CEO Roundtable: Craft brewers face uncharacteristic slowdown in sales

FORT COLLINS — Craft brewing’s long run of double-digit growth came to a halt in the fourth quarter of 2016, causing owners to try and pinpoint why and what it will take to get back on track if it’s more than just an anomaly.

Craft brewers in Northern Colorado on Tuesday tried to put their fingers on what has caused the national slowdown in sales during BizWest’s CEO Roundtable on brewing. Craft-beer sales nationally were down 4 percent during the fourth quarter that ended Dec. 31, but were still up for the year, said Wynne Odell, co-founder of Odell Brewing Co. in Fort Collins. And sales have remained flat during the first quarter of this year.

Likely contributing factors, the roundtable participants said, include a variety of things, topped by recent acquisitions of small breweries by large brewers and competition from wine, distilled spirits and other beverages. Other factors could be the difficulty in securing shelf space at stores and getting distributors to carry their beers to get them into tap rooms, plus the propensity of craft brewers to constantly pump out new brands, creating never-ending new choices and consumers’ lack of knowledge of the intricacies of “good beer” versus “swill.”

“There’s not enough data to know if this is a trend or an anomaly,” said Neil Fisher, owner of WeldWerks Brewing Co. in Greeley. But he is taking action that he hopes will address slower-than-anticipated growth.

“We’re pivoting on our growth plans … and will focus more on our tap room and put less emphasis on expanding distribution,” Fisher said.

Troy Milburn is the co-owner of Brix Taphouse & Brewery in Greeley and a champion of Colorado craft beer. He believes boosting sales will come only after consumers are educated on the finer points of craft beer.

“We have to refocus on winning customers one customer at a time,” Milburn said. “That means educating them about the differences between good beer and swill,” a term Milburn uses to describe beer made by large brewers such as AB InBev. “Until they learn what’s behind craft beer, they will continue to choose what’s familiar,” Milburn said.”

Having so many beers to choose from also could be a hindrance.

“Brewers are pumping out so many new brews, we are training consumers to never drink the same brand twice,” said Josh Grenz, co-owner of Verboten Brewing in Loveland.

Milburn said the days of “meet-the-rep,” events, during which representatives of breweries would visit taprooms and talk about beer to customers, have died off. Odell said this presents an opportunity for the industry to address one-on-one messaging.

A kerfuffle last year between leading Colorado craft brewers and the Colorado Brewers Guild over how the guild responded to its members ideas, seems to be smoothed over with the hiring of Andrés Gil as the guild’s executive director. Gil is leaving Washington, where he was director of the U.S. Chamber of Commerce’s Center for Capital Markets.

“This messaging is something the guild could get involved with,” Odell said.

In the past, craft brewers have happily collaborated on many things, but as sales go flat because the market may have reached a saturation point, that may be coming to an end, Grenz said.

As the number of brewers increases, Milburn and Fisher believe there are closures on the horizon. Wynne said everyone needs to rethink their models. “Those who can adapt will be OK, she said.

As the industry grows, new breweries are having a harder time securing space and cold-storage facilities they can afford, said startup brewers Tara Neckel and Brandon Neckel, co-owners of Old Colorado Brewing Co. in Wellington.

Participants: Neil Fisher, co-owner, WeldWerks Brewing Co.; Josh Grenz, co-owner, Verboten Brewing; Brad Lincoln, co-founder, Funkwerks; Troy Milburn, co-owner, Brix Taphouse & Brewery; Brandon Neckel, owner, Old Colorado Brewing Co.; Tara Neckel, owner, Old Colorado Brewing Co.; Wynne Odell, co-founder, Odell Brewing Co. Moderator: Christopher Wood, co-publisher/editor, BizWest. Sponsors: Hub International Insurance Services: Russ Henninger and Jim Sampson. EKS&H: Chris Otto, Mike Grell, Mike Madden and Drew Maddox.