Forward Looking – Trends in the Craft Beer Industry

Daily we are bombarded with change; sometimes the change is immediate and often it is a work in progress. Not all this change is forced upon us by such things as laws or societal impacts. One specific component of change moves us in the direction of “trends”; less immediate but still change. There are many things that make for change; wine and beer industries also respond to change. The beers that are hot styles today will no doubt change as perception and taste’s change. All change also add to a specific trend or sometimes general trends.

In reality beer trends have been in progress and with us since 3100BC. I guess then we could say craft beer is at least that old. Based upon the fact that prostitution is reported to be the oldest profession, craft beer brewers could be the second oldest profession.

It could be said that the craft beer industry started with home brewers. Some even say that a small brewery in Sonoma, CA, (Albion Brewery), was the start of a recognized micro movement. Depending on appreciation of beers, a case can be made that the industry started in 1980’s and became a significant force in the 90’s. The first brewpub was established in 1982. But, without a commitment to quality and creativity styles the industry probably would not have grown.

Beer trends today are generally defined as styles versus types of beer. For example, look at the strong popularity of the IPA style which is based upon hops. (IPA’s account for approximately 25% of all craft beer sales.) One thing for sure, no matter how small a change is today, any change in an industry could eventually lead to a trend. Before the current craze of craft beers, there was talk of beer falling out of favor with consumers; wine, some prophisied, was the beverage of choice. Now beer is the drink of choice trending with Generation X and Millennials.

The Beer Store (a Canadian beer only retailer) has done an excellent job defining type and styles of beer to help people understand the profiles of beers. Interestingly, within “styles” there can be hundreds of variations in any specific style and those variations are often influenced by regional tastes and ingredients coming from within those regions.

TYPES

Ales-Brewed with top fermenting yeast at cellar temperature, ales are fuller-bodied with nuances of fruit or spice and a pleasantly hoppy finish. Generally robust and complex with a variety of fruit and malt aromas (ales come in many varieties). They could include Bitters, Milds, Abbey Ales, Pale Ales, Nut Browns, etc.

Lagers-Lager originates from the German word lagern which means ‘to store’ – it refers to the method of storing for several months in near-freezing temperatures. Crisp and refreshing with a smooth finish from longer aging and lagers are the world’s most popular beer (this includes pilsners).

Stouts and Porter-Porter is a dark, almost black, fruity-dry, top fermenting style. An ale, porter is brewed with a combination of roasted malt to impart flavor, color and aroma. Stout is also a black, roast brew made by top fermentation.

Stouts, not as sweet to the taste, features a rich, creamy head and is flavored and colored by barley.

Malt-Sweeter in flavor; malts contain hints of caramel, toffee, and nuts. They can be light to full bodied.

STYLES

Amber-A very versatile beer, Amber beers are full bodied having malt aromas with hints of caramel; could be either lager or ale.

Blonde-Blonde ales are very pale in color and tend to be clear, crisp, and dry, with low-to-medium bitterness and aroma from hops and some sweetness from malt.

Brown-Brown ale have evidence of caramel and chocolate flavors and may have a slight citrus accent or be strong, malty or nutty; depending on the area of brewing.

Cream- A very mild, sweetish, golden style of ale.

Dark-Dark ale is a British type beer, combining hops, yeast and a blend of malts. It’s a medium chestnut brown color, with a delicate fruity smell and robust, malty character. This is a great example of regional taste preferences.

Fruit-Most fruit beers are ales. However, they typically do not carry an ale character. To allow for the fruit flavor to come through, the flavor of malt is not dominant and there is a low bitterness level to the beer.

Golden-First developed in the UK, Golden ales are straw colored with a slight hint of citrus and vanilla. The beer can sometimes contain spicier flavors.

Honey-A full-bodied beer with a creamy texture and copper color. Honey beers are slightly sweet with hints of caramel. Not malty in taste.

India Pale Ale-A hoppier version of pale ale. Originally brewed in England with extra hops to survive the journey to British troops stationed in India.

Light-Light in color and mild in flavor. Light beer has fewer calories and/or lower alcohol content.

Lime-Light in flavor with a refreshing lime taste. The intensity of the lime can differ from very subtle to strong.

Pale-Pale ale is a fruity and copper-colored. It originated from England. Pale ales are robust beers that can be enjoyed with strongly spiced foods.

Pilsner-Made with neutral and hard water. Tend to be golden in color with a dry, crisp, and somewhat bitter flavor. Pilsner stands out from other lagers due to its more distinctive hop taste.

Red-Red ales can either be red or light brown in color. They are moderate to heavy in flavor and contain hints of caramel that is offset by the predominant hop characteristic of the beer.

Strong-This is a broad grouping that can describe any beer over 7% ABV. Strong beers are typically dark in color, some are almost black. Different styles can include old ales, double IPAs, and barley wines.

Wheat-Light and easy to drink with very little aftertaste. Wheat provides a soft character to beer and is sometimes hazy or cloudy with a touch of spice notes.

Is the craft beer industry worth all the attention? The answer depends on the definition of “craft”; there are between 4,269 to 5,000 such establishments today and growing. By comparison there are approximately 10,000 wineries in the U.S. Home brewers are estimated to be as many as 1.2 million. Data from the Brewers Association indicates that new craft breweries are coming on-line faster than closings. Not surprisingly, California is the largest craft beer market with more than 25% of craft beer sales, followed by Pennsylvania.

Based upon the beer marketplace, the traditional styles are trending favorably again by consumer: Pilsner, Lager, Helle’s and Ales. Still, the target market for craft beers is the 25 to 34 years-old consumers. But, here loyalty can be elusive. Loyalty from this demographic is not necessarily brand based, rather taste, the feel of community and experimentation. Community refers to brewers with a local brand identity (drawing heavily on locally produced ingredients). Experimentation is a common thread amongst this class of beer drinkers; it seems that this market regularly seeks out new beer experiences. The Millennials are the ones in the sweet spot of the craft beers.

Realizing craft brews are generally more expensive than traditional legacy beers, consumers demand quality above even community. Experimentation will rapidly sort out producers that do not produce quality beers. Most successful craft breweries today are based upon “community”, “quality”, and “style/taste”. As noted by Max Rothman in Brew Bound, in 2007 craft beer sales were $5.7 billion, in 2012 that number was $12 billion and in 2017 it is projected that this category of beer will sell $18 billion-a 50% growth in 5 years. Without community and quality this growth would not be possible.

Styles of beers will always exist to excite the imagination and foster experimentation. For example, in the America Amber style there are approximately 5,824 labels, the Blonde style has 3,804 and the IPA has over 19,079 offerings. The numbers do not reflect cider, fruit, herbal/spice, soda beers.

As an aside, there are many examples of companies missing the signs of emerging trends. The Ford Edsel was one missed trend. Closer to home is the example of what happened to Schlitz Brewing which was arguable the largest brewery in the U.S. at one time. They decided to reformulate their style of beer in the early 70’s and as a brewery they virtually vanished within 5 years. Many groups have tried to resurrect the brand, only to realize that beer trends had passed them by. Trends can be interesting to follow, but if interpreted wrong it can be an expensive and cruel lesson.

As noted, there are many factors within each type and style that drive product development and marketing: demographic, evolving tastes, pricing, perceptions about producers, quality and results of experimentation. For decade’s beer drinkers were satisfied with beers that had similar profiles. Then came craft beers with hundreds of profiles-hops, flavor infusions, holiday oriented, condiments (oranges, limes and lemons) and flavor profiles (sour, fruit, stouts and browns).

A beer style is a description of a beer that defines its ingredients and maybe region of origin. In the craft beer category style is what seems to be driving evolving changes. For the past, several decades, hops have been the driving force in craft beer sales; taste is dominating in craft beers and hops offers huge taste profiles.

Are there signals on the horizon that craft beer is losing favor with consumers? Short answer is: Probably not in the short-term but the dynamics of the market seems to dictate that craft brewers will be changing or adding new products and doing so very rapidly, as trends dictate. For example, trends seem to be shaping up that taste for hop loaded beers may not be growing as fast as in the past.

What are some predictions/guesses for trends in the craft category?

· Change may be in the offing relative to tastes as more local/community brewers continue to grow in numbers.

I have a close acquaintance who lives in Northern California and every visit seems to involve a visit to a local brewer. Those visits are entertaining, relaxing and always a learning experience that helps me understand brewing techniques and my changing tastes.

· In the wine business “Direct to Consumer” (shipping) programs continue to grow. In 2016 the growth was 17% over 2015 and represented $2.33 billion in sales, as reported by Kent Nowlin in February 2017. This growth is driven by people wanting access to wines not available in their local marketplace. Could this market driver also foster a new trend for craft breweries and potential experimenters in other communities/regions?

Some crowler (on demand cans available at breweries) and 22 oz. bottled craft beers sell for more than $12.00 each. At these price points, direct-to-consumer shipping options become reasonable relative to shipping costs as percent of product value.

· Currently 7% of craft beers are bought and consumed at a brewery. With the continued growth of breweries, it does stand to reason more beers will be experimented with and consumed at breweries as that concept reflects “community”.

Canada has brought forth a new approach in a company call “Beer Store” that is jointly owned by 32 brewery owners. These individual owners supply and promote their beers in these stores which number over 100 in a couple of Canadian Provinces.

Maybe there could be some changes in–on premise and off premise beer marketing. Most likely we will see restaurant venues (brew pubs) sponsoring formal pairing events and special beer features.

· Some in the industry are anticipating a trend back to more traditional styles, away from flavored beers. Like the wine business, there are some signs that beer is gravitating to less alcohol and wheat beers. Personally, I hope for more offerings of malty style brews.

· Potpourri trends: • Home brewing will continue to grow as new approaches make home brewing easier, • A move away from IPA’s, • More “community” restaurants will become brewpubs and offer pairings. For this discussion “organic beers” are a separate discussion relative to trends.

If trends were easy to decipher and then act upon, horse races would be sure bets. But consumer trends are difficult to forecast. Trends come from opinions. “People’s opinions depend on various factors such as their immediate perceptions, social factors, and existing knowledge and system of beliefs, and values,” notes Innovate Us. “Public perceptions can change easily.”

The Brewers Association has an interesting take on craft beers: the hallmark of craft beer and craft brewers is–innovation; craft brewers interpret historic styles with unique twists and develop new styles that have no precedent; craft beer is generally made with traditional ingredients like malted barley; (sometimes non-traditional ingredients are often added for distinctiveness); and, the majority of Americans live within 10 miles of a craft brewer. Long live craft brews.

Source by Steven Lay

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