• Joseph Callender

Yeah. What He Said.

I'm constantly reflecting upon the phenomenon of nonalcoholic craft beer and I'm struck by a thought. There's a systems thinking tie in to something that Garrett Oliver shared with me on his thoughts about the American craft beer movement during my 2012 interview with him.

First, a quick clarification about systems thinking. It's not about the tweaking or maintenance of the smaller systems inside organizations and companies.

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Upstairs at Garret's. October, 2012

Systems thinking focuses on the larger systems that encompass a societal pursuit (education, work, health) or span across an industry such as beer.

Back to the interview...

Garrett and I were talking along the lines of why he thinks the American craft beer movement was doing so well back then as compared to other more staid and traditional brewing markets. Garrett's sense was that the American craft beer scene was flourishing because it was largely being pursued as a second or third career choice among the newest brewers. People that were not encumbered by "years of experience" and "knowing the traditional way to do it" were delivering on their newfound creativity and curiosity. They were bringing lessons from their past industries and were unencumbered by experience in order to imagine what was possible.

Even though craft beer is settling down, you can still see examples of product innovation (take it or leave it) repeatedly coming from each successive wave of entrants. Brew a great IPA. Hmmm...we should try a double IPA. What if we make it black? How about a TIPA! What happens if we make it cloudy and juicy? What if we add lactose? Fruit puree! That's it!

The evolution of iterations to the IPA largely came from the least established and experienced entrants into the industry. The incumbents are left to scramble to adopt and to deviate from their plan.

Garrett's perspective at that time paints a very important point about the transformation of an industry.

In the world of systems thinking, of which I am a follower and student, some of the biggest impediments to transformation simply come from having too much, or believing too much, in one's experience. Partly out of comfort and partly out of a sense of necessity, well-experienced people tend to settle into what they know and find it difficult to see other ways of leading people, involving consumers in the co-design of an experience, or iterating on a product. No blame. It's simple human nature. Thus, the best efforts put forth are "safe" tweaks to the existing knowledge base.

Talk to a systems thinker and they will tell you that the only way to transform a system is to start building a new offshoot to the existing system. The existing system simply has too much inertia to be able to shift appreciably in any new direction. They will also tell you that the people most likely to effect a transformation will come from outside of the existing system.

And that is what is happening now.

Even in all of the glory and creativity of American craft beer, it got bogged down in its product offerings. The stagnation and lack of accommodation of changing consumer interests caused it to lose an appreciable consumer base or miss out on the newest wave of fans. The beer industry still largely is not seeing the coming shift. The net effect is that the industry missed a prime opportunity to keep those consumers interested and buying. As the shift becomes more and more prevalent, the industry will be forced to play catch-up.

There is this perpetual thing that happens when an industry does not get out ahead of impending need to transform. Almost every action becomes a reaction to what is already happening and the outcome is a host of temporary "solutions" to "improve" the symptoms that are rising to the surface. This gets repeated for decades until the next transformative idea arrives via a truly disruptive force. Rinse and repeat. Sound familiar?

The Opportunity

The product gap is actually a gaping abyss of product choice. And it was right in front of the industry's eyes the whole time. But as well-entrenched systems full of very experienced people tend to do, the best opportunity is seen as doing more of what is currently being done. IPAs anyone?

There remains very little product choice at the low ABV end of the spectrum. Some early signs seem to indicate that people wanted these products yesterday.

The Next Wave of Transformation

A small but growing set of former beer consumers have decided to force the industry to adopt to their preferences. Almost none of them worked previously in the beer industry but they are bringing something that will fundamentally shake craft beer's foundation . There was a product that they needed but since the industry did not offer it, they have gone out on their own to deliver it.

That product is nonalcoholic craft beer.

And I think it will upend the craft beer industry because NA craft beer has many of the classic signs of real and significant system transformation. Outsider influence. Grass roots. A "Fuck it, let's try this!" attitude. Taking risks that an industry incumbent is unlikely to take. A new product that can literally add previously unforeseen market opportunities. A product developed by the very consumers who desire it. A motivated and passionate early-adopter consumer base (more on this effect in a future blog.) Pulling in consumers vs. pushing product onto consumers.

There are too many positive signs of real transformation to dismiss the impact that the NA craft beer movement is likely to have on the beer industry. It's here and it's going to hurt if you are a late adopter.

As Garrett alluded to, a boost to an industry can come from those that may not have direct experience but can translate their experience to new pursuits or simply see opportunities that the most experienced can't see. From a systems thinking and transformation perspective, allowing people to come forward with new ideas not steeped in years of experience is a key requirement for any transformation effort. The key activity of transformation is conducting the new experiments that reveal the previously non-existent evidence. Nonalcoholic craft beer appears to be the catalyst for the next wave of industry transformation and it's being built by people outside of the beer industry.

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