Leaving the Southern Brewers Conference in Nashville last week, I noted some common themes that haven’t been heard before:
Unlike other recent conferences, you could feel it in the air. There is a storm coming and most are not prepared. More breweries, too many skus, slower growth, rotating taps, consumer fatigue, big money entering the business.
A few years ago it was easy – demand was ahead of supply. There was experimentation and creativity and almost everything worked. Home brewers hung out a shingle and tried to keep up with demand. It was all new.
Today it’s a business; manufacturing, cost accounting, regulatory compliance, bank debt, selling in more distant markets, weekend events, late nights, travel, expenses.
My seminar was entitled “Winners, Losers and Survivors” – How To Recognize Where You Fit In and What To Do About it”. Two years ago I would not have been allowed to give that talk. Last week it was received with attentive ears.
It will be hard for a lot of breweries to survive the next three years. Most will make it through and be better for it and new ones will grow up tough. The breweries that had it too easy will whither if they don’t change. The margin for error is greatly reduced. Cash is the lifeblood of the business and breweries with positive cash flow will do well. Tap room revenue will be what keeps some afloat.
What to do? Every situation is different, but here are a few basic rules:
1. Conserve cash. Invest where you must but be careful. Manage costs because price increases will be harder to take in the face of more discounting by the big “craft” brands.
2. It sounds cliché, but QUALITY is a prerequisite to survival. That means good beer and fresh beer, always.
3. Listen to your consumers. What do they think of your brand? Why do they buy your beer? Why not?
4. Stay close to the market. Listen to your distributors and retailers. Adjust.
5. Stay creative. Keep your craft cred strong with new and different beers to keep your brand relevant
Some well-funded regional craft brewers that are still building breweries in distant markets are going to have real trouble. It has happened before, where sales begin to flatten out just when the new facility is built for growth. Past sales are not indicative of future sales.
Those who survive the storm and come out the other end will be leaner, meaner and better, and will form the long-term future of the craft brewing movement.
Good luck. We’re here to help if you need us.