No growth the 'new normal' for craft
After years of constant growth, the US craft beer industry has entered a ‘new normal’ pointing to the need for brewers to find new ways to grow through innovation, according to US Brewers Association Chief Economist, Bart Watson.
Delivering the keynote speech to open the Craft Brewers Conference in Nashville, Watson said that the craft beer market saw no growth in 2022 and over the last six years average annual growth had been 1.2 per cent.
“Those years of double-digit growth are clearly in the rearview mirror,” he said.
“And unless something changes, I don’t think we’re going to see them again anytime soon.”
He said that slow to no growth is going to be the new normal, unless the industry found a way to change it.
“We’re going to have to find new strategies, new innovations, new occasions, new customers if we want to return to the growth rates that craft had five or ten years ago.”
One bright spot for the market was 7 per cent average growth in sales through taprooms and brewpubs, though even here Watson’s data showed the challenges.
Taprooms and brewpubs that opened in 2018 showed growth of 20 per cent, while those opening before 2018 grew at just 2 per cent.
“This highlights the need to reinvent,” Watson said.
“Hospitality business concepts, which most of these businesses are, typically have a shelf life.
“And this gap between before and after 2018 breweries shows that no one should be resting on their laurels.
“Even in this category, which is clearly the bright spot for craft, breweries are going to have to work to reinvent to stay competitive when more breweries are still coming.”
Watson said brewery openings continue to outpace closures, though the gap had narrowed considerably.
In 2022 the association counted 522 openings, the lowest number since 2013, with 319 closures.
“The era of everyone opening and no one closing is clearly going away,” Watson said. “And I think we’re going to see a year when these are fully in balance and brewery numbers aren’t growing anymore.”
Craft not attractive to new generations and markets
A recurring theme of the opening keynote and a later panel discussion between the CEOs of the US Brewers Association, Beer Institute and the National Beer Wholesalers Association, has been that while alcohol consumption levels aren’t falling heavily, beer’s market share has fallen precipitously.
Watson said beverage alcohol was always changing customers, with every year seeing a new generation of adults entering the market not wanting to drink what their parents drank.
“In the past, this generational shift has largely benefitted craft,” he said.
“They loved craft, they moved into craft, they increased our demographics.”
He said craft’s stagnation was largely due to a new generation moving away from craft.
He also noted that craft was not appealing to non-traditional beer drinkers.
“To put it as bluntly as possible, craft has the lowest percentage of female drinkers and BIPOC (black, indigenous and people of colour) drinkers of any beverage alcohol category.”
“All of the growth in beverage alcohol is in female and BIPOC drinkers, so we’re going to need to change some things if we’re going to connect with this diverse generation.”
“We have the most diverse generation in history coming online and they look different to the current craft demographic.”
“So we’re going to have to find new ways to welcome them to the craft beer party.”
The Craft Brewers Conference continues in Nashville until Wednesday.