Craft beer: back to the future

USA | The Brewers Association’s Midyear 2023 survey results, which were released on 10 August, show a low single-digit decline of 2 percent in craft beer sales in the past six months. The BA considers this a sign of the craft beer market entering into an era of maturity.

Independent craft packaged sales were down 3 percent year-over-year but have improved since the first quarter 2023, when they fell by 9 percent.

“Distributors and retailers have been reducing their focus on distributed craft and searching for growth in other pockets, but there are signs that the worst reductions may be in the past”, the BA said.

Overall, craft brewers “continue to face economic headwinds on both business and consumer fronts”, the BA argued. Not only have borrowing costs risen, while input cost increases have stabilised, there is also mounting evidence that inflation is eroding consumers’ buying capacity.

Exiting the craft beer market

As punters are turning (at least for the moment) against what they perceive as more costly craft beers in favour of international brands, some Big Brewers are exiting the craft beer market altogether.

At the end of May, Constellation Brands, which has made a great success of its Mexican beer brands Modelo and Corona in the US, quietly sold (mostly back to their previous owners) its remaining craft beer brands, taking a USD 70 million hit.

In July, San Francisco’s Anchor Brewery, often dubbed the “grandfather of craft brewing”, was closed after 127 years by its owner, Japan’s Sapporo.

This month, AB-InBev announced it is selling a bundle of eight craft brands to cannabis firm Tilray for just USD 85 million, prompting the website thedrinksbusiness.com to comment that after double-digit growth in craft beers for most of the past decade, AB-InBev is getting out at the bottom of the market.

It will retain a dozen or so craft breweries, which might still become the next Goose Island. But as the disposal underlines, AB-InBev is no longer pinning its hopes on craft beer to compensate the declines among its other beer offerings.

The active craft brewery number in the US increased from 9,119 in June 2022 to 9,336 as of June 2023, with the total brewery number up from 9,242 to 9,456. “In this maturing market, explosive growth from years past has tapered out, but openings continue to slightly outpace closings, and brewers are finding success in niches where they can succeed,” the BA said.

Returning to its roots

The number two brewer in the US, Molson Coors, seems to have adopted a more methodical approach to its craft offerings in its Tenth and Blake stable, thedrinksbusiness.com said. Whereas initially, the strategy was to scale craft beer brands to national brands, Molson Coors is now focusing on making its brands work in a handful of states and develop the pull for these brands at home, the website reported.

This all suggests that craft beer is about to return to its origins – privately owned small operators producing innovative products for a mostly local clientele.