The craft-beer bubble is coming — only not in the way many consumers expect.
Despite a national decline in overall beer sales, the craft-brewing industry has seen double-digit sales increases in recent years. Even with the sudden spike in competition, Columbus breweries are struggling to meet demand — and it’s only going to keep growing. These days, breweries aren’t competing for customers — they’re competing for limited shelf space.
“In earlier decades, there was a certain level of ‘fad’ with craft brewing. But now, it’s a lifestyle brand,” said Eric Bean, Columbus Brewing Co. brewmaster and owner. “We can’t supply Columbus with enough beer.”
In recent years, the craft-beer conversation has come to the forefront of the food and drink industry, and experienced exponential growth as a result. According to the Brewer’s Association, Ohio housed 45 craft breweries in 2011; two years later, that number’s grown to 76, which ranks the Buckeye State as the 12th highest in the country. Still, the Brewer’s Association only ranks Ohio 33rd in terms of number of breweries per capita, which suggests the craft brewery market in Ohio isn’t close to oversaturation.
“Seattle’s half the size [of Columbus], and it has 63 breweries,” said Fred Lee, Actual Brewing Co. owner. “I’d like to see the number of breweries in Columbus double.”
And yet, the growth isn’t specific to Ohio. On July 9, Brewer’s Association economist Bart Watson reported that at the end of June, the United States was home to 3,000 operating breweries — the most the country has seen since roughly the 1870s.
Economists and brewers cite several reasons craft-beer sales rose roughly 17 percent in 2013, despite beer sales as a whole declining two percent. Evolving palates, the popularity of local, quality products, and a more educated and adventurous consumer base have contributed to the explosive growth of craft beer in both Ohio and the U.S. as a whole.
“People are more informed now, and as an educated individual, you know about the shit they want,” Lee said. “I think people are just done being marketed to. It’s a lifestyle shift, not a trend.”
Columbus is especially ripe for the craft-beer market due to the educated millennial population driving the trend. Brewers believe this customer base is also why craft beer is here to stay.
“The millennial generation is now skipping the [large-distribution] pilsner and reaching for craft beer because they have the option. When I was in college, we didn’t have that kind of selection,” said Dan Cochran, Four String Brewing owner. “Once your palate changes, you don’t go back to Bud Light. You can’t.”
Cochran isn’t the only brewer to believe once you go craft, you never go back.
“We are seeing 21-year-olds buying craft beer because it is an affordable luxury. You can get amazing beer for $10 at the gas station now. But more importantly, people don’t revert back,” Bean said. “What people start drinking when they are 21, they stick with.”
The shop-local trend has also primed the market for craft breweries, offering them a direct advantage over mega-breweries that consumers feel lack quality or integrity.
“[As a result of becoming more educated] people now want to know where their food comes from, [and that trend] applies to beer too,” Lee said. “We touch and feel the ingredients we use. That is what handcrafting something means. People are done with consumerism and ready for quality.”
Current food trends have also played a pivotal role in the rise of craft beer. Consumers are seeking extreme and experimental flavors and the craft beer market has been happy to accommodate.
“People want really bitter, hoppy beer just like they want spicy Thai food that can burn your mouth,” North High brewmaster Jason McKibben said. “Because we brew in smaller batches, we can experiment with flavor. There are more flavors of beer than wine; it’s all just yeast, hops, barley and water but the flavor variations are endless.”
The ability to play with recipes, brewing on a smaller scale, gives craft beer an inherent competitive edge in the current market. However, that creates inherent obstacles. The cash-intensive nature of the brewery industry often keeps breweries from growing their production as quickly as the demand dictates. Even when breweries find money pouring in, they’re limited by the amount of beer they can pump out.
“Our growth is only hindered by what we can produce,” Bean said. “I feel like every time we send a check for our new equipment, we’ve outgrown it and need more.”
Columbus Brewing Co. isn’t alone. North High Brewing is expanding their two-barrel operation to a 20-barrel operation in a new facility. Barley’s Brewing Company has a waiting list for keg delivery, and while there are more breweries in Columbus than ever before, sales have never been better, according to brewmaster Angelo Signorino. Brewers can only create as much beer as their bank accounts allow.
“It comes down to how much money you can raise,” Lee said. “Having lots of capital up front is definitely a barrier.”
Having enough cash-on-hand isn’t the only roadblock on the fast-track to craft-beer glory. The market is struggling to make room for all the possible beer options, both within and across brands. Brewers aren’t competing for consumers; they’re competing for retail real estate.
“Shelf space is what will be affected most,” said Jay Taylor, Elevator Brewing Company sales and marketing manager. “You can’t succeed unless you keep your beers on the shelves for consumers.”
As each brand tries to expand both their production and their product offerings, the brand competes with itself for shelf space. This is known in the brewing industry as “SKU-maggedon,” a reference to the consumer goods’ market abbreviation for “stock-keeping unit,” or a specific brand and packaging combination. The demand for experimental craft brews necessitates brewers expand offerings and toy with recipes. But even with the increasing availability of shelf space at gas stations, grocery stores and the popularity of growler fills, beer options are literally growing more quickly than retail options.
“Beer doesn’t age well. If it sits on the shelf too long, the flavor is altered. The consumer is going to notice that, and then that brewery’s reputation with that customer is affected,” McKibben said. “It is incumbent upon the breweries themselves to offer a well-rounded portfolio [of beers] without over-offering.”
Even still, the booming market doesn’t show any signs of slowing, and all signs point to craft beer being here for the long haul. Even with Columbus officials romancing the mid-level Stone Brewing Company in hopes of bringing a $60-million brewery project to the Arch City, the local guys still aren’t sweating, and rightfully so.
“As long as breweries produce quality beer and differentiate themselves from the competition, the number of breweries won’t be a concern,” Watson said. “Craft beer is a part of our everyday life, so the more the merrier.”