Quenching The Thirst
Chapter Two: The Brewers
(An excerpt)
By Rod Kackley
As with any supplier in any supply chain, the Steinman family’s success will be limited to a large degree by the success of their customers, the craft brewers in Michigan. That success is not a given. Even though beer is something of a food staple in Michigan and the Great Lakes region, brewing beer is not a license to print money.
The Steinmans and everyone in this book may love beer, but the fact is that beer’s popularity has been falling faster than the foam in an open bottle of suds left on a picnic table during a July heat wave. According to a story printed in the October 21, 2012 edition of Advertising Age the brewing industry had been on a real downward slide since 2008 until it began picking up in 2012.
Beer volume sales were up 1.4 percent for the fiscal year ending Sept. 25, as compared to year ago numbers. Here’s good news for Jeff and Bonnie Steinman. Most of that bounce back came from the craft brewing industry. The mega-brewers like Anheuser Busch were still in a spiral.
It is not that the world isn’t thirsty for beer. It is. The world likes its beer, with China leading the way, according to a survey commissioned by one of the largest brewers in Japan.
The United States is thirsty for beer, just not as thirsty as China. Kirin Holdings puts the U.S. second in the world, consuming 11 percent of the world’s beer. However, China drank 25 percent of what the world’s brewers put out, which was a total of close to 60 billion gallons of beer.
Michigan is falling in love with craft-brewed beer. Michigan Brewers Guild Executive Director Scott Graham believes Jeff and Bonnie Steinman have made a good bet. The state is fifth in the nation in the number of breweries, microbreweries and brewpubs. He said sales of Michigan-made beer in Michigan—he doesn’t track sales outside the state—were up about 27-percent in 2012 as compared to the previous year. He also pointed out that follows year after year of double-digit growth.
Michigan doesn’t have any brewer on the scale of Anheuser-Busch. However, beer is still more than a cottage or hobby industry for Michigan’s economy. Graham said the craft brewing industry pumps for more than $24 million in wages with an economic contribution of well over $133 million. State officials said that Michigan collected $42.1 million in beer tax revenue in FY 2010-2011. Admittedly that pales in comparison to liquor tax revenue ($135 million) and does not even come close to the tobacco tax revenue collected that fiscal year of more than $974 million. Yet, Graham doesn’t see any problem with labeling Michigan, “The Great Beer State.”
With 118 craft breweries in the state, Jeff and Bonnie would seem to have plenty of customers in Michigan. However, that might be a problem. Could it be that the industry is doing too well? Is it possible to have too many craft breweries? Could this be a craft-brewed beer bubble that is in danger of exploding
“I think at some point, it probably is possible,” admitted Graham. “But, right now we have about three-and-a-half-percent of the market. That is lagging behind the national trend. We have a goal of achieving a 10 percent share.”
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