US craft beer: Is the market slowing – or does it still show signs of potential?

By Rachel Arthur contact

- Last updated on GMT

Pic: getty/victopriianovokhatsa
Pic: getty/victopriianovokhatsa

Related tags: Craft beer, Us

The US craft beer market has matured, with growth slowing and an increasing number of breweries closing their doors. And yet there are still indications of future growth: with a number of new entities obtaining permits with the intention of opening up new breweries.

In 2017 there were around 1,000 new brewery openings, against 165 brewery closures. In 2018 there were 1,039 openings, while the number of closures increased to 239.

But there are a number of entities registering as brewers with the Alcohol and Tobacco Tax and Trade Bureau - showing that brewers still see potential in the craft industry and boding well for its future.

“There are currently 2,500 more licensed entities than there are operating breweries. Not all of them will come into existence and open their doors, but a good percentage will,” ​said Bob Pease, president and CEO of the Brewers Association, speaking at the Brewers of Europe Forum in Antwerp this month.

“The closure rate is certainly ticking up, but the number of new entrants to market continues to grow.”

US craft brewers 2018

The US boasts 7,346 craft breweries (according to the latest 2018 figures), up from 6,490 in 2017. In 2018 there were 1,049 openings, and 219 closures. 

Craft brewer volumes​ were up 4% in 2018 (against a backdrop of a 1% decline in the total beer market), representing a 13.2% market share. Value was up 7% to $27.6bn, representing a 24.1% market share. 

“Interestingly enough, small and independent breweries only have 13.2% of the market by volume, 22% by value. I don’t think there’s any reason why they can’t get to 20% of the market: but that might take more small and independent breweries to open.”

‘The way people are drinking beer has changed’

While an increased number of breweries can obviously help boost production, their presence is also increasingly important for connecting with consumers and ultimately growing sales.

Today’s consumers are not just looking for a drink: they’re also looking for an experience – something that breweries and beer tourism can provide.

“Drinkers are not going to traditional bars and restaurants to drink beer: they’re going to breweries,” ​said Pease. “That’s lead to this phenomenon of beer tourism. We’re seeing beer tourism become a real big thing in the US with Americans who come from within the country and people who come from outside the country to visit some of our iconic breweries – Sierra Nevada, Russian River, Bells, Sam Adams, etcetera. So it’s really changing how the American landscape looks at beer.”

Data from Nielsen shows that beer drinkers who are visiting breweries are drinking more beer; whereas those who aren’t are drinking less.

This doesn’t necessarily indicate causality – it may be that those who drink more beer are more likely to seek out breweries – or those who have an increasing income are spending more on both beer and brewery visits.

However, the correlation does make it ‘pretty clear that getting people into breweries is a good thing for the beer industry’, according to the BA.

And it does highlight ways retailers can, to a certain extent, replicate the factors that draw people to breweries. For example, consumers are looking to be able to sample various beers, or learn more about different beers – all aspects retailers should be able to replicate.

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