Featured Contributor J.M. Hammond @
Hello craft beer enthusiasts, hipsters, beer fans, home brewers, and Sommbeer readers! I wanted to take a moment and provide a proper introduction of myself to all those who follow the great stories at Sommbeer and enjoy the site. I am JM Hammond and I was previously with Iheartbeer.com for a year, and if you want to get a better idea about what makes me tick, you can check out my work there that I did for the last year, but enough about the past. Another way to find me is via Twitter as @JMIheartbeer, Untapp’d as Octabird76, and on Facebook as J.m. Hammond.
I wanted to take a moment and thank David, John, and the rest of the crew here at Sommbeer for giving me a creative outlet for my writing and a place to share my passion and insight about home brewing, craft beer, and the professional brewing industry. You can expect to see info and insight about home brewing, craft brewery news and interviews with those in the industry, some fun and light articles about beer and “beer personalities”, and some serious opinion pieces about things in and around the beer community, and its people, places, and events.
I am based in S.W. Ohio and about 20 miles from Dayton, and 40 miles from Cincinnati and Columbus. So, yes I am lucky to be about dead center in the middle of some huge craft brewery growth, and not too far from some killer local bars and breweries, as well as not terribly far from some bigger and better nationally known breweries in Indiana, Michigan, Kentucky, and Tennessee. Additionally, I do like to hit the ocean in the summer and we have headed to the Carolinas, Georgia, and Florida in recent years with another trip to the Tampa area planned for the 2016 summer, and who knows maybe even the Craft Brewers Conference in Philadelphia and the Beer Bloggers Conference as well in 2016.
I am also a home brewer and have been for the past year now, I belong to the Cincinnati Malt Infusers and hold a seat with them as their club secretary at this time. I brew mostly all grain, but I am not one to shy away from a quickly created extract beer. I think I came in at time that was kind of tailored to me with the whole explosion of the Heineken and Lagunitas partnership story.
I think one of the things that easily gets lost from the craft beer consumer side, or at times that is not even given consideration, is the uneven beer manufacture laws, regulations on distribution, required licensure for business, tax burdens, and the costs of operation that a brewery of any size faces. I think it is also generally lost on the beer fan crowd at large that for a brewery, the least amount of revenue comes from distribution, and that direct sales from taprooms and take out package sales net the most profits. It is that in-house direct sale to consumers that the macro operations seek to slow if not stop across the country, because in many states that option would not exist for the craft brewers if the macros had not exploited a loophole in local or state laws that afforded them the same options. So, anywhere they can shut out self-distribution and sales they win out on the macro size in sheer output numbers on the retail side, since they already have the funds to cover operations and future growth at the same time while controlling their own supply chains by owning and running malt houses and hop farms of their own.
Craft breweries are going to face a time at some future point where there is a possibility for more demand on malts and hops than there will be farms, malt houses, and hop yards to keep up with demand. Add to that the fact that a hop yard takes 3 years on average for the hops to start to produce consistent hop cones and that starting a malt house is very cost prohibitive on the small scale and barley requires very specific conditions to be at a level of quality that is needed to be favorable to brewing. That is why some of the larger craft breweries have begun to seek out their own hop and barley farms and are looking to build or acquire a malting operation.
Brewery partnerships, alliances, failures, and sales to investment parties and larger brewing companies is inevitable. Just like the copyright, patent, company name, and beer name battles will rage on at various times, so will more stories like the most recent partnership, merger, acquisition or whatever you care to call it.
If there is one that that rings loud and true in the craft beer consumer realm is that we like what beers we like, from what breweries we like, and we feel how we feel about things for our reasons and really nobody is going to change our minds. For the most part we are largely a group of seasoned adults that have grown-up, and decided who and what we want to be and what we prefer and will support. So, not a soul is going to tell us how we should think, feel, or whom we should be identified with or by. So, yes I get that but when it comes to things like AB-InBev buying Elysian Brewing and 10 Barrel Brewing, or Duvel USA taking in Firestone Walker, or Heineken and Lagunitas doing a 50% ownership deal, it all boils down to one thing in the end. Plain and simple business, success, expansion, survival, and growth. But for some it also means the potential for something else, macro producers can glean the insight through these acquisitions of what makes the craft brewing world tick, and then in turn use that knowledge to work to halt the cut into profits and the market that the craft brewing segment has moved into.
In the craft brewing world there seems to exist the core ideal that more craft breweries coming on-line will help sustain and prolong the existence of craft beer. That through the addition of any size craft producer into the market, there is better chance that people who always pick up a pale yellow lager when buying beer, might get turned onto the many colors, flavors, styles, and nuances that are craft beer. A friend of mine has a very insightful look at the difference between macro and craft producers. He says “that if you are looking at the poster chart of beer styles macro only hangs in the bottom left corner of the poster with its four or so styles, but craft beer has a rainbow of colors and is made up of the rest of the entire poster.” To me it is like the large albino animal that is afraid to associate with the other colorful animals of its own species, for the fear that their colors may rub off onto it. With that large albino being the macro producers and the others the craft beer industry. With that approach, I fail to see how the albino is not the one eventually headed towards extinction.
Still others look at the situation as though the macros are like the Borg from Star Trek. This large and powerful mass that only wants to consume everything in its way and does not care what is left behind its path of conquest, so long as the Borg can glean something from each entity it consumes.
In reality I think things, more often than not, fall into the middle ground where macros realize there are new dealers moving onto their blocks and street corners, and rather than start a shootout that will certainly lead to casualties stacked up on both sides of the conflict and could leave them looking like the evil one of the two. They are trying to understand the competition at hand and then only spread the offerings to all their current markets that closest resemble their other offerings and they are certain they can market, all the while looking for that one or two items that might somehow shut the floodgates of the craft market. But I seem to gather is that what the macros are failing to see, is that the craft segment is currently less of a threat to them than the south of the border amigos that slang lager suds, but in different colors and flavors.
I do not think that any of us can accurately predict the future of this entire beer market, but I can say with certainty that we the consumers are in a winning position because all of the competition and collaborations are leading to some mighty tasty beers. The innovation and creativity is leading to new and old styles being enjoyed all over the world and from that many jobs and tax dollars are being created all over where those once did not exist. And with that statement it is we who really have the power to determine the outcome of the situation in the end with where we spend our almighty dollars.
So, I wish you all cheers and good beers until the next post!
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