The Growth of Craft Beer is Flattening.
Investing and planning now can ensure growth later.
The growth is slowing, is the ride over?! No need to panic. The industry is still enjoying some very solid growth numbers. In fact, most industries would kill for a 6% growth rate. However, indications are the wild double-digit hockey stick growth charts we’ve come to enjoy may be flattening out. Few industries could sustain year after year growth rates and 15%. More mature craft beer states – Colorado, Portland, and California, may see the slow down first (notwithstanding the great pot debate).
Are you prepared? The brands that prepare and invest now will be in a position to capitalize and even grow in an environment of increased competition. And regardless of whether you believe that time is around the corner or years away, market maturation and increased competition will happen.
In every industry, once the growth boon settles, competition intensifies and inevitably, the weaker fail. Now, while there are still respectable growth rates predicted is the time to really invest in your brand.
Business is fun and friendly when market share is huge and everyone is getting a slice of the pie. However, as Forbes suggests in Three Ways To Dominate Your Market During An Economic Downturn you need to get aggressive now and “invest in marketing and advertising to help acquire your competitors’ market share.”
Other ways to prepare for future economic downturns and increased competition include:
1) Expect it. A downturn will happen, watch for the signs. The Brewers Association, the media and financial analysts watch, analyze and predict and pay attention. But, remember, this is on a national level. Your particular market or business may be at a different stage.
2) Manage profitability. Now, with the incredible growth of the industry you should also be focused on managing your growth. In fact, it is a mistake to try and maximize growth and profitability at the same time. Invest and grow now, but be prepared to make the shift. Developing a contingency plan to produce marginal, short-term profit despite a drop in revenues can be the difference between those who survive and thrive and those who don’t.
3) Prepare to take advantage. Set up a line of credit and be prepared with cash flow. It is always easier to get a line of credit when you don’t need it. Make sure you have access to cash. In a downturn those with cash can capitalize on better prices or even acquisition of competitors who are failing.
4) Get aggressive. Those who aren’t as prepared will have to scale back on marketing, advertising. Being prepared will set you up to grow, increase your presence and secure your brand position.
Cheers to continued and steady growth of the craft beer industry for many years to come. And that beer will taste even better with a contingency plan in place.