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Why the threat of excess choice in beer is over-stated - Comment

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A theory has formed in the beer industry in recent months that the sheer range of brews on offer is leading to consumer fatigue. This month, beer commentator Stephen Beaumont considers the evidence supporting and countering this theory.

Does the growth in the number of breweries globally predicate a rise in the number of beer SKUs available to consumers?

Does the growth in the number of breweries globally predicate a rise in the number of beer SKUs available to consumers?

When the US chain Yard House opened the doors of its first mega-multi-tap bar and restaurant almost 20 years ago, filling the draught lines with great beers was a very different proposition than it is today. "Creating a beer menu for Yard House with 150 to 180 different brands wasn't easy during those early days," recounts Kip Snider, the long-time beer wrangler for Yard House and now a partner in Coin Restaurant Consulting, "Back then, we were at the mercy of what a few beer distributors carried in their draught portfolios. You didn't have (thousands of breweries) creating unique styles to choose from, like the decision makers have today."

That abundance of consumer choice may have been on the mind of consumer futurist Will Higham when he recently spoke with just-drinks. When asked about Anheuser-Busch InBev chief Carlos Brito's musings that consumers may be growing tired of - or at least a bit overwhelmed by - the breadth of choice available to them in beer, Higham said: "What people are looking for is edited choice. They want to feel that they're choosing, but the range available in many areas is exhausting. Consumers actually feel like they have less time."

Today, there is unprecedented variety available in much of the beer world. In the US alone, there are over 5,000 operational breweries, with hundreds more above the border in Canada, well in excess of 1,700 in the UK and numbers in the high hundreds in even non-traditional brewing lands such as Italy, France and Japan. What's more, many of these breweries are making not just the 'old school' core portfolio of half a dozen to a dozen brands, but dozens - or even hundreds - of regular, seasonal, collaboration or one-off beers.

Indeed, this beer largesse has led to some industry rumblings, at least in the US, with beer industry insiders suggesting that certain distributors are quietly dropping brands from their portfolios. Bar owners and restaurant operators in some regions, meanwhile, complain about the lack of reliable quality demonstrated by some newer breweries, even occasionally by sought-after ones with near cult-like followings.

But, amid all this dramatic change, the question remains: Are we truly at maximum beer choice, or is there still room on the bar top for more?

At the end of 2015, the last period for which reliable figures are available, trade body the Brewers Association listed 4,269 craft breweries in the US, of which 3,811 reported their production figures. Of this number, 599 recorded brewing a maximum of 100 US barrels (117 hectolitres), 681 got as high as 250 barrels (292 hectolitres) and 1,321 reached production of as much as 1,000 barrels (1170 hectolitres). Put another way, roughly 68% of those breweries reporting their production figures were selling less than 20 hectolitres of beer per week, with almost half of those selling a quarter or less of that amount.

Extrapolating further, and allowing for the fact that most - if not all - of the 458 breweries that did not report their numbers would fall into this same production category, close to three-quarters of US breweries active during 2015 were selling a maximum of about 40 kegs per week - about the amount that a moderately successful beer-focused bar would sell - with roughly 50% of those selling the equivalent of only ten kegs or fewer per week.

All of which leaves us with about 1,000 breweries producing significant quantities of beer, or about the same number as were operational in 1996. Granted, a significant number of those mid-1990s breweries were also producing lower quantities of beer, but evenso, these adjusted brewery counts clearly suggest that the pressure on distribution channels has not grown nearly as much as the overall brewery count might suggest.

The other significant factor in play in the industry today is the means by which more breweries are selling their brands. In both well-established craft beer markets like the US and Canada and, to a slightly lesser degree, in developing ones such as Brazil and Spain, the model to which nascent brewery operators are looking is increasingly strongly-rooted in local appeal and front door sales. This means, in other words, that a rapidly-growing number of breweries are eschewing the traditional means of distribution in favour of brewery tasting room sales, both in draught and packaged form, and home market keg or cask sales.

Assuming that both of these trends are consistent in most mature and maturing beer markets, and anecdotal and some statistical evidence suggests that they are, then we are not drowning in a sea of choice anywhere near the degree that some, including Brito, would suggest.

In fact, we may have a fair way yet to go before an overabundance of selection becomes a serious concern.


Sectors: Beer & cider

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