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Craft brewers gather in Seattle for conference.

Members of the small brewery segment met in Seattle March 23-26, for the annual Craftbrewers Conference and Trade Show, sponsored by the Association of Brewers of Boulder, Colorado.

Approximately 2800 people pre-registered for the conference, and the trade show filled 100,000 square feet of space in the Washington State Convention Center.

Many small breweries sent delegations to the event, although, as in the past, a great part of the attendance was by aspiring microbrewers, or "wannabes" in the vernacular of the event.

Though the mood was upbeat at the conference, this year's crop of wannabes may have come away with a somewhat different picture than aspiring brewers attending past conferences. Veteran brewers spoke of much tougher market conditions, and some vendors at the trade show complained about a shrinking universe of buyers.

As Institute for Brewing Studies director David Edgar pointed out, "Things aren't growing as fast, although the outlook is still positive. Growth was 27%, and market share moved up to 2.3% for the entire craft category." (In a later presentation, analyst Bob Weinberg said that the percentage share for '96 might actually have been higher, around 2.7%).

Edgar reported that 106 new micros opened in the U.S. in 1996, and 208 new brewpubs.

Edgar presented statistics showing that the average capacity for brewpubs and micros has grown substantially, but noted a danger sign - capacity in at least one region, the Pacific Northwest, now exceeds demand. Currently, he said craft brewers hold 25% of draught share in the PacNW, and 5% of the packaged market.

Edgar put a positive spin on the slowdown, saying "What has been perceived as levelling off, may be some share going to brewpubs. And if it is levelling off, it may be a plateau, not a peak."

Perhaps the most controversial address of the conference came from Paul Shipman, president of the Redhook Ale Brewery of Seattle.

In his speech he said that old-line regional brewers are essentially doomed, "and should go quietly out of business [since] they don't fulfill a useful role."

Shipman said that "the period of dramatic growth for the craft brewing industry is over," but likened it to the boutique wine business, and said craft brewing might well enjoy a "second wind."

However, he said that push-back at the consumer level is a real factor in the slowdown, noting "There is confusion about the number of items available. We've overwhelmed them with choices."

He also cited "friction" at the wholesale level, saying "wholesaler channels are loaded" and observed that many distributors will "begin to divest products."

Shipman also delivered an attack on the practice of contract brewing, saying "I understand it, but I don't think it adds to our helps confuse consumers."

He also blamed contract brewers for restraining the growth of the craft brewing segment, saying "In areas where contracts are strong, brewery openings came late, and [the segment] is not as vibrant."

He said big brewers provide advertising and distribution underpinnings, and small brewers provide exciting alternatives, but said "contract brewers don't invest in development of infrastructure [and] they are much more elastic on prices."

"They [contract brewers] have led in flooding the market," Shipman asserted, "and now real brewers are reluctant to line extend. Contract brewers also help prop up old-line brewers whose existence is doomed, and whose closure would open up a new era of great big brewers and small brewers."

He drew a distinction for his own brewery (now in 47 states through the company's distribution deal with Anheuser) urging that microbrewers not view Redhook brands as market invaders, saying "Redhook is there to help build the industry, not take share from the small local brewer."

Later in the conference, Jim Koch, the president of the Boston Beer Company, and his sales director Rhonda Kallman were jointly awarded the "Institute of Brewing Studies Recognition Award for Establishing the Specialty\Craft Category." In his acceptance speech, Koch seemed to responding to some of this, saying "Boston Beer has committed to being an independent company, to stand with all of you. I would rather have this award from you than a whole pile of money from Anheuser-Busch."

Editor's Note: We'll have expanded conference coverage in our May microbrewery and specialty beer magazine issue.
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Title Annotation:Craftbrewers Conference and Trade Show; Seattle, WA
Publication:Modern Brewery Age
Date:Mar 31, 1997
Previous Article:Whitbread sued over Boston Beer intro.
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