The state of American craft beer industry

Following the cancellation of the 2020 Craft Brewers Conference in San Antonio due to the COVID-19 emergency, CBC Online got underway this week, offering the craft brewing community online access to information. This event is free and open to all and continues for a number of weeks. However, after it concludes, the presentations will only be available to Brewers Association members. For now, the replays can be viewed by everyone.

Earlier today, Brewers Association Chief Economist Bart Watson gave an overview of the main statistics about the craft brewing industry in 2019. His talk covered high-level trends in craft brewing by business model, age of brewery, openings/closings, styles, and more.

Explosive growth

Among highlights of interest to kombucha brewers is the graph showing the growth in the number of craft beer brewers in the USA to a record 8,386. Back in 1993, there were just 446 breweries in operation, (and only 49 in 1983!). This grew to 601 in 1994. There are currently around 530 kombucha brewers in the USA. It remains to be seen if kombucha will match beer in terms of growth over the next 25 years.

The craft beer industry has seen an acceleration of ‘at-the-brewery’ growth from under 2,000 to over 8,000 in the last decade. As the market became more competitive, there were 1,000 closings in the past five years. However, there are a few thousand breweries in planning. In the past five years more than 5,000 breweries opened.

As is typical in most small business niches, the number of openings and closings are moving to become balanced.

Small breweries

The average brewery makes just 375 barrels a year (11,625 gallons) while more breweries made between 119 – 260 barrels than made over 1,500 barrels. Smaller breweries are more at risk of closing, so even though many might close, it won’t have a huge effect on the overall volume of craft beer available.

The growth of the category peaked at 18% in 2014 and has now slowed to 4%. As he said last year, Watson called this “the new normal”.

With the sharp increase in the number of new breweries, capturing any part of the overall growth in demand for beer is more of a challenge for an individual company. Some might argue the same future awaits kombucha brewers.

Brewpubs and Taprooms

There are now 3,000 taprooms as well as 3,000 brewpubs, each category producing 1.6 million barrels.

Brewpubs have seen slow and steady growth as they pair beer and food. They face the challenge of balancing labor costs vs. the desire for the experience of eating in a place that brews beer. Nowadays delivery is a phone click away, so the brewpub of the future needs to meet changing consumer preferences.

There has been a rapid growth in taprooms, with 26% growth vs. 7% for brewpubs.This was driven by new entrants, where the taproom is the preferred model vs. brewpubs.

The drinking public

Almost 70 million people visited craft breweries in 2019, up from 50 million in 2015. The craft beer drinking population has grown, and more of them have visited a brewery.

(To put this in context, based on beer shipment data and U.S. Census population statistics, about 241.4 million people, 73.8 percent of the population, are over the age of 21 and considered legal drinking age. U.S. consumers 21 years and older consumed 26.5 gallons of beer and cider per person during 2018. According to a recent Gallup poll, some 63% of American adults drink alcohol – and the favored beverage among them is beer. Some 42% of American drinkers prefer beer, compared to 34% who choose wine, and just 19% who enjoy liquor the most.)

Trends

Watson noted that just as light beer was a trend the emerged in the 1970s, drinking preferences change. The new ‘mindful drinking choices’ include beverages made with local, health-centric ingredients. Indeed, 21% of breweries report some production of non-beer beverage alcohol such as seltzer, mead, and hard kombucha.

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1 Response

  1. the_editor says:

    Tara Nurin reported on a Watson’s views in Forbes, noting that there’s trouble ahead for the industry:

    That the straight sales numbers have stagnated and dipped slightly comes as not much surprise in a half-decade when American consumers increasingly eschew beer for abstinence, cannabis, wine and spirits … But the BA’s chief economist issued an uncomfortable warning that the winners of the past few years may become the losers after COVID-19’s social distancing measures forced the vast majority of the nation’s breweries, bars and restaurants to temporarily close their taprooms and drinking/dining areas.

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