Brewers Association CEO Bob Pease: Despite Downward Trends, ‘Craft’s Best Days Are Ahead’

While Brewers Association (BA) chief economist Bart Watson warned of continued craft declines during his keynote speech Monday at the Craft Brewers Conference (CBC), BA president and CEO Bob Pease shared a message of optimism while on stage in Nashville.

“Those of us at the Brewers Association firmly believe that craft’s best days are ahead,” Pease said in his opening remarks during the conference’s general session.

To reach those best days, Pease encouraged members to collaborate both in innovation and in problem solving. Garrett Marrero, BA board chairman and founder and CEO of Craft ‘Ohana, echoed those calls for collaboration in his general session remarks.

“There’s no doubt we’re heading into some challenging times,” Marrero said. “We’re all facing the increases in cost, supply chain disruptions, labor shortages and more. As Bob mentioned, everybody has an issue you face, so lean into your friends, your colleagues in the industry. Reach out, ask for help, have a beer and find a solution.”

This is the first CBC since Marrero and Maui Brewing Company acquired Modern Times Beer and joined the two brands under a platform brand, Craft ‘Ohana. The two companies are just one example of many craft breweries who have joined forces and become brewery platforms to share resources and grow. Watson pointed out the trend last month after sharing the BA’s 2022 list of the top 50 craft breweries by volume, which included newly formed platforms Craft ‘Ohana and Made By the Water, which consists of Faubourg Brewery, Palmetto Brewing, Oyster City Brewing and Catawba Brewing.

The message of collaboration was on display at the close of the session with a panel of trade group leaders: Brian Crawford, president and CEO of the Beer Institute (BI), Craig Purser, president and CEO of the National Beer Wholesalers Association (NBWA) and Pease.

“We know when a consumer has an occasion … they have a choice, and we’ve got to be more relevant,” Purser said. “[The solution] I think it’s focus, it is execution, but I also think it is everybody collectively coming together and deciding we’re going to stop that trend of category decline.”

The trio repeated many of the sentiments they made a couple weeks ago at the NBWA Legislative Conference in Washington, D.C. Crawford once again called out the spirits industry’s success in taking away beer occasions, while the beer industry hasn’t been as strong of a collective force across all three tiers.

“Short term, there’s no doubt that hard liquor has been taking market share from us and part of it has been that beer has been somewhat asleep at the switch,” Crawford said. “We’ve been focusing inward and not watching what’s happening around us.

“We need to make sure that we’re aligned in fighting back and fighting for beer,” he continued. “The greatest opportunity is the fact that the three of us are on stage together and we’re singing off the same song sheet song sheet, and we’re aligned.”

Some of the issues beer needs to be aligned on are the fight against lower taxes and increased market access for spirits-based, ready-to-drink cocktails (RTDs); eliminating aluminum tariffs implemented during Donald Trump’s presidency; and highlighting beer as the drink of moderation, as the “threat” of the messaging of “no safe level” of drinking is making waves in Europe and could move to the U.S., Crawford said.

Crawford called the RTD tax fight “critically important,” and warned that the push to lower the excise tax for spirits-based RTDs with ABVs similar to malt-based products isn’t a matter of equalization, but rather a “Trojan horse” to move consumers to higher ABV spirits products. Additionally, the established tax system is a “delicate framework,” and such moves could threaten the work beer has done to get the rates it has, Crawford said.

“We worked 12 years together trying to pass the Craft Beverage Modernization Tax Reform Act,” Pease added. “We do not want to see our friends in the liquor industry try to pull a string and unravel that.”

To re-energize craft beer as it enters its fifth decade, trade group leaders encouraged breweries to focus on the “romance” of beer, particularly in the on-premise. They reiterated Watson’s message that draft serves as one of the biggest opportunities for craft beer, with the channel still not fully recovered to the levels it was prior to the COVID-19 pandemic.

“Getting back to where we were pre-COVID with draft sales is job No. 1,” Pease said.

Keg sales, which were already in decline prior to the pandemic, were still 2 to 2.5 million barrels below where they should have been in 2022. Craft accounts for 30% of that volume, meaning up to 800,000 barrels of craft beer effectively evaporated from the market, Watson said.

Craft’s No. 2 job is to bring in new consumers, particularly women and people of color, Pease said.

“That’s a challenge to everybody in this room,” he said. “We have got to do better in that category.”

Craft is the worst performing segment in all of bev-alc with women and people of color, which is particularly concerning for the segment as those two demographic groups have the highest growth in bev-alc consumers, Watson said. The discrepancy “really hit” Purser, who encouraged the industry to do better at having company leaders and “employment bases” that “look like our marketplaces.”

In terms of tackling shrinking shelf space, Purser encouraged breweries to “focus” on the brands they’re putting in the marketplace and not “create too many varietals that are going to just get lost in this confusion.”

“Make no mistake about it, times are very difficult,” Purser said. “It’s striking that balance with the retailer.

“The whole idea of being able to build up a flagship and work to get it placed is super important,” he added.

Asked how small breweries can better tackle distribution hurdles, Purser admitted that self distribution is a viable choice for breweries in states that allow it, although there are challenges once a brewery wants to get more than five miles away.

Pease asked Purser if there was “more the BA can be doing” to help craft breweries connect with distributors. Purser welcomed the involvement, welcoming “more people in the boat.”