In 2016, a new craft or micro brewery opened in the US on average every 11 hours. Pretty amazing.
Also, the roughly 5,300 U.S. craft and micro breweries produced 24.6 million barrels of beer in 2016. This was about 12.3% of the beer industry's 2016 volume.
More impressively, craft and micro brewers 2016 sales totaled $23.5 billion, which was 21.9% of the U.S. beer industry's revenue.
But despite these frothy numbers, there were also some sobering craft beer stats in 2016.
Volume sales growth slowed from 13% in 2015 to 6% and sales growth declined from 16% in 2015 to about 10% in 2016.
So while the craft beer industry is still growing, the growth is starting to slow.
The financial analyst firm Harding Loevner's report CRAFT BEER IS GOING FLAT. CAN CRAFT SPIRITS CONTINUE THE INSURGENCY? nicely covers the reasons behind craft beer's slowing growth.
A big reason for slowing growth is craft beer is a victim of its own success. Key quote:
... the groundswell of newcomers resulting from lower barriers to entry has fragmented the market, making it increasingly difficult for craft breweries to stand out from their peers and grow their brand.
Another reason is the big brewers are fighting back. They are releasing their own craft style beers and acquiring craft brewers.
According to the Brewers Association, large brewers acquired micro brewers that produced roughly 1.2 million barrels of beer in 2015. This was about 5% of the entire craft beer production in 2015.
Harding Loevner also points to market saturation as a source of declining growth. Their analysis shows an estimated 75% of the US drinking age population resides within 10 miles of a brewery.
Price is also an issue. As the Harding Loevner report says, "there are natural limits to how much of the market will pay $17.49 per six-pack (the current retail price of a Dogfish Head “Flesh and Blood IPA” on Craftshack.com)."
So is the craft beer boom over?
No. And it's especially not over globally. As the Harding Loevner chart below shows, there's plenty of room for craft beer growth globally.
Also, there are still pockets of high growth here in the U.S.
According to CBS MarketWatch's Craft-beer glut starting to take its toll on sales smaller micro brewers are doing much better than larger ones. Key quote:
The 5,000 small brewers shipping fewer than 100,000 barrels a year had an average volume growth last year of 14%, double the growth rate for the craft category overall, according to Beer Marketer's Insights.
At the same time, the article points out that "shipment volumes declined for 16 of the top 36 craft-style U.S. brewers last year."
So the more micro the brewery, the more likely it's doing well.
Our interest in the craft brewing industry is due to the fact that it's such a good example of a barbell industrial structure.
In this structure industries are comprised of a few global corporations on one end and a large number of small, micro and solopreneur businesses on the other.
As the barbell evolves, the number of mid-sized businesses decline in number. These firms lack to the scale to compete with the global giants but are too big to match the agility and flexibility of smaller firms. Mid-sized firms also are attractive acquisition targets for the global giants.
We've been following the evolution of barbell industry structures for over a decade and we often use the beer industry as an example. The reason is the beer industry is such a clear example the barbell.
But it's not just beer. Almost every industry we've looked at is moving to a barbell structure.
See our Industrial Structure section for more on this topic.
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