Tuesday, October 23, 2018
Business

The craft beer industry’s buzz is wearing off

Has craft beer peaked? In one sign that the industry has grown less frothy, more craft breweries closed in 2017 than any time in the past decade.

And while the craft beer makers saw more growth in production than the overall market last year, their pace is slowing.

A new report by the Brewers Association - a trade association representing small and independent American craft brewers - showed that craft brewers saw a 5 percent rise in production volume in 2017. Yet with that growth comes an increasingly crowded playing field, leading to more closures of small craft breweries. In 2017, there were nearly 1,000 new brewery openings nationwide and 165 closures - a closing rate of 2.6 percent. That’s a 42 percent jump from 2016, when 116 craft breweries closed.

Read More: Grocery stores are popping up all over Florida. That’s not the case nationwide

Experts say saturation is still some time away, and that pullback is inevitable for any booming industry that, with time, begins to mature.

"We have seen a little bit of deceleration," said Bart Watson, chief economist of the Brewers Association. "When you’re talking about an industry that sells tens of billions of dollars a year, it’s hard to grow at double-digit rates."

Growth in the craft brewing industry began in the late 1970s and early 1980s, Watson said, and has seen a resurgence in the past decade. With consumers who tend to skew male, younger, whiter and with higher incomes, the industry gained its foothold among adults willing to pay more for beer that tasted better than the mass-produced products that had long dominated the market.

Small craft breweries compete among themselves for taps at restaurants and shelf space at retailers. Yet they are also up against massive industrial brewers who wield heavy influence over the national distribution of beer, and often buy up smaller companies. In 2011, for example, Anheuser-Busch InBev bought the craft brewer Goose Island for almost $39 million, the first is a slew of similar acquisitions.

"The largest brewers have a lot of ways that they can push into the market, rather than relying on consumer pull," Watson said.

Matt Simpson, owner of the craft beer consultancy The Beer Sommelier, said that the slowdown is natural after "an initial explosion." There are many reasons brewers won’t be able to keep up.

Some of that culling, he said, results from home brewers who don’t know how to successfully run a business or market products. At the same time, the industry has revived enthusiasm among craft beer aficionados who set out to found a company and sometimes make bad-tasting beer. Simpson even recalled a recent craft brewers conference where a speaker said that if newcomers didn’t produce good products, they were "going to be the death of home brewing."

"The majority of brewers entering the marketplace are making good beer," Simpson said, "but a few bad apples can spoil the whole bunch."

With more than 6,300 breweries operating in the United States in 2017, small and independent brewers represented nearly 13 percent of the market share by volume of the overall beer industry. Craft brewers produced 25.4 million barrels in 2017, with an estimated $26 billion retail value, according to the Brewers Association. Over much of the past decade the industry’s growth rate held at double digits, peaking at 18 percent growth in 2013 and 2014.

The total beer market went down 1 percent by volume in 2017, a decrease in about 2.4 million barrels from the previous year. Watson said the decrease in part reflects beer’s growing competition with wines and spirits.

Still, Watson and Simpson agreed that it will take some time for the industry to reach full saturation. And albeit at a slower pace, craft breweries are still growing.

"Craft beer tastes better than macro-industrial lagers, which have gotten by for decades using bikini-clad women and famous sports figures," Simpson said. "They’ve made some really touching or funny ads, but that doesn’t make their products better."

Comments

TAMPA — When you buy that shirt from Amazon.com, the box doesn’t come to your doorstep directly from Amazon’s 1 million-square-foot fulfillment center in Ruskin.Instead, it first goes to a smaller distribution center where, in the wee hours, it is ro...
Updated: 14 minutes ago
Sparkman Wharf’s eclectic collection of restaurants to open Nov. 30

Sparkman Wharf’s eclectic collection of restaurants to open Nov. 30

TAMPA — The beer garden, event lawn and shipping-container restaurants at Sparkman Wharf, the re-imagined version of Channelside Bay Plaza, are scheduled to open Nov. 30, developers at Water Street Tampa said Tuesday.That’s later than the October del...
Updated: 28 minutes ago
Dow drops sharply as two industrial giants warn of trouble

Dow drops sharply as two industrial giants warn of trouble

The Washington PostU.S. markets opened in a steep slide on one of the busiest earnings days of the year as a global sell-off and a disappointing report by 3M - a major industrial company that is a window into the U.S. economy - had nervous investors ...
Updated: 4 hours ago
Looking to ‘cut the cord’? Consider an antenna

Looking to ‘cut the cord’? Consider an antenna

It’s no secret that Tampa Bay residents are "cutting the cord" and moving away from cable. But last month, when the Tampa Bay Times asked readers to reach out about the non-cable entertainment services they used, a common theme emerged — antennas.The...
Updated: 5 hours ago
Walmart to roll out delivery, return changes to compete with Amazon over holidays

Walmart to roll out delivery, return changes to compete with Amazon over holidays

Walmart says it will work with third-party sellers to make millions of items available for free two-day shipping on orders over $35.
Updated: 5 hours ago
Review: iPhone XR makes the right trade-offs for a cheaper price

Review: iPhone XR makes the right trade-offs for a cheaper price

Based on several days of testing, it looks like Apple made the right cost-cutting trade-offs with the XR, which starts selling Friday for about $750.
Updated: 6 hours ago
The Largo Safeway turned Publix will reopen soon, its Starbucks cafe intact

The Largo Safeway turned Publix will reopen soon, its Starbucks cafe intact

LARGO — The once Safeway and soon-to-be Publix will reopen Nov. 1, retaining some of fixtures from the California grocer’s store.Chief among them, the Starbucks and cafe seating near the front will stay put, said Publix spokesman Brian West. Tampa Ba...
Published: 10/23/18
Pasco Business Digest for Oct. 26

Pasco Business Digest for Oct. 26

News and notes about Pasco businesses
Updated: 2 hours ago
Which candy will Floridians buy the most this Halloween?

Which candy will Floridians buy the most this Halloween?

Last year, Floridians’ trick-or-treat bowls were leaning toward Skittles. But a more savory — but still sugary — treat has taken over as the Sunshine State’s preferred candy this Halloween. The Snickers bar wins out, accordin...
Updated: 5 hours ago
Pinellas reports a concerning rise in Hepatitis A. Officials urge vaccination.

Pinellas reports a concerning rise in Hepatitis A. Officials urge vaccination.

Health department officials across Tampa Bay are encouraging residents to get vaccinated against hepatitis A, which is on the rise. As of this week, 58 cases of the virus have been reported in Pinellas this year, including a jump of 10 cases from Sep...
Published: 10/22/18