CRAFT BREWERIES REMAIN RESILIENT DESPITE INCREASED COMPETITION

“There’s a ton of room for smaller, medium and even regional breweries. As you get to the national level, there’s less. We’re not playing at that level.”

Avery competitive craft marketplace is becoming far more competitive from a numerical standpoint. The Wall Street Journal reported in January that craft beer’s popularity has risen nationwide for more than a decade. About 9,500 breweries now operate in the U.S., compared to 6,372 at the end of 2017. The pace has slowed slightly from the 2,100 breweries that existed in 2012.

According to the Coloradobased Brewers Association, while the craft beer industry continues to mature, the majority of small and local brewpubs proved nimble last year during continued supply disruptions.

“The industry continues to grow more competitive, facing both internal business pressures and the externally continued growth of new beverage alcohol competitors,” said Bart Watson, chief economist at the association. “While these challenges are daunting, craft brewers are known for their innovation and flexibility, and will need both as they evolve to meet the next generation of beer lovers with new beers and new occasions.”

The Numbers Tell The Story

The Brewers Association indicates there were more than 550 brewery openings and over 200 closures in 2022. They predict this year, brewery openings will be at the lowest level in over a decade and distributed craft volume will not grow. The supply chain will remain rocky, but collectively average prices will be lower than 2022 peaks. However, total brewery employment numbers are expected to increase.

They also reported that fierce competition will likely force out weaker competitors. However, the industry is now established with an infrastructure it did not possess in the early years.

The bigger concerns are beer aficionados who think it’s tough for new brands to stand out today, despite the many experimental flavors, ingredients, and techniques now in play. The deluge of hazy IPAs on the market contains everything from coffee to pineapple, peach, bitter notes, coconut juice, and “better-for-you” nonalcoholic additions.

Some boutique beer shops and small marketers agree that craft beer is reaching an oversaturation point in some cities. This is the case in San Diego, home to nationally known breweries like Stone Brewing. One bottle shop owner believes the upstarts need to know the industry is reaching a tipping point:

“It’s not just growth anymore. Seven years ago, it was nothing but growth.”

The Wall Street Journal spoke to Leah Wong Ashburn, President and Chief Executive of Highland Brewing Co. in Asheville, N.C. Reported to be the first legal brewery in that city since Prohibition, it has operated for nearly 30 years and is now one of 50 in the area. Producing 40,000 barrels annually with a reported $15 million in revenue hasn’t stopped Ashburn from worrying about the crowded field. She fears consumers are bombarded by the competition.

“I think it’s overwhelming for consumers who haven’t been into craft beer,” she says. Yet the same story also points out that some breweries may have benefitted from the increased competition. Atlanta’s Wild Haven coowner and brewmaster Eric Johnson said, “I don’t view [the competition] as even remotely problematic. We looked at this space because Monday Night [Brewing] was already here. Creating a critical mass of folks doing something exciting is important.”

Bring On More

In Colorado – one of the craft beer meccas in the country – others also see plenty of room for growth. According to statistics compiled by the aforementioned Brewers Association, the state is home to 428 craft breweries, which is up significantly from 126 outlets in 2011.

With good beers here to stay, Charlie Berger, cofounder of the Denver

Beer Co., embraces the crowded craft industry. In fact, he plans to open a fourth taproom this year with a separate production facility. His company offers premium artisan ales and lagers incorporating fresh ingredients and both innovative and old-world beer-making styles. Similar to a farmer’s table, Denver Beer’s beer selections change with the seasons and its unique flavors and quality products have caught the public’s attention.

“There’s a ton of room for smaller, medium and even regional breweries,” reports Berger. “As you get to the national level, there’s less. We’re not playing at that level.”

Marketing and brand identity, created with distinctive packaging graphics that often push the envelope of color reproduction on aluminum cans, can also help sway consumers to regional craft brands. Much larger players often use these tools, along with sales promotions, merchandising displays, and more to claim precious retail shelf space and distribution channels that can sometimes create headwinds for local craft brands. But their eyecatching label art attracts new consumers, encourages trials, and reflects the product’s high-quality brand image. Many see that as a good game plan to stay competitive.