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Posted by Brew's Your Daddy on Sun, July 22, 2012

I read an article a while back on CNBC.com that was discussing the growth of craft beer around the country. In general terms, it discussed the different approaches breweries are taking to meet the increasing demand for their products. The original article can be found at:

http://www.cnbc.com/id/47030325/As_Craft_Beer_Grows_Some_Brewers_Spread_Out_Others_Scale_Back

And after reading it, I couldn't help but place myself in the shoes of a brewer and ask myself "What would I do?". I am sure it is a dream of all breweries to have such a constant demand for their products that they are having to deal with it as a "problem that needs to be addressed". But what do you do? Do you build more facilities and continue to expand in order to meet the demands of your market, while at the same time possibly reaching more customers that you wouldn't have been able to otherwise? No one could blame you if you did. On the surface it is simply the next step in a supply and demand market. However, you then run the risk of getting labeled as one of those breweries who have flooded the market with their product to the point of saturation, and in turn be looked at as nothing more than a business making a money grab. If craft beer is truly a passion of you and your brewery, this is a label you fight tooth and nail to avoid.

Then I looked at the other side of the coin. What if you decide to pull out of some markets? What if you say "We cannot continue to meet the demand of all of our customers in all of the markets we are in. We have no choice but to pull out of some of them and focus our efforts on a more concentrated consumer base." You instantly alienate a part of your fan base, and reduce the number of people who can purchase your product in general. Is that bad business, or a quality based decision? It lowers the stress of meeting higher production numbers, which in turn allows you to focus on a smaller group needing to be satisfied, as well as increases quality control and output. In ways, it seems to me that you are showing more of a dedication to your product by choosing to focus, rather than chase the almighty dollar.

So who is right? Does either decision even qualify as wrong? I see pros and cons in both, so I don't feel that any brewery that has reached the point of needing to make one of these choices is wrong, regardless of which direction they go. But what do you think? What would you do if faced with the same decision?

Member Comments (3)

	Posted on 7/22/2012 at 1:22 PM EST by NC_Wolverine (noob) Go big or go home. I don't think of New Belgium, Sam Adams, Sierra Nevada as being so big that I think they are a sell out. I feel that if they are making good beer then they should expand to meet their market. I'm still not sold that Goose Island is NOT making good beers ever since Budweiser bought them out. I would still drink Goose Island because they are still making good beer. If you brew it, they will come.
	Posted on 7/22/2012 at 6:22 PM EST by Tarheeling (noob) To me, whether it's music, beer, or whatever, "selling out" only occurs when you sacrifice quality for quantity. Selling out gets thrown around way too much, as if it's somehow a bad thing for people to deliver a successful product to a wider audience and profit on it. Some people are very possessive of their favorite things and want to keep it all for themself, which is pretty absurd when you think about it. Just because you knew about Arcade Fire before a lot of other people, does that give you the right to determine whether or not they're "sold out"? Answer: no. And like New Belgium, AF has grown bigger but have not sacrificed their quality in doing so. Do that, I say BRAVO! The world is better off for having better access to great products! Now, if you begin to dilute your product just to reach a broader audience (to continue to the music analogy - Kings of Leon), then shame on you. If you aren't ready to satisfy a greater demand, then be patient and don't force it. Scarcity can be a good thing and momentum will keep building if you keep putting out great stuff. Those not in your market will stay interested as long as great reviews keep on coming in. I think the key is not to pull out of markets, but to not enter them in the first place if you're not prepared to meet supply.
	Posted on 7/23/2012 at 11:04 AM EST by Chops (loved) I definitely agree with Tarheeling on the notion that as long as quality is not sacrificed to meet a growing demand, then expand away. On the flip side, I think a giant gray area gets created when products start to have a noticeable decline in quality, yet remain good products. Take Fat Tire for example. Many of us remember when Fat Tire was localized and no one can deny that the Fat Tire of today has lost some of its pizazz. But, it's still much better than the toilet water that Big Beer is mercilessly churning out. Would I shame someone for enjoying a lesser version of Fat Tire who has never tasted the original? Hell no. New Belgium is a power player in decreasing Big Beer's market share, which should be celebrated. But, does the reduction in quality warrant chastising? It's a really good question. NC_Wolverine also makes a very good point. Should we consider a Big Beer acquisition selling out? My initial response is hell yes, especially considering some obvious examples. But then there are breweries like Leffe. They were acquired by Anheuser-Busch InBev, but managed to retain their core model. Hmm, interesting conundrum.