Ale Street News Online

Judging by energy levels at the most recent Craft Brewers Conference, the industry would now seem akin to a teenager with hormones raging.

The CBC was back in San Diego this past April for the second time in four years. The last time, there was a latent feeling of optimism that the industry would break out of a relatively static period. Now, that optimism is completely unfettered as craft beer is well into its third year of double digit growth. The only caution would be the economy and rising prices due to hop and grain shortages; however craft beer seems to have already broken through the first wave of price hikes intact.

At the opening ceremonies (the relatively sane hour of 9:30 a.m. has become de rigueur, although there are some early seminars for the early risers), Brewers Association director Paul Gatza provided the stats that most capacity-stretched breweries well know.

First, craft brewing increased 12 percent by volume in 2007 — 867,000 barrels — that’s more than a million and a half new kegs of craft beer. Early stats for 2008 have growth needling around the 10 percent mark.

There were 46 microbrewery openings last year versus 16 closings. At this level (less than 15,000 barrels), there was 14 percent growth; it would have been 20 percent, but four microbreweries exceeded the 15,000 barrel threshold and moved into the regional craft brewery category; the "sweet spot" seems to be between the 30K-60K barrel producers. Right now, Gatza said, the southeast is the fastest growing area for craft beer.

The outlook for brewpubs is a little more uncertain as the slowing economy exerts an effect on dining decisions. Brewpub production volume was up 3 percent in 2007 with 48 openings and 35 closings.

More in-depth data was provided by a panel of industry trackers at a media session immediately following the opening addresses.

Ben Steinman of Beer Marketer’s Insights said the image of craft beer is so positive that it’s having a beneficial effect throughout the beer industry. Describing the phenomenon as the "craft beer halo" and "the tail wagging the dog," Steinman said the beer industry as whole has had its best two-year run since the 1980s with overall growth of 2.1 percent in 06 and 1.4 percent in 07.

The question is can the craft beer boom last? Steinman said current economics may favor off-premise sales, which speaks to craft beer, but there is plenty of headwind in the shape of competition, pricing and rising costs. Also, how well craft beer can fight off attempts by the Big Three — Bud, Miller Coors — to get into the category. While they account for three quarters of mainstream brands, they only account for 25 percent of high end brands — mostly in the shape of brands like Chill, Blue Moon and Leinenkugel.

Bump Williams of Information Resources Inc., said so far increased pricing has not slowed growth and there is plenty of room to grow. "Seasonals and varietals have added incremental volume and have not cannibalized flagship brands," he said.

Incoming BA board chairman Rich Doyle, president and CEO of Harpoon Brewery, delivered the keynote speech. Proclaiming the US as "the best place in the world to drink beer," Doyle said it is the responsibility of brewers to safeguard the Beer Drinkers Paradise that they have created, and to "make sure that each drinking experience can be special."

He said one interview question he always asks prospective employees at Harpoon is to describe their best beer drinking experience. "If they can’t come up with one, then maybe we’re not the best place for them to work," he said. Doyle went on to describe his best beer drinking experience — at a Yankee game when he was 16; without fanfare, his Dad handed him a beer.

He called for more alcohol education for teenagers so that "we don’t drive another generation into making their first alcohol experience unlawful, in secret with friends instead of with their family."

He said while craft brewers have earned a seat at the adults’ table of big beer, it’s still a bit like they are the cute kids who are asked to leave when the adults get serious. He urged brewers to tell their stories to their elected representatives and he called for the end of distributors’ franchise laws.

At the host site, the Town and Country Resort, clusters of brewing brethren could be seen caucusing in the copious rose gardens or poolside in between seminars or visits to the BrewExpo tradeshow.

One of the most impressive venues was the tiki turned tap room built by Jeff Bagby and the San Diego Brewers Guild. A selection from 100 taps was available nightly, the hottest ticket in town.

A truly global flavor was added by the many international visitors in town to not only attend the conference and tradeshow, but also to judge in the World Beer Cup. Many felt this was truly the year the WBC came of age, with international judges outnumbering Americans in several of the groups.

More evidence of globalization was found in the number of export-oriented panels; US exports, while still relatively small in volume, were up 50 percent last year. Representatives from Sweden and Australia were on hand at the trade show to hand American brewers awards from the Stockholm Beer and Whisky Festival and the Australian International Beer Awards.

The 2,600 attendees were the most at the CBC in 10 years. Boston will be hardpressed to beat San Diego in terms of beer hospitality when it welcomes craft brewers April 21-24, 2009.