Has Craft Beer Peaked In The US?

craft, Has Craft Beer Peaked In The US?

One of the highlights of the Craft Brewers Conference, which recently wrapped up four days of industry talk and serious drinking in Denver, was the “State of the Craft Beer Industry” address.

Helmed by Brewers Association Director Paul Gatza and Chief Economist Bart Watson, this annual presentation is like getting one’s physical results, only for the craft beer biz.craft, Has Craft Beer Peaked In The US?

And the primary takeaway from this year’s gathering is that the industry while still growing has matured.

The good news according to the Boulder-based trade organization is that the industry is still growing. Total brewing volume, (the main statistic the Brewers Association uses to track its constituency) rose 4 percent in 2018 to more than 25.9 million barrels.

But four percent growth is a far cry from the kind momentum the craft beer industry has enjoyed for so many years. Explosive growth that has led to more than 7300 breweries currently operating in the US.

And as the one financial analyst at the Motley Fool correctly points out, the US craft beer industry might have seen negative growth numbers in 2018 had the Brewers Association not (smartly?), changed its official definition of what is considered a “craft brewer.”

The new Brewers Association definition, which was announced last December, significantly altered  the need for a brewer to have the majority of its production be beer. As long as some beer is made every year, the business could be called a “craft brewer.”

And the Motley Fool’s response to those changes at that time was brutal…

craft, Has Craft Beer Peaked In The US?“If you needed any further proof of the difficult straits in which the craft beer industry finds itself, look no further than the latest change to the Brewers Association’s definition of craft beer.”

“The change reflects a desperate attempt by the craft beer industry’s trade group to keep Boston Beer in the fold as the leading craft brewer’s beer sales continue to tumble, when the definition no longer captures the essence of what brewing is about, its right to question why they bother having a definition at all.”

Clearly at issue at that time was whether the Brewers Association’s (BA) craft beer definition change was directly related to Boston Beer (home to Sam Adams Beer but also to a full line of beverages including Twisted Tea and Truly Spiked & Sparkling hard seltzers) which might soon sell more non-beer beverages than it does its heritage beer brand.

The change in the BA’s definition removed the “traditional” pillar, which required a craft brewer to have “a majority of its total beverage alcohol volume in beers whose flavors derive from traditional or innovative brewing ingredients and their fermentation.”

That definition was replaced with a simpler “brewer” pillar that requires a craft brewer to 1) be in possession of a TTB Brewer’s Notice and 2) make beer.

craft, Has Craft Beer Peaked In The US?The primary takeaway of 2018’s end-of-year definitional update was that a brewers such as Boston Beer were no longer required to have a majority of its total beverage alcohol volume in beer.

And as Rich Dupery at the Motley Fool sees it, those definitional changes may have (and we suggest did) skewed 2018’s growth numbers considerably…

“Boston Beer accounts for almost 8% of the Brewers Association’s total production numbers. If the brewer lost its craft beer designation, the industry would go from reporting production growth to reporting a decline.”

So has craft beer peaked in the US? Maybe not peaked, but it’s certainly peaking.

Brewery openings (though less than 2017’s number) far outpaced brewery closings in 2018…so that’s good.

But it’s Motley Fool’s position that last year’s 4 percent growth could be a statstistcal illusion, potentially obscuring a deeper truth, that craft beer’s “headiest days may be behind it.”

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