Craft Brew News:
“Brewprint Solutions”; Thoughts from Bump and JB Lively interactive session put on by First Bev folks, including consultants Bump Williams and JB Shireman, gave lotsa advice on a range of critical issues for craft brewers with lotsa audience participation from distribs. More craft brewers will look in “a real serious way” at “mergers, partnerships, capacity sharing, funding from private equity,” said JB. Craft brewers will “get away from ‘I build my brewery. You build your brewery,'” he added. There is “not a lot of sound, solid business acumen,” among 56 craft brewers working with Bump Williams Consulting, Bump noted, adding that “discipline and planning are lacking” and sorely needed. “If there is a 2d shakeout,” said JB, “it won’t be about quality” but rather because of “lack of business acumen, planning and understanding the cost of being able to compete.”
Yet both Bump and JB expect continued strong growth in 2012, even with the necessity of price increases to pay for raw material cost increases. Craft will get double digit volume increase again next yr, predicted JB. For most who drink craft, it remains “an extremely affordable luxury,” added JB. Even with price hikes, craft “still in for a strong year,” said Bump. Most of the country “still very underdeveloped.”
But Bump is “worried about infighting” among craft brewers, such as recent dirty laundry aired on free goods. “It’s indicative of how competitive the landscape has become and how challenging it’s going to be,” said JB. One distrib chimed in that “peace, love and understanding world of last decade is pretty much over.”
Another concern for Bump: private label craft beer, noting that Kirkland is the #1 craft in Costco. Private label at lower price, “erodes pricing threshold” and there is concern about “quality,” said Bump. Plus it gives retailer what it wants which is more control of margin, and it’s also a “threat to 3-tier” as they “want to cut out the middleman.” Hoping that craft doesn’t fall into that trap, Bump later said “price and quantity are not sustainable selling strategies.” One distrib noted that craft brewers have to get a better handle on their brand story. Recently asked one “What is your brand story?” The brewer had no idea what he was talking about. “This is not a fully-baked proposition,” said distrib.