If you’re one of those people waiting for the “craft beer bubble” to burst, you’re going to have to wait a while longer, according to data shared at the 2018 Craft Brewer’s Conference by the Brewer’s Associaton (BA) Chief Economist Bart Watson.
According to Watson, citing the BA’s Beer Industry Production Survey as well as state production data, craft beer’s market share continues to rise, at a decelerated but still increased 5% from the previous year. Most of this growth is among smaller breweries, such as microbreweries (up 17%) and brewpubs (up 15%), with only a 1% growth in larger, regional breweries.
“The regional breweries are where we see craft’s headwind most clearly,” said Watson. “They’re increasingly facing competition from the world’s largest brewers.”
But while regional breweries may have maxed out their growth potential, there is still plenty of room for new, smaller breweries to emerge and grow. Last year saw a record 997 new breweries open for a total of more than 6,200 operating across the country by the end of last year. And with over 9,000 active TTB licenses, hundreds — if not thousands — more are coming. These newer breweries — those that have opened since 2014 — also saw the largest share of production growth, at about a million barrels. And according to Watson, there’s still plenty of capacity for more craft beer.
“If [the Craft Beer industry continued to] grow at 5% [annually], it would take the industry 12 years before we use up all of the existing capacity that’s out there,” said Watson.
However, breweries that opened in 2013 or earlier saw fewer than 300,000 barrels of growth last year. Watson cautions the new breweries that are currently enjoying growth to have realistic expectations of how long that can continue.
“While you’re growing fast now, don’t expect you’re going to beat the odds when so many older, experienced breweries weren’t able to,” said Watson.
Despite all the growth, craft beer is still just a small piece of the U.S. beer puzzle, accounting for less than 13% of market share by volume. The Brewers Association had set an aspirational goal of 20% craft market share by 2020, one that it now seems unlikely to hit, in large part because the organization removes any brewery that is fully acquired or more than 25% externally owned from its database of “craft” breweries.
“The biggest thing that changed is the pace of acquisitions from the large brewers,” said Watson. “The 20% market share [goal] was for small and independent brewers, and as the large brewers have acquired more and more volume and pulled that out of the craft data set, that’s pulled millions and millions of barrels from formerly small and independent breweries. It was always an aspirational goal… but had those breweries not come out, it would be more realistic that small and independent breweries would have 20% market share by 2020.”
The BA continues to try to differentiate brewers that meet their narrow definition of craft from breweries that do not by encouraging adoption of their Independent Craft Brewers Seal on packaging. Since its launch in June 2017, more than 3,200 breweries — representing more than 75 percent of independent craft volume —have adopted the seal. Ohio craft breweries are further encouraged to use the Ohio Craft Beer seal to help local consumers “drink beer made here.”
