Where Next From A Year Ago

Reportedly we live in the time of the craft beer revolution. In my view, the revolution has already happened; it’s over now, just as we don’t call the maturing and decline of mass-produced conventional beer a revolution any more. The revolution took place with the realisation of the demand for something unconventional on the market and the commercial response to this.

The term craft beer no longer has a definitive meaning and only confuses beer drinkers. Nevertheless, we live in a time when anyone can seek out and access any beer they feel like, acting upon previously latent needs and even realising new ones simply by being exposed to new products brought to life by creative businesses. It is the pendulum swinging backwards from commodity to distinctive products, indicating a new cycle (a wave) of evolution in the beer industry. Whether it’s a trend or a fad is no longer a valid question; the question is what players with a variety of distinctive characters in the industry actually want and what these players will do to achieve that.

Their decisions, determination and conduct will define how and which brews are to penetrate society further, which businesses will be able to be in charge of looking to the demand and how long this cycle will last.

Different players have different interests: status quo, overhaul or restoration can all be legitimate business interests, while indirect stakeholders, e.g. governments, consumers, etc., also have an influence. Ideally everybody wins, but this is unlikely to be subject to some higher grand plan; rather it is likely to be through instincts and a good deal of game theory.

This new wave of brewing has already proven there is way more to beer than what was on the shelves of supermarkets or offered in average pubs until recently. It has brought a great variety of beer styles and compositions, and it’s easy to see that the proliferation of brands and products is causing clogs and fatigue in the supply chain. Hence simply releasing more new or unique beers will not be enough to sustain the new wave. Now, it requires more than just having great ambition, drive and imagination to succeed as a business. The marketplace evolves at a great pace, and success is becoming more dependent on the brewers’ capacity to keep up and adapt.

Parallel to the exponential growth in demand, the number of businesses interested in looking to supply this seemingly lucrative demand is increasing. The new infrastructure further inflates the existing global capacity, and the need for utilisation of any surplus will trigger decisions that will change the marketplace, although it is hoped that most of the surplus capacity owned by businesses with global reach will be channelled into the waking Asian markets.

The collaborative attitude among brewers might suffer in the face of demand expanding more slowly than the potential supply by the growing number of businesses in the new wave of brewing. There has to be a change in trends, and competition will be interpreted in new ways by the businesses which are either new or choose not to scale to succeed, while the bigger businesses are likely to get even bigger and/or their product will be scaled with help from other businesses and thus compete on efficiency from many perspectives. The smaller players will need to concentrate on their strength, whatever this may be.

We will soon see a slowing down of the increase in the number of breweries, either by less start-ups or higher failure rates. There will be a better allocation of self-assigned roles among newer breweries and more emphasis on diversification.

This is the introduction to the ‘Where Next?’ chapter of the Beer Means Business book, written just about a year ago.

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