Showing posts with label business models. Show all posts
Showing posts with label business models. Show all posts

Sunday, October 26, 2014

Being a "local hero" may require the use of a different set of muscles.


Let's expand upon this:

No, we'll likely never return to the time when three huge brewers dominate the entire beer marketplace. However, as the big "craft" players from the West Coast continue to establish production facilities on the Eastern Seaboard (Sierra, Oskar Blues, New Belgium and now Stone), aren't we looking at a scenario wherein retail shelf space comes to be their province in much the same way?

Schumacher offers an interesting comparison, one that points to another level of the brewery proliferation discussion.

How do 2,000 wineries in California survive?

Knowing quite little about it, I'd guess that their business models radically differ. Gallo has wine in every supermarket nationwide. Conversely, a small mom 'n' pop vintner ships a few hundred cases a year of something not at all plonk, and achieves his or her goals. California wineries predate "craft" breweries. Legal regimes vary. They've had time to dope it out, evolve and rationalize.

If every community is to play host to its own brewery, and all of them thrive, my guess is that the avoidance of a bubble bursting depends on economies of scale, and accompanying business plans. What worries me are all the new brewers who posit growth (and assume debt in accordance) according to outside distribution. It simply cannot be the case in the way this market currently works. I weary of collective 13% growth blurbs unaccompanied by a breakdown of production size. How much of that percentage is Sierra, and how much the brewpub in Anywheretown?

To be more succinct, it is the case now, and will be so increasingly in the future, that the interests and strategies of a 300-bbl pub brewer and a 30,000-bbl production brewer differ. NABC and Sam Adams are not alike. We're very different. We may both be "craft" in some nebulous way, but the differences are becoming wider, not narrower.

The practical consequences? I'll save those for another day.

The Beer Curmudgeon: LOCAL HERO, by Harry Schuhmacher (All About Beer Magazine)

 ... One of the most commonly asked questions within the beer industry today is: How many new breweries can the market support? Are we becoming saturated with too many breweries opening up? The answer is: not yet, not even close. There are over 2,000 wineries in California alone. If this local thing keeps going, every community will play host to its own brewery, and that’s not such a bad thing.

Saturday, September 06, 2014

Diary: From platinum to unplugged in a six-pack or less.

My diaries are intended to be extemporaneous utterings of ideas, without gloss or sheen. Sometimes I come back to them and polish, other times not.

In the music business, it used to be that a band toured relentlessly with low remuneration to build a market for its album releases, and if albums and songs hit it big, the returns were huge. Notice how every member of any band that had a 10-million selling album in the 1980s owns one or more castles?

Nowadays, and album is huge if it sells a couple hundred thousand copies in tactile format. Bands give away their music to build interest in touring, or perhaps songs are marketed on television commercials and on-line apps.

The point is that business model has changed completely. I suspect that in coming years, analogous considerations will pertain to the "craft" beer business as it becomes saturated. There'll be the top tier of players -- New Belgium and Bell's and Whomever Else playing the roles of the Stones, Springsteen and other major touring acts. Then there'll be the remainder, finding that the daily production undertow required to get by increasingly resembles those CD sales figures.

There'll have to be other ways of making bank. Probably those on a brewpub/on-premise scale will find it easier. Those on a production scale, with declining outlets, will need to determine how they become the equivalent of touring bands. In short, I think the business model is changing in my world, too.

The question is, how to survive? Not sticking with what are about to become outmoded strategies is an obvious first move.

The analogies aren't exact ... but they're intriguing.