The Brewers Association, the trade association representing America’s small and independent breweries, delivered its annual state of the industry address today. Bart Watson, chief economist with the Brewers Association, described it as a “challenging landscape.”
“There were some positives and some negatives,” said Watson during his address to thousands of brewers and industry professionals attending the annual Craft Brewers Conference, this year being held in Las Vegas, Nevada.
Craft beer production was down 1%. Categories within the industry saw various levels of growth and shrinkage. Taprooms were down 2%, brewpubs were down 4%, contract and alternating proprietorship beer companies were flat, regional breweries grew by 1%, while microbreweries were down 5%. Watson noted that there were breweries within all of those categories that have different levels of success. “44% of breweries found growth last year,” said Watson in his presentation.
“The category is now static in terms of number of drinkers,” said Watson of the lack of growth. “And the number of people saying they are drinking more craft beer is now equal to number of people saying they are drinking less.”
“But customers are still willing to pull out their wallets for beers they value and enjoy,” said Watson. “Customers still spend almost $30 billion on small and independent brewers last year.”
In addition to stagnant growth, some breweries are struggling financially with data showing that costs of goods have increased at a rate higher than prices have increased. Watson noted that many breweries finding success were doing so by focusing on operations, perhaps through cooperation and partnerships to achieve economies of scale while other brewers were finding success by finding new ways to get craft beer into drinker’s hands, associating the beverage with different drinking occasions.
Watson estimated that, “125 million Americans who drink didn’t have a craft beer last month” and suggested that there was still opportunity for brewers to grow. Speaking to the audience of brewers, Watson said, “Many of your customers are fiercely loyal. Breweries that are succeeding are finding ways to have customers drink their products on more occasions.”
“Craft beer as a category has seen fads in beverage alcohol come and go,” said Watson. “But craft is here to stay.”