
Craft Beer Is the Strangest, Happiest Economic Story in America - prostoalex
https://www.theatlantic.com/business/archive/2018/01/craft-beer-industry/550850/?single_page=true
======
sigil
Summary: benevolent regulation caused the craft beer boom. I call bullshit.
Look at this graph [1] and tell me again how great the three-tier system was
for market diversity. America went from 700 post-Prohibition breweries to less
than 100 in 1978. That was the year homebrewing was legalized, and it's a
pretty steady climb back up from there. Brewpubs -- which circumvent the
three-tier system and its all-too-easily-locked-up distribution channels --
were legalized in the early 80s and exploding by the late 90s.

I must however agree that this is a happy development. "Beer Wars" is a great
little documentary about the phenomenon. [2]

[1] [https://io9.gizmodo.com/the-total-number-of-breweries-in-
the...](https://io9.gizmodo.com/the-total-number-of-breweries-in-the-u-s-
from-1887-to-512405715)

[2]
[http://www.imdb.com/title/tt1326194/?ref_=fn_al_tt_1](http://www.imdb.com/title/tt1326194/?ref_=fn_al_tt_1)

~~~
dluan
It's not just that there was a three-tier system, but I would argue that in
this particular case, it was the legalization of homebrewing that was the
gateway into the innovation.

Early 80's and 90's homebrewers were essentially hackers [1], doing things at
very small scales, and branching far out into experimental recipes and
techniques. I'm sure there was innovation in distribution and retail over the
last 40 years, but definitely nowhere near the scale of the actual brewers.

Without homebrewing, you don't get the wave of 80's self/indie hackers
interested in the first place. So yeah, I could believe the author was right,
without the three-tier system the little amount of innovation in brewing
couldn't overthrow the total amount needed to also take over distribution and
retail.

Maybe the analogy would be the first touch phones, or what Tesla is doing now
with EVs.

1\. [https://hbr.org/2016/05/the-founder-of-dogfish-head-on-
flout...](https://hbr.org/2016/05/the-founder-of-dogfish-head-on-
flouting-a-500-year-old-beer-law)

~~~
sigil
> it was the legalization of homebrewing that was the gateway into the
> innovation.

I'm with you on this part. It's hard to imagine the boom happening while
tinkering was outright illegal! Also, surely the 58 year gap (1920-1978)
caused some generational loss of knowledge. The homebrewers of the 80s and 90s
must have started from scratch in many ways.

> without the three-tier system the little amount of innovation in brewing
> couldn't overthrow the total amount needed to also take over distribution
> and retail.

Watch "Beer Wars" and you'll see craft brewers with promising products
struggling to get shelf space. The problems started for them even before the
shelves: they needed to get into existing distributor's trucks, and by this
stage of the three-tier game, tier 3 (breweries) had captured tier 2
(distributors). Why exactly would you let an upstart competitor onto "your"
truck?

What's surprising to me is that craft brewers found a way! They succeeded not
because of the three-tier system, as this article posits, but in spite of it.
I'd love to hear how.

PS. You cite an article by the Dogfish Head founder Sam Calagione. In "Beer
Wars" he recounts the story of how he started an illegal brewery in Rhode
Island, then (because the state was small enough and he knew someone who knew
someone) managed to get a law passed to legalize brewing.

~~~
dluan
I would like to know too, if it really is some odd phenomena that everyone so
far is missing.

If I had to pin it to any one guess, I would maybe go with imports. Beer
imports were always around to some extent, but it was also the way that
consumers got the other tastes they couldn't find at the football game.

In fact, if I had to think back to when I was a kid, there was always that one
uncle who enjoyed drinking imports over typical 'domestic', and maybe that
90's uncle is basically the same person today as a craft-IPA drinking
millennial. Distributors accommodate more imports as brands get acquired, and
maybe that's the gateway. I suppose you could look at the data of brands
changing over the years.

------
ovrdrv3
Love craft beer and I am glad my 125K city has 5 of them, but /r/starterpacks
was dead on with this one:
[https://i.redd.it/fio3hqlmuofy.jpg](https://i.redd.it/fio3hqlmuofy.jpg)

I will be confused if I ever walk into a microbrewery that doesn't look like
that!

~~~
fendmark
Not to be overly contrarian but it does seem that we are getting close to the
peak for the craft beer industry.

Smuttynose Brewery going up for auction is a great example of this.
[https://www.pressherald.com/2018/01/18/smuttynose-brewing-
in...](https://www.pressherald.com/2018/01/18/smuttynose-brewing-in-new-
hampshire-to-be-sold-at-auction/)

Many areas are getting over-saturated with microbreweries and there eventually
won't be enough demand to sustain them.

In retail, $10+ average price for a six pack, the even more offensive 4 pack
of beer for the same price or more.

It's great to see this growth engine for jobs, and I personally love the
amount of variety and innovation we are seeing in craft beer, I just wonder
how long it will last until people are onto the next trend or until the
industry gets so greedy that they kill the golden goose.

~~~
adventured
I agree the movement is likely nearing saturation on total number of
microbreweries. However, $10 +/\- a few dollars, for a six pack, is not a
problem. The mediocre old domestics cost $7 to $10 around most of the US.
Paying more is perfectly fine for a superior tasting product. Product price
scaling works that way in most consumer goods, it makes sense.

~~~
EpicEng
>The mediocre old domestics cost $7 to $10 around most of the US

No they don't, not even close. The beers you're referring to cost that for a
_12_ pack. 6 packs are ~$5.50, and you can walk into a bar and get a draft old
domestic for around $2.00. Wherever you're buying your e.g. Bud Light, it
doesn't represent "most places".

~~~
stickfigure
_you can walk into a bar and get a draft old domestic for around $2.00_

Not in San Francisco.

~~~
EpicEng
Right, but MOST PLACES. Did you read what you were responding to?

------
rconti
One interesting note: The article mentions Ronald Reagan's Justice
Department's lax handling of antitrust regulations as leading to consolidation
in the brewing industry, but the number of breweries was near its nadir before
he was elected; in 1978 Jimmy Carter legalized home brewing, which was close
to the very bottom in terms of number of breweries.

[https://vinepair.com/wp-
content/themes/vpcontent/images/brew...](https://vinepair.com/wp-
content/themes/vpcontent/images/brewery-interactive/historical-breweries.png)

~~~
jsm386
That chart is from a broader article we published last winter:
[https://vinepair.com/map-american-craft-brewing-
history/](https://vinepair.com/map-american-craft-brewing-history/)

More recently we put together a visualization of the 1977 data at
[https://vinepair.com/map-american-breweries-1977/](https://vinepair.com/map-
american-breweries-1977/)

There's also a marked up breakdown by brewery from a 1978 FTC report below the
visualization.

~~~
rconti
That 1978 FTC data is fascinating! Thanks!

------
40acres
I wonder if marijuana will also be able to avoid being crushed and
consolidated by monopolies. I don't think the cigarette industry was able to
avoid it but I am not well versed on tobacco industry regulations.

My gut tells me that since at the end of the day marijuana is an agricultural
commodity large players will come to dominate the market. But on the other
hand there is a decent variety in strain types and flavors and with time you
could see interesting strains being developed that have a uniqueness similar
to craft beers.

~~~
Trundle
One thing about beer that the article didn't touch on is that it's a fragile
product which has its quality harmed by the standard supply chain. It's both
temperature and light sensitive.

This makes many smaller producers compared to few large producers more
attractive than in a more easily transported good eg. phones. One big factory
with all of the quality standards and efficiency gains that allows works great
for the iPhone, not so much beer.

I don't know enough about weed to be able to say where it falls on the
fragility of product spectrum, but it's a factor worth considering and I'd be
interested to hear from people who do know enough.

~~~
bullsbarry
To me this actually makes me respect beers like Budweiser even more. They've
managed to take a fairly temperamental style of beer, mass produce it in
breweries spread around the world, and wind up with a product that is damn
near uniform everywhere I've ever had it. It's not my preferred style, but I
don't think I've ever had a truly bad one.

------
Brendinooo
As someone who has a bit of a distributist streak, it's really nice to see
this.

There's a craft brewery near me, and I patronize it not because it's the best
beer, but because it's pretty good, and I want to support the local business.

Craft breweries seem to be pretty good candidates for distributing the means
of production. I'm speaking a bit out of ignorance, but it's not a lot of
ingredients and it's not a huge deal to ship and store those ingredients,
correct? There are more pieces to a cheeseburger with lettuce and tomato than
a beer - and meat, cheese, and produce can be harder to consistently source
and keep. And because craft is a pure luxury good, price isn't as big of an
issue here is as it usually is when you talk about these things.

~~~
Kalium
You are correct! It's a relatively small number of ingredients to make beer
that can be shipped pretty easily. Grain, hops, yeast, water, an assortment of
adjuncts.

The issues come in with the actual _means of production_ , rather than the
material ingredients. Brewing is a rather technically complex task. It's not
trivial to do reliably - ask any homebrewer about batches they've skunked. It
also benefits significantly from economies of scale, as at scale there's a
whole world of applicable chemicals production control technologies.

It's a lot like housing. It's relatively easy to ship around wood, wire,
pipes, insulation, paint, and so on. Assembling them into a working and usable
house is a smidge more complicated.

~~~
SideburnsOfDoom
> It's a relatively small number of ingredients to make beer that can be
> shipped pretty easily

Contrast that with the finished product. A hoppy IPA is at its best for a
limited time, and that is shortened by exposure to light and heat. Other beer
styles vary, but none last for ever. This favours local production, not
storage and shipping.

~~~
dluan
Not necessarily. There's new container and storage tech used these days that
can make any beer basically last forever. Get a fresh 'crowler' sometime.

~~~
SideburnsOfDoom
I think one of the 2 local craft beer shops has those, for maybe 2 or 3 beers
on keg. Compared to hundreds in cans and bottles.

The crowler is basically a can, and the likes of a Stone Enjoy By or a Brewdog
Born to Die are not going to be the same forever, even in cold dark storage in
a can. The aromatic oils in the hops change over the course of weeks. I have
tasted that. They might still be edible, but tasty? Not for ever.

Even a 12% ABV Imperial stout can lose flavour in the bottle after 2 years or
more.

------
vkou
> Large breweries ignored burgeoning niches, Watson said, particularly hoppy
> India Pale Ales, or IPAs, which constitute a large share of the craft-beer
> market.

He's reversing cause-and-effect.

IPAs are incredibly popular among microbrewers, because it is incredibly hard
to brew consistently tasting batches of beer. Smothering all of a beer's other
flavours, by dumping buckets after buckets of hops into it is much easier.
It's why eight out of every ten craft beers are incredibly bitter IPAs.

I like craft beer as much as the next hipster, but I can't stand this trend.

~~~
throwaway5752
That's nonsense. Craft breweries are businesses and they'll sell what makes
money.

Also, IPAs are incredibly hard to brew, store, and distribute consistently.
Hops are probably the most seasonal part of a mash bill, and high quality
finishing hops are in heavy demand. And the hop acids are subject to spoilage
by heat, light, or oxygen. If you want "smothering a beer's other flavors"
then look no further than whiskey/rum/et al. barrel aging (and I'm not
judging, whatever floats one's boat),

This isn't aimed _necessarily_ at you, but some people taste things
differently. Cilantro, infamously. But hops are another. Maybe you don't like
hops (or maybe you haven't had very good ipas?)

~~~
fouc
My favourite beer ever may have been a sour aged in a bourbon cask. It was one
of those one-off brews that may never appear again.

~~~
throwaway5752
[https://www.wickedweedbrewing.com/locations/funkatorium/](https://www.wickedweedbrewing.com/locations/funkatorium/)
would be up your alley.

------
Tiktaalik
In the City of Vancouver there are five breweries in my somewhat industrial
neighbourhood. In another nearby somewhat industrial neighbourhood there are
another five. There several others scattered about in the nearby satellite
municipalities.

A decade ago if you walked into a Vancouver liquor store that specialized in
craft beer you'd find it mostly full of Seattle and Portland craft beers. Now
you'd find the stock overwhelmingly dominated by high quality beer made within
Metro Vancouver city limits.

We don't find it at all odd to find independent mom n' pop restaurants in
every neighbourhood of every town, and I believe in the long term we'll find
that every town of reasonable size will have a few mom n' pop breweries that
largely serve the local populace.

------
alva
Very happy about the craft beer revolution in the US. Coming from the UK, we
are used to an extremely wide range of beer in our regular pubs (thanks to
decades of activism from CAMRA). If you ever visit the UK make sure you visit
one. Years ago the only beer I could get in regular pubs in the US were Bud
light, Coors etc.

------
pierre
It seems to be a case of beer crafting moving from a production economy to an
'heritage' economy.

In an 'heritage' economy, proximity, uniqueness and the story of the product
matter more than the product itself. We have seen it happen in France for
'macaron', wine and cheese.

More on 'heritage' economy (in french) :
[http://www.gallimard.fr/Catalogue/GALLIMARD/NRF-
Essais/Enric...](http://www.gallimard.fr/Catalogue/GALLIMARD/NRF-
Essais/Enrichissement)

------
mberning
It’s very hard for me to reconcile. I love what craft brewing has done for the
industry. But it has gone to a ridiculous and antithetical place. The culture
has more in common with wine than beer at this point. It is no longer an
“Everyman” drink. Waiting in line for releases. $10 and $15 pours. It’s a
turnoff.

~~~
wil421
Why is this a bad thing? I have so many more options than the cheap beer I
started drinking. The Everyman beer still exists and many people still drink
it.

There are plenty of non $10 or $15 dollar pours to keep me happy. You don’t
have to wait for releases. I only participate in lottery systems for limited
liquor releases, screw the lines.

~~~
aidenn0
Totally OT, but maybe someone in this thread knows why my favorite everyman
beer (Busch) seems to not be sold in California.

~~~
chipotle_coyote
Walmart claims to have it in stock at their store in Mountain View, so I'm
guessing it's sold here. I haven't gone looking myself, but Anheuser-Busch
certainly distributes their big brands in California. It's possible that Busch
itself just isn't that popular out here by mass market standards, though?

~~~
aidenn0
Ah, so does the closest wal-mart to me; they definitely didn't have it last
time I was in there.

------
partiallypro
I, for one, absolutely hate the craft beer revolution in the U.S.; a lot of
restaurants are changing out their taps of beers that are universally liked
for craft beers. It's basically impossible to get a Stella or Heineken on tap
now, everything on tap is Bud Light and a ton of craft beers. There are a few
places that haven't fallen into this, but it's a big problem. I hate it. I
love Belgian and German beers and it has become almost impossible to get
either of them on tap unless you go to a beer hall style bar.

A few of the "craft" beers are owned by the major multinational corporations
anyhow.

~~~
mylons
i guess they weren't universally liked if they're getting changed out for
craft brews.

~~~
partiallypro
Craft beers are cheaper for restaurants and have a higher profit margin, and
there's the "community" factor of having local brews; and in some cases just
some "good ole boy" attitude. There are a lot of incentives. It has not much
to do with net sales, because it is offset by other incentives. Customers
don't often complain, especially in bars that are for partying and generally
just getting drunk. Who cares if this local brew tap doesn't get much
requests? There is no feedback, and it just drives the people who like
"imports" to buy bottles and the profit margin is even HIGHER there. It's a
win/win for the restaurant/bar.

~~~
lotsofpulp
There is feedback, the fact that the business is making more money means they
made the right decision.

~~~
partiallypro
That's not always the case, there may be a short term gain, but long term it
may hurt sales as people go to different bars with more imports on tap. Here
in Nashville there has been an influx of beer halls that serve German and
Belgian beers, imo as a backlash to the localization of beers.

------
kpwags
I love this, but I'm curious as to how much it can grow. The neighboring town
to me has 5 craft breweries on its main street. All of them are within a 1
mile of each other. It's even crazier since there are also 3 winery
storefronts/bars and a craft distillery in that same radius.

The other thing I've found is that it has inspired people, including myself,
to try their own hand at brewing. I just bottled my first batch and while I
have no delusions that I'll start my own brewery, it's a fun activity to try
one's hand at.

~~~
et_tu_brewte
With more focus on tap rooms and not so much on distribution, craft breweries
can be more thought of as restaurants... and you don’t hear people complaining
about too many good restaurants.

------
Zeebrommer
> Indeed, between 2002 and 2007, employment at breweries actually declined in
> the midst of an economic expansion.

I'm not sure this is a bad thing. Although it means loss of jobs, it also
means the breweries got more efficient (producing the same or more with less
human effort involved). How does this work, economically? More jobs is good,
more efficiency is good, but you can't have both when growth is limited.

------
fluxic
Don't blame me!

—PBR loyalist

~~~
ybrah
Was drinking a PBR as I read this. I feel ashamed

~~~
djrogers
Don’t be, I’m sure it’s breakfast time somewhere....

------
rb808
What I dont understand is that in Europe there are dozens of delicious lagers,
in the US I can't find any local copies. Mexican or Central American beers
come closest. Surely with literally hundreds of microbrewery options there
should be something close. Any recommendations?

~~~
toomanybeersies
Craft brewers don't do many lagers for two reasons.

The first is that they're "boring". You can already get lots of different mass
market lagers, and they're all similar.

The second reason is that they're _hard_ to brew. You can hide the fact that
you're a shit brewer behind malt and hops (to an extent). You can't cover up
poor technique in a lager. The big megacorps have got their technique down to
a tee.

~~~
steveax
They typically take longer to finish as well.

That said, I’ve been encouraged by more lagers from craft breweries showing
up. There are some terrific ones that have been around for a long time too,
say Prima Pils from Victory.

~~~
ck425
What do you mean by finish? I was taught by a brewer friend that lager takes a
fraction of the time ales do. (due to faster fermentation from the yeast being
on top and nearer oxygen).

~~~
dagw
Lagers are (or should be) fermented at around 10 deg C, and thus take longer
to ferment than ales that are fermented at room temperature. They also need to
be 'stored' (that's what 'lager' means) at 8-10 deg. for several weeks after
primary fermentation to develop that characteristic lager flavour.

------
archon810
Hoppiest*.

------
hozae
Love Craft Beer, hate the Gout.

~~~
jmiller099
ouch

------
soared
> even [when] obsessed with efficiency, sometimes it is just as wise to design
> for inefficiency

Holy shit

------
chx
Eventually alcohol usage will be looked upon with great fascination of a
custom of a barbarian age: "They used to actually drink poison for thousands
of years but we have moved on."

It'll take time but it'll happen.

~~~
landryraccoon
Eventually our livers evolve (or are genetically engineered) and alcohol is
just another tasty calorie source, like starch or fat.

