Small craft advisory: though the craft-beer industry hit some turbulence in the past, its top brewers see opportunities ahead - beer

Cheers, July-August, 2002 by Cheryl Ursin

Basically, success is breeding success in craft beers, The companies that have grown large enough, have reached a critical mass with their brands, are continuing to grow. "The weaker players are falling out and that is creating opportunities for the stronger players," explains Weinberg.

Steve Harrison, vice president at Sierra Nevada, one of the largest and fastest-growing of the craft brewers, notes, "If you look at the numbers, they say that the industry is basically stable, but if you look at individual companies, you will see that a few are growing a lot, and a few of those, like us, are big. The ones that are doing well now have their own breweries and have done well in their local areas."

IBS's Gatza notes that, in general, the most successful players are the ones that have been in the industry since the beginning. "The ones that are still here are the ones who were in the business in the early '90s, not the ones who got started in '95 or '96," he says. "A lot of the faces are the same as ten years ago.

While a few craft-beer brands have gone national, Sierra Nevada's and Boston Beer's among them, success in the industry these days does not necessarily mean being available across the country. "Many who could be national decide not to be, deliberately," says IBS's Gatza.

New Belgium Brewing, available in 12 states, is a case in point. "We'd rather be really strong in a few states than spread too thin," says Simpson.

Boston-based Harpoon, which acquired the Catamount Brewery in Vermont in 2000, is another. "Our focus is to continue to develop our home market, which is New England, and secondarily, the rest of the East Coast," says Kenary. "The Catamount brewery [which now produces both Harpoon and Catamount brands] has increased our presence significantly in New Hampshire and Vermont. We want to continue to broaden and deepen our existing markets. Our sales growth is not coining from expanding geographically."

What do craft beers need to be successful in the future? "Quality," says Deschutes's Bryant. "It's why the customer liked us in the first place. If we lose that, we lose why we exist. It's one of our points of difference."

Many feel that their authenticity is an important point of difference as well. Indeed, some, including two business-school professors in an article in the magazine Modern Brewery Age (Anand Swaminathan and Glenn Carroll, "Market Researchers Caution Craft Brewers," Modern Brewery Age, February 28, 2000), believe that the image of craft brewers being small businesses handcrafting their products could affect how the craft-beer industry can grow. The two business-school professors speculated that at least some craft brewers would need to grow, not by bringing their existing brands into new markets, but by launching new companies and brands in new markets.

Steve Harrison, vice president of Sierra Nevada, points out that the most successful craft beers, regardless of how widely available, are successful in their local areas. "That creates some legitimacy," he says. He notes that, although Sierra Nevada is one of the biggest craft-beer companies, they've seen no problem being a big company with a crafted product.