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On-Premises Retail vs. Brewery On-Premises

Following years of double-digit growth in the craft beer market, the beer industry as a whole is flatlining. Consumers had their first tastes of new and unique beers from thousands of breweries popping up all across the country, but now, growth has stalled and new watering holes for craft beer fanatics are beginning to dry up.

On-premises retailers, or places where beer can be consumed on-site, are changing dramatically, and such establishments “could be the top story to watch in the beer industry in 2018,” according to Lester Jones, chief economist of the National Beer Wholesalers Association.

“The reality is we’ve seen a change in the on-premises retail marketplace,” Jones said. “Classic bars and taverns are in decline, but the options for on-premises are growing.”

According to Statista, the number of bars, taverns and nightclubs in the United States has dropped dramatically since 2003. There were 71,969 of those establishments in 2003, but in only 12 years, the number of such businesses has shrunk by more than 8,000 to 63,862 in 2015.

On the other hand, the number of breweries in the United States has grown from 1,485 to 4,548 from 2003 to 2015, and has exploded to more than 6,000 today.

The beer industry is also concerned about the growth of wine and spirits, the latter of which replaced beer as the most valuable on-premises product, according to Nielsen.

“The traditional model we know and love – the neighborhood bar – is slowing down and declining,” Jones said. “Year-over-year, there are fewer beers sold in those channels, because on-premises sales around them are changing."

The first major shift Jones pointed to is the emergence of the brewpub. Wineries have long had tasting rooms for consumers to sample wares, with more than 10,000 in the U.S. alone, but breweries lagged behind on this front. Now, brewpubs and brewery taprooms are popping up on major city street corners and small community main streets throughout the country.

Jones said brewpubs are primarily a restaurant, though they are licensed to make and sell beer on-premises.

“It’s a nice small business format,” Jones said. “It certainly started with just a few of them and now has blossomed into a huge business model.”

Seeing the success of brewpubs as a source of steady income, more breweries are beginning to open taprooms, which serve as a place where a brewery can serve its beer – often without a food aspect.

On top of the emergence of brewpubs and taprooms from breweries themselves, establishments outside of traditional beverage-serving models have taken notice of the growing love and interest in craft beer. The “experiential taproom” is a growth avenue many might not have considered, according to Jones. Three of his primary examples for the “experiential taproom” were the San Diego, Philadelphia and Baltimore zoos offering a “brew and zoo” concept.

“They’re the ultimate experience,” Jones said. “I love animals. It’s brilliant.”

Additionally, movie theaters, grocery stores, nail salons and barbers are all beginning to offer beverages to their clientele.

“We talk about a decline in the beer industry, but it seems to be exploding,” Jones said. “We just don’t know how to classify it. It’s complicated and it’s not easy."


Brendan Gary, Director of Marketing
Alliance Beverage Distributing - Grand Rapids, Michigan


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