Experiencing the American Craft Beer Scene Today - Part1

While America didn’t invent beer, they can be credited as the country from which the modern craft beer movement was born and, as a result, many of the patterns seen there tend to be followed by similar patterns in other countries the world over, including Japan. The West Coast IPA was born, and eventually became big in Japan. The same might be said of fruited sours and the current hazy trend followed exactly the same pattern. While there are differences in the beer culture, some subtle differences in what people choose to drink, it can also be said that many of the challenges faced by the industry over there mimic those that we can foresee reaching us eventually as well.

Paul recently wrote a blog and shared about our visit to America, and our search for hops. We extended our trip beyond this, however, with the goal of seeing what’s happening on the other side of the Pacific. We went to New England on the East Coast, which I (Ben) am sharing a little of here, as well as Seattle/Portland on the West Coast, which Paul will share about soon.

A Tough New World

Competition in craft beer in America is fierce now. Long gone are the days where any half decent new brewery could see exponential growth, buoyed by the knowledge that established breweries would support them, and they could only get better, and bigger. “We couldn’t have done what we did had we started now” admits JC, CEO and founder of Trillium Brewing in Massachusetts. As customers are pouring in to their enormous facility - and the furthest from any major town of any of their numerous sites - on a Monday lunchtime, it’s clear that they have done, and are doing, a lot of things right. But they aren’t too big to admit that, despite their success, the market is a very different one now to when they opened their doors in 2013.

Looking at the state of the industry, one might be inclined to think it is in full crisis now. Some of the most highly respected and consistent breweries, who couldn’t make enough beer a few years ago, have had to close up, sending shock waves through the industry. The reality, however, is that while growth has essentially stopped, and is actually about 1% down year-on-year, craft beer’s percentage of the whole beer market - by far the most popular alcoholic beverage - has continued to increase, and sits at almost 25%. Craft beer, by the fact that a LOT of expensive ingredients go into it, and the fact that small and independent breweries don’t have economies of scale to rely on, mean that it’s by its nature a lot pricier than mass-produced beer. With all that in mind, one could argue that it is staggering that in America craft beer makes up such a huge proportion of the market, especially given the rise in costs that impact the working population. The reality is that, while beer might be seen to be the “drink of the people”, for many craft beer is a luxury item, and so it’s perhaps natural that there would be a point where we would reach a natural growth ceiling.

What is different from a decade ago, however, is that the number of breweries that exist in America now - almost 10,000 as of last year - have capacity to supply way more than 25% of the market. In fact, that’s over 3 times the number that existed a decade earlier, while the increase in production is less than double. Whilst 10 years ago new breweries opening were 10 times the number of those closing, they are almost 1:1 now. What was most eye-opening on our trip was how the different breweries have adapted to the new world.

Survive and Thrive Through Diversification

While there is plenty of diversity, the East Coast of the US is perhaps best known as birthplace of the Hazy IPA - craft beer’s most popular sub style. Trillium started as more of a farmhouse brewery, but has definitely hopped on the haze train, and have done it well, hence their continued growth into one of THE hype spots in the region. Founder and CEO JC, as well as Sales and Marketing VP Mike Dyer, showed us around and talked us through their facility that, in addition to the biggest taproom we have ever seen, and their enormous brewhouse, also boasted a hugely impressive copper still, out of which is now coming their line of spirits. Growth through keeping a finger on the pulse, along with diversification, have been key to their strategy.

A somewhat similar theme could be felt going around Allagash, although this brewery, founded in 1994, made its name as a Belgian-inspired brewery. What is staggering, however, is that they produce more than 10,000,000 litres per year (as a comparison, that’s not far off 30 times our yearly production!). And it is an attractive place to visit. What really stood out to us, beyond the balance and range of their beers, was just how much the people working there seemed to be happy. We got a warm welcome from everyone we passed, most of who had no idea that we were visiting from another brewery - every customer seems to be looked at as a VIP. And the overall tone from Jeff, Marketing Director, was just as upbeat despite the hardships of the last few years. They, like many other breweries, have had to pivot, partly from the realisation that barrel-aged beers, and beers in general in large bottles, no longer sell the way they used to. We didn’t hold back, and went straight in, asking them about their decision to branch out into making lagers and IPAs, including a hazy. While this was clearly a hard choice, and one that no doubt some of their fans were less than excited to hear, Jeff was keen to emphasise that this was far from an act of desperation, and more a learning opportunity for the brew team. While the market might see this as being different to “what Allagash does”, Jeff pointed out that their range of beers has always been huge, and they have always had a culture of taking on new styles. While they too keep an eye on what is happening in the market, for them change is inevitable and something to be embraced. Competition is higher than ever, but change and new challenges have been aplenty in their 30 years as a brewery.

Sticking to Your Guns

But diversification and growth isn’t the only strategy in the market. On our visit, we realised that there were a lot more hyper-local breweries, often following the brew-pub model. The idea that you must become a national brand to be a success is becoming more shunned, as the modern customer also realises that, especially for hoppy beers, fresh is best, and for that reason, the less hands the beer has passed through, and the closer to the source, the better your experience is likely to be.

Hill Farmstead are perhaps the epitome of this way of thinking. One of the pioneers of the popular modern forms of IPA (which they, interestingly, refused to call “hazy”; “hazy”, they insist, is the byproduct and not the goal), they continue to cater to an avid following, who are willing to make the trek way out to their remote brewery, based in the beautiful Vermont hills, and without mobile phone signal. Whilst not small, and certainly not a “brewpub”, Hill Farmstead have absolutely stuck to their guns and their philosophy, and for their hoppy products, they 100% believe fresh is best, insisting on a 2 week BBD for some of their products. While they do distribute as far as New York, they currently don’t go further than that, insist on going direct or through distributors they trust - partly dictated by state-by-state rules - and are quick to stop serving to any bars that serve the beer beyond when it should be served, or should their loyal fans report back that the serving quality is poor.

Asking them about growth plans, they are very clear to say that following the market and getting bigger are not the goal. Their expansion even to their current point, was beyond their plans, and simply to handle the extreme demand that they used to struggle to meet, not wishing to disappoint those who make the long journey out to them. So what will they do should the market swing, and their growth falters or even someday decreases? Well, they have expanded organically, and are therefore not in the same boom-or-bust position of some of the more aggressive companies, for a start. It is clear that slowing down, consolidating, and being able to stay true to themselves is their biggest priority, and it is no doubt for this reason why, on a beautiful sunny autumn day, all tables are taken, and a line leading out of the door remains on both their take-away retail side and at their bar.

One other brewery on our Eastern US tour was our friend of many years, Tim Adams of Oxbow. Big bottles, and especially barrel-aged sours, have taken a real hit. As a real flag-bearer of farmhouse beer, we were curious how they might have had to adapt. While they have added lagers to their repertoire (and can boast being the first brewery in America to make an Italian Pils - and in fact put a name to the style), this has been an evolution rather than a departure for them. In fact, when asked whether they were looking to scale up to meet their capacity needs, Tim clearly felt that any brewery doing this right now was rolling the dice. To his mind, now is the time to get what you can out of your capacity, and to keep an eager eye on further shifts over the coming years.

But jumping on the IPA bandwagon is nowhere near what he is looking to do at present. The way he sees it, people are already starting to shift back to West Coast IPAs again. When I first had one of Oxbow’s saisons many years ago at Snow Monkey Beer Live in Nagano, it was earth-shattering, and remains to this day one of the best barrel-aged beers I have ever had. Craft lagers are now probably more popular than they have ever been, and he believes that there will be a return to these delicious farmhouse styles again.

Everything Has Its Place?

Overall, one takeaway from this trip is that having all your eggs in one basket, and simply chasing the latest hype is a dangerous strategy, but also, having the latest hype style being chased is a sign that the market is yet to mature. Perhaps when all of these styles that were once the rage fade out and return again, it will be in a more sustainable and balanced way. After all, we don’t want to constantly drink the same style all night every night, so why should it be that one style has to be king only to be usurped by the next craze that everyone wants to go for? Just like we might want to start with something refreshing, then shift towards something juicy, then maybe something sharp, something bitter, and finally something sweeter and maltier, hopefully as the market calms down and matures, there will be space for all of the beers that were once well loved.