The years of double-digit craft growth may be over, as the category approaches more than 20% of beer sales.
Is the craft beer mug half full or half empty? Growth for American craft brewers hasn’t been this slow in percentage terms since 2004. An industry accustomed to annual double-digit growth may have to face facts: volume, not percentages, matter.
The semi-annual report from the Brewers Association (BA) found that production at small and independent craft breweries (those owned less than 25% by a non-craft brewer that produce fewer than 6 million barrels of beer annually), was up just 5% halfway through 2017.
More importantly, the craft field is headed toward just less than 26 million barrels of beer for the year, enough to push them above 20% of US beer sales volume.
“The growth pace for small and independent brewers has stabilized at a rate that still reflects progress but in a more mature market,” says BA chief economist Bart Watson.
According to the BA, there were 5,562 operating breweries in the US at the end of June, meaning that 906 new beer companies opened during the prior 12-month period.
“The beer world is highly competitive, and there is certainly a mixed bag in terms of performance,” Watson said. “Some breweries are continuing to grow, whereas others are having to evolve their position and nurture new opportunities to ensure they keep pace.”
Not accounted for in the stats are the many formerly independent brewers now owned either in part or whole by AB InBev, Heineken and other concerns. Such ownership keeps them out of the BA’s calculations, even though most consumers and many bar and restaurant operators don’t see it quite the same way.
And those small brewers continue to attract major beverage alcohol company attention. Just last week, Constellation, importer of Corona and owner of Ballast Point, scooped up Funky Buddha Brewery. Just before that, Japanese brewer Sapporo took over what is considered the country’s pioneer craft brewer, San Francisco’s Anchor Brewing.
In many cases, brewers newly owned by Big Beer are continuing to grow through the massive distribution powers their parent companies wield. This suggests that even though BA-defined craft brewers are growing more slowly, the market for more flavorful, creative and contemporary beers is still expanding significantly.
It’s likely that we’ll continue to see deals between craft brewers. This month, New Belgium Brewing Company, located in Fort Collins, CO, agreed to purchase the assets of San Francisco’s Magnolia Brewing Co. and its brewpubs out of bankruptcy.
The last time growth fell below 6% was 2004, when roughly 1,400 craft beer companies made 5.8 million barrels of beer, according to BA records. Around this time in 2016, craft brewers had grown about 8%, but by year’s end that growth had slowed and the craft brewers ended by adding just 6% on the year. All told, the more than 5,200 companies produced in excess of 24.5 million barrels of beer in 2016.
Growth slowdown has particularly affected the bigger craft players, many of whom are in national distribution already and have little geographic room to grow. Meanwhile, another 2,739 breweries are in planning stages, says the Brewers Association.