When Craft Beer Becomes a Commodity

Last month, the folks at BridgePort Brewing launched their 30-year anniversary by highlighting a very specific part of their history--the brewery-defining flagship IPA.  The version of history offered by the brewery wasn't so much a way of celebrating the past as hawking beers in the present, though.  So last week, I celebrated a shadow anniversary with three of the brewers who helped build the BridgePort: founder and long-time master brewer Karl Ockert and early brewers Ron Gansberg, now brewing tart ales at Cascade, and Matt Sage, currently of Indie Hops.  (John Foyston, Pete Dunlop, and Morgan Miller were in attendance as well.)  It was in one sense just a way of having a few writers get the rest of the story, and understanding the richness of those thirty years.

But excavating the past often leads people to start thinking about time in bigger chunks and in turn to pondering what lessons it holds for the future.  At the moment, brewery openings are exploding and established breweries are growing at astronomical rates. Matt, Karl, and Ron had all lived through a similar period in the 1990s, when investors rushed into the market to capitalize on a fad.  A lot of poorly-conceived and poorly-made beer flooded the market and put the growth of craft beer on a decade-long plateau.  The question arose: are we seeing a repeat? 

There were a few jokes, and then Karl said he felt like one of the big changes was that beer styles were done.  "People brew to flavor, not style."  He added, "sessionability is coming back; beers will be brighter and lighter." Morgan Miller, who most recently worked for Ninkasi and has been involved in the beer business for decades, suggested that there would be more regional styles.  Ron agreed, and added that beer would start to reflect local climate more--the beer in Arizona and Florida would diverge from the beer in Oregon.

Then things started to get interesting.  Karl pointed out that as competition increased, consumers "were going to get more cost sensitive."  He observed how we're starting to see tiers develop, with some craft breweries like Portland/Pyramid carving out a niche with less expensive beer.  And as more breweries expanded nationwide and started opening regional plants, craft brewing was starting to look a lot more like non-craft brewing.  Then Ron said something I've been thinking about a lot lately:

"We're going to see a blurring of the specialty beers and commodity beers.  Where we try to hold the line on specialty, the big guys are going to try to drive that to commodity."

For centuries it's been possible to make beer in large quantities.  The "mass" was a lot smaller than it is today, but breweries in Bremen and Hamburg figured out how to make in in quantities large enough for international shipping in the 1200s.  The industrial revolution allowed for truly massive breweries in the late 18th century, and the notion of a "commodity beer" has been with us since.

A commodity is a mass-produced item that is interchangeable with others of its type: agricultural and mining products are typical examples.  Smith farm potatoes do not compete with Jones farm potatoes in the market: they're all potatoes and priced alike.  In commodities, sellers compete mainly or exclusively on price, not brand or quality.  Beer is one of those products that has a commodity dimension and a craft dimension, and the two oscillate in prominance.  The dominance of the commodity beers of the 1970s, for example, sparked the craft revolution.

It goes both ways.  If the over-commodification of beer can spark a craft revival, it can go in reverse, too.  Beer is a simple pleasure and historically has been hugely sensitive to price.  There will always be a large number of consumers who want a decent beer--any decent beer--so long as the price is right.  When Karl brought up tiers, he was pointing out how price and quality shape markets.  And here's the thing we are going to soon have to come to terms with: there's no reason craft beer is immune from commodification.  In fact, it's already happening.  The rise of witbier is real-world example: Blue Moon is the single biggest ale brand in the US, and along with Shock Top, has pushed witbier pretty close to the commodity line.

There's no reason to think this couldn't happen with other styles, too.  IPAs, so long the symbol of craft beer's rebellious image, is a perfect style for commidification.  It's strong enough that it would travel and last well, and could be easily replicated in different plants.  Eventually--probably soon--we'll see mass-market IPAs.  When Anheuser-Busch and MillerCoors have their own mass-market IPA labels, what will happen to Stone, New Belgium, and Ninkasi?  The pendulum has long swung back and forth between the extremes of bland commodity beer and expensive, small-batch artisanal beer.  There is no reason to think American craft brewing has stopped the process.

To bring things full circle, the whole BridgePort incident is in a way a metaphor for this future.  A once-unique, local brewery has been stripped of all character except that which will serve to sell a certain type of beer.  In making BridgePort all about hops, Gambrinus has taken a (certainly inadvertent) step toward commodification.

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By chance, I was invited to try a sampling of some of the "crafty" beers of MillerCoors last week--a different kind of preview of the coming beer attractions.  That experience was also laden with interesting discoveries, and  I'll describe what I found there tomorrow.