Incoming Brewers Association CEO Bart Watson and staff economist Matt Gacioch offered a data-filled, crystal ball look at opportunities and challenges for craft brewers heading into 2025.
The duo offered predictions for 10 areas of the beer business in the new year during a webinar Thursday. Here’s a recap of those predictions:
1. Beer Overall: The trend of declining domestic beer shipments that started in 2016 will continue in 2025, Gacioch predicted. The industry has seen “high single-digits decline” since 2016, Gacioch said. Following a pandemic bump in shipments, the industry is back on trend to pre-pandemic declines, amounting to around a reduction of 10,000 barrels per month.
Meanwhile, inflated inventory levels are expected to decline as production slows.
2. Craft Beer: The number of brewery closures (399) nationally this year outpaced openings (335) for the first time since the early 2000s. Watson noted there is still some variation in the closing rate by state, with some states seeing no closures and others in more mature areas seeing higher rates.
Those trends are likely to continue in 2025, although Watson reminded webinar attendees that the number of closings is “still low.”
At-the-brewery growth is also expected to remain challenged as long as overall brewery growth is slow, Watson continued. Last week, the BA reported that craft volume is expected to be weaker than the -2% mid-year survey number; Watson previously forecasted -2% to -4%.
Scans have seen improvements, but remain weak, Watson said. Dollar sales may eke out positive growth by year’s end but volume is expected to be in the red.
On the bright side, draft is one area where craft brewers may find growth in 2025.
3. Distribution: Gacioch predicted continued competition for shelf space from non-beer offerings, including canned cocktails and THC beverages. Nevertheless, he said independent craft is outperforming full-flavored craft (often considered in scans as higher ABV offerings).
Some wholesalers have also moved away from craft, Gacioch added, pointing to “stark” ordering trends in the National Beer Wholesalers Association’s Beer Purchasers’ Index. Gacioch predicted that the BPI will level out with a “new baseline as beer overall declines.”
4. At-The-Brewery: Point-of-sale data from Arryved showed check volume per site declining -2% in the first half of 2024, but breweries are making up for losses by selling food and other beverages in their spaces.
Watson described the experience in brewery taprooms and tasting rooms as a change from the build-it-and-they-will-come Field of Dreams era to more of a Moneyball game of new business models, such as joint taprooms and increased collaboration.
Watson expects the pace of change to accelerate and new hospitality models to emerge with changing visions for taprooms and brewpubs. He also sees opportunities coming in non-traditional locations, such as rural versus suburban and urban areas.
“It’s going to be more challenging in locations where there’s lots of options, both within craft beer, but also within beverage-alcohol more broadly,” he said.
5. Supply Chain: “‘Tariffs’ will be the word of 2025,” Gacioch predicted. President-elect Donald Trump has already threatened to implement 25% tariffs on Mexico and Canada, as well as additional tariffs on existing ones on China, on his first day in office.
Producers shouldn’t expect inflation to ease much, if at all, on the cost of goods, Gacioch added.
Another uncontrollable for brewers will come from climate-related disruptions, which have manifested in recent years with hurricanes, wildfires and other issues, which Gacioch expects to continue.
6. Pricing: Although there has been a lot of pricing growth for craft and concerns around those increases, craft pricing has lagged behind total beer and overall food and beverage, Watson said. Weak pricing growth is expected to continue in 2025.
In the on-premise, where the price of pints has climbed, Watson suggested those prices “may start coming down to earth.”
Still, there are opportunities for building differentiated brands and premiumization, Watson said.
“Brands that are giving customers a reason to pay that value at different price points are the ones that are going to succeed going forward, and that might be tougher for everyone in a pricing environment where prices have gone up overall for both craft and everything and some customers are looking at their consumer purchasing,” he said.
7. Consumer Spending: Expected increased wages could lessen the impact of inflation on consumers, Gacioch predicted. While there has been a “vibecession” recently, with consumers more acutely aware of economic challenges, negative consumer sentiment could wane as paychecks increase and the sticker shock of increased prices lessen with time, Gacioch said.
Beverage-alcohol’s share of total spending is expected to “remain steady,” he said.
8. Draft: Draft is among the bright spots for craft in 2025, Watson said. Craft’s share of draft is growing, now sitting at 43.4% share. Watson sees an opportunity for craft producers who focus and execute on draft in bars and restaurants as on-premise retail outlets bounce back.
“I’m not going to go as far as to predict it, but I do think this is one place where craft and overall beer has the potential for growth in 2025 if it’s something that enough brewers are focused on as part of their growth strategy, which, to me, makes a lot of sense,” Watson said. “You aren’t going to have everybody win in chain retail, and so seeing a few more brewers add and focus here as a distribution strategy, I think could be what takes draft back into the positive in 2025.”
9. Styles: Craft’s dominant style, the IPA, is expected to gain share of beer styles in the “U.S. of IPA” in 2025, Gacioch predicted. Helping drive those gains will be higher ABV IPAs, he added.
Gacioch also projected share gains for lagers, as more craft brewers jump in on the style.
More distribution losses are expected for seasonal offerings as retailers cut back programs due to e-commerce complications, Gacioch said. Recall, some major retailers, including Walmart, have enacted unique UPC mandates for seasonals and variety packs to reflect more accurate stock levels for e-commerce sales, causing headaches for and complications for suppliers.
However, Gacioch sees an opportunity for growth in taprooms for seasonals, as well as those breweries offering variety on their menus.
10. Positivity: The bev-alc era of flavor, variety and innovation favors craft brewers, Watson concluded. He called this a reason for optimism as “this is where craft brewers were built to play.”
“The type of beverage-alcohol customer that we have today is the one that is going to consider craft in their decision set, and now they have a lot of other things to consider in that decision set,” he said. “So it’s not all good news, but craft brewers have the tools and the know-how to be fierce competitors during this era.”
An advantage for craft brewers is that they are small, nimble and adaptable, he added. He pointed to the more than 600 breweries that now hold distilled spirits permits.
“You’ve created trust with the people who come into your taprooms and know you for great beers, and now many of you are using that as a platform to grow your connection with them in other parts of beverage-alcohol or other parts of beverage as people explore hop waters and other non-alcoholic products,” Watson said.