How Brewers Can Keep Sales from Going Stale
The price of craft beer will be going up soon, and you can expect continued rising costs over the next decade. Big increases. That’s because barley prices are on the climb.
Barley yields have been withering due to climate change, floods, and extended heat waves and droughts. And hops may not be far behind. Compound that with the rising price of aluminum to make beer cans and you’ve got a recipe for crisis.
Some climate experts predict that the beer industry will face near decimation in the second half of this century.
Other than water, barley is the main ingredient in beer. But the crop has been failing in recent years. According to analysts with the investment bank Berenberg, the world’s biggest brewers, such as Carlsberg and Heineken, will face a 16% rise in production costs this year alone.
Craft Brewers Taking Notice
The past five years have seen a craft beer industry growth of more than 10%, but we’ll be lucky to see a 2% growth over the next five years. Amid the growing concern of climate change, and more destructive weather patterns, the farming industry is facing grave concerns over timely planting of crops, a shortened growing season, and the probability of those crops making it to harvest time.
Both established beer makers and the thriving craft beer industry are taking notice. As a result, margins on beer will take a hit, eventually resulting in the rise of beer prices. That coinciding with the increased penetration of wine will result in a drastic reduction in the growth of the hugely popular craft beer industry.
Some companies, such as Anheuser-Busch InBev, are taking matters into their own hands by thinking forward and making plans to develop a drought-resistant strain of barley as well as a winter-growing strain too. And barley crops are being grown farther north as climates have grown warmer. As a result, American brewers find themselves importing Canadian-grown barley more than ever before.
Looking for Solutions
When compared to deeper crises, such as global food insecurity for both humans and animals, fresh water supplies, and ever-increasing storm damage in countries around the world, the cost of barley and the beer industry may seem less significant. However, the impending price crunch is a barometer of other problems to come.
So, what can a craft brewer do to prepare for this upcoming business climate? I can recommend the following options.
Diversify Your Product to Create a Lifestyle Brand
Craft brewers stand the best chance of staying profitable and retaining—or even growing—its customer base by diversifying their product line. In days of yore, the saying went: Do one thing and do it well. But in the face of modern conglomerates like Amazon, you may have a better chance of standing the test of time with multiple business funnels under the same brand.
So, take the culture of what you’re creating and apply it to another business. Here are a few options you may consider. You can serve your craft brew at all of these businesses. And you can grow your craft culture from just a brewery to an entire lifestyle brand.
- Coffee roaster
- Banquet/event space
- Live music venue
- Recreation space
Diversify Your Market to Grow Your Customer Base
Growing your business into untapped, minority markets may be another way to keep the $23.5 billion craft beer industry flourishing. The initial craft beer industry growth has been mostly white male driven. However, minorities, such as women, Hispanic, African American, Asian, and Latino beer consumers make for a wide, untapped audience that can create exponential growth.
Either way, diversification is key in an unpredictable business climate. While you can’t control the weather or the economy, look at what you can control and create growth there.