Craft Beer Challenges

A recent question posed in the Craft Beer Professionals Facebook Group asked ‘What is currently surprising you most about our industry?’ It generated over 250 responses. Craft beer is, in many ways, the “big brother” of our industry (it started earlier and now has over 9,000 producers in the US). Both beverages are fermented. As a more mature industry, many of the comments related to over-supply problems and a tight market. Indeed, the number one surprise was “That people are still opening breweries.”

Here are some the hot-button issues for that industry with relevance for kombucha producers.

• How fast people are shifting from drinking craft beer. The past year has been brutal on our industry. Less consumer spending and high inflation is killing small businesses.
• I don’t know how anyone with a straight face can be asking for money to open a new brewery or in some cases even expanding their business when they aren’t doing all that well in the first place.
• The lack of push-back from manufacturers against the distribution system. We’re seeing distributors cut services and switch to a pre-order only model (only bringing in product they’ve already sold) while still taking the same slice of the pie.
• There is one thing that separates a good business from a bad. Flexibility. I’ve always had one rule and that is grow your business. Growing your business doesn’t always mean greater revenue, sometimes it is eliminating overhead and reducing that bottom line.
• How resistant to change owners/operators are. Lack of value seen for proper process, QA/QC, and optimization. Complete disregard for proper packaging monitoring and control.
• After a decade in Pharma I went to a large craft brewer and was blown away by the lack of process controls, standardized procedures, validation for cleaning procedures, cleaning chemicals, etc. Mindblowing. It’s as if product quality, consumer safety and the safety and ease for the employees is an afterthought. If they’re not obligated by regulatory requirements, they’ll skimp or skip.
• What surprises me most is the lack of understanding that craft beer is more than a craft, there’s science to it as well. The lack of quality control in many breweries, particularly small or nano breweries. These breweries need to pay attention to details if they don’t have the capital or personnel to do proper QC. There are so many factors that can affect the quality of your product. Understanding the science will help with product quality and improvement.
• I’m surprised how many breweries remain afloat despite little-to-no marketing efforts and subpar quality beer.
• I’m surprised cities are still giving people incentives to open a brewery, especially those with no experience.
• Watching what used to be a very open, collaborative community, turn on itself. Hearing the big breweries, completely bash the little guys.
• Dry January, has become the month to celebrate taking a leave of alcohol. The ripple effect is that not as many people are going out to taprooms and good beer bars along with other retail food establishments; because of that those businesses are suffering in what is historically the slowest time of year for sales.
• How, 10-15 years ago, world class breweries took out huge expansion loans and are now following trends as opposed to creating them. I get it, they owe a lot of money, and they can’t risk something not selling, but they’ve become a shell of their former self.
• It boggles my mind that breweries refuse to accept that a batch is bad and put it on tap. It only takes one time for a curious consumer to venture into trying a local craft beer and then think Craft beer drinkers are just a bunch of stuck up snobs because the beer they tried tasted like absolute shit and they’ll never try another one after that experience.
• No surprises per se, but more of a long slow thinning of the herd. Too many folks built breweries with capacity well above their need. This along with folks jumping in to open a spot with no business acumen, and worse, several put out liquid that is terrible.
• How accurate Bart [Brewers Association Economist] Watson’s keynote speech at a brewer’s conference in 2018 was. His message was basically, ‘in the next 5 years or so, you are going to see many closures. Primary reason will be far too many folks thinking they can open a 10+BBL operation without realizing they’ll have no option but to rely on distribution where both shelf and tap space are already at max capacity. This model has hit its limit. The area of unlimited potential exist in the small, Main Street location model with systems sized to produce what they can pour onsite.’ He added ‘When is the last time you heard someone say, there are too many pizza shops or this town has far too many coffee shops?’
• This might be a very unpopular opinion but it surprises me that breweries are still putting out products with terrible embarrassing names and awful labels. Back in 2014 or so there was a serious conversation of elevating the image of beer to that of wine and spirits, getting serious consideration from restaurants. I think the category should be striving for a more mature approach to stay relevant in a market dominated by wine and whiskey.
• How many breweries are willing to go down with the ship instead of thinking differently. If oversaturation is the issue and small breweries are dying slowly, why not merge those operations? I read about a lot of closures, but I see virtually no talk of M&A
• When I acquire a new client that’s wanting to invest in opening a brewery I spend one to two hours seriously trying to talk him out of it. explaining to them the amount of difficulties they will encounter just trying to get the Brewery open. Forget about distribution. And quality control is a must and working capital is usually five times more than what you expected.

So, kombucha producers, what surprises you most about our industry?