The craft beer sector has seen incredible changes in the last few years. In 2017, it’s finally grown to account for more than 10% of the US beer industry as a whole for the first time in history. Couple that with the ever-growing number of craft breweries, brew pubs and other related businesses opening across the country and the future looks very bright, despite the inevitable slowdown of overall segment growth. With that being said, there are quite a few factors that will affect the craft beer industry throughout the rest of this year. Let’s take a look at some of the most important.
Ongoing Big Beer Acquisitions
2016 was rife with Big Beer acquisitions, ranging from the sale of Georgia’s Terrapin to MillerCoors to Oregon’s Hop Valley Brewing Co. and Devil’s Backbone also purchased by Big Beer (AB InBev in this case). You can expect that trend to continue, as will the trend of craft breweries consolidating in order to protect themselves from predators (Southern Tier, Victory Brewing and Cigar City are great examples of how consolidation can help prevent individuals successful craft breweries from being picked off). With that being said, there will likely be fewer buyouts this year as the major producers turn most of their focus to growing the brands they’ve already snapped up.
The Pursuit of “New”
Yet another factor that will have a big impact on the craft beer scene is the trend of seeking out everything “new”. While many craft beer drinkers love the menu of regularly produced beers put out by their favorite breweries, there’s an undeniable trend toward finding the “newest thing” out there.
For several months last year, it was the New England IPA, and while that style is still hot, there are others. This has led quite a few agile local breweries to produce one-offs, which are brewed on a very limited basis, and often only available in small runs of bombers, or only at the brewery itself. This is particularly true for small craft breweries that don’t have a large distribution footprint yet, but even some of the larger breweries regularly cash in on the new or unique beer craze.
This trend is affecting more than breweries and brew pubs though. It’s also having an impact on all retailers, from grocery stores to bottle shops. More and more drinkers are willing to look beyond their go-to beer, at least every now and then. This means that retailers have to open up spots for more and more styles from a growing number of breweries.
That’s good news for consumers, but it’s a tradeoff for breweries. More competition means less shelf space for their own products. Of course, it really only rankles Big Beer as most craft breweries subscribe to the notion that a rising tide lifts all boats.
You can thank homebrewing (and President Jimmy Carter) for the rise of craft brewing in the US. Most of those currently helming new breweries got their start and found their passion brewing at home. The homebrewing industry hasn’t slowed down either. It’s still going strong and is expected to get stronger. As proof, witness the buyout of Midwest and Northern Brewer by AB InBev’s investment arm. If there weren’t profit to be made in homebrewing, do you really think that Big Beer would be trying to get their mitts on the suppliers who keep homebrewers going?
Look for homebrewing to eventually spawn yet more craft breweries, as brewers continue to realize that they can transform that passion into a rewarding business and quit their 9-to-5. However, there’s also a slight negative here. The more people there are brewing their own beer, the less often those people will buy from other breweries. They’ll still buy, particularly in small quantities (for inspiration, or out of loyalty for brands that inspired them), but they’ll focus on consuming and sharing the stuff they make themselves.
Changing State Regulations
There’s a whole lot going on in the realm of state regulations. It looks like both Georgia and Mississippi, the last two states in the country to ban breweries from being able to sell direct to the public, might finally be breaking out of their Prohibition mindset. Direct sales are coming to those states, if current legislation is any indication.
However, there are other potential changes afoot. For example, Tennessee is considering bumping up the ABV cap for beer in the state (it currently maxes out at just 8%). Utah and Washington state are both looking to reduce the legal BAC limit for drunk driving (both going from .08 to .05). Wyoming is considering an increase on excise taxes for all alcoholic beverages, but that legislation has stalled out. North Carolina is trying to raise the cap on the amount of beer that its breweries can self-distribute, which would be great news for those that are located in an urban area where self-distribution would be feasible.
These are just a few of the factors affecting craft beer this year. There are quite a few others out there, ranging from the effect of the craft whiskey boom on beer sales to successful craft breweries expanding by adding new locations on the other side of the country (Oskar Blues and New Belgium are just two prime examples).
What changes have you noticed? Are there any changes that you’d personally like to see in your state or local area?