Global hop marketA local alternative to mass beer suggested by independent brewers has been successful and is now altering the global market. Beer is becoming more diversified, so transnational companies have to accept the new game rules and to switch focus to young and fast growing markets. All these processes increased the demand for aroma and bitter hop as well as their acreage expansion on two continents. However now there appeared a downward trend of alcohol consumption in the world, so even special sorts can soon turn to be sufficient. In this connection the dynamic American hop market is already facing some problems. EU hop producers have become more cautious, they are not racing to exceed the demand and look forward with more confidence, judging by the contract terms.
Hop Market in RussiaGermany still dominates the Russian market, yet over the recent two years one has been able observe a continuous success of Czech hop suppliers. Their expansion and growing popularity of hops from the United States became the drivers of supplies growth in 2016 despite the preceding modest harvest crop in the EU, as well as the factor of relative stability in 2017. In this connection, in 2017, the ratio of the varieties continued to shift towards the aroma ones, and the supplies of Magnum hop and other alpha varieties were reduced. However, the import of bitter hop pellets is partially replaced by extracts, especially from the major beer manufacturers. Total volumes of alpha acid supplies, according to our estimation, decreased by approximately 5% and returned to the level of 2015. Barth Haas Group continues dominating the hop products market; HVG also increased its weight. At the same time, Morris Hanbury significantly reduced the supplies in 2017.
10+1 trends of Russian beer market 2015-2017Despite of the moderately negative prognoses for 2017, the beer market can be stabilized soon. Yet the years of the negative dynamics have resulted in marketing being limited just to “optimization” and the art of balancing between price and volumes. Bigger supermarkets share means stronger trade marketing. These processes are connected to the majority of the described trends. At the same time, the federal brands inflation leads to searching for new tastes, sales channels and contact formats that expand the product range and diversify the beer market, but do not imply a substantial volume increase. Let us enumerate and further discuss the ten trends of the beer market we can see in 2015-2017 as well as the major event of 2017.
Beer market of Ukraine 2017In the first half of 2017, the Ukrainian beer market goes on decreasing slowly. Yet, the companies manage to compensate their lost volumes by raising prices and improving the sales structures. This results in the mid price market segment reduction while the sales of premium brands are rising. These processes are connected to position strengthening of companies Carlsberg Group and Oasis and the market share reduction of Obolon. Most of the novelties by the market leaders belong to craft or hard lemon categories.
Beer market of Russia 2016: PET goes to draftThe beer market of Russia was warmed up by the hot summer, but the preparation for large volume PET prohibition has already impacted it negatively. The year was successful for Efes, MBC and regional producers; Carlsberg’s positions were virtually stable but AB InBev and Heineken lost a part of market share having focused on the sales profitability. The dynamics of big brands was determined by how much the companies were willing to keep the prices down or by their promotional activity. In this context the economy segment of the beer market and sales of inexpensive draft beer were increasing. The premium segment started shrinking due to license brands migrating to the mainstream segment.
Is Extremism in Craft Beer a Good Thing?
I am often reminded of Goldwater’s feisty assertion when I am having a pint of beer in a pub these days. It seems that more and more beers are being “doubled,” “Americanized,” or “imperialized”—that is, they are made closer and closer to the edge of the brewing art. In their extreme glory, they invariably sport one or several of these: 8-plus percent ABV, 20-plus degrees Plato, 80-plus IBU, and 100-plus SRM. Many of these beers are true taste sensations—but, admittedly, some of the more far-out, experimental brews can also be pretty awful.
Sometimes, however, I just want to sit down for an evening of happy socializing and imbibing over a few “moderate” session pints, and they seem to be harder to come by these days, especially in the average American brewpub…which begs the question: “Is extremism in the defense of beer with flavor a virtue?” Or—to stay within the metaphor of presidential sloganeering—are we now overdoing extremism just a bit because “yes, we can?”
Scientists look at how things work in one of two ways: There are laws that are immutable. Gravity is one of them. Nobody has ever observed a Newtonian apple heading skyward after separating from a tree. Then there are things that happen in clusters of values grouped around a mean, distributed according to a symmetrical bell curve. Near the bulgy center of that curve is where the action is. That’s why the curve is also called a “normal” distribution. The curve was first developed in 1809 by the German mathematician and physicist Carl Friedrich Gauss. As events or behaviors gain distance from the curve’s center, in either direction, the less frequently they will occur. In a normal distribution, extreme events are rare and inhabit the right and left edges of the curve. In a social environment, they are usually considered deviant, pathological, dysfunctional, or even criminal.
Extremes may be rare, but we can never eradicate them completely, nor should we. There will always be saints and criminals, geniuses and idiots. However, if statistical outliers shift from being the exception to being the norm, a breakdown of the old order, a revolution, is usually the consequence. All revolutions, including the craft brew revolution, are transitions. They happen when a sufficient number of ardent, impassioned people decide to toss out the ancien r?gime and replace it with a new order. As normalcy is being jolted by the cataclysm of revolution, conditions may drift out of control for a while. But, as even Leon Trotsky and Mao Tse Tung had to learn, there is no such thing as a “permanent revolution.” Conditions eventually settle into a new state of equilibrium. Any lawlessness and anarchy will subside in favor of a post-revolutionary synthesis, a “new normal.” So, where is the American craft brew industry now? An informal survey conducted in July 2010 on the Brewers Association Forum provides some answers.
The American brew revolution started about three decades ago, when the old regime of supreme blandness was replaced with a new regime where flavor rules. Such beers as Samuel Adams Boston Lager and Sierra Nevada Pale Ale were “extreme” in those early days, but, if current sales are any indication, they—and brews like them—have become mainstream. But here is the paradox: If the craft-brew market truly followed a typical Gaussian normal distribution, genuine hop-, malt-, alcohol-, and bacteria bombs (and craft beers with less flavor than the “center brews”) should be very rare indeed. The reality, however, is not so. And this applies more to brewpubs than to the off-premise market. Even a quick glance at the entries in the Great American Beer Festival confirms that the peak of the craft-brew flavor bell curve is definitely skewed off-center. Thus, when a brewpub beer menu features an Irish Red, for instance, at an out-of-style ABV of 7.6 percent, or a K?lsch at above 6 percent ABV—and obviously fermented with the wrong yeast!—is that just a “craze,” as Chris Camara from the brewery department of wholesaler Crosby & Baker in Westport Mass., asks, that may subside someday? Is it virtuous extremism or a brew-technical vice, one that, as Alec Stefansky of Uncommon Brewers, an organic brewery in Santa Cruz, Calif., puts it, believes can be covered up, because extremes are “easier to make than a simple, small beer,” and “all that we put into extremes is typically unbalanced in one direction or another… Extreme flavors [often] hide…extreme flaws.”
Extreme versus Moderate: Blame It on Socrates and Aristotle
From your studies at school, you may remember the great controversy between Socrates, who promulgated a black-and-white list of moral virtues and vices knowable by an exulted philosopher king, and Aristotle, who maintained that anything, both alleged virtues and vices, can be good and bad, depending on whether they are pursued in excess or in moderation. Perhaps the future of the American craft beer culture will depend on whether brewers choose the Socratic or Aristotelian approach. If flavor is good, according to Socrates, more flavor must be better, and extreme flavor, best! In that view, American lagers are a “vice,” German and American craft mainstream brews are so-so, and humdinger IPAs are a “virtue.” Aristotle, on the other hand, would have suggested that balanced beers with moderate amounts of flavor and alcohol represent a desirable golden mean, and that extremely flavorful or flavorless beers, if imbibed in excess, become a “vice.”
Flavor intensity is, of course, as brewmaster Phil Leinhart of Brewery Ommegang in Cooperstown, N.Y., reminds us, “very subjective [and] one man’s potion is another’s poison.” Yet, historically, we can arguably bundle beers into four broad tiers with fluid boundaries between them.
• Starting from pure water upwards, the first tier on the flavor scale is probably the American lager, light or otherwise, and its global cousins. With IBUs barely above the taste threshold, these usually innocuous brews hold between 80 to 100 percent of the market in many countries, which makes them statistically the world’s dominant session beers. In their favor, nutritionists might argue that, as thirst quenchers, most of them are still better for your health than most chemically produced soda pop alternatives.
• Moving up to the flavor ladder, most session beers of central Europe probably represent the next tier. These are consumed over there by the market segment that drinks Bud, Miller, and Coors over here. Drinking a fresh Augustiner Edelstoff in a Munich beer garden, for instance, a Fr?h K?lsch in a street caf? in view of the Cologne Cathedral, or an Uerige Alt from a wooden cask in that famous D?sseldorf old-town pub is definitely a much more sublime beer experience than any American lager could offer. On the British Isles, such brews as Fuller’s ESB or Guinness Stout may hold analogous places on the flavor spectrum.
• The third tier is composed primarily of mainstream American craft beers, usually ales, which tend to be more assertive and flavorful than European session beers.
• Finally, there is the worldwide extreme tier, which includes not just such American brews as Brooklyn Chocolate Stout and Samuel Adams Utopias, but also, for example, such European brews as Schneider Weizen-Eisbock, Uerige DoppelSticke, and Rodenbach Grand Cru Flanders Red.
So what will or should American craft beer be known for—all four flavor tiers, primarily for the extremes, or, as Charlie Papazian recently suggested, only for beers “with real and elevated flavor profiles more distinct than typical light American or international lagers, made by a small and independent brewery?” So, what are the takeaway lessons from the BA Forum survey?
The Extreme Defense
Pushing the envelope toward the outer bounds of the possible is clearly a hallmark of American craft brewing, and on those occasions, when beer is covered by the mainstream media, extreme beers are often the main attention-getters. The BA Forum survey shows that extreme beers, indeed, have their ardent defenders. Says Benoit Mercier of Benelux Brasserie Artisanale et Caf? in Montreal, Canada, “I don't think we’ve been too far. And will we ever be? How far is too far? We've known the lower limits of alcoholic beverages for centuries. Time to explore infinity! I don't think the trend of extreme beers will disappear.”
John Cochran of the Terrapin Beer Company in Athens, Ga. is similarly optimistic about the viability of extreme beer, at least for a while: “The consumer is drinking more extreme-style beers than ever before. Will that continue forever? Of course not. But if craft beer accounts for only 5 percent of the beer being sold in the U.S., then there is still 95 percent of the population waiting in the wings to try an extreme beer. And that is why the growth rate of craft beer will continue on for decades.”
Other brewers believe that, if extremes are used in their proper place, they can drive up the sales of flagship beers. Says Scott Newman-Bale of the Shorts Brewing Company in Bellaire, Mich: “About 20 percent of our sales are in extreme beers. However, we make sure that all of our beers are of high quality, including the Pilsner and lager. The latter is the bestseller in our pub…Extreme beers drive demand for our flagships as well. For instance, in the weeks we launch an experimental beer, our flagships sales also increase.”
Reid Stratton of the Grand Teton Brewing Co. in Victor, Idaho, also sees a clear positioning advantage that comes with brewing extreme beers. “To the vast majority of the beer drinking population, 'beer' still means a light adjunct lager. By brewing increasingly bolder, bigger, and creative beers, we continue to distance ourselves from the popular conception of what beer is, and redefine what beer can be.”
Steve Breezley of the Avery Brewing Company in Boulder, Colo., adds that “a wide variety of beer styles and experimentation are the things that have made craft brewing stand out from other beverages in general and led to their ever increasing popularity.”
Extreme beer has its place especially as an accompaniment to food, argues Alex Crowe, a former brewer and now a faculty member of The Restaurant School at Walnut Hill College in Philadelphia: “I find extreme styles work very well with food and can compete with wine in a way that lighter styles can't.”
What Drives Market Growth, Really?
But if you make it, will consumers flock to your enterprise to make the people who look after the business end of a brewery happy? Several respondents to the BA Forum survey were rather hesitant about the saliency of extreme beer as bait that will lure many of the 95 percent non-craft beer drinkers into the craft fold. Says Todd Malloy of the Rifle Brewing Company in Rifle, Colo.: “I would caution those brewers who are not balancing their portfolio of beers with something that appeases the newly found craft beer drinker. After all, we are still trying to take away market share from the mass-production ‘traditionalist’ brewers.”
Wolfgang Lindell, a German brewmaster working at the Old Harbor Brewery in San Juan, Puerto Rico, also looks at sales volumes: “It t seems to me that the American beer spotlight has gone from one extreme—bland, mass produced adjunct Pilsners—to the other extreme—overly hopped, or overly strong, or sour, or generally extreme beers. What about simplicity, balance, harmony, and drinkability?” To give his point some punch, he asks: “Can you imagine drinking four one-liter mugs of IPA at Oktoberfest?”
Michael Hancock, brewer/owner of Denison's Brewing Company in Toronto, Canada, seems to share this more Aristotelian than Socratic view. To him extreme beers are like “what I see happening in other areas of life. Muscle cars come to mind. ‘More is better’ is not always true … [Instead] the real challenge is to produce a great session beer that has flavor.” There is also a consumer’s corollary to this brewer’s quandary.
As Chris P. Frey, chairperson of the American Homebrewers Association governing committee and a member of the Brewers Association board of directors explains: “I am faced with a dilemma—should I purchase a double Imperial K?lsch (that doesn't even make sense!), or would I rather enjoy several pints of a well-crafted session beer?” Especially brewpubs that offer session beers, he argues, could enjoy “greater sales per customer while lowering the risk for over-indulging; a win-win all around!”
The Advocates of Balance
While only a few respondents to the BA Forum survey believe that extreme beers should be the main focus of craft beer-making, the overwhelming majority stresses the need for their portfolios to be marketable, which leads them to a much more balanced approach.
Says Bryan Simpson of New Belgium in Fort Collins, Colo.: “At New Belgium we definitely pride ourselves on making drinkable, well-balanced beers (such as Fat Tire), but we have a few extremes in the cannon as well (think La Folie sour brown). I think a good portfolio embraces both ends of the spectrum.”
Bo B?langer of the South Shore Brewery in Ashland, Wis., agrees. “Our flagship is still our flagship…In the end, beer drinkers find a comfort zone for the majority of their purchases.”
While Jeffrey Stuffings of the Jester King Craft Brewery in Austin, Texas, believes that beers with high OGs, ABVs, and IBUs can be made drinkable “by drying [them] out so people aren't left with high finishing gravity, cloying sugar bombs,” Sam McNulty of the Market Garden Brewery and Distillery in Cleveland, Ohio, is still concerned with the high alcohol levels of extremes. He looks at the American beer culture as “one of drinking ‘sessions,’ and we've all established a pace at which we sip, but huge ABVs of session beers don't jive with this ‘pace’.”
Considering that virtually all extreme beers are ales, not lagers, Ommegang’s Leinhart, a maker of many robust Belgian-style ales, asserts, perhaps surprisingly, that “the lighter, more delicate styles are more difficult to brew from a technical standpoint…and the notion that ales are somehow superior to lagers strikes me as absurd.”
The Craft Beer Portfolio of the Future
These cross-currents of opining suggest that there may be a genuine tension between craft beer as an exuberant act of creating and craft beer as a beverage business, that is, between art and accounting. Most brewers would agree with Avery’s Breezley, for instance, that pushing the envelope of what the brewhouse can yield is exciting. Steve cautions not to listen to critics, who spout opinions about “what other brewers should or should not make.” Instead, he says, “stay true to your passions as brewers and make the beers that inspire you and your customers.”
But there is also a strong view that selling more, not less, beer to session beer drinkers is desirable. After all, brewing is both a creative culinary art and a capital-intensive economic enterprise. Therefore, when Todd Ashman of Fifty-Fifty Brewing Co. in Truckee, Calif., maintains that “It's up to the brewer to decide what might work and if it will sell,” one would expect a brewery business manager to say: “No, it isn’t.”
Marty Jones of the Wynkoop Brewing Co. in Denver would agree: “What you want to do?” he asks. ”Be the brewery that makes a giant beer your fans dig a couple times a month under a small set of circumstances? Or hook them up with beers they can enjoy in a broad range of settings and occasions, complemented by a whopper beer now and then?”
This is a sentiment echoed by Jim Jeffryes of the Kannah Creek Brewing Co., a brewpub in Grand Junction, Colo.: “We would rather sell our customer three beers per visit than just one imperial beer.” Even the extreme “Vermonster”-maker Matt Nadeau of the Rock Art Brewery in Morrisville, Vt., advises that “as an industry…we should work hard to promote both aspects of craft brewing, flavorful session beers as well as extreme beers. It would be wise of us to cater to the new craft consumer as well as the highly published ‘social drinker,’ who drinks a beer to be social in a group and may not want big, bold flavors. If, as a group, we begin to be painted as elitists and off-the-wall brewers in various media, we risk losing more mainstream consumers and begin to narrow our future.”
In this argument between art and accounting, however, there ought to be no room for dogmatism! Breezley correctly admonishes us that, “if you like to brew traditional style Viennas and/or golden ales, but not Imperial IPAs or stouts, that's great, but don't frown upon others who do, because I believe it goes against the core of what makes our industry so much fun to work within.” I would add that this sentiment should cut both ways. It should be equally unacceptable for extreme brewers to denigrate those who try their hand at making lighter, more mainstream brews. After all, as Crosby & Baker’s Camara reminds us, “flavors do not [necessarily] change in a smaller beer, they're just more compact.”
Only a few craft breweries, such as the Boston Beer Company, are large enough to make a full spectrum of beer. Boston Beer can almost literally be all things to all people, a luxury that is hardly available to smaller breweries. As such, the Samuel Adams brand is probably a concentrated mirror of the craft brew industry as whole. It is at once an extreme and a mainstream brand. Next to its flagship Boston Lager, it includes such heavyweight and out-of-the-ordinary releases as Triple Bock, Utopias, Chocolate Bock, Blackberry Witbier, and Imperial Pilsner, as well as the first craft Light and a seasonal Noble Pils, both brewed as easy-drinking session beers in the central European tradition. In fact, the Noble Pils is an overtly Czech-German inspired brew, based on Czech floor malt from Weyermann® and hops from Tettnang, Spalt, Hersbruck, Saaz, and the Hallertau. The phenomenal success of Sierra Nevada Pale Ale, a great session beer of decidedly American character, is another indication of where the true center of the American craft-consumer curve might now be located.
Contriving to Produce Happiness in the Aggregate
While at the beginning of the craft brew revolution, the pursuit of extremism—even as understood then—in the interest of flavor was probably no vice, perhaps it is now time to put the vast variety of American craft beers into a more “normal,” post-revolutionary bell-curve perspective. Obviously, there will and should always be a market for brave, extreme breweries at the frontier of fermentation experimentation, such as Allagash in Portland, Maine, and Stone in Escondido, Calif., and many breweries in between. Their glorious, flavorful beers…from super-dry, bacterially fermented, mouth-puckering teasers…to rich, super-hoppy/malty, high-alcohol heavyweights have become an integral part of our craft-brew culture. But should every brewery make them? Should “brewing where no man has brewed before” be the prime standard by which a brewery’s quality is ranked, and the prime means by which it gains market share? The survey in the BA Forum suggests not. Instead, the consensus seems to be that, if craft breweries want to maximize their market potential—without compromise, that’s understood—the aggregate industry portfolio, not necessarily each individual brewery, ought to offer the consumer a full, top-quality spectrum of both quaffing and sipping beers, and do so at a ratio that makes sense, even though what makes sense may not always be the same thing for the creative brewer and the meticulous accountant.
When it comes to creativity, perhaps it is Socrates who wins the argument: Flavor is objectively good! But when it comes to business, I think it is Aristotle who carries the day: Overdoing flavor can be bad for business. The future of the craft brew industry, it seems, will depend on how well these two forces can come together. Perhaps, the craft brew movement as a whole, in its quest for flavor, is only now settling into a proper balance between extreme beers on the right edge of the bell curve; “moderate” session beers—both edgy and not—in the center; and light but flavorful beers on the left side of the curve. The wine industry, incidentally, seems to have found such a balance a long time ago. Ashman of Fifty-Fifty Brewing Co. is optimistic that it will happen, because the craft brew industry “is young but [now] maturing.” Finding the right portfolio balance, therefore, appears to be an issue that is coming more and more into focus.
As Fal Allen of Anderson Valley Brewing Co. points out, “I would never say we have too many beers or that innovative beers have gone too far…[but] it would be a shame if we lost our sessionable, thirst-quenching beers in a rush to find the most extreme ones.”
This is an important issue, because much is at stake! There is no more elegant spokesperson for that importance than Samuel Johnson, the author of the first dictionary of the English language (published in 1755). As quoted by his biographer James Bowell, Johnson enlightened us that “there is nothing which has yet been contrived by man by which so much happiness is produced as by a good tavern or inn.” And not surprisingly, to Johnson, a tavern chair was “the throne of human felicity.”
Judging by the voices of American craft brewers, the craft brew industry is now evolving its own normal distribution of beer styles, its own bell curve, by which it will “contrive” to spread the most happiness amongst a growing market of consumers who are likely to congregate in a tavern (or at home for that matter), exercising their free and ample choices, while comfortably ensconced in their “thrones.”
16 Mar. 2011