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The Northeast is a Beer Desert

"The Northeast is a Beer Desert."

...Fred Eckhart

By Sean

On a recent trip to Portland, Oregon, I drank some of the finest beer made in the world. There, the beer community embraces the virtues of innovation, collaboration, and exclusivity. Imaginative brewers salute the area with commemorative beers for restaurateurs (Hair of the Dog's "Greg" brewed for Higgins' Greg Higgins), barkeeps (Rogue's "Younger's Special Bitter" brewed for Horse Brass Pub's Don Younger), and notable critics (Hair of the Dog's "Fred" brewed for Fred Eckhart). Like all good things, supply is limited. So is distribution. Seldom, if ever, are these beers found outside of the Northwest. In some cases, this is due to a lack of a scale, but in most, it is by choice.

Consultants love to draw parallels between the distribution of investment management and pharmaceutical products. Both industries are faced with increased competition and slowly-declining margins. The response, in our industry, has been to create more products with broader distribution. In the beer industry, still dominant players like Budweiser and Coors are employing the same strategy, but to limited avail. With sales growing at more than 30% over the last three years, craft breweries, like those scattered throughout Oregon, are chipping away at the market share of the major brewers, which now hovers around 77%, down from over 90% almost ten years ago.

Firms would be wise to take a page from the Oregonian craft brewers' playbook: innovative products in shorter supply and more targeted distribution channels.