The Brewers Association (BA), the trade organization representing small and independent American craft brewers, today released results from its midyear survey, shedding light on the state of the craft beer industry and indicating optimism for the second half of the year.
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 decline of -2% in the market. From a competitive distribution market and rising costs, to changing consumer preferences and supply chain disruptions, the craft brewing industry has radically grown and shifted over recent decades, with that change only accelerating in recent years.
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.
Reported at-the-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.
Overall, craft brewers continue to face economic headwinds on both business and consumer fronts. From a business perspective, borrowing costs continue to rise, and while input cost increases have stabilized, they remain elevated over previous levels. Meanwhile, mounting evidence shows inflation eroding consumers’ buying capacity and diminishing their savings, and the impending restart of student loan payments this fall could impact consumer purchasing power during the back half of the year.
“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.”
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