Can the Craft Beer Market Continue to Thrive?
Beer drinkers are currently enjoying prosperous times in America. While the number of craft breweries continues to boom, one has to ask, can this growth rate be maintained?
In 1910, prior to prohibition, the number of active breweries was approximately 1500. The years 1919-1937 marked the Dark Ages of brewing in America. Immediately following prohibition, the number of breweries grew fairly rapidly to almost 500 active breweries in 1940. The next 50 years marked the Industrial Age of the American Brewery. While the assembly line had become a standard of efficiency, all industries made it their goal to find ways to produce more for less. The market quickly was overrun by the big fish. The number of breweries toppled during this era, while production efficiency was on the rise.
The 1990’s marked the beginning of the Renaissance Era for brewers. This era marked a cultural shift for beer drinkers as the craft brew trend became more and more popular. With the popularity of craft beer on the rise, we see the number of active breweries continue to soar to the current day.
Based on current trends, it appears that this Renaissance Era has not yet peaked. The number of brewery openings rose 62% from 2010 to 2011. And opposite of that, the number of brewery closing decreased 68% during the same time. Overall, this led to an 11% increase in the overall number of breweries from 2010 to 2011.
How long can this era last? Surprisingly enough, total beer consumption has been on the decline for 4 straight years, down 1.9% in 2010. However, volume share for craft breweries has seen a steady improvement every year since 2007. In 2011, craft brewery sales made up 5.68% of the total volume sold in the US.
I feel confident that this prosperous era will continue into the middle of the current decade before the market is fully saturated with breweries. There are a number of areas and trends that will continue to allow this type of growth.
- Craft beer will continue to take a bite out of the large brewery’s market. The market share of the craft beer market is expected to increase 10-15% each year. At this rate, craft breweries will own approximately 10% of the market by 2016.
- The amount of imported beer saw pretty significant drops around the time of the recession. There have been some small recoveries, but I would expect imported beer to see minor decreases at the sake of craft brews.
- There is an ever increasing trend to buy local and this includes beer. Store owners give preference to local breweries when dividing up shelf space. This will make it more difficult for the large craft breweries such as Boston Beer Company, Sierra Nevada, and New Belgium Brewery to expand across the US. But in return, I expect to see an increase in the number of local breweries, which will increase the total number of active breweries.
So what can beer drinkers expect as we reach the end of the current era? I see some early signs showing up as to what we can expect in, what I refer to it as, the Biotech Era. I expect that the market will expand and in order to survive, you will see large craft and non-craft breweries buying out smaller breweries. In some instances, it will be for the name alone and breweries will be closed down. In more favorable circumstances, small breweries will just end up having new management. We have gotten a glimpse of this trend when Anheuser-Busch purchased Goose Island Beer Company.
As a fellow beer enthusiast, what do you see in the future?
Your Choice. Your Beer. Drink Up.
- Beer Universe