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Craft Brewing – making impact on industry

July 18, 2017

For many, the explosion of craft brewing in recent years has represented a growth in opportunity, an expansion of choice, or simply an exciting time to drink beer. But for some – like big-name regional and national brands – the changes have meant stiff, and perhaps unwanted, competition in the marketplace.Craft brewing making impact on industry

The numbers in recent years show evidence of a potential changing of the guard.

From 2011-2016, according to the national Brewers Association – the trade association representing small and independent American craft brewers – craft brewers have increased their volume share of the beer marketplace from 5.7 percent to 12.3 percent. In 2016, retail dollar value for craft brewers nationwide was $23.5 billion, a 10 percent growth from 2015 and comprising 22 percent of the market share.

Seven years ago, according to Brewers Association, there were 1,596 craft breweries operating in the United States. As of 2016, there were 5,234. Compare that to 67 total large and/or non-craft breweries (craft breweries are defined as small, independent and traditional).

As the craft industry explodes, local businesses which boast beer as a primary product must adjust. In Northfield, two microbreweries – Tanzenwald and Imminent – popped up in 2017 within a span of two months. They’re the first two microbreweries to ever exist in the city and are emblematic of the changing marketplace.

For Northfield Municipal Liquor Store owner Stephen DeLong, a change in the brewing environment has meant changes in business strategy.

“It’s definitely a real thing, and it seems like every week we’re shown something new that a sort of local or quasi-local craft brewery is popping up,” he said.

Without having a breakdown of the numbers, DeLong said he feels younger consumers are driving the interest in local and craft-brewed beers. It forces him to more carefully consider what should be stored on his shelves.

He said over recent years, many smaller brand beers have been added to the mix at the Northfield store. He said it’s worked for the most part, engaging customers interested in trying new things. However, the demand for what’s new can also present challenges.

“The possible downside is people are always looking for the next thing,” he said. “We can’t have everything. We can’t always have the latest thing. We try the best we can to represent what’s local.”

At a liquor store like that in Northfield, expenses associated with bringing in various craft beers can be more easily managed. Owners can buy from local distributors in small bulk, not risking a large profit loss if the brand doesn’t sell.

However, for bars, like NaKato Bar and Grill in Mankato or Patrick’s on Third in St. Peter, it can be a trickier dance. NaKato Manager Jake Downs said he sees the shift toward craft brewing as “very positive,” because of the variety in styles and tastes beer drinkers can now access.

He said, though, that craft beers are significantly more expensive to bring in than the major beer names, like Budweiser or Miller Lite. He believes the onus to bring in craft brews relies on the demand. It’s also about a commitment to bringing what’s new.

“For us, bringing in craft beers has definitely helped build a customer base,” he said. “Because we have five rotating tap beer lines, one of the biggest questions I get is ‘what’s new?’ We bring in specialty beers, rare beers. If we don’t have something you like on hand, sometime in the next week we likely will.”

Patrick’s General Manager Mathias Ove agrees. He started working at the St. Peter bar and restaurant in 2006. At that time, the bar had 16 taps. It now has 32. Only two of those taps contain big-brand beers – Miller Lite and Miller High Life.

Ove is himself a home-brewer, and is excited to be bringing in new and unique beers. He said he was nervous, at first, to bring in some of the most rare, expensive craft brews, knowing the prices per pint would be high, but that anxiety vanished when he saw the response.

“I would scream in 2006 at the price of beers I’m paying for now, but I’m buying brews that are extremely limited, that many bars can’t get,” he said. “I was afraid people wouldn’t pay that premium price, but nobody has had any problem with that.”

The growth in craft brewing in the last decade has certainly been eye-popping, but last year’s growth numbers were actually down compared to previous years. That’s because, according to Brewers Association, large-volume brewers are buying out craft brewers.

Craft brewers added 1.4 million barrels in 2016, but that number was tempered by the 1.2 million barrels lost from large brewing companies taking over smaller breweries.

“Any growth in beer sales seems to be at the craft level,” Northfield’s DeLong said. “So those big customers are buying breweries, buying labels to get in on the action.”

Anheuser-Busch InBev (Budweiser, Corona) and MillerCoors (Miller Lite, Coors Lite) still make up about 72 percent of all United States beer sales. And as both Downs and Ove noted, many customers still drink “what they’ve always drank.”

But no one can doubt craft brewing is taking off. The future of the beer industry, meanwhile, remains unknown.

“It’s exciting, because we really don’t know where it will go from here,” Ove said.

 

By Philip Weyhe

Northfield News and Faribault Daily News reporter. Email at pweyhe@northfieldnews.com.

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