Can Beer Save America?
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That gap between share of total volume and share of total dollars generated is the high-price/high-quality/low-volume business model at work. Basically, craft brewers are generating a much larger share of beer revenue than they are contributing to the overall volume of beer in America — meaning that, contrary to previous trends, a growing share of consumers are willing to pay more for less, as long as the product is the comparatively higher-quality product that craft brewers provide.
Will this trend continue? Will the craft brew industry follow in, say, Apple’s footsteps and become the next high-quality David vanquishing the quantity-over-quality Goliath? It’s hard to say, but unlike in most other industries, the battle doesn’t look like it will be muddled by compromise — which makes it a hugely important test case.
Recall that in other major industries, the establishment’s low-price titans have typically tried to crush the high-price/high-quality upstarts by partially mimicking them — think Microsoft copying Apple or Wal-Mart partially pantomiming Whole Foods. In the beer industry, by contrast, it’s the opposite. Save for a few mini-brands like Coors’ Blue Moon line, which pretend to be a craft brew product, the macrobrew moguls are largely doubling down on their old low-price/low-quality/high-volume formula.
So, for example, Coors Light isn’t changing its watered-down product; it’s simply going with color-changing cans. Pabst is thinking about introducing not any higher-quality lines, but instead trying to brand its products to the military. And most blatantly, Miller has just launched this television campaign promoting a new can that allows the beer to be consumed as quickly as possible.
Though thinly veiled as a mechanism for better drinkability, the new “punch-top” can is obviously developed as the first specifically engineered to shotgun beer — that is, specifically designed to drink beer in a way that makes sure you don’t actually taste the beer. The unique selling proposition of the campaign is incredibly blatant in its embrace of the low-price/high-volume model: It is screaming at you to buy the cheap product exclusively because everything about it — the beer and even the can — is aimed at helping you pour it into your body without even having to taste or savor it. In this “punch top” innovation, Miller is effectively acknowledging that its customer base is those who drink only for volume — and it’s trying to thus convince more beer enthusiasts that speed drinking is a virtue.
The craft brewing industry, by contrast, is going in the opposite direction, trying to direct the beer-drinking population away from volume for volume’s sake. Visit a liquor store with a wide selection of microbrews and you’ll find an ever-more diverse selection of specialized offerings, from double IPAs to sour beers to barley wines. Notably, many of these products are sold in smaller sizes — four-packs or single pint-size bombers — making their price-per-ounce of beer far higher than the typical macrobrew. Additionally, what innovations the industry has made to beer technology tend to be fundamentally different from those of the macrobrew companies: They tend to be aimed at making the beer itself actually taste better (best example: Left Hand’s breakthrough creation of a bottled, widget-free milk stout on nitro).
In the competition for the future of drinking, both sides are obviously trying to exploit their strengths and minimize their weaknesses. The massive macrobrewing corporations are trying to take advantage of their size and corresponding ability to produce volume — all while playing down the fact that their beers have little local character or quality. The craft brewing industry, composed mostly of independent small and medium-size businesses, know they can’t compete in a volume game, and so they are trying to promote quality and diversity. It’s a straightforward fight — one that may seem only interesting to drinkers, but one that truly transcends the inebriation industry. It underscores both consumer shifts and questions about what kind of economy we want in the future.