The problem is getting there. Gilpin expects to start seeing some of the microbreweries gobbled up by the likes of Miller and Anheuser-Busch, which has a 33 percent stake in Redhook. "I think you could see more marrying between the big brewers and the craft brewers," she says. "The big brewers want it and the craft brewers are kind of in a pickle."
This Gilpin is a Morningstar analyst so I take this with a grain of salt. I am not sure what quality of analyst Morningstar employs to track the craft beer segment but I am sure it isn't the cream of the crop. She does make some valid points but she fails to see the connection many people feel with craft beer. Sure, some places will close up but I am guessing that most brewers would rather close up then sell out to Miller-Coors or Bud. She touched on the tipping point that they are on with the hops, another bad year and it could be catastrophic for the industry, but I think the brewers and the hop industry has learned from this mistake and I bet behind the scenes things are getting put in place to prevent this from happening.
I guess my big beef with this article is the thought that more craft brewers would bow to the almighty dollar and be bought out by the big boys. I have no doubt they will, but my guess is, the ones that BMC would want to buy are big enough to make it through on their own. They aren't going to buy a bunch of tiny brewers because they won't make any money doing that, I won't get into the economics of it. They would be interested in the bigger boys like they have purchased interests in in the past, like Red Hook, Pyramid, Goose Island, etc.
So, as we have discussed many times, be prepared to pay more for your beer, like you are paying more for everything else. I know I will!
2 comments:
I think you missed out on the most important point in the article.
Sales of RedHook are up from last year, but instead of a profit, they are showing a loss.
What that means is RedHook isn't raising prices. Mainly, because they can afford NOT to do so. Well, and who would pay much more for RedHook anyway? The large pseudo-craft brewers can afford to hold tight on their prices while the real craft brewers can't. But this puts pressure on the little guys to hold tight. The economy of scale RedHook operates on is vastly different than that of somebody like Pacific Rim or Jolly Pumpkin.
I've got to wonder, though, how much 2007 numbers for the pseudo-craft brewers reflect an impact from hop prices.
Also, just because ingredients are more expensive doesn't mean the quality of the beer should become inconsistent. It sounds like Pacific Rim had other problems besides just higher costs.
Cheers
matt
But, craft beer keeps gaining ground in the market... That either means craft breweries will have to hang in there through the hard times as the audience grows or even more interest from BMC.
Interestingly,
"The Boston Beer Company posted record fourth quarter net revenue of $92.2 million, an increase of 25.7% over the same period last year. The net revenue increase in the fourth quarter was primarily driven by a 19.5% core shipment volume increase. The company also reported a strong increase in net revenue per barrel of approximately 5.2%." - from probrewer.com board.
and this "growth" is from existing markets.
NewBelgium is also not raising their prices.. or as much as other micros, granted they're pretty big.
I would guess craft brewers are 1. finding ways to reduce cost of production and 2. passing the increases in cost to the consumer. and that's ok with me.
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