Craft Brewers Conference: Looking back to move Forward

Image: Craft Brewers Conference & BrewExpo America

The days of double-digit growth in the craft beer category might be a thing of the past. However, that doesn’t mean small and independent brewers won’t continue to thrive as the market gets more crowded, according to Brewers Association executives at the 2017 Craft Brewers Conference.

“It’s slowing down, that’s true,” said BA director Paul Gatza. “But there’s still a lot of growth out there, and somebody’s going to get that growth.”

As part of the group’s annual State of the Industry address, Gatza and chief economist Bart Watson talked about recent industry statistics and called out emerging trends. In 2016, for example, craft beer grew by 6%, trailing import volume growth by one percent. The double-digit growth that has marked the craft industry in the past few years may be a thing of the past, according to Watson

“You can’t keep growing 18% year over year over year when you get to an industry of our size,” Watson said.

While percentage growth has slowed, volume is still quite significant; craft brewers added 1.4 million barrels last year, the fifth largest volume increase. Craft is continuing to grow rapidly in underdeveloped state markets, however, and demand is strong. That demand, however, is for microbreweries, which “are the clear winner” in recent years. Those very small brewers are benefiting from being able to serve beer at their tasting rooms rather than expand distribution. In 2016, onsite brewery sales totaled 2.3 million barrels, or about 9% of total craft production, Watson said.

With more than 5,300 breweries now operating in the US, there are more than 7,700 permitted breweries, meaning many more are headed toward operation. There are more than 2,000 additional brewing locations (many of them second or third facilities) scattered across the country.

Meanwhile, the number of brewpubs increased by 14.8%, and those outfits produced 1.35 million barrels last year. Lastly, regional craft brewers struggled last year, growing just 0.9% while producing 17.94 million barrels of beer.

“Dollar sell growth was a little stronger,” Watson said. “So dollar share of retail as consumer spending was up to 21.9 percent.”

Brewers Association CEO Bob Pease accused large brewers of trying to squeeze craft brewers from the marketplace and limit beer drinker choice. He called the recent scooping up of craft brewers a “deliberate effort to eliminate the differentiation between small and independent craft brewers and those owned by larger conglomerates.

Chair of the BA board and Allagash Brewing founder Rob Tod told attendees that the beer business was in the midst of a “tectonic shift.”

“We should be gravely concerned when we hear themes like 'independence does not matter to the beer drinker,’” he said. “For the sake of beer, we need to tell our story and keep the steering wheel for beer in the hands of the small and independent brewers."

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