In June, the Brewers Association (BA) announced the beer industry’s latest milestone: The seemingly never-ending list of craft breweries had finally topped 3,000.
“What does 3,000 breweries mean?” BA economist Bart Watson asked in a blog post. “For one, it represents a return to the localization of beer production, with almost 99 percent of the 3,040 breweries being small and independent.”
That was certainly the sentiment expressed by many craft brewers during last week’s Great American Beer Fest, where we traveled to ask attendees how market segmentation was impacting the retail landscape.
“Right now it feels like local is the word of the year,” said Magnolia Brewing founder Dave McLean. “Everybody is kind of focused on local breweries in each market. It makes sense, and that seems to be where it is headed for right now.”
But for some, there might be too many local craft beer choices out there.
“If I was a craft consumer and not in the industry, for me, it is a dizzying array of SKUs and I think it is a little overwhelming for the consumer,” said Russian River co-founder, Natalie Cilurzo.
But how does that “dizzying array” impact the operations at a larger, more-resourced craft brewery outfits like Firestone Walker, which ships its beer to markets thousands of miles away from its home base?
“It is noisy out there,” said Firestone Walker co-founder, David Walker. “When we started, there were 500 breweries in the country and today there are 3,000 and we are growing. We are growing a hell of a lot faster than when we started, so it must be helping us.”
The idea that a rising tide floats all boats is a familiar one, but some of those boats might soon begin taking on water. As sales from Firestone Walker and other mid-size breweries continue to grow, nationally distributed craft players like Boston Beer and Sierra Nevada are slowly losing market share, despite increasing sales. That’s why those companies are working overtime to protect their spot on the shelf.
“In terms of the retail sector, I think there is going to be a narrowing of opportunity there,” said Odell Brewing CEO, Wynne Odell. “There is physically only so much shelf space and those breweries who are able to execute at a national level I think will obviously have the upper hand.”
So which breweries will ultimately end up winning?
“I think nobody really knows what this is going to look like in the next couple of years,” said Bill Manley, a longtime beer ambassador with Sierra Nevada Brewing.
Those responses and others are featured in our latest video segment, included above.