It doesn’t really seem to make much sense at first blush, but craft beer, the fastest growing segment of the beer market, appears to be shrinking. Even though craft brewers’ sales continue to grow, their areas of distribution may be poised to get smaller.
It’s about who will buy their beer. In the early years of the good beer renaissance here in the US, craft brewers had to take their beer to their audience. Then, as now, most of the beer drunk in the US was made by the few mega-brewers at the top of the feeding chain. Finding customers meant that the new brewers had to take their beer to as many markets as possible to connect with the handful of beer lovers who were looking for something new and different. At the same time, brewers were trying to educate the beer drinking public in the advantages of good beer.
These days, the picture has changed. The big brewers are still massively outselling the craft beer segment. What’s different is that more people are willing to buy craft beer. They don’t buy it every time they pick up a sixer but more beer drinkers are game to try a new brew from time to time.
So, what does all this have to do with shrinking distribution? Take Flying Dog for example. They recently announced that they are reducing their distribution because with a more focused region, they can sell just as much or even more beer than they can by shipping nationwide. And, with reduced shipping and marketing expenses, their profit per bottle goes up. With more people in a smaller area buying their beer, and so much of the market dominated by the big, boring brewers, it just makes sense to shrink.
Personally, I think this sucks. It’s a selfish position but, right now I can walk into my local beer store and buy beer from almost every state in the Union. If they all follow this model, the selection of beer is going to drop. Profits be damned; keep sending me my beer!