Monday, March 4, 2013

Survival of the fitest

I haven't written on this blog for a while, and in fact have been taking a bit of a break from the Israeli beer scene. Not beer, just the scene. :) And by the looks of it, I'm not the only one.

The one beer event that I did go to in these past three months was "Beers 2013" - the yearly showcase of Israeli craft brewing held, like the Oscars, at the beginning of the following year. So while the name said "2013", the event was all about 2012, and one name kept coming up over and over "Mosko" brewery.

Mosko is a new brewery opened in Moshav Zanuach by a couple of childhood friends, a hippie and a ba'al tshuva, who started home brewing together and then went pro. It's a great personal story, and the beer itself, while nothing special, isn't bad. But this is not what attracted people to the Mosko stand. What attracted them is that Mosko was the only new brewery to open in Israel in 2012.

That's right. After three years of breweries spawning in this country like mushrooms after the rain, in 2012 we had just one.

On the other hand, several breweries went the opposite direction. Starting with Butterfly brewery in Dalton which closed (thankfully), Libira and Salara who merged their brewing opperations, and several other breweries that have been seriously re-thinking their business plan. It wasn't all bad in 2012: Dancing Camel opened a second location, and a couple of 50+ tap bars opened in Rishon. But the overall trend this past year seemed to be one direction - downwards.

The obvious question is why? I'm sure that many people (especially the kind of people who read this blog) will be quick to blame the draconian doubling of the excise tax for this trend, and certainly that had in impact, but I feel that's just a small part of the story. Looking around the Israeli beer scene it seems to me that it is over-crowded, over-saturated, and not self-sustaining. At the end of the day, it's not enough to be a nice guy with a story and a dream. You have to be able to do one thing: Sell Beer.

You don't even have to make good beer. It helps, of course, and it's easier to sell a quality product. But it doesn't matter how good your beer is if you can't get it to people with decent ease and a decent price. Oh, in the long run quality will make or break you, but lack of distribution will kill you much faster. This is why it took Butterfly beer so long to die: It was shitty from day one, but they signed up with the Scottish Company and had good advertising. They were available in lots of places, and they got people to buy the beer. (Once they bought it once, they never made the mistake again, but that's a different story)

The point I'm getting at is that this is a natural process. Right now the Israeli craft beer market is not big enough to support all the breweries in it. There's a minimum amount of money that a brewery needs to survive, and there's not enough to go around so that every brewery will make that. This means some will fail. The excise tax will serve to make this process quicker, but it would have happened anyway. In the next two or three years we will see a string of brewery closings, mergers, and production shifts. Mark my words: if you are looking for good deals on brewing equipment, you'll be able to get a lot of good second-hand stuff soon.

Who'll survive? Those who can adapt, as always. Darwin pointed this out a long time ago: It's not the strongest, most powerful, or quickest that survive. It's those who can change quickest and adapt to a new circumstance. The Libira and Salara merger is exactly that kind of adaptation: lowering costs by sharing production capability, and building on respective strengths. Another example of this is the booming business over at Mivshelet Ha'am - small breweries using contract brewing to avoid equipment and regulatory costs. Ultimately, a brewery is a business, and a business works by lowering costs and maximizing profit. Nothing else.

My hope is that this will lead to better beer, since breweries that don't make good beer wont survive, and the breweries that do survive will recognize that they must invest in quality in order to remain competitive. It can easily go the other way too: Breweries trying to appeal to the broadest consumer base will start tailoring their beer to the lowest common denominator, and we'll end up with a bunch of pale lager makes. But I hope that personal integrity will bring those brewers that are truly passionate about the craft part of craft brewing to keep brewing exceptional beer, to keep innovating, and to keep a real craft industry in this country alive. If for no other reason, than that I hate drinking Goldstar...

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