U.S. CRAFT BEER: GROWTH OR DECLINE?

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The news just came out this week that the state of California just passed the mark of 700 breweries in California alone (http://goo.gl/gGeBxQ). An impressive milestone, for sure, but one which begs the question: Have we reached the apex? Can the market handle even this many breweries, much less continue to grow?

On the other hand, for the first time in the short history of the Craft Beer Boom in the United States, there seems to be a decline in craft beer consumption, at least according to an article that came out last week saying that Sam Adams and Sierra Nevada have either had basically no growth at all this year, or a decline in volume for the first time in the history of these two giant craft breweries (http://goo.gl/D4s6B2).

Are these stories at odds with each other?

Not at all. The reason? The craft beer market has never been about replacing Budweiser with Sam Adams, or any other single brewery. The Craft Beer Boom has always been about trying new brews, creating new styles, and making better beer. It also has always been very grounded in local production and sometimes even local ingredients. The craft beer enthusiast is never satisfied with one brand, unless that brand is extremely creative, and even then the “enthusiast” will at least want to constantly compare other brews with his “favorite” brews.

The means that no one brewery can completely dominate the market the way Budweiser, for example, did in the past. There is a demand for new beers, new breweries and different styles. (This doesn’t mean that brewers need to play with new and strange ingredients…. though that is fun too, in it’s own right). The possibilities are limitless, as long as the brewers are truly bent on their quixotic quest for “the perfect beer”.

What we predict is a continuing growth, but a slower growth, in breweries around the country. This will necessarily affect the big players, like Sierra Nevada, since consumers have ever more choices to choose from and ever more beers to try. What is interesting about this is that the limitation doesn’t seem to be on the number of breweries, but on the size any one brewery can achieve. Monopolies will be the ones that suffer, which means you and I win.

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