Beer for Profit, Food for Thought

When I was little, my dad used to sing to me all the time. When I got old enough to sing along, he taught me easy songs that were fun to sing. Roger Miller's "King of the Road" was always a good one. So was George Jones' "The Race is On." But the one that's hung out in my brain the longest is a little ditty by Tom T. Hall called "I Like Beer."

I'd advise you to teach it to your kids. Watch what happens when they sing it at social functions or during "take your kid to work day."

Photo by Aubrey Sun

Photo by Aubrey Sun

Now, when you're a kid, beer is just something Dad drinks after he cuts the grass or when he and your uncle take you fishing. It seems magical and fun... until you get your first sip. Then, you're disgusted. But you figure all the older kids in your life can't be wrong so you try again when you're in your later years (maybe even before you're "allowed" to drink it—not that I'd know anything about that). Pretty soon, you turn 21 and you're knocking around bars, singing karaoke and getting thrown out of a happy hour for your liberal interpretation of a pub's "no shirt/no shoes" policy.

Again...not that I'd know.

What I like most about beer is it can be anything you want it to be. If you want something to sip on, you can nurse one cold beer until it's lukewarm and as flat as a pancake. If you want to be a party guy, you can buy a case of beer. If you want to be a beer snob, there are snobby beers. If you're cheap, you can buy cheap beer.

Please drink and form a society responsibly

There are some scholars that believe we couldn't have evolved without beer. That sudsy, swishy delight was one of the reasons we developed agriculture, as well as an important social lubricant.

From NYTimes.com:

"Once the effects of these early brews were discovered, the value of beer (as well as wine and other fermented potions) must have become immediately apparent. With the help of the new psychopharmacological brew, humans could quell the angst of defying those herd instincts. Conversations around the campfire, no doubt, took on a new dimension: the painfully shy, their angst suddenly quelled, could now speak their minds."

... Beer was thought to be so important in many bygone civilizations that the Code of Urukagina, often cited as the first legal code, even prescribed it as a central unit of payment and penance.

And beer, too, has evolved. The cultivation of grain and the growth of hops made brews more accessible, and stronger. Experimentation with fermenting, production and water quality yielded multiple varieties of beer, wine, and liquor. Beer was more valued than water for slaking thirst during long voyages because stored beer wouldn't spoil or freeze easily (the way water would). The "need" for beer has diminished with the introduction of water treatment and filtration, but the love of beer abides.

It's that love that drives an American beer market of 200 million barrels of beer every year and a total of $99 billion in sales, according to the Brewer's Association. Major corporations like AB InBev, the owners of Budweiser and other brands, perpetuate a continual tumult over which beers sell by driving their own prices up and down, creating flux and driving demand to and from their own brands. The Justice Department is worried that AB-InBev might be poised for a monopoly, given their aggressive marketing and pricing strategies. Despite its parent company's size, Budweiser sales are slipping in the U.S. Why?

Well, it could be the fact that there are 2,360 small brewers churning out 13 million barrels of beer every year. Beers that are stronger, darker, sweeter, oakier, headier, and pricier than Bud. Craft beer as an industry grew 15% by volume in 2012 and 17% in retail dollars. Brew pubs, microbrews, regional craft breweries and contract brewers churn out their custom brews for regional markets and, from time to time, make the money it takes to go broad. These craft beers have inspired more and more small brewers to get in on the brewing game, trying their own concoctions.

So, in an industry that was already dominated by dozens of choices (albeit only produced by a handful of multi-billion dollar manufacturers), there are now hundreds, even thousands of new recipes brewed and shipped to stores and bars every year. How does the industry keep from drowning, the way gum producers found themselves "stuck" with too many flavor options and too-high margins?

The larger brewers are wising up to the market saturation and the public's desire for premium beer, putting more effort into selling pricey beers with higher alcohol contents and trendy labels. The old workhorses (or are they clydesdales?) are being downgraded, marketed for volume and value rather than taste and craft. There are two markets now—the high-margin beers sell to "discriminating tastes" and the low-margin beers go to "volume drinkers."

Giant industry markets being upset by small, community shops? Industries that are ages old, looking to stay relevant in the midst of change? The branding power of large labels diminishing as smaller labels seek relevance and a leg up on the competition?

This sounds so familiar...

Co-op-a-top, Again

Beer was originally an important part of society. Ask the millions of Americans employed by brewers, distributors, sports venues and bars and they'll tell you it still is. The growth of micro-brewers hasn't gone unnoticed. Recently, Senator Charles Schumer sought start-up funding for Hudson Valley Hops, a co-op of growers that are seeking to grow hops in New York, just outside of New York City (which has a few bars and brewers...I'm told). The co-op's hops could be used to buoy the microbrew industry through an influx of affordable, readily-available hops.

As micro-brewers emerge, so do jobs in all of the aforementioned industries. Beer was what helped us grow our societies and it might help save the ones we have now. But micro-brewers getting into the game should take it from those of us who have been—and still are, in some ways—where they are now:

  1. Don't be everything to everyone—AB InBev works to promote dozens of brands, each competing against the other internally, screwing up the prices and making a good beer hard to find. Stick to a few core concepts and build from there. Sam Adams has seasonal flavors and rolls them in and out at different times during the year. Are they over-saturating the market? Heck no—they're all Sam Adams, with the same smiley Sam on the front. What's more, Sam Adams encourages amateurs to try their hand at the brewing game and even gives them the basic recipes and equipment to try. Now there's a company that's not afraid to open up to the public.
  2. Start your own tracking early—In the advent of new technologies, credit unions have had to work backwards a bit to figure out where leads come from, how people open accounts online, how to manage foot traffic more efficiently... the list goes on, but technology has been a big help. If you're a micro-brewer, why wouldn't you be looking into ways to track every step of the selling process and focus on the markets that really want the product?
  3. Never sacrifice quality—The level of care in a craft brew is what makes it valuable. There's nothing "wrong" with Bud Light (believe me), but it's a product made and sold hastily and in bulk. In the pursuit of your craft, focus on the quality you look for in the product and it will surely help you make the product better. The clients I work with that focus on the member rather than the numbers are the ones that have lasting impact on their members' lives. Make the decisions that best benefit the drinker.

Boy, all this writing makes me thirsty.

I could use a cold one right about now.

Jimmy

Jimmy Marks thinks whiskey's too rough, champagne costs too much, and vodka puts his mouth in gear.

Posted on March 27, 2013 and filed under Author: Jimmy Marks.