Business

Is craft beer industry's buzz wearing off?

Increasingly crowded field leads to closures of small craft breweries

Bottles of beer are seen on display at a new outlet of French grocery retailer Auchan on the day of its opening in Moscow, November 28, 2014. REUTERS/Sergei Karpukhin/File Photo
Bottles of beer are seen on display at a new outlet of French grocery retailer Auchan on the day of its opening in Moscow, November 28, 2014. REUTERS/Sergei Karpukhin/File Photo

Has craft beer peaked? In one sign that the industry has grown less frothy, more craft breweries closed in 2017 than any time in the past decade.

And while the craft beer makers saw more growth in production than the overall market last year, their pace is slowing.

A new report by the Brewers Association — a trade association representing small and independent American craft brewers — showed that craft brewers saw a five percent rise in production volume in 2017.

Yet with that growth comes an increasingly crowded playing field, leading to more closures of small craft breweries. In 2017, there were nearly 1,000 new brewery openings nationwide and 165 closures — a closing rate of 2.6 percent.

That’s a 42 percent jump from 2016, when 116 craft breweries closed.

Experts say saturation still is some time away, and that pullback is inevitable for any booming industry that, with time, begins to mature.

“We have seen a little bit of deceleration,” said Bart Watson, chief economist of the Brewers Association. “When you’re talking about an industry that sells tens of billions of dollars a year, it’s hard to grow at double-digit rates.”

Growth in the craft brewing industry began in the late 1970s and early 1980s, Watson said, and has seen a resurgence in the past decade. With consumers who tend to skew male, younger, whiter and with higher incomes, the industry gained its foothold among adults willing to pay more for beer that tasted better than the mass-produced products that had long dominated the market.

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Small craft breweries compete among themselves for taps at restaurants and shelf space at retailers. Yet they also are up against massive industrial brewers who wield heavy influence over the national distribution of beer, and often buy up smaller companies. In 2011, for example, Anheuser-Busch InBev bought the craft brewer Goose Island for almost $39 million, the first is a slew of similar acquisitions.

“The largest brewers have a lot of ways that they can push into the market, rather than relying on consumer pull,” Watson said.

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