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Monday, August 24, 2015

Yellow Beer's Passing Presents Challenges

When it was released in late 1970, George Harrison's All Things Must Pass served notice that he was moving on from The Beatles. The album was a coming out party for Harrison, and it made a solid statement along those lines. He had arrived, a mystic with a future.

Fast forward 45 years and we find ourselves witnessing the All Things Must Pass mantra applied to beer, fizzie yellow beer, that is. Much of the beer world is moving on. And the consequences of that transition are a sight to behold.

The collapse of yellow beer is creating challenges for everyone in the business. This isn't exactly breaking news. The situation is well-documented in industry news and newsletters. There's a lot of consternation out there.

Control is a big issue. Not so long ago, big beer and distributors controlled what stores, bars and restaurants sold. Choices were limited to mass lagers and related sludge. Take it or leave it. That arrangement was fine with the suits running things, forget the retailer and consumer.

But the transformation of craft beer into an economic force has turned the tables. Today's market is increasingly driven by what retailers and consumers want. Don't get me wrong. There are still parts of the country, particularly rural areas, where yellow beer is hanging on. Even there, its days are numbered. Make no mistake.

The effects of the altered landscape are plain to see. Consumers, especially young ones, are looking for something, anything new and cool. They've turned almost completely away from mass market beers and are even abandoning established craft brands. It's a 31 flavors mentality.

Retailers respond to what consumers want, not what the big daddy brewers and distributors want them to sell. So we've seen a shift toward new and novelty brands as a means of maintaining the interest of consumers who have shrinking attention spans. Peach Apricot Saison, anyone?

It's fair to wonder where the preference for trendy leads. When new breweries are popular specifically because they're new and older breweries are shunned specifically because they aren't, some might say consumers have lost their way. But that's a topic for another day.

Distributors are caught in the middle. They can't rely on the crap they used to sell because it has limited traction with retailers and consumers, regardless of how hard they push. They've been co-opted into the craft revolution. Some have been more proactive and done a better job with that than others. It's a work in progress, clearly.

Big beer's response has been predictable. We've watched them market fake craft brands like Blue Moon and Shock Top to confuse and confound consumers. They've launched bizarre hybrid products in an effort to stop the bleeding and bring young consumers back into the fold. These forays have achieved limited success, at best.

In the case of Anheuser-Busch, which traditionally leveraged its position via supply chain efficiencies and cutthroat marketing tactics, we've seen them acquire craft brands 10 Barrel, Goose Island and Elysian as part of an effort to "partner" with craft beer.

The more shocking AB ploy is its effort to vertically integrate in some states (like Oregon) by owning brewers, distributors and retailers. The three-tier system is supposed to block such tactics, but the laws aren't airtight everywhere. Wherever it can, AB is bullying branch and non-branch distributors into focusing on AB products, stuff that doesn't have much appeal.

It's hard to see where this leads. The trend toward the trendy in craft beer is problematic in my mind. Fads usually don't have a lot of staying power and this has the look of a fad. Still, the era of yellow beer is passing. That reality is going to challenge traditional assumptions and sensibilities going forward. Wild times in beer.

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