Craft brewers to toast 2014
How good can it get? Craft beer has yet to reach its saturation point. The industry’s U.S. revenue hit an estimated USD 4.2 billion in 2014, and it is now the fastest-growing alcohol category by revenue.
In 2013, the craft beer industry represented less than 8 percent of the total beer market by volume, but has likely surpassed 10 percent in 2014. Analysts expect it will own a 20 percent share of the U.S. beer market by 2020.
The Brewers Association reckons that there are now 3,200 licensed breweries in the U.S. after 1,650 at the end of 2009. The U.S. is adding 1.5 new breweries a day and they’re all fighting for a piece of a shrinking market — or, at least, a shrinking light lager market.
“With beer, many consumers want to experiment with bolder flavours. They are dropping mild lagers like Budweiser for bitterer India Pale Ales, coffee-flavoured porters and barrel-aged stouts. Budweiser has gone from being one of four beers available on draft in a typical bar to one of 10 or more”, the Wall Street Journal reported on 28 December 2014.
“We are late to the game,” Luiz Edmond, AB-InBev’s North American president was quoted as saying. “It took us more than it should to recognize the trends.” He added that “you shouldn’t be surprised” if the company buys a few more craft brewers.
AB-InBev has grown its volume globally by focusing on big brands like Budweiser and Stella Artois. But it has had to shift its focus in the U.S. to craft because its market share has slipped to 46 percent after peaking at nearly 50 percent a decade ago, according to Beer Marketer’s Insights.
In 2014, AB-InBev bought Oregon-based 10 Barrel Brewing Co. and New York-based Blue Point Brewing Co. Those deals followed the 2011 acquisition of Chicago’s Goose Island for USD 38.8 million. Goose Island now sells 30 different beers, from 19 four years ago, and expects beer sales to top 400,000 barrels this year, about three times more than in 2011. Goose Island is sold in all 50 states, from 26 in 2011. Combined, Goose Island, 10 Barrel Brewing and Blue Point will have produced about 500,000 barrels beer in 2014.
Until December 2014, the U.S. beer market grew by about 0.3 percent according to estimates. December could be tricky (results are not out) and may dip the industry to flat. Nevertheless, this indicates that those years of overall beer consumption decline are past and that the beer market will continue to grow in 2015 based on improving employment and lower petrol prices.
