Tuesday, November 9, 2010

The New Media and the Business of Craft Beer

The Portland Beernoscenti 

The craft brewing revolution predates the intertubes, e-mail, blogs, facebook, twitter, text messaging and blurts (okay this last one is a figment of my imagination).  In Oregon the early days of Bridgeport, Widmer, Full Sail and the McMenamins were about one or two new, flavorful beers that tried to gain a foothold in a market dominated by the mega-brewers.  News spread by word of mouth and the occasional print media story.  A minuscule beer enthusiast crowd might get excited about a new or special offering, but generally the name of the game seemed to be: brew a good beer or two and try as hard as heck to get it in stores and in bars and restaurants, perhaps aided by an ad or two bought in the local paper or a billboard.

Cut to 25 years later and the business had been radically transformed by the new media and especially social media.  Now breweries generally have facebook pages, twitter feeds, blogs and, coming soon, blurts! There is now a huge number of beer themed blogs on the internets that create an echo chamber for breweries as well, and they are always hungry for new content.  [The recently concluded Beer Bloggers Conference is testimony to the emergence of beer blogs as a force in the industry]

This has changed the market in many ways, but it seems to me the most important way the market has changed is the fact that it is much more about generating instant buzz.  25 years ago, buzz took months or years to spread: "hey have you tried that crazy wheat beer that Widmer makes?  No?  You gotta try it!"  Now buzz happens instantly and fades just as quickly, so breweries need to find ways to generate a constant stream of news or the 21st century attention span will quickly forget about them.

I don't know the counterfactual, but I strongly suspect that this wave of new media is largely responsible for two trends: the sudden explosion of small, local breweries and the massive expansion of more and more special, one-off and extreme style beers.

Small local breweries (which still take a pretty sizable investment in equipement) have a much better and cheaper way to become known and generate a following of loyal customers through the new media.  They can make themselves known, have a steady stream of special events and beers and make a go of a new business much easier than in the 80s and 90s.  [This can also lead to more speculation and quick successes and failures so I suspect the volatility of the business will increase]

To keep potential customers and beer entusiasts attention, new beers, new beer styles and new beer methods are critical.  Yes at first only the beer geeks will know and care but in this day and age word spreads daily not monthly as it did before.  Get the beer geeks attention and pretty soon buzz will spread far and wide.

To me this is almost all upside - more breweries, more beer, what's not to like?  But there are some potential downsides as well: by always needing to try new experimental things the quaslity of the beer might suffer.  With short attention spans brewers are now needing to brew many one-offs and do not have the luxury of refining recipes as before.  Also, the attention paid to 'regular' beers may suffer what with so much effort going into new beers.

From an economics perspective this creates a real danger zone for breweries.  Beer is what we call an experience good - meaning that you cannot tell its quality until after you purchase it, unlike a piece of clothing, say, or a TV that you can touch, examine, try on, view, etc. before buying.  Ideally, then you want that first impression to be great if you are a brewer.  So having a superb basic line-up serves that purpose.  But having lots of new experimental beers of varying quality runs the risk of creating bad first impressions.  If I was a new brewer, I think I'd find this tension difficult to deal with.

When I think of masters of the new media and masters of this tension I think of Ninkasi.  Extremely adept at using the new media outlets, they created a lot of buzz.  But they also came out with a basic line up of stellar beers that ensured customers were getting a great first impression and built from there.  They have a few seasonal beers and an occassional one-off like the fresh hop beers, but they are careful not to cannibaize their core beers.  This makes sense for a major packaging brewery, but might be harder for a small local brewpub in a crowded marketplcae like Portland.  

In the end though, I am willing to say that on balance the rise of the new media and its association with craft brewing is a tremendous boon.  Walking into my local Safeway or QFC or New Seasons demonstrates the power of the new media, what with a huge amount of cooler space given over to craft beer including obsucre and limited offerings. I am pretty convinced that this would not have happened in the absence of the new media.  New media is all about unfiltered information and the craft beer movement, with the right amount of enthusiasts, artistry and energy has tapped into its power better than most industries it seems.


Update: In the comments, Tim Wright points to a fascinating bit of research on the use of new media among Scotland's brewers.  Apparently not yet very common.  Guess who has it sorted though?  Yep, Brew Dog.  

Update 2: Brady at The Daily Pull responds as well.


Tim Wright said...

Very intersting and it seems to me that craft beer is a perfect area for Social Media to be a valuable tool. However our recent survey sugests that Scotlands Craft beer sector has some way to go before it cathces up with teh US use of Social Media.
You can read the survey here

Brady Walen said...

Great post, Patrick. I've also given quite a bit of thought to the ways in which social media has reshaped the craft beer business and industry. Rather than leave a lengthy response here as a comment, I've posted my response on my blog:


Bill Night said...

I'll give in to my curmudgeonly instincts and say that I think the craft beer explosion would have happened much the same way without social media.

You picked a very good example in Ninkasi -- they are doing almost everything right with respect to both social media and beer (beer geek complaints about quality notwithstanding). But they also pound the pavement very hard -- similar to the feet-on-the-street strategy that resurrected PBR pre-social media.

Twitter and facebook -- as much as we rely on them now -- have only been in wide use for 2 or 3 years. The success of good beer in Oregon -- Widmer, Deschutes, Bridgeport, and now upstarts like Ninkasi -- predates that, including their supermarket shelf space. Further, I find the twitter presence of breweries to be sickly sweet -- mostly just marketing blasts and fake-smile back-slapping when someone gives them a friendly review. Sure it's unfiltered information, but it's like unfiltered advertising, and people are going to tire of it very soon. If that's what is causing rising interest in beer, we're in trouble.

The other side of the unfiltered coin is represented by social media sites like Yelp. The reviews -- whether positive or negative -- are so unreliable and oftentimes idiotic that you really can't use the information at all. I don't think it's driving any trends.

Patrick Emerson said...


I don't suggest that new media is a substitute for pounding the pavement. Far from it. But I do think it is a way for breweries to create buzz for themselves whereas without a big advertising budget they could not have before. And as a part of that there is a heightened emphasis on special beers and special events.

I am not suggesting it is integral to the craft beer industry, but that it has helped create the event driven emphasis we see now.

I am also not suggesting this is necessarily bad. In fact it may be a much better equilibrium than in the absence of new media.

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