My favorite numbers

The craft beer industry numbers are in for 2008, and given the current economic climate, we are pleased. It appears that you have continued to buy craft beer despite losing your jobs – nice work, everyone. In order to establish my credibility as MNB?s resident geek, here are my favorite numbers from the Brewers Association?s annual sales report and why they matter:

• Craft beer volume was up by 5.8% for the year, and dollar sales were up 10.5%. What does this mean? Craft beer is still growing, and not just because brewers are increasing their prices. Demand for craft beer is still ticking up and people are buying more good beer. In fact, my back of the envelope calculation says that in the second half of the year (which was a lot crappier than the first), volume grew by around 5% and dollar sales were up double digits. Not bad in a shrinking economy.
• Craft beer made up 4.0% of the market last year up from 3.8% in 2007.  Suck it, InBev.
• Overall beer sales grew by 1 million barrels last year, and nearly 500,000 were craft beers.  That means that 4% of the market accounts for half of the growth in beer sales.
• Operating costs for small breweries increased 39% last year.  Probably the most alarming statistic in the report, it?s a sobering reminder that in order to stay in business, you can?t just sell more beer.  You have to sell it profitably.

Overall, some good news here and some cause for concern ? we?ll be keeping our eyes on the numbers for the first half of 2009.

Georgia Sunday alcohol sales law faces test today

Sunday alcohol sales are currently illegal in Georgia, with limited exceptions (on-premise, at sports events, etc.). Today the Georgia state Senate panel will vote on a bill to allow Sunday alcohol sales. We here at Monday Night Brewery are, of course, rooting for the free market to knock some sense into the current legislation. According to the AJC,

Backers this year are touting the additional revenues selling beer and wine on Sundays could bring the cash-starved state. Opponents maintain it would sully what is a day of worship to many Georgians.

I am also a member of the Facebook group “Tell Sonny Perdue to Keep His Veto Pen Out of My Sunday Booze,” which has a few members going down to the legislature to protest today. If you’re in the area, throw out some “good beer vibes” and hopefully we can get this thing rolling.

Georgia is notoriously backwards in their beer legislation (though admittedly we have it better than Alabama). While Sunday sales wouldn’t be a huge step forward, it could certainly be the beginning of a series of laws making it easier to sell and buy craft beer in Georgia. And for that we are excited.

UPDATE: The vote was delayed for one more week because no one showed up. Thanks, legislators.

Photo via Silver Starre

Interview with a scholar: Professor Ken Elzinga (part 1)

This is the first (and potentially only) installment in a new series interviewing “scholars” about the beer brewing industry (no Jeff, just because you went to Harvard that doesn’t make you a scholar). Professor Ken Elzinga is a renowned economist at UVA, was my adviser in college, and I realized recently that he’s an expert on the economics of the brewing industry. He kindly granted me a phone interview and some excerpts are below.

From the perspective of an economics professor, what do you find most fascinating about the beer brewing industry in the United States?

I don’t think there is any other American industry that’s had the trend to consolidation that brewing has had and then at the same time have a thousand new entrants come in almost in your lifetime?certainly in mine.

So if you were a boy growing up in Michigan, you not only knew of Miller High Life and the Budweiser brand, but you knew of Goebel and Pfieffer, Stroh’s and Drewry’s.

At the same time, as that steam roller of consolidation moves across the industry, coming up from below, starting with Fritz Maytag out in San Francisco? you could actually pinpoint it historically. One guy, one town, one event when he takes over Anchor Steam Brewery and turns it into a craft brewer and starts to develop a clientele for craft beer and then these two kind of different marketing models of a brewery selling through a small distribution network either on premise or off premise or a brew pub offering food and beer made on premise, this little thing gets started in San Francisco and spreads across the country to now, where there’s over a thousand brewers, and some day they’re going to have a 10 percent share of market.

The cost efficiencies were such that only if you had a plant of 4 million barrels or above, could you be cost efficient, and then these guys come in and offer a craft product at a different price point with product differentiation and they changed it dramatically.  So that’s the yin and the yang of the beer industry.  That is what makes me? as an economist, why I’m interested in it.

Do you believe there is an opportunity for consolidation of microbrewery brands?  While it has certainly occurred on a more minor scale (Independent Brewers United/Magic Hat example), do you anticipate it happening more extensively, or does consolidation undermine the competitive advantage that micros have (local focus, diverse and unique product offerings, etc)?

Yes, that’s starting to happen. Magic Hat would be the best example where you actually have a consolidation of brands that are not geographically contiguous to one another. Now how much money those guys are making, I do not know.

But I find that interesting and I suspect there will be more of that.  So far the ties between craft brewers have been just through their trade association. And that’s been terribly important because it’s been a real trade association of networking, of camaraderie.

What is your opinion on the following beers:  Amstel (owned by InBev – who you consulted for), Bud Light (AB product, who InBev bought), Coors Light, and Miller High Life, (also a company you consulted for)

Amstel is one that I’m very bullish about.  I think it’s a really solid brand.  Amstel has the advantage of being a pricey beer, an import price point, but InBev is a really relentless cost cutter and they run a lean operation.  Anheuser-Busch will be a much leaner operation under InBev and I suspect it won’t affect the quality of the products.  How it’ll do the marketing, I don’t know, but they’ve already gutted the 9th floor of the Anheuser-Busch offices, which [was] this beautiful palatial place where the Busch family could hang out. That’s all gonna be gone.

Bud Light is a remarkable product. Bud Light is a good example of [the second mover advantage] because it comes along after Miller Lite, and Miller stumbled in producing a low-calorie beer. [Bud Light didn't] make the same mistakes and Bud Light is the largest selling brand of beer in the United States now. The light beer phenomenon is something that nobody could have predicted.

Coors is essentially a Coors Light company that makes a lot of money off of Blue Moon as a sideline. Miller has essentially become Miller Light.  They’ve just had a terrible time with Miller Genuine Draft and other interesting products that they’d come out with.  It seemed to be a hit for a while, but they haven’t been able to sustain it.

Miller High Life, to me that’s sad.  That was a great beer when I was a kid.  The champagne of bottled beers, a great slogan, but Miller has tried to reposition it. They tried to move it up into the premium level.  They tried to bring a low price point.  Miller [has] had a hard time finding a marketing focus.  My hunch is that Leo Kiely who’s a really good beer marketer will be good for Miller.  He’s a Coors guy.  He now heads the JV.

In the next installment Professor Elzinga will share his take on the future of craft beer, how the recession will affect the industry, and what beer and lipstick have in common.

No brewing tonight

In an unprecented move we will NOT be brewing tonight. Hopefully this will be the last consecutive baby-related cancellation.

That is all.

Jeans and a t-shirt

One of the small (but not to be overlooked) things that I look forward to is wearing jeans and a t-shirt to work. Because once Monday Night Brewery is official, this will most assuredly be happening. Here’s Jeff wearing the requisite brewery dress code at the Brewhaha last year.

Right now Jeff, Joel and I work in sectors that could probably be collectively classified as “corporate America,” with the dress code to boot. Jeff has it worst. He pretty much has to wear a cummerbund to work every day. Joel works from home a lot, (hence his nickname, “No Pants Joel”) but he has enough out-of-town meetings to know what it’s like to wear a collared shirt and ? God forbid ? a belt.

I look forward to the day when brewing reigns supreme, and I can cut all the collars off of my shirts, thus creating a new and amazing trend. Because it turns out I hate buying dress clothes. It just seems like a massive waste of money to me. Thrift stores sell delightfully ironic hipster tees for $1. Beat that, Express for Men.

Speaking of ironic, our new logo is a man in a suit. Yes, loosen that tie, sir. You deserve a beer.

Note: Bonus points if you know where today’s Joel picture is from

Interview with a brewer: Aviator Brewing in NC

It’s been approximately 8 years since our last interview with a brewer. But we’re back. This week we talked with a new brewery in North Carolina, Aviator Brewing Company. We’re always attracted to the upstarts since the start-up process is usually fresh in their minds. Mark Doble, the head brewer, was kind enough to share his thoughts on Aviator and the NC beer scene. Enjoy!

*Note: Aviator image has been janked without permission from Aviator website.

1) Give us a synopsis of who you are and what you’re about

I?ve always loved beer?started at an early age. I spent ten years in Europe and just learned to appreciate different beers. I started brewing and was fascinated by the process. I?m kinda like Papa John’s?Better ingredients, better beer. We buy the best malts (or at least in our opinion) on the market.

2) What do you love most about what you do?

What! You have to ask this?making beer?I love the mash-in. Doesn?t matter how many times you do it?it is exciting. Also watching the yeast at work is pretty amazing.

3) How do you see the craft beer scene changing in North Carolina and the South in coming years?

NC will dominate the beer scene in the next few years?no doubt. Look at the brewing movement in Asheville?it is great! There are some fairly progressive breweries in the state?just give it time. At Aviator we will do our part to push NC as a brewing state.

4) What marketing tactic has been the most beneficial to you thus far?

I?m a brewer..and not much of a marketing guy. I would have to say word of mouth?and brew some damn good beer.

5) Where can consumers currently find your beer? Where do you expect them to find your beer a year from now?

In Raleigh?Tir-Na-Nog , The Pit, Raleigh Times (soon), Rudinos Chain (Holly Springs right now, others coming, and (of course) at the brewery Thur ,Fri, Sat 4-8pm (tour @3pm).

I would like to have my beer in most of the good beer stores and supermarkets in the area. I?m not really into slamming the beer on the market and putting it into locations where it doesn?t make sense.

In a year if I could get my beer on tap in the Governor?s mansion in Raleigh?that would be good?and show that NC government is behind the NC breweries in the state. Seems like the wineries get all the support?I?m sure someone in NC government likes beer?!?

6) If you were to start another brewery from scratch (hypothetical, of course), what would you do differently this time around?

Find a very rich friend?there is some cool equipment out there?just buying it is the problem. I would love to have a brand spanking new 20bbl system with whirlpool tank and some custom designed fermenters. I?ve have a few friends that own microbreweries so have avoided most of the big pitfalls.

7) Your store has three items for sale: 1) a growler; 2) a pint glass; and… 3) an organic zucchini? Please explain.

Yep?the zucchini seems to get a lot of attention?I think I?ll get a shirt made up featuring it. I?ve even had an order for it?which I did sent out. It was just a test item in the online store?and I forgot to take it out. I think I might try a zuchinni beer???

Before you get your hopes up

There’s no brewing tonight. And we’re targeting two weeks from today (3/2) for our glorious return. This is, of course, subject to change.

Enjoy your President’s Day with a nice craft beer.