19 Dec The Proverbial ‘Craft Beer Bubble’ and What it Really Means for Indiana
For as long as humans have exchanged calves and raw grains for sacks of cereal and loaves of bread, we have been an economic species. The principles of supply and demand may not be written into the literal double-helix swirling under our skin among white blood cells and intestinal bacteria, but in the highest metaphorical sense economy and profit are part of our makeup. We make stuff. We sell it. We take that money and make more stuff. This is the human biology we think about.
Since I began writing for Indiana on Tap almost three years ago, talk of the craft beer bubble has permeated every conversation. It may not have been sitting on the “head of the beer” (if you’ll allow me the cheesy play on words), but it has been resting on every bar stool, pouring out of every tap-spigot, and fermenting in every back room tank. And that’s the other thing about our economic anthropology. For as long as we have engaged in the act of trading one good for another, we’ve been afraid. If economy is that aforementioned DNA of human definition, fear is the viral plague wreaking havoc every fourth or fifth generation. So when these conversations come up—they always do—they are tainted with a thick film of apprehension.
Most writers and prognosticators seem to agree that the craft beer bubble A) doesn’t really exist, and therefore B) isn’t going to pop. Variations exist, sure, but this is the basic narrative overall. So let me clarify. There is a craft beer bubble, just as there’s a video game bubble and a college tuition bubble and a smartphone bubble. But we’ve allowed the disaster that was the 2008 housing implosion to convince us that all bubbles explode violently, sucking millions of innocent souls into the vortex which follows. Sure, that’s what happened with housing…and with buying stock-on-margin in the 1920’s…and to a much lesser degree with the “dot-com” era of the late ‘90’s. But most bubbles don’t pop. They leak out slowly, like those graduation party balloons you leave tied to the mailbox three weeks after the party. Craft beer is one of those bubbles. The leaking has begun, and this is a good thing.
Here is what we know. One: if you want to become the next Three Floyds or Sun King, it’s going be a vastly more herculean effort than it was for Three Floyds or Sun King. Besides a brilliant business sense and a sound vision, both of those operations benefited from great timing. They didn’t move too early (say in the early ‘90’s before the public was ready for the product), and they didn’t wait until too late (if that’s not now, then it will be soon).
Two: if you brew in a heavily populated area, surrounded by many competing breweries, you had better make good beer PDQ. Today’s craft beer drinkers are smarter than people like me. They’re willing to experiment, but they’re not willing to hand over large sums for bad booze. Perfect your lagers, master your stouts and porters. If your only good beer is a hyper-hopped IPA, then you’d better be located in the most prime location in the city, enveloped in the most atheistically cool scenery, or supported by the best damn chef in the Midwest.
And three: if you’re brewing in a small community or isolated neighborhood…embrace it. The new market for craft beer is something akin to the farmer’s market. Local is the story. If you make bad or mediocre beer, but you embrace your community and invest heavily in it…they will give you time. Use that time to fix your beer. Once you’ve got it down, maybe…maybe…you’ll strike enough production gold to distribute around the region or even the state. But you have to take care of home first. There are plenty of “craft” breweries in Indiana where the faces behind the bar change so frequently that it feels more like you’re at a Walmart. There’s value in making yourself the face of your brand, and in putting that face next to the tap handles in front of your customers. A strong neighborhood and a loyal following will give you steady income for the rest of your career.
So when some breweries eventually close, and that will happen, there will be no need to panic because craft beer in its purest form is here to stay. Those closings will simply mean that the people who really had no business getting into the business are now getting out. What will be left will be a few lucky powerhouses, destined to be bought out by Miller-Coors or AB-Inbev, and the great many local operations consistently delivering good suds to the same people they talk to in their church pews, at little-league baseball games, and the produce aisles in their neighborhood grocery stores. This is safest level of our economic DNA, and it’s the heart of the future of craft beer, as well.