Is the Craft Beer Industry Losing Faith in Craft Beer?

Once upon a time, craft beer wasn’t what it has become today, but that doesn’t mean it can’t go away again.

Every product has its own life cycle, even the most popular bands (and brands) grow old. People lose interest and eventually people don’t care at all. And maybe we’re beginning to see the beginning of the end of for craft beer sector.

Over the last decade the craft beer biz has grown from a niche market to a multibillion-dollar force in the wider beer industry. However, there are signs that the industry may be undergoing a period of reflection and uncertainty, leading some to question whether craft beer insiders are losing faith in their own creations.

And there are several factors in play…

Overcrowded Market and Saturation

One of the key challenges facing the craft beer industry is market saturation.

In the 2010s, craft breweries grew at an unprecedented rate, with thousands of new breweries opening across the US, Europe, and other regions. This growth has led to an oversupply in certain markets, making it difficult for smaller breweries to distinguish themselves from the competition.

As of June 2024, there were 9,358 active craft breweries in the United States, up from 9,339 in June 2023. The total number of breweries in the country increased from 9,456 to 9,528 during that time. But that insane growth feels like it is cresting with the number of new brewery openings and closures roughly matching one another as things stand today.

Changing Consumer Preferences

Another factor causing uncertainty is the shifting preferences of drinkers (translation: consumers are becoming bored with craft beer as a beverage).

An overwhelming variety of craft beer options—endless IPAs, sours, stouts, and more—has led the abundance of choice has also made it harder for individual brands to stand out. And with so many breweries vying for attention, some within the industry have expressed concerns that the constant drive for novelty and differentiation may have diluted the quality and consistency that initially attracted loyal craft beer enthusiasts.

And maybe this brilliant abundance has simply sated consumer demand. As one frustrated brewer asked us at the 2024 Craft Brewers Conference last April, “I mean how many different IPAs can I make to keep them interested?”

Increasingly consumers are now gravitating toward other beverages, such as hard seltzers, cocktails, and non-alcoholic drinks. These new trends have left some craft breweries scrambling to adjust their product lines, incorporating lighter, more health-conscious options, or exploring hard seltzers and ready-to-drink (RTD) offerings to compete.

When heritage brewers like Dogfish Head start hyping their canned cocktails with the same enthusiasm as their beers, you sense the ground shifting.

Financial Pressures and Distribution Challenges

The financial strain of running a brewery, especially in an oversaturated market, have also taken a toll on the industry. Smaller breweries often operate on tight margins, relying heavily on local distribution and taproom sales to stay afloat. The COVID-19 pandemic exacerbated these financial difficulties, as many breweries were forced to close their taprooms or shift to takeout and delivery models, which proved less profitable.

Additionally, distribution remains a significant hurdle for small brewers, as they compete with larger companies for shelf space in stores and tap space in bars and restaurants. As a result, some breweries have opted to remain small and hyper-local, while others struggle to balance growth with the quality and authenticity that define their brand.

The Future of Craft Beer

Many industry insiders see these challenges as growing pains rather than signs of a fundamental crisis. The industry has always been driven by innovation and passion, and despite the competition and financial pressures, there remains a dedicated group of brewers committed to producing unique, high-quality beer.

But when prominent industry voices like Brewbound, which bills its online site as “Beer Industry News, Events & Jobs,” are now publishing more articles weekly about hard seltzers, canned cocktails, and non-alcoholic drinks, than craft beer itself, you can’t help but worry.

In the end, the craft beer industry may not be losing faith in craft beer itself, but rather grappling with how to navigate a changing landscape. Whether through innovation or by returning to its roots, the future of craft beer will depend on how the industry adapts to meet the challenges and opportunities ahead.

“Our whole category can be replaced,”  Scott Metzger of Craft ‘Ohana, the parent company of Maui Brewing Co. and Modern Times Beer, said at his CBC presentation in Vegas last April . “We don’t have to have a pity party about this, but every single day and every single moment, we have to continue to earn our place in this industry, earn our place in the minds of our customers.”