2017 State of the Craft Beer Industry

Written by on April 12, 2017 in Beer - No comments

Brewers Conference pressThis morning at the Craft Brewers Conference in Washington, D.C., the Brewers Association presented their annual State of the Industry report.

The craft beer market is crowded, with over 5,300 U.S. breweries currently operating, but it’s still growing — an average of two new breweries open each day. Overall, new brewery growth has slowed from an 18% jump in 2013 and 2014, to 12% in 2015, down to 6% in 2016. Bart Watson, the Association’s Chief Economist, said to expect that to be the “new normal” growth rate for the industry.

“We’ve seen this before,” said Paul Gatza, Director of the Brewers Association, in reference to the slowed growth and pointing to the 1997 cover of New Brewer Magazine headlined “Growth slows in a crowded market.” (There were around 1,396 breweries open in 1997).

826 new breweries opened in 2016, down from the previous two years, although with more than 2,000 unopened breweries currently hold federal brewing permits, more are on the way. Only 97 breweries closed their doors in 2016, around the same percentage of that closed the previous two years, but Watson also predicts an increase in closings. “In the long run we have to expect with more competition there will be more closings.”

IPAs continue to dominate the craft beer marketshare — “I’ve been on stage here at CBC for four years which means I’ve got to talk about IPAs four times,” Watson joked — comprising 25.4% of all craft beer sales. He noted big growth among lighter beer styles, such as golden ales (up 51.2%) and saison/farmhouse ales (up 44.4%).

The BA emphasized quality as a continuing concern, and preceded this year’s state of the industry keynote with a quality panel that included Larry Horwitz from Four String Brewing Company in Columbus.

“Every successful brewery has to solve the problem of how to achieve both great quality and creativity,” said Horwitz. “High quality beer is not an accident. Successful breweries will plan for creativity and innovation.”

The BA also pointed to the merger of Anheuser-Busch InBev and SABMiller as a top concern, as well as the acquisition of small breweries by the large corporate breweries, though such acquisitions were down in 2016 from the previous year. These acquisitions can create confusion among consumers.

“There’s some confusion about breweries that are assumed to have been acquired when in fact they are still small and independent, and some companies are assumed to be small and independent when in fact they’ve been acquired,” said Gatza.

Increasing diversity among craft brewery employees and beer drinkers was highlighted as a key topic of focus for the Association this year. “Diversity is not a problem to be solved, it’s a value to be lived” said Bob Pease, CEO and President of the Brewers Association.

As part of this effort, the Association has revised their advertising guidelines for breweries.

“We want to stay away from beer names and labels that can be offensive,” said Gatza.

To enforce this, breweries whose business names, beer names or label artwork are deemed to be potentially offensive by an outside committee will no longer be permitted to promote any medal or award they claim at the BA-owned World Beer Cup or Great American Beer Festival, although such breweries will still be allowed to enter the competitions.

The BA also plans to continue to support research and development of beer ingredients, and currently has granted 14 grants for barley development and another eight toward hops growth.

About the Author

Cheryl Harrison. Editor of Drink Up Columbus. Geek of the craft beer/board game/sci-fi varieties. Fan of patios.

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