Session #80 – Is Craft Beer a Bubble?

Here is my entry for the eightieth iteration of The Session; this one titled “Is Craft Beer a Bubble?” hosted by It’s Not Just the Alcohol Talking.

As of late, people in our community have been seen talking in hushed whispers, huddled on bar stools murmuring of pseudo-economics and critical mass, of too many beers in too little space, of inevitable collapse. Their concerns are not unfounded given the current slugfest for shelf space taking place in bottle shops around the country. 2,483 conveyors of craft beer now dot our 50 states; 1,165 brewpubs, 1,221 microbreweries, and 97 regional breweries, all of who only make up ~7% of total American beer consumption. Another ~1500 are slated to open in 2014. That’s nearly 4000 brewers fighting for the precious taste buds of a passionate but overwhelming minority.

Some doomsayers talk of brewers who can’t keep up with demand, who will inevitably brew not-so-good beer. They talk of so many beers that consumers will be paralyzed by the paradox of choice. They talk of craft beer as a bubble; a market that cannot possibly accommodate so many breweries springing to life in this newly fermented renaissance of craft beer.

But a bubble suggests a diaphanous sphere created quickly and filled with air, something of no substance and little direction, likely to burst as soon as it comes into contact with a rough surface or a stiff breeze.

I’m not sure craft beer is a bubble. I think it’s a wave.

When a bubble pops, there’s pretty much nothing left. Poof. Using the traditional model applied to houses, banks, and .COM start-ups, if the perceived economic bubble around craft beer suddenly popped, the market would crash and all the brewers except a big few would go out of business. Only those with the deepest roots (and the most money) would be able to weather the storm. We’d be left in the negative, and would feel the implications of the crash across all sorts of other markets.

In theory.

But despite what some of us want to believe, beer isn’t a necessity. Since the advent of clean, public, potable water, beer has been a luxury good, reserved for those wealthy or thirsty enough to want to buy it. This separates it economically, as its supply and demand aren’t inextricably tied to the rest of our economy. People aren’t going to be underwater on a case of Stone IPA, and even if they were, somehow, because of a quick and dramatic price shift, it’s not exactly going to ruin their credit.

Craft beer lives in its own economic world, only tangentially affecting similar goods like spirits and wine. And that world won’t just pop and go away. But it might crash.

I see the current trend as the peak of a tsunami. It’s headed to shore and picking up momentum as smaller waves join with the larger mass. There are hundreds of surfers riding the top, some little dudes on boogie boards cruising the bottom, some people in boats bracing for impact as the wave slides closer and closer to the sandy beaches.

The wave can’t stay at its peak forever. Eventually, because of gravity and the change in depth, the wave will topple and crash, taking all those surfers and boogie boarders and hapless swimmers with it. Some brewing great beer now may wash up uninjured. Others may be knocking the water out of their ears for weeks as they realize that their microbrewery was just a really expensive hobby. They’ll all be tumbled around in the violent surf. It’ll be impossible to know who survived until the tide pulls the water back out.

As a side effect, the people who were just chilling on the beach will get wet. This flood may bring in a whole new demographic of craft beer drinkers; those who hadn’t even seen the wave coming from the safety of their folding chairs and umbrellas, but now realize that getting wet isn’t such a bad thing. Some of them may even like it.

But when the wave does subside, the water will remain. The little waves who made up the big wave may be gone, or may have joined with other waves as the currents pull them back out to sea to repeat the cycle. Some of the infrastructure on the land might be damaged or destroyed, but overall, everything will be OK. The breweries with the foresight to plan ahead, buy boats, and invest in flood insurance shouldn’t even feel the effects of the crash.

The community may lose some of the variation, but we’ll probably see a tightening and refining of current styles. We may not have 100+ beers from every state, but we might have breweries starting to hyper focus, building their dynasties on the back of a particular style that is of world-class quality.

The net result: less beer but better beer.

The wave may crash, and it may crash soon. It won’t be a sudden thing where you wake up one morning to find out that Congress couldn’t get its shit together and now you have no work to do, it’ll be subtle and drawn out, in a series of openings and closing you may not even hear about. Don’t fear it though, as it probably won’t mean the end of your favorite beer if they’re already brewing right now.

But you may get wet. Don’t forget your towel.