Bursting the “Craft Beer Bubble” in Oshkosh

If you have the slightest interest in good beer you’ve no doubt heard the racket about the looming craft beer bubble. The implication being that craft beer production has outpaced demand. That a day of reckoning will soon be at hand. I don’t buy it.

Often cited in these stories is the sharp increase in new breweries. There are now more than 4,600 breweries in America. You’ll see that factoid coupled with the recent slowdown in retail sales for established brands.

The two occurrences do correlate. But not in the way that most reports on the craft beer bubble suggest. It’s not as though people are abandoning national brands like Fat Tire and going back to Miller Lite. They’re abandoning Fat Tire for beers brewed in their own region.

Much of the decline in sales of established craft brands is directly attributable to the success of newer, smaller breweries serving local markets. Dip down below the five largest craft breweries and you’ll see that growth continues to be significant – in the area of 16%.

Craft beer drinkers are steadily moving away from national brands in favor of local beer. In fact, they’re going directly to the source. According to the Brewer’s Association, about 7% of craft beer sales now occur on-premise in brewery taprooms. Growth in this sector is estimated to be near 20%. That’s a phenomenal figure.

So what does this mean for us in Oshkosh? First of all, it indicates that opportunities remain ripe for breweries in this area. The shift is clearly towards local beer. That bodes well for Oshkosh’s two breweries and ought to be encouraging for the three breweries currently in the planning stage.

The flip side is that brewery taprooms sometimes have an adverse effect on beer sales in bars. Craft beer on draft in Oshkosh has always been strongly associated with the bar scene here. That could shift if we have more breweries in Oshkosh selling beer from their own taprooms. There’s awareness of this within the industry. The Tavern League of Wisconsin has already has shown its willingness to fight the growth of brewery taprooms. But that’s yet another fight the Tavern League will likely lose.

If there is a craft bubble, its impact will most likely be noticed on the retail side. The vast majority of packaged beer sales in Oshkosh occur in grocery stores and gas stations. These are places where distributors have a heavy hand in deciding what beer goes on the shelves. That’s a situation that almost always favors larger breweries.

I’ve talked with plenty of distributors over the last few years. They rarely show enthusiasm for dealing with portfolios that include dozens of brands from small breweries they know little about. That’s not good for any small brewery hoping to make headway selling packaged beer.

It’s not good for consumers, either. Our local grocery stores have the resources but lack the aptitude to curate anything other than a mediocre beer selection. And their reliance on distributors virtually ensures no improvement on that front. If you’re into good beer, that makes it all the more important to support places like Gardina’s and Ski’s where people who work in those stores are deeply involved with what goes on their shelves.

One last thing, I can’t help but think about all of this within the context of Oshkosh’s beer history. If in the next couple years we find brewery taprooms growing in prominence, it will truly be a return to form. Our earliest breweries all operated on a taproom model. Bare Bones, not being a brewpub, has the most direct connection to that lineage. Judging by the brewery’s production numbers it appears Oshkosh is more than willing to support such endeavors once again. Things here are changing. It’s not a bubble. It’s another beginning.