Happy National Beer Day! Quench your thirst with the top beer industry trends and mergers.
Did you know there are currently over 5,300 breweries in the U.S.? Craft brewers provided nearly 129,000 jobs during 2016—7,000 more than the year before.
The Brewers Association confirmed an end of an era in the beer world: double-digit craft beer growth has slowed.
- Craft beer as a whole grew 6 percent in volume and 10 percent in retail dollar value in 2016—that’s down from the roughly 12-15 percent growth it had regularly shown in recent years.
- Good news for a 12.3 percent total market share for craft beer, up only 0.1 percent from last year’s 12.2 percent share. Retail dollar value was estimated at $23.5 billion, representing 21.9 percent market share, thanks to the higher prices in the craft beer market.
- 1.2 million barrels of craft beer produced in 2015 being removed from play in the 2016 field. Minimal growth added 1.4 million barrels of its own.
- The total amount of craft beer produced rose from 24.3 million barrels to 24.6 million as a result.
- Small microbreweries and brewpubs that were driving the 1.4 million new barrels of beer, account for 90 percent of the craft brewer growth.
- Closings were up slightly, to 97 breweries, dwarfed by the openings of 826 new breweries.
- The smaller segment of younger, smaller breweries and brewpubs continue to grow fastest, taking advantage of market openings in underserved neighborhoods or cities.
- Large regional breweries—i.e. New Belgium or Boston Beer Co.—face more challenges competing with over 5,300 breweries in the country. This could cannibalize sales numbers for older flagship brands such as Fat Tire or Boston Lager.
Known as a “young, upstart” industry, craft beer has now seemingly grown large enough that repeating its seemingly untouchable numbers is getting more difficult and more complex.
As Paste Magazine put it, “these numbers are more complicated than they initially appear. The market didn’t simply slow down; it had some of its largest pieces removed from the board.”
“Large regional breweries such as Lagunitas, Ballast Point and Founders are no longer included among the ‘craft; numbers by the Brewers Association, thanks to buyouts/changes of ownership that disqualify them, which significantly alters the numbers. Lagunitas alone would have been the #5 craft brewery in the U.S. in terms of volume, if not for the change in their classification.”
A more mature craft beer industry, with acquisitions by “Big Beer” brands and global breweries are changing the beer industry game. Sure, the Brewers Association no longer considers the likes of Founders or Ballast Point craft, but they are still embedded in craft history and culture.
Regional Brew Trends
Bart Watson, the Chief Economist of the Brewers Association pointed out, “Small and independent brewers are operating in a new brewing reality still filled with opportunity, but within a much more competitive landscape. As the overall beer market remains static and the large global brewers lose volume, their strategy has been to focus on acquiring craft brewers.
“This has been a catalyst for slower growth for small and independent brewers and endangered consumer access to certain brands. Small and independent brewers were able to fill in the barrels lost to acquisitions and show steady growth but at a rate more reflective of today’s industry dynamics. The average brewer is getting smaller and growth is more [diffused] within the craft category, with producers at the tail helping to drive growth for the overall segment.”
Why was the year so challenging for regional craft brewing companies? It’s a multifaceted answer.
“They’re facing a more competitive space, with 5,000-plus breweries in the country. I’d be expecting many of those regional craft breweries to be reformulating their strategies. Regional craft breweries did grow overall, but very slowly. Moving from a regional to a super regional is much more challenging. It’s much more of a long shot than it was 10 to 20 years ago,” Watson added.
Among craft brew trends, Virginia, North Carolina, Florida, and Texas experienced a net increase of more than 35 breweries during 2016—a sign the BA report explains as a “strong base” for growth in the Southern states.
Recent Beer Moves
In December of 2016, Asahi Group Holdings Ltd. committed to acquire brewing assets in five Eastern European nations from Anheuser-Busch InBev NV for $7.8 billion.
The huge overseas merger creates a new European beer platform featuring Pilsner Urquell, especially for a Japanese food-and-drink industry that is struggling at home. Asahi recently acquired European brands Peroni and Grolsch—among others—from SABMiller.
Another major acquisition was Anheuser-Busch’s purchase of Virginia’s Devils Backbone Brewing Co., along with MillerCoors’ Tenth and Blake division’s acquisition of a majority stake in Terrapin Beer Co., of Athens, Georgia.