Craft Beer Business is Booming
All across the country new breweries are popping up everyday, in every state. Big beer producers would love to have you believe that this fad will die off. I’m here to tell you that craft beer is no fad, it’s here to stay, and let me tell you: business is booming.
Craft beer sales in 2013 went up 17.3% even as total beer sales went down 1.9%
This country has been drinking less and less beer overall. Since 2000, beer as the choice of drink for Americans has gone from 55% to 49%, while spirits continue to gain ground. However, all of the loss in beer interest has been a loss of desire to drink what the industry refers to as “premium” beer (Budweiser, Coors, etc).
Craft beer on the other hand has continued to to gain traction and market share. While total shares of beer overall went down by 1.9%, craft beer sales went up 17.3% in 2013. Even as Americans are choosing to drink less beer, when they are drinking beer more and more are choosing a craft beer. The craft beer business community couldn’t be happier: although it makes up 7.8% share in total beer volume produced, craft beer rakes in close to 20% of the total sales of beer with a $14.3 billion market.
Breweries are opening across the country at record pace
As of 2014, there are over 3,000 breweries in operation in America, passing the previous record which was set in the 1870s. That’s right: there are more breweries in operation right now than ever before in this country’s history! And that number will continue to grow. If the United States had as many breweries per capita as Germany, there would be over 5,000 breweries; it’s safe to say the number of craft breweries has a ways to go before we get to that stage.
Still, most analysts are not overly concerned with an oversaturation of craft breweries: Bart Watson of the Brewers Association commented that “At this point, there is… evidence that supply isn’t meeting demand.” The fact is that not every brewery is going to bottle their beer and compete for shelf space at your local grocery store. But anyone making quality beer can run a successful brewpub. The demand for beer choice in America has never been higher and it isn’t going away.
90% of Americans live within 10 miles of a brewery
Not only are breweries popping up everywhere, it’s likely one is opening right around the corner from you. A trend taking off across America is a desire for locality. Coffee shops that use beans grown from a local farmer are a popular spot amongst the younger crowd. The same goes for craft beer. Simply put, people like to support their local businesses and economic community.
The good news is that for most Americans this is an option. There are 2,200 ZIP code tabulation areas (ZCTA) that have a brewery. To quote Bart Watson of the Brewers Association once more: “Long gone are the days where San Diego and Portland are hogging all the local breweries.”
Myth: there isn’t a demand for a luxury product like craft beer
It’s true that craft beer is not always cheap; a six pack of bottled Bud Light with probably run you about half as much as a six pack of a craft beer IPA. But here’s the thing: Americans don’t seem to mind. There is a myth that craft beer is too much of a luxury good, and therefore is not reasonably accessible to everyday people. But from the evidence shown we know that isn’t true.
There is a real desire by many beer drinkers for a more fulfilling, flavorful drink. Craft beer is a niche market that taps into an existing consumer base looking for more choices, not less. The average craft beer drinker has an adventurer spirit; it’s no wonder that tasting festivals with hundreds of breweries to try are a hot spot in many major metros like Denver and San Diego. It’s up to the consumer to choose to spend their limited resources on a luxury product, which is exactly what they’re doing with craft beer.
Millennials: the new beer consumer
With 80 million people the Millennial generation is much larger than its predecessor Generation X at 50 million. Millennials make up close to 46% of new craft beer drinkers. Corporations fight each other tooth and nail to land lifelong brand loyalty from the next great spending generation. But unlike previous age groups, when it comes to drink of choice Millennials are much more inclined to “drink around.”
Even when they do commit to a brand their desire for variety means they’re willing to spread their beer spending money to many different breweries and beer styles. In an industry with two major players for decades, the Millennials are a generation that finds themselves unfazed by either. Their desire for craft beer rates higher than any previous generation, and with more and more coming to legal drinking age, craft breweries have plenty of reasons to be excited about the promise of more business.
The business of craft beer is booming. With thousands of additional planned breweries, it’s clear that craft beer is not a fading trend in America. Instead we can expect additional market share for the craft beer industry to meet a growing demand. So cheers to you, the craft beer drinker, may your options soar ever higher.
Sources
http://www.brewersassociation.org/statistics/national-beer-sales-production-data/
http://demetergroup.net/sites/default/files/news/attachment/State-of-the-Craft-Beer-Industry-2013.pdf
http://blogs.wsj.com/numbers/craft-beer-takes-a-bigger-swig-of-the-shrinking-beer-market-1502/
http://www.cnbc.com/id/101124259#.
http://www.beveragemedia.com/index.php/2012/05/who-is-the-new-beer-consumer-brewers-ready-to-say-ihola-and-more-to-expand-reach/
