Lag of the light lager

For many dedicated craft beer fans, it is difficult to fathom why light lagers dominate the global beer market.

Easier to fathom, then, is the fact that the popularity of these relatively flavorless beers is flagging. Sales by volume of Bud Light and Budweiser dropped 5.3 percent and 5.7 percent, respectively, in 2017. Miller Lite and Coors Light also saw dips in sales. The downward trajectories of mainstream lager sales are not new turns in the market. The industry analyst firm IWSR reported that, from 2010 to 2016, Budweiser’s sales value declined by 17 percent while Bud Light’s dropped 14 percent. Craft beer’s share of the market has meanwhile grown, with small and independently owned breweries now claiming between 12 percent and 13 percent of national beer sales.

As millions of beer drinkers increasingly choose not to buy the most popular beer brands in the world, it beckons one to ask what is going on. Bart Watson, chief economist for the Brewers Association, an industry group in Colorado, says a population-level change is underway.

“People are more interested now in variety, in niche, local, artisanal products,” he says. “We’ve seen beer-lover demand for fuller flavor increase in the past couple of decades.”

Tom McCormick, director of the California Craft Brewers Association, also thinks many people long stuck on what he calls “industrial lagers” have become rather abruptly aware of flavor.

“I’ve seen people who drank only Bud or Coors or Miller try an IPA, and their eyes light up and they say, ‘Wow!’” he says.

Big Beer’s financial struggles come in spite of aggressive maneuvers by large beverage companies to wedge out a stake of the craft market by purchasing numerous small breweries. Anheuseur-Busch InBev, aka “The Budweiser Company,” has purchased Goose Island, Golden Road, Elysian, Wicked Weed and a half-dozen other companies since 2011 in order to cash in on consumer excitement, and sales paces, that the beer giant’s own flagship lagers were failing to generate.

But the losses of the beer industry’s biggest brands aren’t necessarily gains for the craft beer market. While sales of small and independently owned beer brands are still increasing, the pace of growth is slowing down. The craft market was growing roughly 15 percent a year as recently as 2015 and has since slowed to about half that pace.

So, what’s going on? Where have the people who no longer browse the watery lager supermarket aisles gone? McCormick says some have shifted to wine and spirits, while some are simply moving from lager that is watery to lager that they perceive as “fancier”—namely Michelob Ultra and Modelo Especial. Each of these brands, which are still pretty darn watery, saw sales increase by 20 percent last year.

“But we know some of these people are also going to craft,” McCormick says.

Watson says craft beer sales are rising especially rapidly in places like Texas and Florida, where craft beer culture took root only relatively recently, while in beer-smart cities, including San Diego and Portland (and probably the Bay Area) the growth of the craft beer sector is slowing as the marketplace matures.

At Iron Springs Pub & Brewery in Fairfax, brewer Christian Kazakoff says he has never seen someone come into the brewpub and have “a life-altering moment.” What usually happens when people unfamiliar with craft beer enters the brewpub, he says, is they cautiously seek out a beer that is as close as possible to the industrial lagers they’re familiar with—something pale, mild and low in alcohol.

“I’ve never seen one of these people taste a craft beer and say, ‘I’m never going to drink Bud again!’” he says. “That would be cool, though.”