The craft beer industry is changing how people are drinking their favorite beverages. The industry in the US just recently surpassed the number of breweries that were in existence before Prohibition with 4,144 breweries as of November 2015 and this growth has sparked a number of industry trends which are important to examine.
In 2015, the craft beer industry saw Session IPAs rise to dominance. In 2016, watch for the expansion into hard soda beers, such as hard ginger ale or hard root beer, to dominate the industry.
The craft beer industry trends tend to change from year to year based on the personal preferences of a targeted demographic. This is why you’ll see some brewers focusing solely on fruit-flavored sour beers, while others create a solid Kolsch, while still others, like the New Glarus Brewing Company, keep making consumer favorites like Spotted Cow while offering seasonal-only offerings to keep demand levels high.
Innovation Fuels the Craft Beer Industry
- Samuel Adams hopes to lead a charge toward popularizing a new style of carbonation in 2016 with its series of nitrogen-carbonated beers: a coffee stout, an IPA, and a white ale.
- Guinness continues to promote its own nitro-IPA, which it introduced in 2015.
- Left Hand Brewing has also recently expanded into nitro, creating offerings in cans and bottles that the industry has not traditionally provided.
- It’s not just beer either: brewers are also looking to incorporate craft cider practices into the beer industry to create a unique set of products. For example: Dan Gordon, who is the co-founder of Gordon Biersch Brewing Company, has launched the Aurum Cider Company.
- Aging programs for beer are also finding a targeted market, with beer being aged in barrels that contained bourbon, cognac, or even tequila finding levels of popularity for the craft beer industry.
- Then there’s the movement toward Crowlers. Exposure to light within a glass container limits the shelf life of a craft beer, so a switch to jumbo cans still offers consumer convenience while being able to boost the profit line of the craft brewery since the beer has a longer shelf life while sitting in the can.
- Craft brewers currently provide an estimated 424,000 jobs in the U.S., including serving staff in brewpubs.
- Growth of the craft brewing industry in 2014 was 18% by volume and 22% by dollar shares.
- The retail dollar value from craft brewers in 2014 was estimated at $19.6 billion, up from $14.3 billion in 2013.
- Craft brewers now account for 1 out of every 10 beers that are sold every day.
- Portland, OR has the most breweries of any city in the world, with 58 in the city proper and another 84 in the metro area.
Consumers within the craft beer industry like to have their favorite beverages available, but they also want to try something new. This is why innovation is what fuels this industry. It’s great to drink Guinness, but sometimes you want to try something different. That’s why new options are always being explored. When consumers respond in a positive way, such as with the hard soda beer trend for 2016, then brewers will hit the market hard with a slew of products. Unless a brewer keeps exploring for new flavors or experiences, they will be surpassed by the craft brewers who are willing to take a risk to see if something sticks.
Consolidation is the Current Craft Beer Industry Trend
- Anheuser-Busch Inbev purchased 3 craft brewers in 5 days in 2015: Camden Town Brewery [UK], Breckinridge Brewery [Colorado], and Four Peaks Brewing [Arizona].
- MolsonMillerCoors is expected to make a similar move in 2016, bringing in craft brews to their macro-brewing processes.
- Heineken International acquired a 50% share in the well-known Lagunitas Brewing Co. with talks of taking that brand global as part of their craft brew emphasis.
- Constellation Brands also made the effort to jump into the craft beer segment thanks to a $1 billion purchase of San Diego’s Ballast Point Brewing Company.
- There were a total of 24 craft brewery mergers and acquisitions within the craft beer industry in the US in 2015.
- And it’s not just the craft breweries that are being bought by the major players that is consolidating the industry. SABMiller and AB-InBev merged in a $107 billion deal as well, which could lead to more craft brewery mergers in the future to remain competitive.
- Craft brewers sold an estimated 212,159,327 barrels of beer in 2014.
- Yet since 2005, craft breweries have averaged 10.9% annualized growth and now operate over 3,400 total craft breweries in the United States.
There has been some concern about big money coming into the craft beer industry, but it really was an expected outcome. The fact is that beer has always been something brewed locally using local ingredients and small batches. For many years, consumers have been satisfied with macro-brewing practices because it allowed them to have beer readily accessible. What we’ve seen with the craft beer industry is a return to our brewing roots. This is what people want, which means the larger brewers must have a presence within the industry in order to maintain their profitability.
How Healthy is That Craft Beer?
- Restaurant chains with more than 20 locations in the US are required as of December 1, 2015 to offer nutritional information on the beer that is sold.
- This will affect some craft beers because the craft drinker tends to focus more on the quality of the beer than the number of calories they are consuming.
- With the rise of gluten-free breweries like Burning Brothers and Ghostfish Brewing, gluten-free beers are no longer a weak replacement for the real thing.
- Crain’s Cleveland Business reports that there are an estimated 1.2 million home-brewers in the US, most of whom started in the last 15 years.
- Research into craft beer shows support for a decreased risk of cardiovascular disease among healthy men, men who have had heart bypass surgery, women and among drinkers with type II diabetes.
- Hops contain Xanthohumol, which has been found to have significant anti-cancer activity in liver cancer cells and also in colon mucosa.
- Consumption of alcohol can help lower cholesterol levels by raising high-density lipoprotein (HDL) levels.
- Craft Beer is a rich source of silicon, which plays a role in increasing bone mineral density and may help prevent osteoporosis.
When consumed in moderation, defined as 1-2 drinks per day, then a craft beer is a healthy beverage option. There’s no questioning that fact. It is also what is fueling the explosive expansionism of the craft beer industry. Millennials are especially attracted to fresh and healthy products. When a craft beer is able to promote itself as being an alternative that offers more than the water-down flavors of a macro-brew, then it will influence that consumer. This is why the IPA dominated in 2015. No one expects a craft beer to have fewer calories than a Light beer from a major brewer, but it must have superior qualities in order to stay competitive in the beverage market today.
The Trend of Going Too Far With Craft Beer Ingredients
- Mamma Mia’s Pizza Beer is crafted from pizza crusts, giving consumers flavors of garlic, basil, oregano, and tomato with the beer.
- Sprecher Mbege Ale is an unfiltered and fire-brewed African style beer that is brewed using bananas.
- Cannabia is partially brewed as a traditional organic Pilsner, but then in the second step a “secret special organic hemp, source water and organic sugar blend is added before fermentation has ended.”
- Browerij Smisje Wostyntje Mustard Ale is a Belgian beer that is brewed using “90% barley malt, 10% Munich malt, two sorts if hops, dark candy sugar and mustard seeds.”
- The Porterhouse Brewing Company in Ireland shucks fresh oysters into their conditioning tank during the brewing process.
- Lost Abbey’s Gift of the Magi beer is “golden beer that is bittered with the bark of Frankincense and also contains a small amount of Myrrh.”
- 53% of regular beer drinkers in the 21-34 age demographic say that a beer with local ingredients is either somewhat or very important to them.
In an ultra-competitive industry, one must be able to set themselves apart in order to find a consumer niche that can be targeted. This is why so many craft beers are looking at non-traditional ingredients as a method of attracting consumers to their label. Now maybe your preferred beer won’t have the gifts brought to the baby Jesus as told by the Biblical Christmas story or be like John Maier in Oregon who uses yeast from his beard, but it might have coffee or curry spices in it. In 2016 and beyond, look for this trend to continue expanding as craft brewers look to find ways to distinguish and market their labels.
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