A Shot in the Arm: 2021 Craft Beer Preview (Part 1)
Craft brewers were put to the ultimate test in 2020 and for the most part, they passed. The pandemic administered a Fast and the Furious, NOS-style injection of problems that accelerated many trends already threatening the industry. Businesses went to the garage for a look under the hood, slashing expenses and cobbling together alternative business models. The Summer brought a healthy dose of PPP funds and a false-positive feeling of recovery, serving as a temporary antidote while allowing many businesses to limp toward this year’s finish line. While the worst may be yet to come for breweries looking down the barrel of Q1 2021, Big Pharma’s vaccines and Congress’ second booster shot of PPP may be the literal and figurative shot in the arm we need.
Entering 2021, a great deal of uncertainty still remains, however there’s a few things that we do know. There’s still over 8,000 breweries and, virus or no virus, the need to stay ahead of craft beer’s rapidly evolving and heavily segmented consumer base remains critical. Staying at home and limiting trips has changed the way fans are discovering new beers and experiencing their favorite breweries. Join me, Nostradouglas, and a cast of beer friends via recorded Zoom conversations, as we look into our crystal balls and share what intrigues us most about 2021.
#1 - The Resurgence of National Brands
Guest Prediction
Evan Batt, Monarch Distributing (Indianapolis, IN)
Prior to the pandemic, the biggest craft breweries in the country already experienced sales skewing heavily toward the off-premise (retail stores). The shift away from keg sales over the past year was an easier transition for these national brands to absorb, compared to regional and local breweries. Already stacked with the talent, relationships, and distribution for selling into chain stores at scale, breweries like Sierra Nevada and New Belgium have been able to react fast and make up lost ground in a hurry. Their faster paced innovation of late, increased focus on marketing, and perhaps most importantly, their competitive pricing have these OGs poised to, as Evan putt it, go back to the future.
Photo by Doug Veliky
#2 - SKU RATIONALIZATION
Guest Prediction
Kate Bernot, Freelance Beer Writer (Missoula, MT)
Kate brings up a major threat to craft brewers with aspirations beyond local, and the diverse fanbase they attract. If the opportunity for shelf space continues to shrink due to factors including the rise of alternative beverages, those competing in big box stores may become further limited to their top sellers only. As a result, the number of beer styles available in these grocery-centric avenues will continue becoming more narrow.
Local breweries and independent bottle shops who championed IPA over the last decade will find themselves in a new position of strength worth marketing toward. While they can’t compete on price, their flexibility and nimbleness allows them to push more style diversity and even promote it as a core point of differentiation. In addition to access to the new hotness, bottle shops will cater even more so to the customers willing to make that extra stop for a broader selection. Speaking of IPA…
#3 - IPA Hits the Reset Button
The leading hop suppliers are hard at work breeding new varieties and developing agriculture-driven products that will continue driving exciting flavors and intensities keeping IPA on top of craft beer for the foreseeable future. Well-branded, functional innovations like Cryo Hops®, Incognito®, and Lupomax™ will keep the style fresh and engaging in the mind of both brewers and the consumer. But when it comes to the major iterations of the last decade like Black, White, Red, Hazy, Brut, and Sour IPA, I think craft beer has reached the end of the road and is more likely to run it back through that list again, with today’s updated knowledge and experience, than it is to strike oil with the next hazy. And on that note…
Photo by Doug Veliky
#4 - “West Coast-Style” Gets MURKY
The last nine months have seen a strong uptick in demand for nostalgia, including throw-back beer brands and styles, leading to their rediscovery and rejuvenated appreciation. As a result, even breweries known for Hazy IPAs or those who shifted in that direction are recognizing the opportunity for IPAs more like the ones we drank 7 to 10 years ago.
In this rush to go back to our roots, the term West Coast IPA is already starting to get bastardized. The style is being attached to beers simply as an indicator that they’re clear, without the full arsenal of attributes that ignited the craft beer explosion. Much to the chagrin of brewers and purists, I see marketing from the industry’s long tail taking over this term in 2021 and broadening it’s true and original interpretations beyond the point of recognition. Crisp, clear, and perhaps even bitter IPAs will become cool again, but “West Coast-Style” will become as broad as “Hazy”. This is the price you pay when going mainstream I guess. Don’t worry, I hate myself for writing this.
But haze isn’t going anywhere, in fact…
#5 - Treemansion? Treehouse becomes a Top 50 CRAFT Brewer By Volume
Early each Spring, the Brewers Association releases their list of the Top 50 Brewers by Volume. Far from the most important metric to judge breweries by, but one of the few recurring lists that isn’t subjective. It’s always exciting to see who is growing, who is contracting, and the occasional craft darling making their way onto the list for the first time, like Three Floyds a few years back, and Modern Times more recently.
In 2019, Treehouse reported an estimated 43,000 BBLs of production which put them around #69. This amount of barrelage is especially jaw-dropping given that their beer is only sold direct-to-consumer (DTC). The cut-off to being in the Top 50 in 2019 was around 60,000 BBLs, which is a massive gap to make up for in a single year. That being said, I am going to gamble and say that this Juice Machine’s clout, continued investment in capacity, and the way they move volume was not nearly as adversely affected by the pandemic as the breweries ahead of them on the list. I may be a year too early on this one, but I like to be punctual.
Photo by Doug Veliky
#6 - The Rotating Lager Series
It’s become a running joke with industry prediction posts that the following year will become “the year of the craft lager”. From a sales data perspective, Lager has paled in comparison to IPA’s numbers in part due to its price point, but also a lack of diversity. Big craft breweries who put up the big volume numbers have attempted a single year-round lager for simplicity, but with so much excitement in trial, it’s hard to find enough loyal, repeat buyers of the same year-round $9.99 Pilsner 4/6-pack, despite how delicious they taste.
Enter the rotating lager series which I’m seeing a ton of small Chicago breweries turn into a focus point and am confident more will follow. While these often IPA-driven breweries can’t keep up with true lager-focused operations like Metropolitan, Dovetail, Jack’s Abby, and Bierstadt, they can constantly breathe new life and better velocity into a single dedicated lager spot in their portfolio by making it change with the seasons. Alternating between variations like Helles, Vienna, Märzen, Dunkel, Schwarzbier, Dry-hopped, etc. will take the consumer on a flavor journey, leading to more loyalty and better sales.
Photo by Doug Veliky. Samples provided by Oskar Blues.
#7 - Big Packages from Small Places
This prediction post was supposed to be ready in December, but as I started writing my first prediction, I realized that it deserved to be its own post, which is how Unboxing Twelve-Packs happened…
As a result of the success of 12-packs in the grocery stores and “bundles” sold at taproom curbside operations, small craft breweries who wouldn’t normally play in this large format will make the leap. Thanks to cartons that fold shut with remarkable sturdiness without the need for an expensive machine or glue, big packs become operationally feasible for any sized brewery willing to stuff them by hand.
#8 - Online Beer Releases stay Digital
Guest Prediction
Chalonda White, Creator of Afro Beer Chick (Chicago, IL)
Chalonda is coming at this prediction from the standpoint of the consumer, who she predicts will become less willing to stand in line for the newest barrel-aged stouts and barleywines. After what could stretch into 18+ months of ordering exclusively online and with e-commerce seeping deeper into all types of purchasing behavior, craft beer’s biggest spenders will be in a position to demand this level of convenience. But they won’t have to…
Breweries are becoming equally as reliant on the online format and are currently investing significant capital into tightening up their e-commerce infrastructure. There’s no better time to re-evaluate your Point Of Sale (POS) technology than when most retail operations are idle, and today’s restrictions present an opportunity to explore more integrated solutions with a less painful implementation. By the time in person releases are even possible again, breweries will have built a better mouse trap and neither party will be interested in revisiting the old formats.
#9 - Barrel-Aged Sours Find a New Home
Packaged beer sales shot up like a rocket ship last year. Any freshness issues that a brewery faced in the market got cleaned up in a hurry thanks to a sense of urgency by shoppers in March & April. One style left behind during this pantry loading phase was barrel-aged sours. Typically found in large format bottles and designed for sharing occasions, American Wild Ales had been clinging to a loving (me), but stagnant consumer base for years.
Heading into 2020, I predicted that oak-aged sours would begin getting canned, having seen the successful transition and acceptance of stouts and barleywines in this format. I was vindicated with examples including Michigan’s Jolly Pumpkin, Denver’s Crooked Stave, and then Berkeley’s The Rare Barrel in September when they released one of their original barrel-aged sours in 4-packs of 16oz cans, Map of the Sun which was followed by others:
Photo by Doug Veliky. Samples provided by The Rare Barrel.
Committed to sour, but understanding that their customers are evolving quickly, The Rare Barrel has been among the sour producers who’ve been active finding new silos for their sour ethos. Understanding that the IPA customer is too big to ignore, they’re a couple years into exploring the tricky Sour IPA category. More recently they’ve introduced a dry-hopped blend of sour base and pilsner, in an attempt to offer a crisper option to the adventurous lager drinker while maintaining that sour signature.
I’m rolling this prediction forward for second year and saying canned barrel-aged sours become more common than not in 2021. For breweries like Russian River who package sours primarily in consumer-friendly 375ml bottles, a 16oz can makes little sense, so there will be some obvious holdouts. But for those who were formerly in 22oz / 750ml bottles and less steeped on tradition, I expect the transition to can to become more common.
#10 - The year of The Fruited Sour
Historically the enemy of the barrel-aged sours I just spoke about, Kettle-Sours (or Quick Sours) can be turned around at speeds resembling IPAs and often at a lower cost. The style has quietly been growing at a fast clip, with only a modest number of competitors leaning in, like Anderson Valley and Dogfish Head’s Seaquench. While not always marketed as such, kettle sours tend to be low in calories and ABV, yet possess a more complete flavor experience that Low Cal/Session IPAs struggle to match.
More importantly, these Session Sours are the solution to a large, previously unknown segment of customers who want to like craft beer and support local breweries, but want something light and just flat out don’t enjoy IPAs. Hop centric beers lean on names like El Dorado, Sabro, Riwaka, etc., which require an educational leap from the casual consumer base. Kettle sours can take a page from the more wide-reaching strategy of hard seltzers by using approachable fruit combinations to accomplish the variety aspect.
Photo by Doug Veliky
Now here’s my spicier take with fruited sours…
When have you ever known the big, mainstream craft breweries to allow the small, local ones to keep a successful style all to themselves? Breweries across the country are having wide success releasing what I call Jamba Juice beers, that are often a Berliner Weisse but more closely resemble a fruit smoothie. I’ve had a handful and while I don’t crave them, there’s no denying they taste good in the right setting. For me, I’d only want to drink them at brunch or poolside perhaps, but I completely understand that they’re geared toward a different consumer who absolutely freaks out over them. I predict that at least a couple big, scaled up breweries will start dabbling in the overly fruited sour, of the pasteurized, non-exploding variety.
Intermission
As craft breweries continue tracking consumer behavior through COVID’s lifespan, they’re facing a lot of the same challenges and decisions that they would have faced anyways. There’s still opportunity within craft beer, but no wins come as easy as they used to. You work twice as hard for half as much and that’s just how a maturing industry works. Owners and leaders are now faced with the decision between exploring the white space in this underdeveloped alternative beverage world, which many have the infrastructure in place for, or doubling down on who they are and set out to be. Part 1 focused more on the latter. Check out Part 2 where I’m joined by a couple new guests to dive into the former.