Monday, November 2, 2009

Beeronomics: Artisanal Products and the 'Novelty Curve'

Busy day today (week actually) so I'll farm this one out to Beervana blogger Jeff Alworth who has a fascinating tidbit about what Karl Ockert of Bridgeport calls the 'novelty curve.'

Here is Jeff's quote from Karl:

"Every beer that comes along goes through a novelty curve, and ours is no different. [Brewery X] is the current big one on the streets. They’re going through a novelty phase where people are out there trying and sampling. All breweries go through that. If I left BridgePort now and went out and started a new brewery, I could do the same thing. I could take tap handles right and left and get a lot of sampling. But it’s that “stayability”—being able to develop loyalty. That’s the tough part."

This is true of lots of industries, especially ones in fashion (Crocs), technology (Palm) and food (restaurants in general). There is always a new trend, fad, technology, chef, whatever that captures the attention of consumers. But artisanal products like beer are particular in my mind. They can be recreated faithfully over time like cheese, bread, etc., but are always subject to new varieties and tastes. So it has always seemed to me a challenge to stay faithful to the core products and yet maintain interest through new creative pursuits. Bridgeport and Deschutes seem to me the exemplars of this strategy at the moment with their core beers and their special offerings (Stumptown Tart, The Abyss).

But overall this says to me that the market for craft beer is exceptionally healthy. From a Schumpeterian point of view this innovation and creativity will leave some breweries behind, but this is all part of a healthy creative destruction process. So it is both a pretty exciting time and a pretty scary to be in the business, bit overall it seems lie a market that has huge potential to keep expanding for a long-long time and the winnowing out of less exceptional and creative breweries will actually help this process.


Jeff Alworth said...

There's another factor that I forgot to mention, but your "creative destruction" comment highlights it. It's that as the market matures, some early products find themselves swamped by changing tastes. Although Widmer has done a good job maintaining Hef, MacTarnahan's and Full Sail Amber are brewed in a style that is no longer so interesting..

I think BridgePort IPA will find itself in the happy part of the Venn diagram, even as tastes change. Not all products will fare as well

Jack R. said...

I hope this is not to late for further comment from the professor.
Is 'the novelty curve' and attendant 'creative destruction' a
- late 20th century
- American
phenomena ?

Is it a feature of present day Western European capitalism, as well?

Is there an identifiable seminal source?

Patrick Emerson said...

The existence of business cycles in economics dates back to the 19th century. Kondratiev thought there were natural waves at the end of the the 19th century.

Schumpeter popularized the idea that, within this process, there is an endogenous process by which old technologies/idea/firms are destroyed by the creativity of new entrepreneurs and technologies and this this is a healthy part of the capitalist process.

He also suggested that the entrenched corporations (interests) will start fighting this process and so the demise of capitalism will come from within as government and corporate interests will align to curtail the entrepreneurial spirits that exist in a capitalist society.

Or at least that's what I remember from my history of thought class from years ago...