September 29, 2013

There has been much talk lately of the possibility of a craft beer bubble set to burst.  On August 30th David Olive raised the issue in the business pages of the Toronto Star.  His bullet points include market saturation, falling beer consumption and buy-outs, among others.

On the 20th of September The Brewers' Association released an article on the topic which was cited by Steve Beaumont and the reaction was swift, though I confess I am reminded of the barbs that realtors fire out any time someone mentions a housing bubble.

The concept is hardly new and I have always imagined it was natural.  Oddly enough, I have been making notes for a while on the matter so now is as good a time to commit to print as any.

I have been drinking craft beer since the first half of the 1980s, when we called them microbrews.  I can remember when it looked like there would be brewpubs in every town in a few years.  That bubble burst and they didn't disappear altogether.  They continue to open, just at a slower pace.

What causes a bubble to burst?  Briefly put, the trend-chasers find something new.  One day those who follow craft beer because it is fashionable will finally be convinced that Armagnac is the next big thing, though likely not until after the Armagnac folks give up trying and, Heavens, they are persistent.

There are a good many signs that we are experiencing a bubble but it was an event in Toronto this past summer that convinced me.  I want to be careful naming names but from the initial announcement and a release of "additional information" (five drink tickets instead of one with your $25 admission - two to three tickets buys a half pint) it dawned on me that the craft beer movement has been reduced to fleecing hipsters in order to sustain expansion.  Who else will pay what regularly works out to twenty dollars or more per pint for something brewed in a corner of a restaurant's kitchen?

Another example:  When a television show resorts to stunt casting we know the end is near.  Of late we have witnessed brewing collaborations with Tom Green, Barenaked Ladies and others.  Brewers are going to extremes in order to be noticed in this manner, with their packaging and their names. 

Herbert Stein's law states simply that something that cannot continue will stop.  So it is with the craft beer boom but don't worry.  Working in the financial industry has taught me that a boom is not necessarily a good thing.  Does anyone else remember the days of irrational exuberance when junior gold explorers were rebranding themselves as tech companies?  Today we see beers brewed with beef jerky, Brussels sprouts and pink salt and this sort of thing will, mercifully, be gone when the craft beer bubble bursts.  We will still be left with plenty to choose from and I will continue to enjoy craft beer so let's get over it.