Growth Continues for Micros

The Brewers Association recently released the 2017 industry data for the craft beer segment of the beer industry. Overall beer production was down 1% while the craft segment was up 5% year over year from 2016 to 2017. Overall beer sales were down 1.2% while craft sales were up 5%.

Growth of the craft beer segment has been fairly consistent over the last 10+ years although this growth has slowed in recent years. While the growth in production and sales has fallen back from double digit growth to single digit growth, the number of suppliers increased by nearly 25% in 2017.

The growth of the craft beer segment is being largely led by "microbreweries" - those packaging breweries producing up to 15,000 barrels per year. This category accounted for nearly 60% of the total overall growth in the industry. This category also accounted for the majority of new brewery openings in the United States for 2017.

Many larger craft and regional craft breweries are facing increased competition with the emergence of so many new suppliers to the market making it more difficult to compete for shelf space and tap handles in markets outside of their home markets.

Consumers continue to demand "fresh" and "new" products making the craft beer industry morph from local or regional to hyper-local. It is going to be interesting to see how the market responds as the number of overall suppliers should exceed 7,000 by the end of 2018.

Breweries in planning and early stage breweries should focus greater efforts in driving on-premises sales and working closely with retailers to develop the consumer pull through the market. Distributors have amassed unmanageable portfolios and should not be exclusively relied upon to develop a product or brand.

I believe the craft beer segment will continue to see relatively healthy growth in 2018 and beyond, but I believe the majority of this growth will be led by regions with comparatively less evolved craft markets, namely the Southeastern United States.