Local Lagers Looming

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Although a big part of craft beer’s strength lies in its diversity of styles, there are certainly trends in beer lover preferences that make particular styles or groups of styles rise to the top. In recent years it’s been IPAs. IPAs are still growing 40-50% in scan data on a bigger base than ever.

But what might be the next big thing? Looking out at the beer landscape, I think we’re about to enter a new era of the local lager. Why?

1. The Market Evidence

There are already signs in the scan data of craft lagers taking off. Although amber and pale lagers didn’t stand out in scans, pilsners announced themselves in the first month of 2015 with 56% growth versus a year ago (Source: IRI Group, MULO+C, YTD through 1-25-15). It’s not hard to see why. Going booth to booth at the recent craft brewer pavilion at the National Grocers Association show, nearly every brewer had a great pilsner. Some were brands that have been around for a while, but there were plenty of new additions. Those new entries are combining with longer-term brands to create new excitement around pilsners.

2. The Capacity Equation

Lagers take more time and capacity to produce. I was talking to a brewery rep recently about their pilsner, and he commented that they loved it, but they could make four batches of IPA in the time it took to produce the pilsner. Because this brewery is growing fast enough to strain their capacity, it’s a simple business decision to make more IPA over pilsner.

Those days can’t last forever, and I think as growth inevitably slows a tad (it can’t be this fast on larger and larger bases forever), brewers are going to start thinking about what to do with their capacity and realize that lagers are a great way to use any excess capacity.

3. Beer Lover Preferences

This last piece is the most important, as ultimately, any trend in the beer market has to be built on solid beer lover demand. When looking at consumer demand trends, local lagers from craft brewers sit right in a sweet spot between sessionability and fuller flavor. This sweet spot isn’t new. When looking at the craft market over the time, there has always been a spot for fuller-flavored sessionable options, one which lagers target quite well (there’s a reason Boston Lager has been near the top of craft brands in scan data for a long time).

I personally think this opportunity in the marketplace is expanding for a variety of reasons. First, as craft consumers have matured, many of them are looking for ways to integrate craft into more occasions. That means more sessionable options, but without giving up the fuller-flavored styles or the variety that craft lovers crave. Although session IPAs are one part of meeting this demand, brewers will certainly need to diversify options as this market expands.

Second, lagers have long dominated the American beer market. When you look down the list of top selling brands, the top-20 brands are all lagers. This isn’t new. Lager has long been the choice for a majority of beer lovers. Combine that with the increasing desire for diverse locally-produced flavors and you get demand for more local lagers in a variety of styles.

I’ll add that one reason I’m highlighting pilsner as a potential all-star in the local craft lager category is that it marries these demand trends (sessionability + lagers) with a new one: America’s love for hops. A blog post I found recently really drives this home visually, showing that pilsners are a style that can both showcase hops and malt, while bringing it home in a sessionable format. Looking at the increasing numbers of hoppy pilsners entering the market, I think a lot of brewers have the same feeling. Now it’s time to see if beer lovers agree.

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