Will Alabama get its share of a $100 billion industry?
Some people still think craft beer is a fad, driven by a few stereotypes such as bearded hipsters who want to look worldly and counter-culture. It will pass, and the macros will barely notice, so the thinking goes.
That thinking is wrong, and Alabama is in danger of missing out of a major opportunity to cash in during the diversification of beer manufacturing.
Craft is now a significant player in the beer market
In 2013, a big milestone was accomplished as craft beer outsold Budweiser brand in shipments. To be fair, this comparison doesn’t include other Bud brands such as Bud Light.
But the news is still dim for macro brands, at least in the U.S. In 3rd quarter 2014, AB-Inbev (owners of the Budweiser brand) reported a 3.7% decline in U.S. volumes. MillerCoors reported a 2.1% drop in volume for 2014.
Over on the craft side, Boston Beer Co – the largest publicly-traded craft brewer – reported a whopping 21% increase in volume in 3rd quarter 2014. Boston Beer Co owns the Samuel Adams, Twisted Tea, and Angry Orchard brands.
More generally, the Brewers Association reported that while overall U.S. beer production declined in 2013 by about 2%, craft beer production increased by 18%.
Big beer is buying in
Perhaps nothing demonstrates the potential of craft beer better than the behavior of the titans in the beer industry. In just the last few years, Anheuser-Busch has bought small craft brewers such as Goose Island, Elysian Brewing, and Blue Point Brewing Co. The company is expected to increase acquisitions, and it was recently discovered that they approached Cigar City Brewing Co in Tampa to discuss acquisition. (Cigar City recently skipped Alabama in its search for a second production facility).
These acquisitions are in addition to the crafty brands already owned by macro producers, such as Blue Moon (MillerCoors) and Shock Top (Anheuser-Busch).
What it all means
We may never live in a world where a relatively small number of companies don’t dominate the beer market – there may always be a place for macro beer. But we’re also not going back to the worst days of consolidation. There are opportunities in beer manufacturing, although it remains to be seen if Alabama will be able to compete for those opportunities.
Unfortunately restrictions on direct sales, that are almost unique to Alabama manufacturers, have kept us from attracting brewery development projects and will likely continue to put our homegrown brewers at a competitive disadvantage as they try to grow in an increasingly competitive market.
The takeaway is this: The manufacturing tier of the $100 billion beer industry in the United States is opening up. Will Alabama be able to fairly compete with other states? Or will it continue its unusual restrictions on beer manufacturing and ignore thousands of jobs and hundreds of millions of dollars in state GDP.