This year will be the first, other than 2020, in which independent breweries’ volume has declined in the modern era of craft beer, according to the Brewers Association’s (BA) 2023 Year in Beer report.
“Outside of a unique 2020, this will be the first time that independent brewers have seen such a decline,” BA chief economist Bart Watson said in a video accompanying the report. “The primary culprits are slowing demand growth, competition from across beverage alcohol and a changing retail environment.”
Among drivers of change at retail are “declining draught sales and reduced shelf space for craft,” according to the report.
“While the Brewers Association, along with state guilds, will continue to fight for additional market access in areas like direct-to-consumer, many of craft’s current challenges will require new strategies to reach new and existing customers in new occasions with new flavors and innovations,” Watson said.
In 2022, craft beer’s volume increased +0.1% – a flat middle ground between overall beer’s -3.1% decline and imported beer’s +2.8% increase. Dollar sales of craft beer increased +6% last year.
Last month during his keynote address at the Massachusetts Brewers Guild’s (MBG) annual conference, Watson shared that craft volume for the first half of 2023 declined -2% year-over-year (YoY). In the 13 weeks ending August 13, craft dollar sales increased +0.7% YoY in NIQ-tracked off-premise channels, but volume declined -3.1%, according to data Watson cited from 3 Tier Beverages’ dashboard for BA members.
So far in 2023, about 420 breweries opened and roughly 385 closed, Watson wrote. The delta of 35 between those figures is the smallest in recent years. In 2022, about 550 opened and more than 200 closed. In 2021, an estimated 710 breweries opened while 176 closed, according to the BA’s 2021 report.
In his MBG keynote, Watson pointed out that the “pretty clear decline” in new brewery permits issued by the U.S. Department of Treasury Alcohol and Tobacco Tax and Trade Bureau (TTB) correlates with a decline in brewery openings, instead of an increase in closings.
“We’re at a place where we’re starting to see the number of breweries be more or less static,” Watson said.
Despite challenges facing the industry, Watson found a bright spot: “The continued overall popularity of the category.”
“Independent brewers still sell more than one out of eight beers in the United States, and consumers spend roughly a quarter of their beer dollars on a beer from a small and independent brewer,” he wrote.
For the first 10 months of the year, craft beer accounted for 10.18% of all beer category dollars and 7.16% of case sales at multi-outlet grocery and convenience stores tracked by market research firm Circana, which also includes craft brands owned by large, multinational breweries that the BA excludes from its craft brewery data set. The craft segment lost -0.37 points of dollar share compared to the same period last year.
Highlights and Headwinds
In Washington, D.C., the BA has continued its lobbying efforts during a year of “ups and downs,” including outreach to the 84 newly elected members of the 118th Congress and “educating them about small and independent breweries and the legislative issues that impact our industry.”
Federal government affairs issues in 2023 have included “supply chain issues focusing on CO2 capture and ensuring that the federal excise tax structure put in place by the Craft Beverage Modernization and Tax Reform Act is protected.” The U.S. Postal Service Shipping Equity Act, which would allow the USPS to deliver beverage-alcohol in states where DTC shipping is legal, was reintroduced in May.
After the supply chain roller coaster of the last few years abated, climate change-driven disruptions caused below average harvests in European hops and North American barley, according to the BA.
In three years of existence, the BA’s mentorship program has cycled through six cohorts that have connected more than 200 mentor-mentee pairs.
Look for more Brewbound coverage of Watson’s Collab Hour webinar about data points from 2023 and predictions for 2024 later this week.
For more insight and analysis of the beer landscape in 2023, watch Watson’s and National Beer Wholesalers Association chief economist Lester Jones’ presentation during the Brewbound Live business conference last week in Marina del Rey, California.