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» Beverage Industry News » Craft Beer Industry on an All Time High

Craft Beer Industry on an All Time High

Beverage Industry News» Beverage Industry Newsposted Apr 21st, 2005 12:00:00AM by Pat Hagerman

Craft brewers, specialty beer distributors and the allied trade gathered in Philadelphia for the 22nd annual Craft Brewers Conference last week to celebrate a strong year of growth and, yes, sample a few beers.

Philadelphia provided a colonial backdrop highlighted by an enormous number of specialty beers scattered among what seemed like a good-beer bar on nearly every block. Last year’s conference in San Diego may have had warm sun, poolside parties and a sprawling resort feel, but Philly shinned in its own way by providing a dizzying number and variety of specialty beers on draft within walking distance of the conference.

The highlight of the conference was not so much in the setting however, but in the numbers. Last year, the craft beer industry experienced perhaps its most stellar performance ever. There have been years when total growth was much higher, years with more openings and times when the conference itself had far more attendees. But never before has the profile of the craft beer industry been as healthy overall than in 2004; and its vitality continues to shine.

Craft beer sales outpaced all other categories of the alcohol beverage business in 2004 with a volume increase of 7.0 percent. Even brewpubs and contract were up by 5.1 percent and 2.3 percent respectably. It was the first time since 1996 that all categories of the craft segment were up.

Spirits, which garnered much attention in the last year as the hip new category among young drinkers had a volume increase of 3.1 percent for the year. Wine, also considered to be gaining a new appeal among a broader segment of consumers had a increase of 2.7 percent. The import category, which has outpaced craft since the late 1990’s, squeezed out a 1.4 percent increase, the lowest volume growth since 1992. And the major brewers had nearly flat growth yet again, up just half a percent.

Within the craft category, regional specialties were up the strongest with a 8.5 percent increase. Most of that growth came from the 15,000-60,000 barrel/year brewers, some of which gained growth in the 30-40 percent range. This was in part due to new-market expansion, but also the growing popularity of the new generation of brewers capitalizing on eccentric and big styles combined with unique marketing messages. Micros (package plants selling less than 15,000 barrels per year), were also up strongly, growing by 7.0 percent.

Brewpubs were finally able to gain ground after the post-9/11 on-premise slump, growth attributed in part to more brewpubs adding packaging for off-site sales and a revitalized on-premise business in general. The number of units declined fairly significantly as 46 new brewpubs opened in 2004 while 77 closed.

It is a growing and maturing face that the craft beer category now displays. After the healthy and cleansing slowdown of the late 1990’s, the category is once again attracting attention from all sectors of the alcohol beverage business. To never have had a single year of declining growth and to bounce back after a five year slowdown shows even the last of the skeptics that better beer is indeed here to stay.

But the category is still small, and market share has been hard to come by. Still at only 3 percent of total beer sales, it will be a gradual and long process to alter the beer landscape. For retailers to significantly change their beer sets and provide more shelf space, market share will need to increase to 5 percent or more.

But it is possible, in an optimistic yet realistic scenario, that craft continues to evolve and grow, perhaps increasing its growth rate as consumers become more educated and continue to see the value of good beer. There are rumors swirling that Anheuser-Busch may partially reverse its “exclusivity” policy and allow their distribution network to carry more specialty brands. More and more small beer wholesalers are popping up to further fill the need for access to market. Without a doubt, there has been more positive mainstream press on craft beer than anytime in the last 10 years. Not only are the numbers encouraging for craft beer, but the surrounding environment is finally becoming more fertile for market share growth as well; the first time in the short history of the better beer category that these two trends have converged.

Perhaps the most important component of all is that craft beer has stayed relevant. Thanks to the new brewers who have caught the attention of the 20 year-olds, and the ability of some of the larger craft brewers to attract a wide spectrum of consumers, the category will remain healthy at least for the short term future.

Today, there are 1396 breweries in the United States. Twenty seven years ago, there were 42. That is a good thing.

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Pat Hagerman

Posted by Pat Hagerman

Pat Hagerman is co-founder of ProBrewer.com. When he's not leading operations for ProBrewer you can find Pat working on Internet of Things (IoT) infrastructure and systems. If you're having a beer with him ask about some of the more original skills he's taught Alexa.

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