During the 2015 Super Bowl, Anheuser-Busch took a direct shot at craft beer. The Budweiser ad dismissed craft beer as a nonbeer made with “pumpkins” and craft beer drinkers as the opposite of the older, rugged men who drink Bud. Using strong alpha-male imagery, the ad portrayed Budweiser as true beer “made the hard way.” As observed by numerous national publications, the ad was viewed as a declaration of war against craft beer drinkers.
And that was odd. One week earlier, Anheuser-Busch purchased its fourth craft brewery—Seattle’s 50,000 barrel-a-year Elysian Brewing Company. The founders of Elysian called the anti-craft ad “tone deaf.” MillerCoors, the world’s second largest beer company, took the side of craft breweries, an apparent appreciation of the disastrous price they would pay if they alienated college-educated drinkers. Craft producers have been pushing up against industrial beer and spirits companies for decades in a fight to win not just store shelf space but, more importantly, the hearts and minds of American drinkers. Since 2008, craft brewers have been gaining ground against Big Beer at a spectacular pace. With the Super Bowl ad, the world’s largest beer company pushed back in front of 120 million television viewers. Budweiser’s new “Beer Made the Hard Way” ad campaign continued to run after the Super Bowl. The Big Beer/craft beer conflict continues to define the beer industry.
The craft alcoholic beverage industry is racing toward a future that is equal parts electrifying and terrifying. No one is certain how long today’s spectacular expansion will continue or what will follow when it ends. But today’s craft beer, spirits, and hard cider entrepreneurs are having the ride of a lifetime. To join them now, you will need to run fast to catch up and be prepared to hang on tight.
This book will help you decide if this wild ride is for you. And, if it is, we will show you how to survive and thrive. We reached out to dozens of craft producers—the pioneers as well as fledgling entrepreneurs, the largest craft companies and some of the smallest—to bring you their stories and, just as importantly, their advice. Each story is different and the specific advice from one insider is just that, the reflection of that person’s unique point of view. As you connect these dots, you will see the larger landscape and be able to understand where you might fit into this fast-evolving industry.
There are no simple rules to follow, no foolproof formulas for success with craft. There is, however, a shared belief among craft brewers, distillers, and cider makers that even with the incredible growth in demand for craft, thirst for their products is far from sated, even in regions that seem to be bursting at the seams with craft producers. As we write this, the failure rate for craft beverage businesses is effectively zero. That will change as a rush of starry-eyed newcomers intensifies competition, making it increasingly costly to survive what will surely be a frantic next few years.
In this book, we lay out the very different challenges you will face as a newcomer to each of these three sectors. While they are seemingly similar with skilled artisans moving freely from one sector to the other—craft brewers have opened both cideries and distilleries—these sectors have their own cultures and challenges. They have separate regulatory requirements and very different cost structures. They present unique business challenges.
Beer is the most mature of these craft sectors with a unifying culture grounded in the open hostility Anheuser-Busch and other Big Beer companies have displayed toward craft. By necessity, craft brewers developed a strong mutual support system unusual in American business. They work together in small and large ways, united in their mission to grab market share from Big Beer. How Big Beer responds to its shrinking market share and falling profits will define the next phase of the craft beer revolution.
Craft distillers have no similar overarching culture. The relative newness of craft spirits is one reason. The long lead-time necessary to produce aged spirits can make distilling a far more expensive venture than brewing beer and limits the come-one-come-all camaraderie. More significantly, industrial distillers appear to have learned a lesson from the beer industry and avoid appearing to directly threaten craft distillers. Also small distillers are open to using industrially produced ingredients and often work closely with industrial spirits companies. As a result, “craft spirits” is less defined than craft beer.
Craft hard cider is the baby of the bunch, but it is a baby shot full of growth hormones. The opportunities are fantastic for new producers in this sector. But, here too, the definition of “craft” is unsettled. Ultimately, it will be a farm vs. factory fight, fresh fruit vs. fruit-flavored ingredients.
You will find investors (people who are willing to invest and offer advice) are plentiful and accessible, although relationships with them can be fraught with peril if your goal is to operate independently. The supporting players supplying equipment, ingredients, and advice are in place. Customers flock to you with little prodding. The only quick way to fail is to ignore the rules. These sectors are controlled from top to bottom by government regulation. Federal, state, county, city, even neighborhoods have a say in the production and sale of alcoholic beverages.