It's like an elephant's tea party, Someone's going to get sat on
– David Walker, Firestone Walker Brewing
By Tony Forder
A panel of established brewers addressed (or perhaps embraced) the Elephant in the Room at the 6th annual Meeting of the Malts – namely the recent glut of small breweries and their tasting rooms nationwide that is eating into established craft beer retail sales.
President of Boston Beer Co., Jim Koch, acknowledging that sales of his flagship Samuel Adams Lager were off as much as 15% in 2016, said the new category is a fact.
"If it's good for the consumer, we should accept it and embrace it," Koch said. "Our job is to make it good for us. We have to find other cool things to tell the consumer to make them want to drink our beer.
"We'll see how it plays out – some will sell, some will close," he added. "For the long term of our industry, it's getting people off national brands."
Koch's remarks were in response to questions asked by both myself at a pre-dinner press conference and by industry statman, Bump Williams, MC at the dinner panel. In his remarks, Williams said the impact of tasting rooms kind of snuck up because, "It's a new category that's not being measured." He also remarked that "brand loyalty continues to erode," and that the industry's most popular style, IPAs, currently occupies 28% of the craft category.
Another panelist, Eric Wallace of Boulder-based Left Hand Brewing, said if wholesalers are upset about the popularity of tasting rooms, they only have themselves to blame. "(Direct to consumer) is a direct result of wholesalers holding brands hostage," he said, adding that if companies don't change with the times, they'll be swallowed up. But he warned new breweries, "There's a reckoning coming." He said everyone on the panel had been through tough times before, citing the shakeout of the late 1990s.
The local member of the panel, Dick Yuengling of D.G. Yuengling & Son, said his company was "down a bit," in barrelage last year but as the oldest family-owned brewery in the U.S. was used to industry fluctuations. "You have to be able to handle the downs as well as the ups," he said, referencing Prohibition and WW II as a couple of bigger bumps in the road.
Also, on the panel, David Walker, of California-based Firestone Walker cited Uber and Amazon as other facets of the direct-to-consumer revolution – "We just have to live with it." He said the tasting room culture is continuing craft brewing's legacy of "creating communities, redeveloping (urban infrastucture)" and having "massive economic impact." Firestone-Walker can attest to the power of local with it's "805" area code brand that drove sales last year while other brands were mothballed.
The Meeting of the Malts, sponsored this year by Micro Matic USA, has garnered a solid reputation as an industry event well worth attending. Sponsored by the Brewers of Pennsylvania, the event is open to members and beer enthusiasts alike with an attractive format consisting of a 4-person panel meet the press, panel discussion, followed by 4-course dinner, with beer pairings of course. The event also featured a silent auction and a brewpub festival featuring 15 local breweries. The location was the impressive ArtsQuest Center at Steelstacks, the enshrined former steel mill in Bethlehem, PA.
In BOP business, Executive Director Dan LaBert handed out their annual "growler" awards to three PA legislators – Speaker Mike Turzai, Rep. Mike Tobash, and Sen. Richard Alloway II – for their work in bringing the Malt Beverage Tax Credit to fruition. The tax credit matches equipment and facilities investments made by applicant breweries (max $200,000).
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