Brewers Aren’t Inspired By the Widget Model
More than three years ago, Great Notion debuted in Portland with a then-novel blend of hazy IPAs, pastry stouts, and pastry sours. It was supported by a youthful-urban brand of bright colors and hand-drawn art, whimsical names, and a business approach of single-release beers sold in cans. Very few breweries in Portland ever become destination stops, and those that do rarely maintain that juice for more than a year or two. But Great Notion has continued to dominate the ratings sites and can uniquely command very high prices while attracting robust crowds.
I don’t know much about economics, but that looks like a winning formula. Once the model was demonstrated to be a proven winner, I would have expected to see it replicated by new breweries given that the marketplace is so overstuffed and getting attention is so challenging. And yet, in those years a couple dozen breweries have opened and only one, Ruse, can plausibly be called a stylistic rival. (And even Ruse deviates I’m notable ways from the model.) What percentage of new breweries adopt this model? Hard to get exact numbers, but certainly less than 20%—which means 80% of new breweries, at a minimum (probably more like 85-90%) are doing something else.
New York has a brewery operating with the Great Notion model—Other Half, and it’s also the most hyped and sought-after beer in the city. All the same elements are there. The bright cans of hazy IPAs and pastry beers, the long lines of young people. In my week in NYC, I visited a half dozen breweries and spoke to brewers at a few more, most of them opened since Other Half debuted in 2014, and none have adopted the model.
The buzziest of breweries often have this model (Modern Times, Trillium, Tired Hands, and so on), and around them sprout breweries that don’t. When I mentioned this phenomenon on twitter, it received a lot of pushback: “What are you talking about?—everyone makes hazies now,” “It’s really hard to make these beers,” (or a corollary, “You can’t capture lightning in a bottle twice”), or “You’re denigrating these breweries because it’s really hard for this model to work.”
I’m not sure I find these rebuttals convincing. Of course everyone’s making hazies now. That’s a beer, not a business model. And these beers aren’t that hard to make. If they were, all the jillion one-off beers the breweries make would be full of weird flavors or wouldn’t coalesce as beers. But they’re not hard to make once you know how—which is true of most styles. Finally, is this business model really so hard to succeed with? If it is, could I please see a list of all those who have adopted it and failed? Because it looks like those who pursue it do quite well.
(My podcast co-host, apparently some kind of economist, offered the most verbose critique: “I think you have to think about this as a strategic game. If three other local breweries are doing hazies, is it the best move to try and mimic or to try and establish a separate identity? The Nash equilibrium might be one of differentiation. The general linear spatial product differentiation model would suggest everyone try and capture the middle (most popular spot). But in the multidimensional world of beer styles, it might be better to differentiate.” Yeah, whatever, nerd. This actually seems like something we should take up in a pod, so let’s just put a pin in it for now.)
The Nash equilibrium aside, I’d argue something else is at play here. It’s actually evident when you talk to brewers who both own the companies using the hazy model and those who have a different approach. What you see pretty quickly is that both have the same motivation. At Great Notion, Andy Miller and James Dugan founded the brewery because they loved these beers—not because they were coldly calculating the financial picture. They were making them as homebrewers and they were thrilled by the idea of making them as professionals. I have interviewed Sam Richardson on the phone, and touring the brewery emphasized the point: Other Half is also a passion project.
The breweries that have opened since these that pursue a different approach do it because lactose blueberry IPAs isn’t their jam—obscure Franconian lagers or sessionable English ales, or West Coast IPAs, or whatever they make are. Every business owner has to appeal to a customer base. Most American craft drinkers like hoppy ales, and most American craft breweries make them. Upright has an IPA. That’s both good business sense and also just polite. When someone walks into your brewery, you want them to find a beer they’ll enjoy. But it doesn’t mean that every brewery making a hazy IPA is Great Notion.
Moreover, the business models look different. To use local examples, Wayfinder was inspired by the drinking culture of Bavaria and Bohemia and offering sessionable lagers to be drunk on-site was the vision. Around the corner from Other Half is Folksbier, which has a country ethos and proclivity for making rustic beers. You can go down the list: breweries are largely projects pursued because of a specific, often unique vision. I recently taught two rounds of classes in the Craft Beverage Business certificate course at PSU, and of the six dozen or so students, I saw very few that were considering the Great Notion model.
Beer isn’t a widget. In the main, brewers start them because they have a vision for the beer they want to make, not because they want to print money. Surely some entrepreneurs are looking at the market and thinking they’ll enter it to make a buck, and they will probably go with the obvious model. If you don’t care about beer, use the model with the most potential. Starting a brewery is costly, the short- and mid-term prospects are not lucrative, and the work is hard. Few enter the business without passion, because that’s what makes the whole thing worth it. As it happens, it looks like there’s a more limited supply of brewers who want to pursue the Other Half model than there are customers clamoring for it, which means that for now, those breweries will continue to enjoy big crowds.