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Craft Brew at a Crossroads

The pint glass is either half full or half empty for craft brewers—which it is depends entirely on how individual operations plan to navigate a doubly disruptive suite of consumer changes.

Matt Reynolds1

One issue is the generational and demographic change among potential consumers that has been on craft brewers’ radar for years. The other is the more immediate, pandemic-related channel shift in the way people consume alcoholic beverages. The industry experienced 8% growth in 2021, but that was the inevitable bounce back after the shutdowns of 2020. And 2021 didn’t get fully back to pre-pandemic, 2019 levels.

All of this is according to Bart Watson, Chief Economist for the Brewer’s Association. I heard from him at the annual Craft Brewers Conference held in Minneapolis in May.

“You can look at what happened in the past year and have very different views depending on your size, business model, geography, and more,” Watson said at the conference. “Obviously, our top line number of 8 percent is a very positive growth number, but it’s cycling [at] a negative 10 percent given the huge channel shifts we saw in COVID away from draft, away from at-the-brewery sales, and so what we’re seeing is a rebound as much as true growth.”

The big picture is that craft is a maturing industry, and while it’s still growing, the pace of growth is slowing. That means more U.S. breweries are fighting for pieces of the same national pie. And depending on the region, that pie might have maxed-out in size.

Craft brew categories are subdivided by venue into taprooms, brew pubs, microbreweries, and mid-sized regional breweries. As stands to reason, in-person craft brew venues exhibited the biggest 2021 bounce-back: taprooms (+21%) and brew pubs (+19%). Those two categories are most dependent on foot traffic and butts in bar stools, so naturally they experienced the most growth in 2021. Packaged beer, which is not venue dependent, grew the least, but also suffered the least in recent months. Draft beer, though, is a red flag.

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