Business Lessons from the Craft Beer Boom

Here’s a growing segment of SMBs that truly has a head for business: craft breweries. According to CNBC, there are more than 2,700 craft breweries in the U.S., the most since the 1880s, with new breweries opening at a rate of 1.2 per day.

Craft breweries have expanded beyond local markets to national distribution, which puts them in direct competition with the likes of Anheuser-Busch and Molson Coors, as well as established national craft brewers such as Boston Beer and Sierra Nevada. The Wall Street Journal reports that although they still only make up 7.8 percent share of the overall beer market, craft beer sales have expanded during a time when beer sales overall declined. And this growth has occurred despite attempts by the big beer companies to sell their own craft-like beer.

What lessons can other SMBs draw from the craft beer boom?

Find Your Market Niche

Produce what people want. While beer has traditionally been associated with “working class” and “college-age” tastes, craft beer takes advantage of the growing trend of “fun” and “luxury” purchases, particularly among Millennials. As Millennial marketing expert Lindsey Kirchoff notes, craft beer has a considerable “cool factor” among Millennials who seek to avoid established brands as a way of expressing individuality. Moreover, craft brews are generally viewed as appealing to those with more sophisticated tastes, therefore enhancing the consumer’s self-image.

Innovate to Cultivate New Customers

The reason there can be so many craft breweries is because there are so many kinds of craft brews. Craft breweries innovate in two important ways:

1. They set themselves apart from the big beer makers, whose large size limits them to fixed, inflexible product categories, distribution and packaging models.
2. They set themselves apart from each other by developing unique products that don’t rely on mass appeal, but instead provide something new to a niche audience. If that something new doesn’t quite work out, craft breweries are nimble enough to respond to evolving tastes more quickly than larger, established beer makers.

Collaborate to Succeed

As The Dallas Morning News points out, notions of “winner takes all” don’t apply to the craft beer industry. Small businesses can collaborate and still compete. Craft breweries have developed a community that not only shares recipes and best business practices, but offers mentorships to new businesses.

In certain circumstances, you can even collaborate with your larger competitors. Several small breweries got started thanks to loans from larger companies; Samuel Adams even sold its hops at cost to smaller competitors during a recent shortage of specialty hops.

Through these methods — targeting ignored niche markets, shifting your product offerings rapidly, and collaborating with other business — SMBs can experience growth rates they haven’t seen in a long time. That’s a result worth celebrating with a fine fermented beverage!