Midyear 2023 survey results are on par with 2022 annual trends, with the industry leveling out after years of growth followed by two years of a unique market due to COVID-19.
Indicative of a maturing era for the craft beer industry, the survey reveals a low single-digit volume decline of -2% in the market.
Rising costs, borrowing costs and supply chain disruptions are identified by brewers as key issues for the industry. But the biggest challenge come from competition from other types of beverage alcohol, such as RTDs and hard seltzers, while inflation is eroding consumers’ buying capacity and causing them to cut back on purchases altogether, particularly in the on-trade.
“Optimism is on the horizon as the midyear survey shows hope for better trends in the future,” reflected Bart Watson, chief economist at the Brewers Association. “Collectively, craft still needs new ideas and new strategies to move beyond our current normal, which is a slow-growth environment. Craft demand isn’t going anywhere, and there is plenty of opportunity for growth within new channels, occasions, and customers.”
In breaking down the distribution channels, according to Circana scan data, independent craft packaged sales were down -3% year-over-year (YoY) but have improved since the first quarter of 2023 when they were down -9%.
“Distributors and retailers have been reducing their focus on distributed craft and searching for growth in other pockets, but there are signs that the worst reductions may be in the past,” notes the trade association.
At-brewery sales were healthier than distributed craft sales, favoring hospitality-focused businesses. While Alcohol and Tobacco Tax and Trade Bureau (TTB) data suggests a small decline in keg sales, which have been trending down since before COVID-19, onsite appears to be up, both in the midyear survey and select point of sale (POS) data.
Further illustrated in the Brewers Association’s Annual Production Report, craft beer sales growth was stronger than volume growth due to pricing, share shift to smaller brewers—who are more likely to sell onsite and via distributed draught—as well as the continued channel shift back to on-premise, which has a higher average retail value.
The active craft brewery number increased from 9,119 in June 2022 to 9,336 as of June 2023, with the total brewery number up from 9,242 to 9,456. “In this maturing market, explosive growth from years past has tapered out, but openings continue to slightly outpace closings, and brewers are finding success in niches where they can succeed,” says the Brewers Association.
