Beer sales may be down, but it’s not killing the buzz for craft brewers.
According to the latest report from Technomic on adult beverage trends, total beer sales in the U.S. decreased 1.4% in 2013. The craft beer category, however, rose 9.6%.
“Craft beer as an industry has been around since the ‘70s … but probably over the last six to seven years, consumer interest in craft beer has accelerated and taken off to new heights,” says Technomic vice president David Henkes.
The Brewers Association, which defines craft brewers as those making less than 6 million barrels annually, is still compiling its final figures for 2013. But staff economist Bart Watson says they are eyeing volume growth around 13% for the 2,600 craft brewers in the U.S.
“IPAs are the first among equals,” says Watson. Early data suggests that volume growth for the category is up around 40% in 2013.
Henkes points to of-age millennials as helping to drive the trend toward India pale ales (IPAs) and hoppy beers.
“They’re prone to experimentation: trying new styles, new flavors and a new taste,” says Henkes.
But some of the top craft brewers say it's more than that.
“Over the last five years, craft beer has no longer been driven just by the influencers, the 20- to 25-year-olds. We’re starting to see it penetrate all walks of life,” says Charlie Paulette, chief sales and marketing manager for the Gambrinus Company, which makes Shiner beers.
“The soccer moms are drinking Belgian white ales, and the older guys playing golf are drinking Shiner Bock,” says Paulette. He says the 105-year-old Shiner brand saw sales rise 7% in 2013. The latest Brewers Association rankings name Gambrinus/Shiner as the fourth largest craft brewer in the country.
Many of the craft brewers credit their growth to the variety of beers they are able to bring to market. Ryan Arnold, the communications manager for second-largest craft brewer Sierra Nevada, says the company brewed more than 100 different types of beer in 2013 alone, more than 50 of which were new flavors.
“We’re constantly tinkering – that’s the spirit of craft beer,” says Arnold. He says there’s a notable demand from consumers for more variety from the company. In a similar vein, the Boston Beer Company (maker of Sam Adams beer) released 70 different types of beer last year, according to founder Jim Koch.
Consolidation Ahead for Craft Brewers?
Last week, Anheuser-Busch announced it had purchased Long Island craft brewer Blue Point for an undisclosed amount. Meanwhile, some are wondering when the market will become oversaturated – and whether more consolidation is in the cards.
“Markets can’t grow forever. We are going to see growth start to tail off [at some point],” says Watson. But at the same time, he says further consolidation may not be a viable option.
“You rarely talk about consolidation in the restaurant industry,” says Watson, comparing the smallest brewers to restaurants, since many serve both homemade beer and food. “The microbreweries focused on their own neighborhood or city can own their little market and be viable,” he predicts.
Deschutes Brewery founder Gary Fish, whose company lands at the no. 5 spot on the Brewers Association list, says he’s been approached a number of times over the years with acquisition opportunities, but has declined.
While Fish says double-digit growth will likely taper off eventually, he is optimistic about the appetite for craft beer.
“I don’t see any easing of the consumer’s excitement for local breweries … or varietal wine, or coffee, or organic produce at farmers’ markets,” says Fish. “Other people get paid for that speculation, but I think we have a lot of room left to run yet.”
And Koch, who is widely credited with helping to popularize to the craft beer movement, shares Fish’s confidence. The largest craft brewer in the country, Boston Beer Company grew 20% over the first nine months of 2013, says Koch – but still makes up only a little more than 1% of the overall market.
“We might eventually get to 2% -- it might take another 30 years, but when you’re only at 1%, there’s a lot of room to continue growing,” says Koch, who mentors and provides microloans to new craft brewers through the Samuel Adams Brewing the American Dream program.
“The entire craft beer category only has 7% of the market, so all of us craft brewers believe there is room for everybody,” he adds.
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