Nationwide, sales of distributed draft beer have stalled at the same levels reached in 2021, as the on-premise reopened following COVID-19 pandemic-driven closures.
The draft market is estimated to be 2 million barrels below historic trends, Brewbound editor Justin Kendall said, citing data from Brewers Association chief economist Bart Watson, to kick off a conversation about the state of draft beer during Brewbound’s recent Brew Talks meetup in Denver last month.
Panelists included Dogfish Head co-founder Sam Calagione, Buffalo Wild Wings director of beverage strategy and innovation Jason Murphy, and Tamarron Consulting co-founder and president Lori Scheiffler.
“This is not a pandemic problem – it’s a generational problem,” Calagione said.
Draft’s share of Dogfish Head’s portfolio has declined in the last decade and a half, from 25% draft overall, to 23% on-premise, 20% of which is draft. Because Dogfish “came up as a brand that focused on the higher ABV beers” that were “more wine-like in their presentation,” the brand has been somewhat insulated from draft’s crisis.
At Buffalo Wild Wings, one of the country’s biggest purveyors of draft beer, draft accounts for 93% of all beer sales, Murphy said. Of the remaining 7% in package, one brand accounts for 3.5%.
“We rely on draft in everything that we do,” he said.
Pandemic-driven consumer spending shifts toward the off-premise may be stickier than anticipated, and those changes have taken middle-tier attention with them.
“We have seen a little bit of a dip in engagement from a lot of our wholesalers,” Murphy said. “A lot of the prioritization is still going to off-prem, specifically c-store seems to be the priority from all the conversations we have. And we know the reasons why: The 19.2 [oz.] format is just blowing trends out of the water. That’s where the consumer is going.”
Those 19.2 oz. cans have propelled some craft brands, such as New Belgium’s Voodoo Ranger family, to atmospheric success in recent years. But the gains may be coming at the expense of draft.
“We see that a lot of venues have shifted to that large format can, which is a loss of a lot of draft opportunities,” Scheiffler said.
As consumers’ desire for draft beer seems to wane, Buffalo Wild Wings has its eye on converting some of its thousands of tap handles to non-beer products, Murphy said. Beer companies could be at risk of losing more of those handles to other products in the future.
“There’s going to be an inflection point soon where those handles are gonna go to wine and they’re gonna go to batch cocktails and I might put on a nitro cold brew line,” he said. “I used to be a place that had 20 handles available to our brewery partners in each restaurant. Now we have 10, or 30 handles and now we have 20, because the other 10 are going to RTDs and things like that.”
The full conversation can be heard on the Brewbound Podcast and watched here.