It was the first year craft beer had not grown market share.
Ignoring 2020, a year when almost every industry suffered anomalous results, craft beer had grown every year for as long as anyone can remember. But when Bart Watson, chief economist of the Brewers Association, took to the stage to present his state of the industry address at the 2023 Craft Brewers Conference, he reported that the streak was over. The Brewers Association, the trade group representing small and independent brewers, had determined that the craft beer achieved 0% growth in 2022.
“We’d certainly seen slower growth even prior to Covid,” says Watson. Craft beer had been growing by double-digit percentages year-over-year for decades, but this had slowed to single-digits since 2016 (in 2020, the industry actually shrank by 10% as the pandemic wreaked havoc on all hospitality-driven industries).
At one time, the Brewers Association had a stated goal of craft beer representing 20% of the overall beer industry. But with the announcement of no growth in 2022, that percentage may have peaked at its current 13% by volume, though it does represent 25% of the beer market by dollars, since craft beer is generally more expensive than the beer sold by the large multi-national brewers.
As the leading advocate for small and independent brewers, the Brewers Association is shifting focus to improving market access for the approximately 10,000 craft brewers in America. For example, while wineries are legally allowed to mail their products direct to consumers, breweries cannot. And a complex web of state laws, many of which have not been amended since prohibition, present artificial barriers to small brewery success.
Until those regulatory changes can be made, brewers will need to examine their businesses in light of stagnant growth. “There are plenty of breweries that are still growing,” notes Watson. “But brewers might need to update their strategy, such as focusing on profitability rather than growth. Or they might have to alter the balance between distribution [of packaged product] and hospitality [within the brewery taproom].”
In November 2022, San Diego’s acclaimed The Lost Abbey announced that it would “right-size” to cut costs in response to changing market conditions. And in June 2023, San Francisco’s 127-year-old Anchor Brewing announced it would end national-wide distribution to focus on its home market in California. A month later, Anchor announced it would cease operations altogether. Considered to be icons in the craft beer community, the announcements by The Lost Abbey and Anchor Brewing sent shockwaves through the craft beer community.
For now, the closure of a craft brewery like Anchor Brewing is unusual. New brewery openings still outpace closures, though those two numbers are converging. It is yet another sign that the craft brewing industry is maturing.
“Consumers don’t need to worry,” says Watson. “There’s lots of opportunity to get great beer.” But while growth for craft breweries had been assumed for decades, those days appear to be over. “Support your favorite local brewery,” advises Watson.
“We are a maturing industry,” says Watson. “But the future is still bright.”
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