on tap in the world of craft beer: trends, challenges and opportunities in local breweries | Food

By Craig Manning | November 12, 2022

For years, craft beer was a niche, an emerging segment of a global industry that held significant potential for disruption. Today, according to the Brewers Association, craft beer accounts for nearly 27% of the $100 billion beer market in the United States. What was once the exception on restaurant menus and bar tap lists has, in many cases, become the norm. Specialty foams have their own sprawling aisle at the grocery store, and there still isn’t enough space for all the different breweries competing to market their wares.

So what does a mature market mean for craft brewers themselves? Discover, Northern Express convened a panel of three local craft beer leaders – Scott Newman Bale, CEO of Short’s Brewing Company; Russell Springsteen, founder and owner of Right Brain Brewery; and Brian Confer, brewer and co-owner of Stormcloud Brewing, to talk about trends, challenges and opportunities. Here’s what we learned.

TREND: Beverages other than beer are a key avenue for innovation, but can also be instant fads.
A logical assumption about the maturation of craft beer is that a more sedentary market would leave less room for innovation. For his part, Newman-Bale pushes back on that notion: Innovation, he says, is alive and well in the world of craft brewing, even if it often takes the form of beverages other than beer.

“I think the speed of innovation has actually increased,” says Newman-Bale. “Breweries have certainly matured, and it’s hard to come up with new things that haven’t been made mainstream, but there’s also a whole new world of alternative drinks, like seltzer.”

Springsteen agrees, noting that Right Brain is currently exploring a variety of alternatives to beer as potential avenues for growth. “We are looking to develop non-alcoholic beverages, mainly sodas,” he says. Next on that front is a cherry-flavored soda, called Cherry Brain Pop, which is slated to launch next spring. “We’re also trying to develop an energy drink and are looking at flavored water,” Springsteen added. “We just don’t have enough bodies to aggressively develop new products.”

This is where one of the great challenges of innovation and trend finding for breweries lies: being agile requires staff resources, and craft breweries need workers as much as any other type of business. Nowadays. In this regard, Newman-Bale argues that faster innovation cycles may actually be more of a curse than a blessing. “I would say innovation trends were on a three to five year cycle,” he says. “Now it’s a year or two, which creates extreme problems for breweries, distributors and retailers who have to plan ahead.”

There’s also evidence to suggest that big new trends won’t stick around forever, especially in the realm of alternative beverages. The cautionary tale is the hard seltzer market, which exploded in popularity in the late 2010s but also fell 5.5% in the last year alone, according to NielsenIQ.

“Seltzers fade very quickly, especially in smaller brands,” Newman-Bale said. Northern Express. Short’s was one of those small players briefly, having launched the Beaches seltzer brand in 2019. “We exited that market at the start of the year,” adds Newman-Bale.

A new uptrend is ready-to-drink cocktails, which saw sales growth of 42.3% last year. But is this avenue a trend here to stay, or is it another fad?

“Currently, ready-to-drink cocktails are taking a hit on beer sales,” Springsteen says. “But at the same time, seltzers are flattening out and don’t seem to have the legs they had three years ago.”

Another increasingly popular route is non-alcoholic hop water. Last summer, Short teamed up with bluegrass superstar (and Michigan native) Billy Strings to release Thirst Mutilator, a hop water named after one of Strings’ songs. This product, says Newman-Bale, “does very well in its initial launch” and will likely become a staple of Short’s. “We also looked at fermented teas, lemonade, and canned wine or blended wine drinks,” adds Newman-Bale.

For its part, Stormcloud avoids the chaos of the non-beer market by staying true to its roots.

“I have friends in the industry who make really good seltzer and hop water,” says Confer. “But at Stormcloud, we have chosen to focus on where we are strongest: traditional beers.”

TREND: APIs remain dominant.
Craft beer is home to a long list of beer styles that you probably won’t find at most commercial beer producers, from imperial stouts to scotch ales to sours. But the epicenter of the craft beer world remains India Pale Ale (IPA).

“IPA styles still dominate,” says Springsteen, noting that two of Right Brain’s next big moves center on this hop-centric craft beer. First, a new Right Brain beer, the pub-favorite Free Play IPA, will debut in cans next spring. Second, the brewery will make further forays into jumbo 19.2-ounce cans next spring, with two IPAs, Free Play and Spiny Norman, leading the way.

Always on the minds of brewers is the Hazy IPA, a style known for its cloudiness and fruitier, less bitter flavor profile than a traditional IPA. This style became popular around 2017 and has yet to lose its grip on the American craft beer drinker.

“The excitement over fuzzy IPAs doesn’t seem to be diminishing,” Confer says. “Our lead brewer, Chris Schnepf, recently brewed Stormcloud’s first Hazy, called One String Puppet, which uses new products and an experimental yeast strain from Omega Yeast Labs. It was a big hit at the pub.

CHALLENGE: Supply chain challenges have hit craft brewers hard.
If you’ve noticed price hikes on packaged beer recently, blame the supply chain. For over a year, breweries have struggled to source aluminum cans, and while Newman-Bale, Springsteen and Confer all say this particular problem has eased, it has only been replaced by other misfortunes.

“Our new issues are in fruit and, to a lesser extent, malt,” says Newman-Bale. “Both had supply and quality issues and at a much higher price. Cardboard and transport prices also skyrocketed.

“Things just cost more — doubling the cost, in many cases — and take longer to get,” Confer adds.

An issue that Stormcloud is watching closely at the moment? A shortage of carbon dioxide. In beer, CO2 plays many critical roles, ranging from carbonation to preventing beer oxidation. A graph shared on social media in August by the Brewers Association’s chief economist, Bart Watson, showed that CO2 price spikes in 2022 were more severe than increases in any other ‘brewery input cost’ , including cans, malt, carton and trucking. The problem, if not improved, could even force breweries to make less beer.

“At our size, we didn’t have any difficulties [getting the CO2 we need]but I’ve heard that bigger breweries have to cut spending due to lower allocations,” says Confer.

CHALLENGE & OPPORTUNITY: 2023 promises trials and triumphs in equal measure.
A congested beer market, ongoing supply chain issues, and the need for frequent pivots could all spell trouble for craft brewers in 2023.

In particular, both Springsteen and Newman-Bale point to packaged beer distribution as a dwindling avenue for revenue and growth. Springsteen says Right Brain’s potential to grow its presence on store shelves in the future is largely “flat,” while Newman-Bale says distribution is “getting more and more difficult and less profitable” in due to the fact that the breweries “have not been able to pass on significantly increased supply costs to the customer.

“2023 is going to be a very tough year for brewing,” Newman-Bale predicts, pointing to distribution issues as the main reason. “I expect to see several breweries close or change their business model.”

But it’s not all bad news. “Any challenging environment provides opportunity,” says Newman-Bale. “At Short’s, we will work to focus on what we have fun doing rather than what just sells beer. Primarily, this approach will be about getting back to the ‘power of smallness’, creating experiences that we can share with the consumer.A significant change in operations is the promising addition of a beer garden in Bellaire, opposite the main Short’s pub.

At Right Brain, Springsteen says distribution challenges have been somewhat offset by 2-3% traffic growth at the company’s location on 16th Street in Traverse City. The brewery hopes to build on this growth next year, starting with a 15th anniversary party in February and continuing with another event in April that will highlight beers made in collaboration with other breweries. Perhaps most notably, Springsteen says Right Brain is working on an expansion of its pub space, which will add a coffee roastery, pizzeria and whiskey blending operation to the existing brewery building. “More details to follow as we navigate the final designs and prepare for construction,” Springsteen teases.

Stormcloud, meanwhile, is celebrating the success of its big debut beer of 2022, Sunrunnr, which is a seasonal wheat-style summer beer brewed with a pair of yeast strains not often found in beer from around the world. northern Michigan. “We’re spending the winter tweaking this beer on our pilot system and can’t wait to get it back on the shelves in 2023,” Confer says. “Additionally, in the spring of 2023, we’re launching a limited-time offer in 12-ounce cans of our 31 planes, a double IPA that’s been a longtime favorite in our pub.”