There is no data about the future, reliable or unreliable. And it’s impossible to get any. So, in the absence of data, one is left with one’s imagination, creativity, history, hunch, nerve endings, gut, whatever you want to call it.
The best future forecasters look for clues and hints, rather than reading graphs and extrapolating. The seductive comfort of data, with its inherent backward-looking perspective, conspires against insightful glimpses into the future, as my colleague argued. She compared divining the winds of change to an animal's ability to sense coming weather.
Our prediction that 2016 will see the stalling of overall growth for the craft-beer segment senses change in consumer sentiment and behavior. It's based on a bit of data, but correlated with our take on several kinetic market developments, mini-trends, and hints of change.
In no particular order, here are some recent observations that, taken together, prompt our prediction:
Less that craft's slowing; more where it's slowing
The bit of data: Craft growth has slowed dramatically and at a quickening pace in a critical channel, namely on-premise bars and restaurants. These are ideal venues for craft brands with their higher prices where their labels can be displayed to impress friends and fellow patrons, and where price sensitivity is at its lowest.
• When brands slow in their highest-potential channels, it's like a canary dropping in the coal mine.
BigCraft selling out
Since the segment's earliest days, craft-beer barons have railed against "big corporation" ownership. They impugned BigBeer and claimed its size was inconsistent with the higher standards of artisan brewing. Actions always speak louder than words. The sale/merger/partnering of some of craft beer's most successful breweries tells drinkers "corporate" and "quality" are not inconsistent after all.
But there's more to it than that. The timing of the decision to sell (or partner) brands like Lagunitas, Ballast Point, Firestone Walker, Elysian, Saint Archer, Golden Road, BluePoint, and Boulevard in the past year or so is noteworthy. Why have the insiders decided now's the time to opt for the very corporate lash-ups they once disdained?
• Sellers always aim to sell as close to the top as they can. To some of the most successful craft-brewery leaders, then, tomorrow must not look quite as bright as today.
BigBeer making corrections
While BigBeer for years has relied on "fun" ads, rarely promoting the differences in its products, craft brands have long focused their messaging on distinctiveness: the quality and flavor of their beers. This important strategic advantage for the craft guys is in the process of narrowing.
A year ago, Budweiser's marketing strategy changed from "entertainment" to a product-distinctiveness focus. Selling replaced cuddling (as in puppies). Anecdotal evidence suggests the brand's business responded favorably, and immediately. Also, largely uncommented upon until recently, Coors Banquet has been employing a successful product-distinctiveness strategy for nearly a decade. The brand has posted nine consecutive years of growth.
We'll have to wait and see how provocative the facts are, but Coors Light, Bud Light, and Heineken have all announced they intend to serve up product-based facts in new advertising yet to debut.
• BigBeer's product-distinctiveness messaging can only erode this once-exclusive advantage enjoyed by craft breweries.
What's actually growing?
The hottest new craft brand isn't an IPA or a stout. It's a root beer. Large-brewery-brewed and the brainchild of a shadowy new-product consultancy, "Not Your Father's Root Beer" is neither craft nor beer. Its stunning success--a single brand larger than hundreds of craft brewery businesses put together--promoting itself as a small-brewery product actually blurs and weakens the definition of craft.
• Believing the growth of faddish soda-pop flavors is "craft beer" growth is nonsense.
Too many slow (and no) movers
No consumer market can sustain an ever-expanding variety of offerings. Beer shelves are literally clogged with craft brands, too many of which are only marginal sellers. Anecdotal evidence exists that some retailers stock multiple craft offerings selling just a six-pack a month each.
• A constantly expanding number of choices and zero-sum flavor-churning may delight the geek minority, but it will annoy and ultimately frustrate many more shoppers.
A great portion of craft's momentum really is local
The recent news that the number of breweries in the U.S. reached an all-time high--above 4,000--was proof to some that the craft segment was still on fire. Yet most of these new craft brands will never sell beer very far from their home brewery. Forever small and local, the character of their business is more brewpub than brand-marketer.
• Without wider distribution, most new local breweries add little to craft growth.
A note from the seedy side
Recently, the "dive bar" has risen in media mentions and consumer consciousness. It's not a major trend yet, by any means, but one interesting aspect of these low-brow, retro, blue-collar taverns is the homage they pay to everyman sorts of beer brands: Hamms, Old Style, Ranier, Pabst, and yes, Miller, Bud, and Coors. Could this be the first whiff of a craft-beer counter trend?
• Nothing stays "cool" forever.
Into the future...
To be clear, there will be individual craft-beer brands that flourish and continue to post solid growth. At over 10% of the industry, the craft segment is large and well-established. It will certainly not disappear. But neither will it double in size as some of its starry-eyed enthusiasts predict. They're busy extending lines on their graphs, so to them, the future will look just like the past.
But as we all know, it never turns out that way.