When investing in beer, pick the packagers.
Every year I play in an annual pond hockey tournament with a group of college friends on Lake Winnipesaukee in New Hampshire.
We have mixed results on the ice. But we always have a fridge full of New England’s best beer. And the boys from Idaho bring an assortment from their part of the country too. Most importantly, we are able to connect every year and share long tales and tasty suds.
Up until two years ago our beer selection was mostly Vermont offerings since that’s where we all went to college. And they were mostly IPAs, specifically double IPAs (DIPAs).
But in the last two years there have been a lot more session and super session IPAs, lagers, pilsners and other varieties. As trends go, what we see happening is that the IPA boom has been winding down and consumers are enjoying 16-ounce cans of beer in the 4.8% to 6.5% alcohol range a little more. Easy to drink, and easier to get up the next morning.
Taking that thought process one step further, I think the implications for the craft brewing industry is that competition is still intense. There are a lot more brands now and there’s a ton of brand variety overlap. Distribution is a huge factor too – in some cases the rarer beers are still intensely sought after. But there’s something to be said for the easy-to-find beer that everyone enjoys, regardless of what state you’re in.
If I had to narrow down the list of the five most popular craft brewers that we enjoyed beers from this past winter, I’d say the two leaders for DIPAs and IPAs remain the Alchemist (Stowe, VT) and Trillium Brewing (Boston, MA).
For other offerings (including a few IPAs too), there were a lot of cans from Tree House Brewing (Charlton, MA), Nightshift (Everett, MA) and Hill Farmstead (Greensboro Bend, VT) leaving the fridge.
The most popular new offers (at least in my book) came from the expanded beer list at Lawson’s Finest Liquids (Waitsfield, VT), which now has a new Taproom in “The Valley.” If you can get your hands on their Scrag Mountain Pils or The Space In Between offerings during the summer months, you’ll be a happy camper.
In terms of investment potential, there are still a few ways to invest in the craft beer industry. But none of the above are publicly traded.
As in previous years, I’m inclined to say packaging is the surest bet as can volume is somewhat insulated from trends in flavors and brewers. Sure, there are trends in can shape and size, but for now this is a good thing (the 16-ounce can has been a huge seller). Ball Corporation (BLL) is a good example.
There are also a few smaller brewers like Boston Beer (SAM) that are publicly traded and offer opportunities. Other examples are Craft Brewers Alliance (BREW) and Waterloo Brewing (WBR.TO). But this is a fickle industry and investors in these companies should pay attention to the trends in the underlying business.