Size Matters

I had an interesting conversation with a brewery rep last night. It was the Eugene stop, the final stop, on Bigfoot Beverages’ trade show route. The Bier Stein had the fortuitous idea to host the after party, taking over the majority of its taps with Bigfoot breweries. For a guy who needs to be in touch with brewery folk in order to keep ticking, it was a feeding frenzy for yours truly (sorry, it sounds like I think of brewery reps as meat; that’s not the case. I was just hungry.).

I had this interesting conversation in the middle of the thrumming Stein, which is an inspirational place to begin with, where I should be writing more often, with a rep who works for a successful medium-sized brewery (around 20,000 barrels produced last year) in Oregon. His employer doesn’t have trouble selling its beer, he noted happily. The beer is basically sold before it hits the loading dock. He remarked that another, much larger brewery would often have stacks of full kegs waiting to be sold. At the same time, his brewery is struggling in the Bend market.

That’s no surprise; Bend is a statistical outlier. With enough breweries to supply at least two more of its population (not counting tourist traffic), a Boneyard tap in every bar, and the number 10 largest craft brewery in the country by volume: Deschutes. For an outside brewery to snag a tap handle in Bend, it really has to show up and go through the motions (grocery store tastings, face time with beer buyers) to occupy a nook of that besotted market.

The brewery with beer sitting around has much wider distribution (it is also on the top 50 list), and I noted that running out is not an option; an empty shelf slot or dry faucet will quickly be filled in, possibly by this rep’s beer (nature and beer drinkers abhor a vacuum, the saying goes. Just ask my kitchen floor. Ba-dum-ch!). Having some overstock that’s managed well is security in a fluctuating market.

At the same time, this brewery rep’s bosses are trying to grow 20% or more this year. 20%! Twenty percent! A bit alarming considering the retarded market growth. Not impossible, but a bold expectation. The movie version of this scenario involves a spreadsheet-addled young salesman pushed to extreme, vulgar, illicit lengths to meet the numbers, then taking the fall when it all comes crashing down. In the final scene he is contentedly serving food at a homeless shelter. Spoiler alert!

bigsmallbrewery

An increase of around 5,000 barrels is, like, a million pints. With many breweries growing into bigger systems (Great Notion, Bend Brewing Co., and Migration come to mind) is there a divide between the market realities and the perception of available space on shelves, tap lists, and bellies? I would wager that starting a small brewpub is a better idea at this point than continuing a model of linear growth that goes against the current.

So yeah, size matters. Various conversations focus on quality issues, overhead, styles produced, but few (that I’ve read, at least) address the proportional size of breweries, output and geographic spread, and marketing issues. I’ve spoken with several brewers at smaller breweries who have named a modest maximum desired output. Their goal is to serve their communities first. Making waves in new markets and maintaining relevance there is less important.

I’d be interested to hear some other perspectives on this issue, either from beer industry folks, or any other production-sales-retail sector; the reality is that beer is special because it is the foundation of human civilization, not because it’s some unique widget.

4 thoughts on “Size Matters

  1. I think a marketing professor in a business school could add theory and experience. Explosive growth is not so rare. I was taught cases in which the producer’s problem was finding or borrowing enough cash for operations. That’s just one aspect; production, especially of a distinctive product, is more fundamental, but it’s happened before.

    A possible model is the automobile market at the turn of last century.

    My contribution to the demand side of the situation is that I asked for Ninkasi (any variety) at Rodman’s, a big retailer in DC. Floor manager said, “Their rep just left – I’ll text him.” The rep came back and Rodman’s ordered a few cases. I first saw them in DC at our Whole Foods.

    Like

    1. Well, you sent me down a Wikipedia rabbit hole about automobiles. The auto boom may have similar growth stats, but far fewer producers than beer has now; home tinkerers weren’t opening their own factories left and right, though many produced really weird automobiles!
      The sales side of this is intriguing. I think some reps are going to be shouting upwards, “hey, this isn’t feasible!” depending on the size of the brewery and its staff.
      Glad to hear of citizen buying power; my experience was always a customer asking for a beer that simply wasn’t available in the region, or of super limited distribution.

      Like

  2. (Thought I responded last night but the internet ate it)

    Def correct about larger breweries needing back stock to keep handles full.

    I think any brewery that can be nimble in their styles, create new draft product to stay relevant in this rotating handle environment will do well. We also drink a lot of OR breweries in-state and way more craft beer consumption growth per capita. So it’s almost easier to grow in-state than out though it seems counter intuitive.

    Interesting to compare one distributors products against each other. If you look at Columbia vs smaller distro, they have a boatloat of $ to throw at things that smaller distro/breweries do not.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s