The Brewers Association recently delivered its annual state of the industry address, highlighting the challenges faced by small and independent breweries in America. Chief economist Bart Watson described the current landscape as “challenging” during his address at the Craft Brewers Conference in Las Vegas, Nevada. The address revealed a mix of positives and negatives in the industry, with varying growth and shrinkage across different categories.
Craft beer production was down by 1%, with taprooms and brewpubs experiencing a decline of 2% and 4%, respectively. Contract and alternating proprietorship beer companies remained flat, while regional breweries grew by 1% and microbreweries saw a decline of 5%. Despite these challenges, Watson pointed out that 44% of breweries managed to achieve growth over the past year.
One of the key challenges facing breweries is the increasing costs of goods, outpacing the growth in prices. Many successful breweries have focused on improving their operations through cooperation and partnerships to achieve economies of scale. Additionally, some breweries have found success by expanding their market reach and associating craft beer with different drinking occasions to attract new customers.
While the overall growth of the craft beer industry has stagnated, customers remain loyal to brands they value and enjoy. Despite the challenges, customers continued to spend nearly $30 billion on small and independent brewers in the last year. Watson highlighted the potential for growth by pointing out that there are still 125 million Americans who drink but have not tried craft beer.
In a competitive market with changing consumer preferences, breweries need to adapt and innovate to succeed. Watson emphasized the importance of building customer loyalty and finding ways to have customers drink their products on different occasions. By tapping into new market opportunities and focusing on customer relationships, breweries can overcome the challenges and thrive in the industry.
The state of the industry address by the Brewers Association revealed the complex challenges faced by America’s small and independent breweries. Despite the obstacles, there are opportunities for growth and success for breweries that are willing to adapt, innovate, and build strong relationships with their customers. By addressing the current landscape with a strategic mindset, breweries can navigate the challenges and continue to thrive in the competitive craft beer market.