Business Risks Articles

US Craft Beer Market: Current Trends and Growth Opportunities

Analysts recently admitted that the market for craft beer in the USA is about to reach its peak and a slowdown in the craft sector is inevitable. However, Bob Pease, Head of Brewers Association, indicated that craft breweries along with imports remain the main growth drivers of the American beer market.

In fact, demand for rich taste, variety and local products from small and independent breweries shows no signs of decline. As the craft market has grown, it seems natural that its very growth has slowed, but many experts still feel optimistic about the future opportunities of the beer market.

It should be noted that the top-class beer market is still underdeveloped compared to the markets of many other consumer goods. That’s why the trend to produce more premium beer, which is currently observed, probably has a great potential to develop further.

Since beer lovers seek variety, there is no single style or taste that can be considered a leader. IPA continues to be a powerful driver of growth, in particular, due to the advent of new innovative approaches to its production. IPA is not only a style, but a promising platform for innovations as well.

On the other hand, a powerful group of lighter styles offered by craft breweries exists. These are blondes and golden ales, Kölshes and pilsners, light sour beer and other types of lagers. This trend is reasonable, since an overwhelming majority of beer has a strength of 4-5.5% and growing craft brands offer their clients a richer assortment.

The continuing trend on the market is multinational companies acquiring craft breweries. Multinationals see the same trends and will do everything possible to capture this market. At the same time, brewers who want to leave the business will more often choose selling the brewery compared to other possible options.

The main challenge for craft beer is that large producers will be able to use their advantages in scale, marketing and distribution to promote their brands both in wholesale and retail segments, even if this would be contrary to the consumer demand.

In general, access to the market will become more complicated. Shelves are getting crowded, it’s difficult to find a place in the pubs and many distributors today buy fewer new brands than earlier. In the states where brewers do not have vast opportunities to enter the market (for example, self-distribution and direct sales are limited), there is a risk that they will not be able to find a way to their target consumers.

Johnny Forsyth, beverage market analyst from Mintel, considers that US craft beer sector will continue to grow at a healthy pace over the next few years, but it will be divided into two subcategories, i.e. mass craft and real craft.

Sam Adams beer, for instance, is so large and so widely sold nowadays that it moved into the mass craft segment. At the moment, it is on par with Blue Moon, Shocktop and other brands that actually aren’t a real craft because they are produced by large companies.

The real craft brands will remain those who will carefully preserve their authenticity, while remaining exclusive, small, regional and independent. They will reach fewer consumers but craft beer experts will undoubtedly prefer them.

Research conducted by Mintel found that American beer lovers accept the concept of mass craft beer very well. They believe these brands are trustworthy, perfect for everyday consumption, more affordable and it’s easier to find them in the supermarkets compared to the true craft products.

In addition, mass craft brands are a perfect fit for those consumers who want to drink more delicious and premium beer but do not want their taste buds to be detonated by the IPA hop bomb. Such brands will help new consumers define their own preferences in a wide assortment of craft beer.

Thus, craft brands need to decide which of these subcategories they will be present in, since it’s pretty hard to play on two fields at once. Such prospect of market development is good news for large manufacturers who will be able to play a transparent game in the mass craft segment.