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22 April 2021

US craft brewers sold 9 percent less beer in 2020

USA | For once the doom-mongers were wrong. Restrictions to prevent the spread of covid-19 in 2020 did not force thousands of craft brewers out of business, The Brewers Association (BA) revealed on 8 April 2021.

Although the BA recorded 346 closings in 2020, another 716 hopefuls took the jump, bringing the total number of US craft brewers up to over 8700.

The closings may appear high in absolute numbers, but in percentage terms it only came to 4 percent, which was on par with 2019. It was also far less dramatic than in the early Noughties, when up to 10 percent of all breweries shuttered each year.

Per the BA’s estimates, volume sales by craft brewers dropped 9 percent to 23 million barrels (27 million hl), from 26.3 million barrel in 2019. This was the first recorded decline in the BA’s history. Most affected were keg beer sales. But the loss would have been higher had many craft brewers not switched to selling packaged beer over the counter instead.

Taprooms held up surprisingly well

The BA’s survey showed that brewpubs (-19 percent in volume sales) were more affected by the pandemic than taprooms (-0.1 percent). The reason the BA gave was that taprooms are a younger format and less associated with a fine dining experience than a visit to a brewpub.

Interestingly, although the number of visitors to brewery venues was down in 2020, punters spent more per visit: USD 30 per cheque in 2020, compared with USD 20 per cheque in 2019. The BA concluded that revenues held up better than visitors. The thing to watch this year is: Will punters continue to spend as much per visit or will they resort to previous spending patterns?

Legalise direct-to-consumer shipping

A far greater worry is the future of keg beer. As Bart Watson, the BA’s Chief Economist, pointed out, distributors already see keg beer as a declining business. Besides, they have been scaling back on the number of SKUs (down 20 percent by some estimates) they are carrying in order to drive growth. According to the BA, these two trends combined make a powerful argument for allowing craft brewers to engage in direct-to-consumer shipping across state borders, which is still banned in the majority of US states.

The BA is concerned that 2021 could prove another tough year for craft brewers. It fears that the number of closings could be as high as in 2020 or even higher. No one knows how many breweries are currently in “hibernation”. As they push reopening dates further back into the year, many could decide not to reopen at all. What is more, the financial damage craft brewers took in 2020 could still drive many over the edge this year.