Brewers Association: Craft Growth Slows to 5 Percent

Growth for U.S. craft beer companies is the slowest it’s been in 13 years, according to a new report from the Brewers Association (BA), a trade group representing small and independent brewers.

The BA today reported that production at small and independent craft breweries – those companies that are less than 25 percent owned by a non-craft brewer and produce fewer than 6 million barrels of “traditional” beer annually – was up just five percent midway through 2017.

“The growth pace for small and independent brewers has stabilized at a rate that still reflects progress but in a more mature market,” BA chief economist Bart Watson said via a press release.

If that five percent growth trend holds for the remainder of 2017, BA-defined craft breweries will combine to produce fewer than 25.8 million barrels of beer.

The last time growth fell below six percent was 2004, when roughly 1,400 craft beer companies made 5.8 million barrels of beer, according to BA records. By comparison, in 2016, more than 5,200 companies produced more than 24.5 million barrels of beer.

According to the BA, there were 5,562 operating breweries in the U.S. at the end of June, meaning that 906 new beer companies opened during the prior 12-month period.

“The beer world is highly competitive, and there is certainly a mixed bag in terms of performance,” Watson said. “Some breweries are continuing to grow, whereas others are having to evolve their position and nurture new opportunities to ensure they keep pace.”

Bart Watson at the 2016 Winter Brewbound Session

Indeed, after six straight years of double-digit volume growth (2010-2015), growth in the craft beer segment has become more difficult to squeeze out.

According to a recent Nielsen report, 86 of the top 100 craft brands grew slower over the last 12 months than they did in 2015.

“Although more difficult to realize, growth still exists,” Watson contends, arguing that many craft breweries are “benefiting from on-premises and taproom sales.”

In a “members-only” blog post, Watson explained that growth for the largest craft beer companies in the U.S. was slower, which impacted the organization’s topline figures.

“Regionals, which are far more reliant on distribution, continue to grow at a slower rate than micros,” he wrote, noting that companies that produce fewer than 15,000 barrels annually reported growth of about 25 percent through June 2017.

Around this time last year, BA-defined craft brewers had grown production about eight percent through the first six months of the year. Growth slowed in the back half of 2016, however, and category-wide production increased just six percent on the year.

Something that could help trends improve during the back half of 2017, however, are increased taproom sales. Watson said he believes an uptick in beer being sold directly to consumers — something the organization can’t accurately quantify at the moment – could shift industry-wide production “up a point of two,” he said.

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