Mixing It Up – Beer Industry Growth and Decline

It’s definitely no secret that the US economy has seen better days. The economic outlook for the US and the world at large remains bleak, with few bright spots. One only needs to look at the number of Occupy protests going on to really see just how disaffected people have become. Perhaps that makes it no big surprise that the beer industry (like most other industries) is down overall. In fact, Big Beer has been posting some record losses – 2010 saw a decrease of 1.9% overall in the US, on top of a decline of more than 2% in 2009. Import sales have also tapered off in recent years. However, there’s still celebration going on in the word of beer brewing – craft brewers have lots to cheer about.

Craft Brewing Market Share Increases

While Budweiser, Miller, Coors and other Big Beer companies have seen their market share drop in 2010 and throughout 2011, craft brewers have experienced the opposite. According to the Brewers Association, craft brewing has increased – up to almost 1800 individual breweries in 2010 and more opening during 2011. 

It’s not just the number of craft breweries opening; the annual production for craft brewers has also increased significantly. 2010 saw an increase up to almost 10 million barrels produced by US craft brewers, up from less than 9 million in 2009. 2011 is set to be even better according to most estimates. 

Finally, you really only need to look at the numbers to see the truth here. Craft brewing sales jumped up by 15% during just the first half of 2011 over 2010 numbers (2010 saw an increase of 12% in revenue in contrast). 

The Major Players

So, who were the major players in the increase here? Sierra Nevada posted good sales growth and even Boston Beer Co. has increased their profits, despite some setbacks during the year. However, it is not only about craft brewers. Yeungling has also experienced significant growth and they are not what you would call a “micro brewery”. In fact, the growth of Yeungling can be seen as good news for the industry as a whole.

America’s “Oldest Brewery”

Yeungling bills itself as America’s oldest brewery. It’s also America’s fastest growing brewery according to a new study. However, before you get the idea that they’re expanding throughout the US, that’s actually not the case. The growth here comes from increased market share within the states that the brewery serves (14 at last count). What accounts for this increased market share and for Yeungling displacing big brewers?

That’s one of the key hints – Yeungling is not having much impact on the sales of craft beer. Rather, the company is competing directly with Budweiser and other Big Beer companies. This is because while the company is not a “craft” brewer, they do things a little differently than their larger brethren. You’ll find that their beers are darker in color, more robust in flavor and more complex in character than your average Bud Light. 

They put out three very well-known variations in most areas they serve – Yeungling Lager, Yeungling Light and Yeungling Black and Tan. Each is more flavorful and complex than anything out there from Bud or Miller, which immediately sets them apart from larger breweries. However, when it comes to price, the company is priced about the same as what you’ll pay for your average 6-pack of Big Beer product. That puts them slightly under the cost for your average craft beer 6-pack. In essence, the company is doing what Big Beer should have done years ago – offering a product that provides better flavor and character at a price that most people won’t blink at paying.

Why Doesn’t Yeungling Compete with Craft Beer?

If Yeungling is putting out beer that is so markedly different from the big boys, how is that they are not competing with craft breweries? The answer to that is that the brewery offers more complex products, but they’re still not the same as what you’ll find on offer from a craft brewer. These are mass produced beers, no doubt, even with all the differences. That means that they still don’t hold the same appeal for consumers who purchase craft brews exclusively. That’s ok, though – the company’s not targeting craft brew lovers. They’re after the people who drink Budweiser, Coors and Miller.

A Great Starting Point

In fact, Yeungling’s products might just be the best jumping-off point for those interested in breaking away from Big Beer but unsure where to start. Their lager is good stuff and sufficiently different from a Budweiser to be immediately noticeable, but not so different that the drinker gets culture shock. Their Black and Tan is quite tasty, but it doesn’t have quite the same character as some of the more creative mixed craft beer types out there. All of this means that drinkers can enjoy something a little off the beaten path without venturing into the forest, so to speak.

This has been the way that many people have made the switch to craft brews from mass-produced, watery beer. With a product that rides the middle ground between known and unknown, most drinkers feel a bit more confident breaking out of the mold. After all, wouldn’t you feel more comfortable drinking something that had at least some resemblance to what you’ve always known as “beer” than if you were limited to going from Bud Light to an oatmeal stout or something similar?

Physical Growth, Too

In addition to enjoying better sales, Yeungling is having an impact on local economies through physical growth. For instance, when the company started serving Ohio this year, quite a few new jobs were created when companies had to add extra delivery drivers, extra routes and more. It’s also led to increased sales in pubs and bars as consumers find that they have another option to purchase. All in all, Yeungling’s growth has had an immensely positive effect on the economy and promises to keep doing more of the same as the brewer keeps to their slow but steady national expansion.