We are not retreating – we are advancing in another direction..

There is the saying: “Those who do not learn from history are doomed to repeat it.” Such is the case in the beer industry, but not necessarily in a negative way.

We see history repeating itself in the birth and incredible surge of craft beers, aided, of course, by the internet and social media.  Go back in time to the years immediately preceding prohibition.  Tied houses aside, the industry had thousands of breweries across the U.S.  Similarly, today, we have 4,000 breweries and the trend shows no signs of slowing.  Those breweries 100 years ago were local breweries, serving the community not just with beer, but said breweries served as the social gathering place for locals.   Often these breweries serviced their patrons more along the lines of segregated establishments based upon the nationality of those in the region.

History is repeating itself as the local flair is back, bigger and better than perhaps anyone could have predicted.  Every industry publication, distributor and even breweries say the same thing:  Local is in, regional, and some national brands, are out!

After the end of prohibition and the end of WWII, many of these successful local breweries made an attempt to expand outside of their local footprint, some even building breweries in other states. One such example came from the state of Texas, when a local brewery decided to supersede its state boundaries and built a brewery in Oklahoma City.  One by one, these out-of-state breweries failed for a myriad of reasons, many because they simply could not compete with the big domestics beers.  We all know the story.

To some extent, this is happening again.  Just last week, St. Arnold’s, the oldest surviving craft brewery in Texas, announced it was leaving the state of Florida and instead has decided to focus sales and marketing efforts only in the states of Texas and Louisiana.  What makes this decision interesting is that the feedback from St. Arnold’s Florida wholesalers was that the brewery had done everything by the books.  St. Arnold’s hired the right people, made the right chain calls, priced the beer right, focused on the right marketing strategies, and had plenty of feet on the street,  yet St. Arnold’s could not get the traction to match their efforts.

Now St. Arnold’s is upping their efforts in their own backyard.  They are going back to the basics, often referred to as the “300-mile rule,” which states that it becomes difficult for a brand to establish itself competitively against local brands, if said brand is 300 miles outside the radius from its home brewery.

In some sense, there are markets and states, including Oregon and Colorado, where breweries are like Starbuck’s:  one on every corner. And in some instances, there is extreme pull-back. For example, Grapevine Brewing in Grapevine, Texas, just pulled all their packages and kegs out of the market, deciding instead to sell beer only at their brew pub, located in their new facility, and in their beer garden.

Some may say that this pull-back is a breweries’ last attempt to survive, and while this might apply to a brewery like Grapevine, it does not apply to St. Arnold’s.  St. Arnold’s move could be defensive maneuver to combat the growth of Karbach and other Houston area breweries.  Either way, expect more and more breweries to limit expansion or retrench.  We are not retreating…we are advancing in another direction!