The Blame Game: Why Craft Beer Sales are Declining
When was the last time you were in a craft beer bar in San Diego and ordered a Sierra Nevada Pale Ale or a Sam Adams?
The answer to this question has a direct impact on the recent industry-wide reporting of the lag in craft beer sales. Marketing firm, IRI International, released a report on overall craft beer sales for the first half of 2016 and after years of unencumbered growth, craft beer sales have finally begun slowed down. Brewbound reported that craft beer sales were up 6.5% from this year over last year and while that doesn’t sound too bad, it’s concerning when it’s compared to the 17% growth at this time last year. That’s a serious difference, but craft beer lovers shouldn’t begin hoarding their favorite brews just yet. When the numbers are looked at closely, a different story emerges. There are two main reasons why this decline shouldn’t worry the average craft beer drinkers.
1. Extreme Growth Can’t Last Forever
According to the Brewer’s Association’s article, “slower growth is a natural part of category maturation.” With more breweries, comes more competition as craft beers takes a hold on mainstream retail channels. Yes, we had a few years of double digit growth but as an industry matures it’s normal for that extreme growth to slow down.
2. Big vs. Small Craft Breweries
This is the crux of the numbers released because when you really look at the industry as a whole, one can see that the biggest craft beer brands are the ones that are struggling. Sam Adams, Sierra Nevada, New Belgium Fat Tire, Blue Moon and Shock Top all reported a decline in sales. First, we would argue that Shock Top and Blue Moon shouldn’t be considered in the number at all because they are owned by AB-InBev and Coors, respectively. Once you take them out of the equation, growth goes up to 8.9%, from the 6.5% that was reported. In fact, these big dogs are to blame for most of the slow down. 15 out of the top craft brands were in decline and six of those 15 brands are in the middle of double digit declines in volume. This has a significant impact on the reported number because their huge sales impact that number heavily.
What this all means is that although there is some slow down in the growth of craft beer, it’s mostly because the bigger craft beer companies are impacting those numbers.
Simply put, craft beer consumers are becoming more discerning with what beer they choose to drink. People that used to reach for a Sierra Nevada Pale Ale are now reaching for smaller brewery brands. It’s interesting because these bigger companies most certainly paved the way for the breweries that came after, but once craft beer drinkers are introduced to all of these smaller, and some might argue, more innovative breweries, they seem to choose to spend their dollars on these brands.
The report wasn’t all doom and gloom. Not only did they find that IPAs are up 28.5 % year to date from last year, but also Vermont-based, Lawson’s Sip of Sunshine IPA (which is a personal, cross-country favorite), entered the list of top 30 brands in sales in convenience stores, selling more than $2.3 million in beer year-to-date. When is it going to come to the West Coast?!? People are still drinking craft beer and are focusing on quality, small breweries, like Lawson’s.
So don’t believe the hype that craft beer has reached it’s saturation point. There is plenty of growth still available for innovative, smaller craft breweries, and that’s good news for everyone!
SB-1426: The Pay-to-Play Bill That Could Kill Craft Beer
There’s something brewing in the California senate and it could have a devastating effect on the craft beer industry here in San Diego as well as the rest of the Golden state. An article in The West Coaster recently brought up the issues with SB-1426, which would legalize pay-to-play, and is rallying support within the craft beer community to oppose this bill alongside the California Craft Brewers Association (CCBA) and the San Diego Brewers Guild (SDBG).
What is pay-to-play? Since Prohibition, there have been laws on the books called tied house laws. Tied house laws are federal and state laws that prevent alcohol suppliers (like breweries, wineries and distributors) from exerting undue influence over retailers. In essence they are meant to protect the industry from unfair business practices. Pay-to-Play is when a supplier offers money or other compensation to a retailer in exchange the promotion or marketing of their beverage. This could be shelf space, marketing costs, free advertising or even tap handles at a location. Although the practice is illegal, it’s well known within the industry that it certainly happens. The bigger the business or supplier is, the more they can pay to have their beer front and center of the retailer’s space.
The SB-1426 bill would essentially legalize the pay-to-play practice here in California by allowing for compensation to be given to retailers for things like marketing and alcoholic beverage promotion. This would give an unfair advantage to big suppliers like Budweiser or big distributors with lots of money to throw at retailers for this purpose.
We have talked about this issue before, but it all goes back to big beer companies buying up craft breweries like 10 Barrel Brewing, Saint Archers, Golden Road, Elysian and more. They bought these craft beer companies to actively compete with the rest of the craft beer community. If this bill goes through, they will legally be allowed to us their millions of dollars to influence what brands of beers you see in bars, restaurants and retail locations throughout California.
Here at Thorn Street Brewery we self-distribute and simply don’t have the budget to pay what these companies will be able to pay to have their brands promoted, marketed and available. What this means for you, the craft beer lover, is that you will see more and more independent breweries not able to get their beer in the same places, which will lead to a decrease in beer diversity and availability. But don’t worry, big beer has a bunch of “craft breweries” to fill those taps and shelf space that they will certainly be paying for. It just won’t be many of your favorite San Diego (and beyond) breweries.
So what can you do? You can email or call your representative and let them know you don’t support SB-1426 and that it will actively hurt the craft beer community which California has worked so hard to build. Find out who your local rep is here at http://findyourrep.legislature.ca.gov/ and help make sure that all craft breweries get a chance to play.
Help a Hipster Program: Making a Difference One Beer at a Time
Recently, The Harris Poll conducted a survey of beer drinkers that has rocked the craft beer world. Not only did they find out that craft beer drinkers led healthier lifestyles than macro beer consumers, but to the shock of the craft beer community it was found that nearly half (47%) of all craft beer drinkers only drink beer on the weekends.
You are probably as shocked as we were to uncover this damning trend. How can true craft beer fans only imbibe two days out of the week when there are five other days to drink the delicious elixir? Luckily, there is a new program out there for hipster craft beer lovers that helps them get over their fear of drinking beer during the week.
The “Help a Hipster” program was started right here at Thorn Street Brewery and will, we assume, be rolling out nationwide later this summer. The program is really simple. You think about which bar or brewery you want to go to on a Sunday through Thursday night, and you invite at least one craft beer loving friend to go along with you. Don’t take no for an answer! Many times consumers will come up with excuses like, “I have to work tomorrow,” or “I don’t have any money to spend on beer,” or “My sponsor might call.” These are all excuses that they have learned to live with because of their fear of drinking during the week.
Don’t let fear run your friends’ lives! It’s a lot like the “See Something, Say Something” campaign. If you are seeing a hipster sitting alone in a coffee shop reading “The Birth of Tragedy” for the 4th time, it’s your duty as an avid craft beer fan to save them from a beer-free week and invite them out for a beer.
“It was Tuesday and I wasn’t even thinking about getting a beer,” Forrest from Golden Hill said recently. “But then this guy walked up to me while I was whittling this bottle opener out of repurposed Ivory and asked me to go and grab a brew with him. I was at first shocked but then realized that drinking on a Tuesday makes a lot of sense.”
The benefits to drinking during the week are many. Easy to get tables at your favorite bar, no lines to deal with and daily imbibing keeps you in beer-drinking shape and ready for the weekend.
So what are you waiting for? Get out there today and Help a Hipster and save people from a beer-free week!
Making Beer Dreams Come True: What’s On Draft Season Two
Some say that craft beer takes itself too seriously. The stereotype of bearded hipsters solemnly sipping on barrel aged Imperial Stout while quietly discussing its merits and follies is one that has fully permeated the craft beer industry. Luckily, there are two beer dudes who are are not only serious about the craft but are serious about having a great time too.
Tom Keliinoi and Aaron Mayer are two best friends who also love craft beer. Tom is a native San Diegan who worked for years in the entertainment industry in L.A. before moving back to San Diego and working for Acoustic Ales, where his bestie, Aaron, is head brewer. They began working on their idea for a web series devoted to the love of craft beer which became, What’s On Draft.
What’s On Draft Season One brings viewers behind the scenes in some of San Diego’s hottest craft breweries. Tom and Aaron filmed segments with brewers and industry insiders talking about the beer, the brewery’s story as well as tastings of specific beers from the brewery. They take viewers behind the scenes and show parts of breweries that most patrons rarely see.
One of my favorite segments is at Alpine Beer Company. Tucked up in the mountains, an hour’s drive East of San Diego proper, Alpine Beer Co. makes some of the best beer in San Diego. Learning more about how this brewery operates as well as hearing funny insider stories makes for a highly enjoyable viewing that gives watchers a never before seen perspective on this small but influential brewery.
They also showcase some hilarious and topical short films like, Beards of Love, a satirical look at the ubiquity of beards in the brewing industry.
The cool thing about What’s On Draft is that these guys not only want to talk about craft beer, but they know the industry inside and out. That means that they know the right questions to ask in an interview, they are respected by brewery insiders and they understand the craft beer industry as a whole. But they aren’t afraid to make fun of themselves and craft beer, making their film shorts the perfect antidote to the perception that craft beer takes itself too seriously.
Now, Tom and Aaron are looking for funding for their second season and have a Kickstarter campaign up and running. They need your help to make the second season a reality and that means donating even a few $$ to their campaign. There are some really cool rewards set up for backers, so head over to their Kickstarter page and take a look.
On Saturday, June 25th, at 3 pm we will be holding a Viewing Party for What’s on Draft here at TSB. They will be showing segments and clips from their first season, holding a raffle with awesome prizes and hanging out, sharing a beer with you! We couldn’t be happier to support such a noble (and maybe a little self serving) cause so we hope you will join us to help them reach their goal and put out more craft beer videos.
Jump into the ocean wearing a onesie and TSB gear. Eat 3 jalapenos and chase it with a pint of Chilecabra. Do a beer shot with someone over 80 in the tasting room. If you have been hanging around the brewery or checking out our social media over the last couple of weeks, you have probably noticed a few odd things going down, here at Thorn Street Brewery. First of all, no, we are not torturing our employees. Everyone taking part in the Thorn Tribe Challenge is doing so of their own free will…sort of. That’s right, we thought we could kick off the summer with a staff challenge that would be as fun as it was crazy.
We came up with more than 80 individual and team challenges for our teams of 6 to compete in. Each challenge is given a set number of points from 5, for the easier challenges, to 50, for the toughest ones. People can get points for their teams through both types of challenges but each task can only be completed once by each person.
The competition is fierce and the teams are already out in full force trying to rack up the points. Take a look at some of the challenges that have already been completed by our brave Thorn employees…
Slap a TSB sticker on a basketball backboard
Get TSB in a classified ad/most tap handles/stick a stickers somewhere awesome (brewer’s butt?)
Get a pic of someone in uniform in TSB hat
Do a beer shot with someone who is over 80 years old in the tasting room
Down a growler
Read a book under a tree in TSB gear
Find someone named Nelson to drink a Got Nelson? IPA
Go to a TSB event out and about in San Diego
Get an “I Voted” sticker on your TSB hat
Beer at the Zoo
Find someone you don’t know rocking Thorn gear
Thorn in a personal ad
We even have a few videos for your viewing pleasure. First one is eat three jalapenos and chase it with a Chilecabra Pale Ale…
And a video of a priest saying “Jesus loves Thorn Street?” Yeah, we have that too…
So keep an eye out for more crazy tasks to be completed before the challenge ends in the beginning of July. See what tasks you can do and post them to our page and tag #thorntribechallenge to get in on the fun. And yes, there might just be another Thorn Tribe Challenge in the near future that will be open to everyone…including you!
Here’s a list of the tasks…
THORN TRIBE CHALLENGE RULES
1) If you do not capture (picture or video) your challenge and post on Instagram using #ThornTribeChallenge. You did not complete the challenge.
2) TEAM Challenges must be completed by ENTIRE team. You are allowed to substitute ONE missing member with TWO non-members rocking TSB gear.
3) You must tag your entire team in group challenges.
4) All pictures/videos need to be original for this contest. No re-posting/using old pictures.
5) All points are per person unless expressed as a TEAM challenge .
6) You can only do a challenge once.
5 Point Challenges
~ Down a Growler (contents of your choosing)
~ Slap a Thorn Sticker in someplace Awesome!
~ Plant a tree in TSB gear
~ Read a book, under a tree, in a park… in TSB Gear
~ ‘I Voted’ Sticker on your TSB hat
~ Go to a concert, preferably local musician like Robbie or Doug, head to toe TSB schwag
~ Get a picture with someone in ‘Uniform’ (trade hats for extra 5 points)
~ Post a photo of a friend over seas repping Thorn gear
~ Attend Padres Game in gear
~ Find someone random (you do not know) rocking Thorn gear, take a picture pointing at each others shirts
~ Do a keg stand on one of the new kegs. preferably tap’d and drinking
~ Neighborhood/park cleanup
~ Slap a Thorn sticker on a basketball backboard
~ Put a Thorn sticker on your car
~ Tightrope walk with a growler
~ GOT NELSON – find someone named Nelson (must show ID in pic) and have him drink ‘Got Nelson’
10 Point Challenges
~ Jump into the ocean wearing a onesie & a Thorn hat
~ Get your whole TEAM on one bike and ride it for 10 feet
~ Take your TEAM for a game of disc golf
~ Get a caricature drawing of your head on a raccoon’s body
~ Get thorn street mentioned in an article
~ Get a hug from someone with a Face Tattoo
~ Get Thorn Street in a classified or personal ad
~ Get Thorn Street on a podcast or radio station
~ Make a short song about Ralph the Raccoon and sing it
~ Eat 3 jalapeños and chase it down with a pint of Chilecabra
~ Do a beer shot with someone over 80 years old in tasting room
~ Get a priest or nun to take a swig from a growler and say “Thorn St Rules”
~ Get a priest or nun to say “Jesus loves Thorn St”
~ Get a mariachi band to sing a song about TSB
~ Get a picture of a band member rocking TSB schwag at a show/concert
~ Throw a beach party with TSB banner, ez-up, available schwag
~ Picture of your TEAM riding bikes/boards down the boardwalk at beach
~ Create a recipe using a TSB beer and post recipe and final outcome
~ Throw a kegger at your house with Thorn beer
~ Have dinner with your parents with a TSB growler on the table
~ Get a growler into a movie theater or Drive-in
~ Get top 3 score at any game at Coin-Op and enter initials TSB
~ Run the beer mile. Finish Growler. One pint per lap
~ Stripper pole dance…Thorn street stickers nipple pasties
~ SUP (stand up paddle board) TEA PARTY w/ growler
~ Mt. Woodson TEA PARTY w/growler
~ Potato Chip Rock TEA PARTY
~ 3 SISTERS TEA PARTY
~ Attend any of these outside events (bonus 5 points if your entire team is there)
Riviera Supper Club June 19
Prep Kitchen June 22
KNB Del Cerro June 30, 6pm
15 Point Challenges
~ North Park to Beach TEAM bike ride
~ Hose a Brewer
~ Surf a wave with a Growler
~ Get a pic at the bottom of the ocean with a growler
~ Team pic on Public Transportation
~ Volunteer at Homeless Shelter or Soup Kitchen rocking schwag
~ Donate Blood in gear
~ TEAM dog walking
~ Dress up in Halloween costumes and do Karaoke @ lamplighter (Bonus 15 entire TEAM)
20 Point Challenges
~ TEAM pub crawl, minimum 3 accounts 1 beer per, One team member blindfolded the whole time
~ TEAM pub crawl, min 3 accounts 1 beer per, trade clothes girls-guys OR biggest-smallest
~ Paint your face like a Raccoon and go into a bank to get change for $100. Bonus 5 points if you hand the teller a note “have a nice day” when you first walk up.
~ TEAM most accounts visited in one day
~ TEAM Karaoke @ Lamplighter
~ TEAM chicken wing roulette* Home & Away basket of wings, one insanely hot wing, people take one wing at a time until someone gets the hot one. Nobody leaves table for 1 minute.
25 Point Challenges
~ Growler to top of Mt. Whitney
~ Ride a Penny Farthing in a Raccoon Costume (costume provided)
~ Dress as a flight crew on USS Midway w/ TSB sticker on helmet *action shot
~ TEAM golf outing
~ TEAM – 4 growlers of Relay – 4 people – 4 laps of anything
~ SMUGGLERS COVE – dressed as a ‘smuggler’. Smuggle a growler into PETCO PARK,
SEAWORLD, or ZOO
~TEAM – dressed in tattered clothes you must float in a raft that is too small w/ growler #castaway
50 Point Challenges
~ Get TSB tattoo (Ralph or Logo counts)
~ ANY POST during challenge with the most combined FB & INSTAGRAM ‘likes’
~ TEAM – “Abbey Roof” – Do a Brewery Tour dressed like monks, sandals mandatory, haircut bonus – 10 points
Top Five San Diego Spots to Beat June Gloom
San Diego is known for its more than 70 miles of beautiful coastline, but during May Gray and June Gloom, when the changing temperatures bring the marine layer inland to cover the coast, it can definitely put a damper on beachside activities. Never fear! Here are our top picks for the best patios and outdoor areas that are not at the beach. This way, while all the beach goers are feeling gray and trying to stay warm, you can just travel inland to where the marine layer breaks and the San Diego sun is still shining strong.
This Hillcrest Mediterranean restaurant/bar is known for its delicious food, fun atmosphere and killer patio. Come here for some sun, handmade sangria or their extensive craft beer list, but make sure you try one of their famous doner wraps or an order of their hangover fries. With plenty of shade and spacious layout, this patio is a sure bet on any San Diego day.
This spot in Old Town is one of the most entertaining places to hang out for an afternoon, anywhere in San Diego. 22 craft beers on tap, house-smoked BBQ and other eats, craft cocktails and an outdoor patio filled with games. Bring your friends and challenge them to a game of ping pong, beer pong, corn hold, giant Jenga, darts, foosball and more. Don’t want to break a sweat? They have tons of board games to keep you busy too! They recently renovated their outdoor space making it bigger and better so stop by and check them out soon.
This is one of the newer ones on our list, but they have already made quite an impact on the Hillcrest food and beer scene. Not only do they have an excellent craft beer list, but they actually hold the distinction of housing the most San Diego breweries on tap in one place. Their large patio sits off of the front of the restaurant making it the perfect spot to people-watch while you enjoy the off-the-beach sun!
The Station in South Park is known for being a local family hot-spot. This is because they have a designated (and gated) play area where little ones can rumble while their parents enjoy craft beer, craft cocktails and delicious burgers. The menu is small but they do it up right. Make sure you order some of their garlic parmesan tots and if you aren’t into the kiddos, don’t worry, little ones usually clear out around 8 pm.
If the Station is heaven for kids, then the Quartyard is doggie Mecca. They have an actual dog park located right off from the main dining/entertainment area where you can bring your drinks in and sip away while your dog plays. S&M Sausage and Meat serves up delicious hand-crafted sausages and more and the bar area has an extensive craft beer list alongside refreshing craft cocktails. They have a full event calendar with concerts happening multiple times a week, food truck nights and a Thursday night market that features local vendors and music.
1102 Market St
San Diego, CA
Dog/Kid Friendly? Yes
Anti-Trust Regulators Probe Budweiser’s Can
In totally unsurprising news, Budweiser’s parent company, AB InBev, is under investigation by U.S. anti-trust regulators. We recently reported on the Department of Justice’s investigation into the claims that AB InBev illegally pressures its distributors to sever ties with smaller beer companies and only distribute AB InBev products. In our blog post we noted that the their alleged illegal activities are one thing, but it’s nothing compared to their legal incentive packages offered up to distributors who are aligned with them.
In late 2015, the Wall Street Journal reported that AB InBev unveiled their new incentive program for distributors in their network. They already own 17 U.S. distributors, who only carry their brands, but to the other 500, they offered a lucrative marketing package which encourages these distributors to almost exclusively carry their brands.
Basically, the perks are this: if distributors’ sales volumes are 95% made up of Ab InBev brands then they would be eligible to have half of their marketing costs paid for by the beer giant. The funny thing is that distributors who carry any AB InBev brands are already contractually bound to spend a specific amount on marketing for those brands, from Goose Island to Budweiser to 10 Barrel Brewing and usually includes things like retail promotion and displays costs. Now, if distributors carry 98% of their brands, AB InBev will cover 75% of that cost, up to $1.5 million. They estimate that distributors who participate in the program will receive approximately $200,000 in benefits for taking part and having AB InBev beers account for 98% of their inventory. Now that AB InBev has a bevy of craft beer breweries in their stable, they can offer this incentive to more distributors who before insisted on craft beer making up part of their inventory.
So what’s the real issue here? AB InBev says that they are playing by the rules and Reuters reported that their spokesperson had this to say about the incentive program,
“Our voluntary incentive program clearly does not prevent or inhibit other brands from getting to market,” and that the program is a “reflection of just how competitive the U.S. beer industry has become.”
According to anti-trust insiders the issue isn’t that they have created incentives for their distributors, the issue is how the program is structured. In fact, the program seems to be structured in a way that instead of giving an incentive to promote the Budweiser brands, it gives incentives to suppress the sale of other brands. This is the crux of the whole investigation. Since the rewards are set up to kick in when a certain percentage of all beers carried are AB InBev, that means the distributor would have to carry less of the other beer brands to get the reward. If they had set up the program to only kick in when distributors reached a certain dollar amount sold or number of kegs sold, they wouldn’t be facing this probe from anti-trust regulators.
Furthermore, Reuters reported that Budweiser has contractual requirements where, “A distributor that would want to promote a craft beer would be also required to run an equal promotion for Budweiser, which becomes prohibitively expensive,”
With the takeover of SABMiller but AB InBev set to happen later this month there is some possibly good news for independent brewers. Insiders have said the merger approval will include limits on the number of distributers that AB InBev could own going forward. Although this doesn’t help the small breweries effected by their questionable incentive program, it does show that U.S. regulators understand that one giant company controlling all avenues of the beer industry would not healthy for the diversity and overall health of the industry.
What do you think? Is this fair play in the big game we call capitalism or is AB InBev once again trying to get ahead by choking out the little guys?
COME DRINK WITH US
Thorn Street Brewing - North Park
3176 Thorn St., San Diego, CA 92104
Mon - Tues: 4PM - 10PM
Wed - Thurs: 12PM - 10PM
Fri - Sat: 12PM - 11PM
Sun: 12PM - 9PM
Thorn Brewing Co. - Barrio Logan
1745 National Ave, Barrio Logan, CA 92113
Mon - Fri: 2PM - 10PM
Sat: 12pm - 10pm
Sun: 12pm - 9pm
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*DOG ARE WELCOME IN THE BREWERY AS LONG AS THEY ARE LEASHED & WELL BEHAVED. **CHILDREN ARE WELCOME IN BREWERY ANYTIME BEFORE 8PM.