The Brewers Association Midyear Update Shows Craft Beer Declined, But The Future May Be Brighter

Food & Drink

Over the first half of 2023, craft beer declined — for the first time (other than 2020) since the Brewers Association started reporting craft beer sales numbers — but the second quarter was better than the first, so the worst may be behind the industry.

In 2022, the Brewers Association reported 0% growth, and while the first half of 2023 showed a 2% decline in craft beer sales, the second quarter was better than the first, providing optimism for the maturing industry.

“Breweries are adjusting to the new environment,” says Bart Watson, chief economist of the Brewers Association. Consumers are drinking less beer overall, but breweries are adjusting their product packaging mix (larger beer packs are selling better) and their distribution channels (selling more direct to consumer). Draft beer sales, which have been declining since 2014, are declining at a slower rate and retail sales numbers are improving with both UPC scan data and wholesale distributor survey data improving since 2022. “Q3 shows possibility,” says Watson. “The scariest numbers from 2022 are now trending up.”

One notably bright spot in the data was breweries producing less than 1,000 barrels of beer per year. These very small, hospitality-focused breweries at which most of the beer is sold directly to consumers were “strongly positive” according to the Brewers Association presentation.

Despite borrowing costs and input costs rising faster than beer prices — which would indicate profit margins are narrowing in craft beer — craft brewery closures have not been increasing. The total brewery number actually increased slightly to 9,456. To Watson, this proves the resilience of craft breweries which are figuring out ways to stay in business despite headwinds. “They’re finding ways to be more efficient,” he says.

“Don’t bet against craft breweries,” says Watson. “We have thousands of scrappy entrepreneurs working hard.”

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