The State of Craft

When independent brewers took exception to the mass marketing of mundane beer, the result was an American revolution. By establishing a local brewery within 10 miles of 80 percent of the population, independent brewers literally conquered America.

In 2024, the next challenge for craft brewing became apparent: How to deal with demand that is no longer insatiable after the craft community suffered a series of body blows. First came the buyouts of established craft breweries by mega brewers that began in 2015. The pandemic followed, further denting the masses’ demand for craft brews. The most recent headwinds are a cultural shift in what people drink and how they view drinking.

But I still don’t get the purveyors of doom and gloom when it comes to craft.

Citing the usual checklist, economists have all kinds of statistics about the sales slowdown in beer overall and craft specifically. Competition, changing social attitudes and the generational shift from Millennials to Gen Z are the usual starting points about why packaged craft beer sales continue to decline without draft sales in tap rooms or restaurants making up the loss of volume. (Draft sales are rising to pre-pandemic levels.)

Fortunately, we are not economists. Skipping the day-to-day minutiae about year-over-year declines in favor of the larger picture, craft beer’s sales totaled $29 billion in 2023 for those breweries considered independent by the Brewers Association. That’s up from pre-pandemic numbers by $3 billion. A more realistic discussion is about a craft beer marketplace that no longer thrives on increasing demand driven by new arrivals or new territories.

Yet, the extraordinary beers keep coming. Innovation continues to be sparked by the authentic pursuit of some of the world’s best beer.

From more refreshing hazy IPAs, to new takes on West Coast IPAs as well as impeccable pilsners and lagers, craft brewers continue to explore their art and science by using a wide range of new methods and ingredients. The smaller, more esoteric categories like stouts, sours, wild ales and fruited beers, not to mention saisons and farmhouse styles, continue to be well subscribed in the judging at the Great American Beer Festival. Beyond that, it’s surprising to learn just how easy it is to find English styles.

While there was a lot of “monkey see, monkey do” to meet demand when there seemed to be no end to it, a renewed focus on connecting to consumers is bringing craft back to its authentic roots. Authenticity can be described as a real connection to customers. Making that connection now requires a brewer to constantly build on its name and reputation, origin story, the quality of beer and innovation.

The view from here looks as if the generational shift from the Millennials to Gen Z is having the biggest influence on the challenge brewers face in generating new craft beer drinkers.

From 2000 until the pandemic, the timeline of craft’s market share growth correlated directly with the arrival of Millennials at the legal drinking age. This love of all things artisanal included such DIY pursuits as homebrewing, or, say, making (then slicing) your own bacon. Check out any crowded taproom and you’ll see a predominance of the group that came of age close to the century mark, when artisanal pursuits became the acid test of cool.

The current challenge with an aging base of fans and a younger generation goes beyond an engaging taproom and good beer. Occasions are required to keep craft beer, pardon the expression, cool. And, when it comes to communicating from the shelf, look no further than New Belgium’s distinctive product line and the labels on its Voodoo Ranger IPAs.

In the retail space, independent brewers, regardless of their size and who is walking the aisles, are faced with the same challenge. There’s a dizzying array of choices, which include RTDs (both spirit-based and malt-based) as well as an avalanche of fermented malt beverages, hard seltzers and hard teas.

On the other hand, do we miss the good ol’ days before hard seltzers began arriving in 2016 when a multitude of craft beer choices jammed the cabinets? Probably not. In place of running everything up the flagpole in as many states as possible, the smaller craft brewers now tend to pick and choose how they connect with consumers in retail sales. Microbreweries are less inclined to think of expanding to a new state as the best path to growth. (There’s an indirect benefit of less out-of-date beer on the shelves.)

There are new horizons and methodologies that are having a positive influence. There’s a movement to encourage minority ownership of craft breweries as well as efforts to market to minority drinkers. Mergers between smaller, independent breweries are creating new possibilities for not only sustaining brands but expanding them. Contract brewing between independents has also expanded opportunities.

Although THC drinks are not brewed, this “beyond beer” category may help the bottom line in the future at breweries with excess capacity. Currently in that gray area between accepted but illegal in half the states, marijuana use is cited as a headwind for craft beer. Those who might pursue an alternative lifestyle are choosing marijuana over alcohol, or so the theory goes. Alas, at this point, it’s just a theory.

After the pandemic, no other issue has cut into the craft mystique like independent breweries selling their businesses on an eight-figure or nine-figure scale to macro brewers, which can lead to a downturn in sales. Corporate giant Heineken, for one example, reports that the once high-flying Lagunitas brand that reflected the counter-cultural mentality of founder Tony Magee has fallen precipitously from its sales peak.

In the three years after Heineken’s nearly $1 billion purchase in 2018, production at Lagunitas fell by 122,000 barrels. That was before the pandemic. From a high of just over 1 million barrels at the time of the final acquisition, the brand’s most recent annual production was down by over 300,000 barrels at the end of 2023. 

Is there a “deep state” conspiracy among the big brewers to minimalize craft? That seems hardly likely given the investment macro brewers such as AB InBev and Kirin-Lion, in addition to Heineken, have made acquiring craft brands. Or the investment made by MolsonCoors in Blue Moon. But the faltering of major brands that have been acquired certainly has a negative impact on the perception of craft. Constellation Brands, for instance, wrote off much of its $1 billion acquisition of Ballast Point.

Devotees may not have given up on drinking craft beer as the result of what some perceived as “selling out.” But in any case, regarding craft as a life-changing force is no longer in vogue. Once regarded as a progressive movement with the inherent political overtones of changing the world, craft beer has become a lifestyle movement, not necessarily a belief system.

When the sales of Anchor Steam flagged, the seemingly inevitable nadir arrived when owner Sapporo, Japan’s oldest brewer, elected to close Anchor Brewing last year, the place on San Francisco’s Potrero Hill that christened the craft movement in the 1960s.

Craft’s overall staying power is exemplified by three of the top 25 U.S. beer producers. Although now owned by Kirin-Lion, which technically does not make them “craft” by the Brewers Association criteria, the New Belgium and Bell’s brands are in the black for 2024. Two of the seven other producers with increased sales are craft stalwart Sierra Nevada and Athletic, the leader in non-alcohol beer sales. Boston Beer, Yuengling, Artisanal Brewing Ventures, Firestone Walker and CANarchy, the other craft brands in the Top 25, show declining sales for 2024.

Where is evidence of craft’s staying power? Recent data shows an improvement when it comes to declining beer sales. Plus, many producers have used pricing to sustain the bottom line, which indicates customer loyalty among craft drinkers, who continue to pay premium prices.

Attitudes toward drinking itself are changing in the form of “Dry January” and “Sober October” along with many other emerging trends driven, in part, by younger Americans. Fortunately, led by Athletic, which grew by 70 percent in 2024, non-alcoholic craft beer is the fastest-growing segment by far. Athletic’s marketing data shows that most of its customers also drink traditional beer. The key to its success is a highly innovative and technically challenging brewing process.

What about the media? Given that we are in the media business, it would not behoove us to cite a media conspiracy. It’s just that craft is no longer regarded as a cultural phenomenon when it comes to mainstream media – although Athletic’s story as well as its non-alcoholic beer come close these days.

Instead, craft beer is here to stay – simply as a regular and valued member of the neighborhood.