In the course of putting together our annual Forecast issue (the fun begins with the rather foreboding cover item on energy drinks on page 32), it’s often a tricky task to put a fresh spin on certain categories that, year after year, seem to have been performing more or less the same, give or take a volume percentage point here or there. And when the outlook for the coming year is for more of the same, it’s a mixed blessing: It’s a good thing because those doing the forecasting have a smaller chance of being wrong when performance has been so consistent and bad because those of us tasked with writing about such projections have to figure out a way to not keep repeating ourselves.
The category of which I speak, of course, is beer. To borrow a phrase from Led Zeppelin, the song remains the same: Beer’s going to keep losing alcohol share to wine and spirits, the overall market’s going to be flat or, at best, grow at a dying snail’s pace, but the craft segment’s going to continue to enjoy low double-digit growth in both volume and dollar sales.
However, a potential new twist on what’s happening in the market is that a strange dichotomy has emerged. At the top of the market, where the large multinational brewers roam (and on the distribution tier, for that matter— but that’s another story), consolidation is the driving dynamic. AB InBev is buying Modelo—a handful of years after InBev bought Anheuser-Busch to form the gargantuan entity we’ve come to know and love—Heineken’s expected to take control of Asia Pacific Breweries and there are always rumors and rumblings that AB InBev might even merge with SABMiller to give new meaning to the word ‘formidable.’
But on the small brewer side, domain of the crafts, you’ve got the reverse happening. There are already more than 2,100 small, independent brewers in the country, up several hundred from just a year ago. With more than 1,300 breweries in planning at last tally, that number could hit 2,500 in 2013. Sure there’s some consolidation happening with a couple of brewers here and there merging or giants scooping them up—à la AB InBev-Goose Island—but, relative to the number of newbies popping up, those instances are few and far between, the exceptions rather than the rule. It’s almost as if the market as a whole has gotten so consolidated that the pendulum has swung toward the exact opposite of consolidation, as far as craft brewing is concerned.
It’s a phenomenon that’s carrying over into spirits, as our November 2012 cover story could attest. It’s also happening in the non-alcohol realm among segments like artisanal sodas.
Will this reverse consolidation eventually slow down and become the reverse of reverse consolidation (aka ‘consolidation’)? Of course, that’s ultimately the market trajectory that history favors. However, 100 or so years from now, couldn’t the cycle start anew yet again? Even more recent history favors that scenario. It’s a pendulum effect and, pendula are, after all, controlled by gravity—a force not unlike consumer demand.