[Editor's note: For more on craft beer and Airways Brewing, check out the story on the company in next Monday's edition of the Business Examiner's bi-weekly publication.]
The craft beer industry is absolutely exploding right now.
According to the Brewers Association, which counts in its membership more than 1,000 breweries and 19,000 home brewers nationwide, craft beer sales rose 15 percent last year. New craft breweries are popping up everywhere, increasing from 1,900 nationally in 2011 to 2,300 in March of this year. And according to Business Insider, export sales have also hit a record high.
It's important to note that, granted, craft beers still comprised only about 7 percent of America's total beers sales last year; domestics and big breweries like MillerCoors and Anheuser-Busch still rule the roost. But especially within the beer world's ever-significant 21-35 demographic, craft breweries are catching on fast, molding more discerning palates as they do.
“It's tough to go back sometimes after you start drinking craft beers,” said Alex Dittmar, founder and head brewer of Kent's Airways Brewing Company. “There's so much variety in craft beer. You've got so much to choose from, and variety's important to a lot of people, especially your younger beer drinkers now.”
Dittmar's business has certainly been beneficiary to the trend. According to him, Airways projects to pump out 500 barrels in 2013, about 150 percent more than last year.
But with craft beer's popularity continuing to grow, there's a pertinent concern of the market getting too saturated for its own good. With more and more entrepreneurs delving into microbrewing for profit, is it getting more and more difficult to stay — and, ultimately, separate yourself — in the crowded marketplace?
It's kind of a complicated question, the way Dittmar sees it.
“I think that from a volume standpoint, we're not seeing saturation,” he said. “I think that, from that standpoint, there's room to grow. We are noticing brand saturation, though, meaning the number of breweries opening is where we're seeing the market start to swell.
“Now, some of this is what I'm observing, and some of it is what just my thought is based on that,” cautioned Dittmar. “But there is brand saturation, meaning there is only so much shelf space.
“Anyone who argues that there's more shelf space is full of crap,” he laughed.
And when there's only so much shelf space to go around, retailers are having to make choices on what to sell.
“Even in established brands, we're seeing now (retailers) either saying, 'Sorry, we don't have room for you,' or 'Okay, we have room for two out of your four products.' So we're seeing the shelf space now push back a little bit.
“Not so much with us, but we've seen it a little bit. I've seen it with other breweries, too. All of a sudden, I notice that this other brewery had four products here last month. Now, they're down to two and maybe they've also cut one of ours. They've probably cut the worst performer out of four or five.”
A small craft brewery worth its salt, then, has to figure out a way to keep its product on the shelves, much less keep it moving off them. And that's no easy endeavor.
“It's tough,” said Dittmar. “One, you just have to know which of your products are products that sell, so you just have to know going into a market what your best stuff is. Two, you have to offer support like bigger breweries can't. Sometimes, you just can't help it.”
That's where calculated decision making has become key in the craft beer segment, Dittmar said. He keeps a close eye on trends in the beer world almost day in and day out, and he's quick to answer when asked what's currently big and what's not.
“Nobody wants a pale ale anymore,” said Dittmar. “No one wants them nowadays. IPA (India Pale Ale) is different. Everybody wants an IPA, but there are too many pales. … And IPA style, for example, has changed and is changing.
“The ESB (extra special bitter) is a great example of something internally that sells well,” Dittmar later added. “Externally, it does not, because Red Hook has given a bad name to that term. You either love or you hate Red Hook ESB, but when people see 'ESB,' they automatically think Red Hook. Their feelings are so strong based on that brand that a lot of people do not drink that variety, regardless of where it comes from. They do not want that beer. Mine's totally different from that and people like it when they try it, so our challenge is selling and marketing our ESB independent from that impression.”
Asked if such decisions are ones that keep him up at night, Dittmar chuckled and shook his head. After all, given the continued maturation of Airways Brewing, other, larger choices are on the horizon, such as how much the company wants to expand and what to do when the leases at both of its facilities expire.
Still, Dittmar remains aware that craft beer's ongoing surge has to end sometime, and that in such a crowded market, good business sense is key to Airways' continued success.
“Obviously, craft beer will slow down at some point,” Dittmar said. “It can't do double digit growth forever. However, I think that we'll hit too many brands long before that, and that the weaker brands — the stuff that doesn't sell — are where breweries are going to find themselves having expanded too fast, or new breweries that just weren't able to take traction.”