The grandfather of the modern microbrewery movement, Fritz Maytag, once mused that “one day, there will be a brewery in every town in America,” recalled Steve Hindy, co-founder of Brooklyn Brewery.
On a recent coast-to-coast road trip, Hindy stopped through a handful of the nation’s 9,200 breweries and found Maytag’s prediction may have nearly come true.
“I can’t tell you how proud it made me to see the quality of the brewing and the commitment to community,” Hindy said Tuesday during the Craft Brewers Conference in Minneapolis. “We all worked hard to make that happen.”
But can it last?
Despite claiming a record share of the $100 billion American beer market last year — 27 percent of all dollars spent on beer went to craft brewers — growth has slowed, a tell-tale sign of a maturing market.
New beverage competitors are claiming shelf space. And the aftershock of the pandemic is still being felt.
“I want to highlight for the hundredth time, this isn’t a bubble bursting,” said Brewers Association economist Bart Watson. “But demand for the segment as a whole does not guarantee demand for individual businesses. ... Only 30 percent of brands are growing right now.”
Watson told many of the 10,000 people gathered for this week’s Craft Brewers Conference at the Minneapolis Convention Center the industry has matured to the point that brewers need to focus on their brand, establish their niche and keep pace with changing demographics.
“When you’re thinking about what’s going to grow, think about your brand and what’s going to make your brand grow,” he said.
Breweries keep opening in more corners of the country and have nearly doubled in number since 2015. Still, the amount of beer produced by craft breweries has not yet recovered to the high-water mark set in 2019. And large regional brewers comprise a majority of that production. In Minnesota this includes brands like Surly, Schell’s, Castle Danger and a few others.
Meanwhile, the growth of alcoholic seltzers and ready-to-drink canned cocktails — referred to as a “fourth category” competing with beer, wine and spirits — has seen explosive growth in recent years.
That presents an opportunity for some — many brewers now offer seltzers in taprooms and in stores — but overall it presents a threat to the industry: “If these trends continue, beer is not going to be the number one beverage in the United States,” Watson said.
Over the past two years, the craft beer industry was kept afloat by $1.5 billion in coronavirus relief funds, and demand for beer at home helped keep many breweries in business. That major demand shift from taprooms to cans caused a shortage of aluminum cans and other supply-chain headaches, driving up prices.
“We’ve lost some breweries, and I don’t believe that’s over,” said Garrett Marrero, Maui Brewing Co. CEO and chair of the Brewers Association board. “Out of the ashes of the pandemic, we have an opportunity to break from the status quo to rebuild our industry.”
Marrero said that craft beer drinkers crave creativity and innovation — and quality above all.
“If you’re not making great beer, you’re not doing anyone any favors,” he said. “Invest in your quality.”
Watson said the state of the industry is a “pint glass that’s half full or half empty.” Brewers that respond to consumer demand and cultivate strong brands will see the most success in the coming years.
“A more mature market forces us to think about the customer more and find niches where we can grow,” Watson said. “There are only so many consumer dollars, distribution trucks and retail shelves.”