There Is No Bubble; Long Live the Bubble (Part 239)

A few days ago, this article by the Brewers Association's staff economist Bart Watson drew some attention.  In it, Watson argues that there is no "craft beer"* bubble.  He's correct, but he cooks the numbers and conflates metaphors throughout the article, throwing gasoline rather than water on the bubble fears.  (There's an egregious chart in the piece that should make him blush.)  But his central point is correct: judging whether there's a craft beer bubble by the number of breweries is a silly metric.  If the US had 5,000 small breweries and brewpubs making 500 barrels of beer, it would amount to 1.3% of the total beer market.

(Though, to jump into a digressive parenthetical, I can't help but point out that when he wrote this sentence, I nearly fell out of my chair: "This leads me directly to my second point: everyone should stop talking and/or worrying about the number of breweries."  Ha!  Watson's employer spends a ton of their marketing capital sending out breathless press releases twice yearly promoting the growth in brewery numbers.  No one would care if the BA didn't flog that horse so brutally.)

But the real reason there's no bubble is exposed in a different recent article, this one from Ad Age.  The key graf:

Among the losers are No. 1 Bud Light, whose sales fell 0.7% in the period to $5.9 billion, and No. 4 Miller Lite, down 2.5% to $1.9 billion. Though light beers began declining about five years ago, their descent has accelerated this year, noted Benj Steinman, president of trade publication Beer Marketer's Insights. "And that really matters," he said.

Add to that Budweiser, which is in freefall, dropping another 4.33%, and you see why craft beer has so much room to grow.  At less than 10% of the market, it is a tiny slice and is years away from anything approaching a real bubble.

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*There is no such thing as craft beer.