The Brewers Association released its 2018 growth figures for craft beer on April 2 and it contained some stark statistics for the industry.
Not only did craft beer volume growth fall for the third year straight, slowing to 4% in 2018—down from 5% in 2017 and 6% in 2016—but the industry saw a record number of brewery closures. While 1,049 new breweries opened their doors in 2018, 219 ceased operation—a closure rate of 3%.
“The beer landscape is facing new realities with category competition, societal shifts, and other variables in play. There are still pockets of opportunity both in terms of geography and business model, but brewers need to be vigilant about quality, differentiation, and customer service,” explains Brewers Association economist Bart Watson. These are similar sentiments to those Garrett Marrero of Maui Brewing Company shared in his recent interview with The Growler.
But the report by the Colorado-based trade group also offered some positive statistics for the industry, including an increase of the volume market share for craft beer to 13.2%—up from 12.6% in 2017 and 12.1% in 2016. This and the 4% volume growth came in a year when the overall beer segment shrank by 1%, largely driven by falling sales of some of the biggest domestic beer brands and an overall consumer shift away from beer to wine, spirits, and non-alcoholic beverage options.
On April 3, Watson published further insights into this year’s report. In it, he states that the bulk of craft beer’s growth is driven by microbreweries and brewpubs rather than from regional craft brewers. The analysis reports:
- Regional craft brewers were static in 2018
- Microbreweries contributed 80% of the craft category’s total growth, up from 60% in 2017
- Brewpubs had a solid year—up 13%, accounting for about 20% of total growth
What’s more, Watson’s analysis signals that the growth being driven by microbreweries and brewpubs is itself being driven by “new entrants” into the market and from small production increases across the industry. “Looking in absolute terms, most breweries produced similar levels to 2017,” explains Watson.
He also points to the growing importance of at-the-brewery sales in today’s market. “At-the-brewery sales for craft brewers grew about 400,000 barrels to around 3–3.1 million barrels,” Watson writes in the analysis. “These sales represented 40% of craft category growth in 2018.”
What does this spell for the future of craft beer? A more competitive market, for starters. With a shrinking group of beer drinkers in the U.S. and a growing number of craft breweries, brewers are seeking out ways to set themselves apart or diversify their portfolios to win over established beer drinkers and new drinkers alike. Moreover, the statistics also signal the difficult climate regional craft brewers distributing in multiple states are facing.