Lew Bryson on "craft" beer's serious issues, and the looming shakeout.

Prepare yourself for a hyperbole-free reality check, courtesy of Lew Bryson.

Craft Beer’s Looming Crisis, by Lew Bryson (Daily Beast)

Here's the good news/bad news pivot, one that reinforces the point that brewers with a strong community presence and local roots have an advantage or two, but trust me, you'll want to click through and read the whole essay:

... As consumers become increasingly interested in locally-made products, there has been a rise in beer bought in brewery tasting rooms, which is much more profitable for a brand considering it cuts out several middlemen from the transaction.

So much beer is purchased there, in fact, that some people think category sales are significantly under-reported by retail sales-tracking services like IRI or Nielsen, which rely on register data from large store chains. Industry consultant David “Bump” Williams, who once ran IRI’s beer data division, thinks the amount is significant. He estimates that 20 percent or more of total craft beer sales go unreported. (He also points out that for some small breweries, meaning those that produce less than 20,000 barrels a year, direct sales are the only way their brews are available.) It’s a rapidly growing phenomenon, and one that could very well account for a percentage of the disappearing growth rate.

But even if one figures in direct brewery sales, the recent meteoric rise of craft beers can’t go on forever. If sales of the category continued at 2015’s rate of 12.8 percent, the entire U.S. beer market would be, well, completely craft in 17 years. That’s simply not going to happen.

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"Craft" beer is good at reusing old buildings, though it might depend on the size of the brewery.

Of course, it's also possible to completely outgrow these older buildings, at which point the traditional industrial park makes better sense because it's built for production of any and all items, and built next to automotive transport arteries.

At this point, our discussion can turn to a completely different model of sustainability, as I remind readers that older production breweries used to be places adjacent to railways, navigable rivers and canals.

But as brewpubs ... yes.

Definitely.

Reason No. 500 why craft beer is great: Reuse of old buildings, by Chris Crowell (Craft Brewing Business)

Sustainability is an integral narrative within the craft beer industry’s story, and many of these initiatives make for great headlines, but one of the most impactful sustainable attributes of the craft brewing industry, often overlooked, is the reuse of real estate and old buildings.

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What, you couldn't find an actual beer writer to fetishize multinational beer companies?

Esquire helpfully informs us ...

Aaron Goldfarb is the author of How to Fail: The Self-Hurt Guide, The Guide for a Single Man, and The Guide for a Single Woman.​

How very compelling, considering the article he wrote is about beer, not sex. Qualifications, anyone? In "It Doesn't Matter Who Owns Your Favorite Brewery," Goldfarb celebrates the fact that beer is entering a golden age of multi-national stewardship.

In fact, I predict the beer industry will begin to resemble the liquor industry. You know, the industry where an Italian amaro-maker like Campari can also own an American, family-run bourbon distillery like Wild Turkey, as well as SKYY Vodka and about 20 other international brands. Where Diageo seems poised to own just about everything you can possibly pour down your face. Or where a Japanese company like Suntory somehow manages to own Jim Beam and Maker's Mark bourbon-wise, Laphroaig and Bowmore in the scotch realm, and even a brand that makes cupcake vodka. Have any of these brands grown worse? I doubt it.

Have you ever heard about the straw man fallacy?

It never, ever was about the fear that AB-InBev (with Goose Island and others Trojan crafts) or Heineken (Lagunitas) would destroy the quality of the "craft" brands they buy.

Rather, it's always been about following the money: About them using such brands to leverage shelf space, or conduct price wars, or use in many varied ways gleefully developed throughout their multinational corporate histories toward the objective of "winning," which in multinational terms, is about eliminating, weakening and neutralizing competition.

You see, Aaron -- you wouldn't know this, so let me help you -- this thing got started back in the day so as to save beer's soul, which had gotten sucked clean out of it by ... yes, by the same multinational companies you fetishize.

It's time we admit craft beer is a business, no better and no worse than any other multi-billion dollar business. Sure, its products can get you drunk and make you hug people more than normal, but in the end, it's still a business that needs to make a lot of people a lot of money. There's nothing wrong with that.

Go back to writing dating books. Please.

As noted yesterday: Now more than ever, what matters to me is supporting brewers who function as independent local business persons. I know from a quarter-century of experience that these are the folks keeping the ethos real, and the money local, where it recirculates and helps other local businesses. It's just a matter of personal taste. Multinationals like Heineken have enough money. I'd rather have more control over where mine is spent.

It's time to put the genuinely local and "micro" back into this thing we all love.

I agree: "Local lagers looming."

During the course of research for an upcoming Food & Dining Magazine column submission, in which I'll survey the Gordon Biersch branch in Louisville, this link turned up.

I'd bookmarked the article long ago, and as is my custom, forgotten all about it.

Watson points to three factors to support his contention that we're about to enter a new era of local lagers: Market Evidence, Capacity Equation and Beer Lover Preferences.

I think he's absolutely right, particularly in the second of these. Eventually, there'll be much excess capacity, and when there is ...

Click through for the details.

LOCAL LAGERS LOOMING, by Bart Watson (Brewers Association)

Although a big part of craft beer’s strength lies in its diversity of styles, there are certainly trends in beer lover preferences that make particular styles or groups of styles rise to the top. In recent years it’s been IPAs. IPAs are still growing 40-50% in scan data on a bigger base than ever.

But what might be the next big thing? Looking out at the beer landscape, I think we’re about to enter a new era of the local lager. Why?

Rants, bar fights and strip clubs. Maybe it's time to become a wine drinker.

Thanks to RC for the link to the piece in Thrillist, a site I seldom acknowledge, except that in this instance, a writer is agreeing with most of what I've been saying for five or more years.

Consequently, I'm perfectly happy to cop some major vindication. If I can't make any money in this job, the least I can do is establish a legacy for calling the occasional shot.

Earlier this week, Stan Hieronymus couldn't find many feel-good beer links, and at least part of the reason was another round of wonderment at "craft" beer's failure to appreciate why "craft" beer events at strip clubs bear the potential to alienate women. Stan already had considered the topic on April 20:

This is a discussion about awareness. There’s been an ongoing conversation about sexism in beer and it needs to continue. In the midst of all those tweets somebody suggested “someone will still find a reason to be upset” and that is true. But some things should be obvious. “I sell beer. I want more women to buy it. I’d like more women to feel comfortable working in my industry.” The next thought should not be “Benjamin Braddock got the girl in the end, so I’ll ask these women to join me at a strip club.”

For a while now, I've heard a variation of this: "Just relax, Rog. Get back to it being about the beer, and stop trying to fight all these other battles. People want to get away from those battles when they're having a beer."

Problem is, this is remarkably similar to what I used to hear before I ever campaigned for better beer. I'm a straight white male American, and as such privileged without just cause. Because of this, why don't I kick back and enjoy the national eclipse? Why be upset? What can I do? Why try to change things?

But you see, that just isn't me. I'm almost 55 years old, and this weird ethos of mine -- the zeal to educate, the contrarian tendencies, the frustration and exhilaration, the logic, passion and anger -- always defies explanation, although I tried to fathom at least part of it last week, and naturally only managed to skirt the edge.

Better beer held out the promise for a very long time that it might help me understand myself. Often it did, and now it's slipping away amid the predicted absorption into being just another business.

Really? Being a business person is the last reason I became involved in business. My point was to make a point, and it always seemed a necessary evil to me. These days it seems more evil, and less necessary. If someone in New Albany within stumbling distance of my house would brew a hand-pulled Ordinary Bitter of about 3.8%, and serve it every day alongside a decent plate of curry, I'd be there every day, and forego the craziness. A gently smoked lager would work, too. Maybe there'd be time to read that way.

And don't even ask, "But Rog, you own a brewery -- just brew one of those."

So what do I do?

Run for mayor.

Rage against the machine used to be a band. Now it's my daily existence. Here's the article: Bar Fight: Why craft brewing is about to go to war with itself, by Dave Infante (Thrillist)

Pop open a Trojan Goose and enjoy this explanation of why you shouldn't.

Get ready for an uncommonly good explanation of the American brewing marketplace, a link forwarded me by my friend Jerry Ramsey. Here are a few passages and my thoughts.

For America's craft beer revolution, brewing battle has come to a head: The independent beer movement has exploded, threatening Big Beer and posing new dilemmas for craft brewers, by Michael Pizzi (Al Jazeera America)

... “It’s not just a matter of craft brewers banding together with our fists in the air against Big Beer anymore,” said (Chris) Gallant, Bronx Brewery’s general manager. “The biggest challenge is that there are just so many of us.”

What does this have to do with our monolithic "friends" at the Big Two?

The “Big Two” conglomerates — Anheuser-Busch Inbev and SABMiller — recognize the small beer movement is growing into a legitimate threat ... (and) pitched battles are brewing between Big Beer and small beer lobbies over distribution and franchising laws that determine access to markets. In Congress, dueling bills have been proposed to reduce the steep excise tax on beer in the United States, one of which offers a graduated tax schedule that would benefit small breweries. With their deep pockets and army of lobbying firms, Big Beer might just have its way.

With friends like them, who needs Islamic terrorism, except that "traditional low-cost American beers like Budweiser, Coors and Miller are simply going out of style." If you're a multinational monopolist, what's the response to an aesthetic precluded you by virtue of DNA?

“At Anheuser-Busch, you see a future where if you don’t act now to restructure the marketplace, your present product selection is going to confine you to a much smaller business down the road,” said Barry Lynn, a senior fellow at the New America Foundation who has done extensive research on the beer market.

So restructuring the marketplace is what Big Beer has begun to do, experts say. Contrary to its recent anti-craft messaging, Anheuser-Busch has actually begun to buy out independent breweries, starting with the 2011 purchase of Goose Island in Chicago. It has since bought out Blue Point, 10 Barrel, and, last year, Elysian in Washington (which, ironically, produces the Pumpkin Peach Ale that Budweiser mocked in its Super Bowl ad). The company has not commented whether the buying spree will continue, including in an email to Al Jazeera, but its strategy so far seems to involve subsidizing and selling its craft offerings cheaper than its competitors, proliferating them across its massive, coordinated distribution networks.

Lynn said he didn't think the plan was to profit off these beers directly. “What they want to be able to do is offer wholesalers or retailers a full array of products, to say ‘you don’t need to go anywhere else, we’ve got your craft covered.’”

Yes, that's right: Colonize taps and shelf space, lock them down by whatever means is workable, and keep small brewers from coming through the door. It's what AB-InBev does with zombie crafts like Trojan Goose Island -- and yet many of you still feed money to the monolith.

Why?

Paul Gatza, director of the Brewers Association, which represents the craft beer industry, said the Big Two can, by way of co-opted distributors, offer preferential treatment — prices and promotional displays, for example — to bars and stores who choose not to carry independent brews. Now that craft is in their repertoire, Gatza said, “you’ll see it more and more at bars, where Anheuser-Busch is dominating the facility and all the beers on tap are produced or owned by them."

And where have we heard this before? Right across the river, in fact, where the money you feed the monolith via Trojan Goose is used against the interests of your local brewer.

In some states, Big Beer has taken the even more aggressive strategy of buying out wholesale distributors. In doing so, Big Beer is challenging the formalized 3-tier system that has regulated the alcohol market in the U.S since the 1930s — whereby the brewer or distiller, wholesale distributor and retailer are all supposed to be separate entities, or tiers. Established in the aftermath of prohibition, the idea was that an intentionally inefficient system would keep the alcohol industry’s once-formidable political power in check. Decades later, those safeguards against vertical integration helped catalyze the craft revolution.

Small brewers argue that the acquisitions should be illegal nationally (in most states, it already is), pointing out there is no incentive for a distributor owned by Anheuser-Busch to carry anyone else’s brew. The controversy has come to a head most recently in Kentucky, where earlier this month the House approved a bill backed by independent brewers that could require Anheuser-Busch to sell its distributors in the state.

And yet, perhaps the most enjoyable aspect of these David vs. Goliath scenarios comes when Goliath starts crying like a hungry and abandoned baby.

Damon Williams, director of sales and marketing for Anheuser-Busch in Louisville, Kentucky, told Al Jazeera in an email that the bill "has nothing to do with craft beers and everything to do with greedy special interests."

Damon, my man ... takes one to know one, doesn't it?

About the looming crossroads.

From the iconoclastic to business-as-usual.

It's where we're headed, isn't it? But as the article makes clear, the shakeout will create bargains for those who possessed the capital in the first place.

Paging Herr Marx ... Groucho, not Karl.

Craft Beer Is Booming, but Brewers See Crossroads, by Ian Mount (New York Times)

... “What’s interesting is you have a lot of entrants, with low barriers to entry, chasing a finite amount of growth,” he said. “The industry will do very well as a whole, but you have a lot of people who are doubling or tripling capacity and taking on debt to do it.”

Mr. Steinman of Beer Marketer’s Insights agrees.

“People have built out way in front,” he said. “They’ve made bets and not all will succeed. It’s pretty likely there will be some that won’t survive. And then there might be some capacity available for cents on the dollar.”

Uh huh: "Are we seeing the end of real craft brewing?"

When an entire generation of beer enthusiasts looks at the demonic visage of AB InBev and sees not the face of pure and unmitigated evil, but a benign grandfatherly figure who provides them barrel-aged stouts brewed in zombie fashion by Trojan Goose ... then yes, it's all over.

The fat lady may now sing.

The only authenticity likely to matter during the years to come will be derived primarily from stubbornly independent on-premise brewing operations possessing genuine principles. So it goes, but no, it isn't going to be the same. That stale smell of money? It's the same great buzzkill, every single time.

Are we seeing the end of real craft brewing?, by Joe Sixpack (Don Russell at Philly.com)

LOOKING BACK on the takeover of a tiny Oregon brewery last week by Anheuser-Busch InBev, some years from now we may remember it as a turning point.

Or maybe we won't remember it at all.

But right now, it feels like the Day the Music Died - the day when craft brewing took the inevitable step from the adolescent innocence of selfless idealism to the maturity of just another bottom-line business ...

 ... For when we think of craft beer as just another business, it's not the aroma of malt and hops we're savoring. That's the stale smell of money.

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.

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.