compared to the industry practices of coca-cola or even those of some of the big entertainment companies.
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Postby S. St. Jeb » Tue Sep 03, 2013 11:47 pm

Kel Varnsen wrote:
S. St. Jeb wrote:
Falling consumption. ...and the recent continent-wide crackdown on campus binge drinking...

I don't think this affects the craft beer market.


I think it would. I mean not all people who buy craft beer are fanatical about it. Some people just buy stuff like say Steamwhistle or Lug Tread because they like something that has more flavour than coors light. If people are cutting back their beer drinking for diet/health reasons it is going to affect the casual bud light drinking the same way it effects the casual steam whistle drinker. I mean there is a reason molson developed molson 67. It wasn't for fun. And they still sell it so there is obviously a market for a low calorie beer.


I don't think I was very clear in my point. My thinking was that "campus binge drinking" is likely done with cheaper, macro stuff. I can't see more expensive, stronger flavoured craft beers being consumed in that situation. So, if campus binge drinking decreases, I don't think it would affect craft beer sales.
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Postby matt7215 » Wed Sep 04, 2013 10:30 am

Mike-KBCo wrote:Ask yourself this: have you ever seen anyone who has liked craft beer go back to macro?


I havnt gone back to macros but I certainly dont buy craft beer the way I used too. I no longer feel the need to try every new product on the market. I rarely buy bombers or 750s because the value per ml is terrible. Lastly, if a macro product is better then a craft product I no longer feel like I should go for the craft just to "support the little guy". If Im in the mood for a pilsner Im grabbing a Pilsner Urquell or Bitburger. If I feel like a porter Im grabbing a Fullers. In fact pretty much the only style I still buy from craft producers is IPA.

$11 bottle or Wayward Son, no thanks, Ill take 3 Chimay White
$14 bottle of Flying Monkeys BNL, nope, 7 bottles of Sinha
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Postby markaberrant » Wed Sep 04, 2013 11:22 am

matt7215 wrote:I havnt gone back to macros but I certainly dont buy craft beer the way I used too. I no longer feel the need to try every new product on the market. I rarely buy bombers or 750s because the value per ml is terrible. Lastly, if a macro product is better then a craft product I no longer feel like I should go for the craft just to "support the little guy". If Im in the mood for a pilsner Im grabbing a Pilsner Urquell or Bitburger. If I feel like a porter Im grabbing a Fullers. In fact pretty much the only style I still buy from craft producers is IPA.

$11 bottle or Wayward Son, no thanks, Ill take 3 Chimay White
$14 bottle of Flying Monkeys BNL, nope, 7 bottles of Sinha


Great minds think a like, I am with you all the way!
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Postby Tapsucker » Wed Sep 04, 2013 6:38 pm

markaberrant wrote:
matt7215 wrote:I havnt gone back to macros but I certainly dont buy craft beer the way I used too. I no longer feel the need to try every new product on the market. I rarely buy bombers or 750s because the value per ml is terrible. Lastly, if a macro product is better then a craft product I no longer feel like I should go for the craft just to "support the little guy". If Im in the mood for a pilsner Im grabbing a Pilsner Urquell or Bitburger. If I feel like a porter Im grabbing a Fullers. In fact pretty much the only style I still buy from craft producers is IPA.

$11 bottle or Wayward Son, no thanks, Ill take 3 Chimay White
$14 bottle of Flying Monkeys BNL, nope, 7 bottles of Sinha


Great minds think a like, I am with you all the way!


You're both heretics. It's people like you that are discouraging independent brewers from producing 15% ABV bacon-guava white porters. Yeah, maybe a little steep at $20 a bomber, but we really NEED this stuff. :lol:
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