Within on-premise drinking, the number of bars has declined every year between 2001 and 2016, according to the Bureau of Labor Statistics. However, as fast as bars are closing (-0.9%) they are being replaced at nearly the same rate by eating establishments (0.7%), the majority of which serve alcohol.
Taproom vs. brewpub: A taproom is where production breweries producing less than 250,000 barrels annually can sell their own beer on-site with an on-sale malt liquor license. A brewpub is a restaurant combined with a brewery that can sell its own beer as well as operate a full bar.
“Since there are more eating establishments, the number of on-premise locations offering beverage alcohol actually grew in total 0.4%,” BA chief economist Burt Watson said.
“If we look outside the strict confines of on-premise, we can also see that volume is slowly migrating into a new ‘third space channel,’ driven by experiential desires.”
The third space channel can be defined as not home or work environments, but places associated with a sense of community such as concert venues, sports events, museums, zoos, and other “quasi-public spaces,” Watson said.
Tasting rooms drive on-premise traffic
A strong case can be made that tasting rooms fall into this third space channel, according to Watson, and have played a significant role in driving consumer interest in craft beer and can be a solid source of future growth for the category.
The market share of draught beer, the majority of which is found in off-premise channels including taprooms, saw its highest share of beer production in two decades last year, according to BA data.
“For years, beer was steadily shifting to more and more of an off-premise business,” Watson said.
“I think you can make a strong case that taprooms, along with these other occasions, have played a role in rejuvenating beer’s on-premise culture and draught beer volumes.”
Watson pointed out that even as on-premise beer sales appear to be on the rise, total beer volume continues to slow, but community driven experiential drinking spots like taprooms could be part of the solution to curbing the decline.
“If we shift our focus from the narrow bars to a broader vision of places to enjoy a beer away from home, we see more positive market signs.”