During the last recession, there were 1,600 breweries in the U.S. and craft beer was an affordable luxury. When the coronavirus hit, there were nearly 9,000 breweries and a $35 four-pack wasn't unheard of. Discounting isn't a race to the bottom: It's a reckoning.
A few days ago, @lehnerjw, @revnatscider and others talked about how hustle and innovation could help brewers through this. What struck me was the realization that you had to give the consumer SOMETHING. Be it delivery, be it service, be it packaging options, or be it discounts.
The craft beer premium is tricky: Build it up too high, and you leave yourself vulnerable to situations like this. Erase it, and you remove motivation for investment. So what can you do? You have to restore balance.
During the boom after the recession, the money folks saw the premiums limited releases and said "That: That's what we want." The NEIPA and hazy boom, the sour and spontaneous fermentation push, even Grapefruit Sculpin all presented huge premiums and dragged up the median.
That meant the average price of pints and six packs across the board went up. When it became clear that breweries could keep all of that for themselves through own-premise sales, we saw a proliferation of bare-bones taprooms that made PNW pubs seem gaudy by comparison.
Brewing is by no means a license to print money. It's hard work and, in that hypercharged atmosphere, it required near-constant innovation just to hold a customer's attention. But the race toward higher premiums and enhanced profit helped an affordable luxury become just a luxury
When you have brewery workers who can't afford to drink at your brewery, that's a problem. When you have customers being asked for $15 to $20 a six pack at retail just for trial, that's a problem.
So look what you have now. In many cases, it's the breweries in the middle who held a bit on pricing and kept themselves available beyond the taproom that are leading the charge. I look at @BaerlicBrewing, @OTBrewingCo, @revnatscider, @FortGeorgeBeer, @BuoyBeer...
Yes, some on-premise accounts have to discount, but are you folks really asking if a $5 32-ounce beer (15 cents an ounce) is sustainable? When a $9.99 (14 cents an ounce) always has been? We're learning the sweet spot, and it's south of "normal."
And look at the breweries I've named who are doing the schlepping and the hustling: These are the big, prestige, bottle-trading brewers: These are the everyday-drinking, area-specific breweries. They're among the most accessible Oregon has, and they're adapting accordingly.
There's always going to be a high end: Way before this, Oregon had its Hair of the Dog, its Logsdon, its Cascade. But each is an outlier with purpose and process behind its premium. When a brewery is just out to protect its premium, a customer can smell it.
That's going to be unacceptable practice going forward: If you want to sustain your business through once-a-decade hardship, you can't appear to be a luxury. Your premium can't be your only purpose. You'll want consumers to remember in good times how you got them through bad.
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