It takes a pretty big event to stand out in a lively place like Nashville, but from April 30 to May 3 this year, the Craft Brewers Conference (CBC) took over Music City. Nearly 15,000 brewers, their suppliers, and other industry members got together amid honky tonks and BBQ joints to talk beer and learn more about what challenges the craft beer industry face.
Now in its 35th year, CBC is the single largest collection of people and businesses involved in the craft beer industry. The event is hosted by the Brewers Association (BA), and conjuncts every other year with the World Beer Cup (2018 was a competition year).
For about a week (including all the brewery tours and shows on the side), CBC provides a fantastic opportunity for the industry to come together. New entrants get to meet with the old hands who pioneered the homebrew and craft beer industries; trends and recipes get hashed over; manufacturing equipment and compliance management tools are showcased; all, generally, over a beer or three.
If there is any watchword for CBC, it is the spirit of cooperation and innovation that has carried the craft beer industry from basements and garages to the multi-billion dollar market that exists today.
Changing of the Guard
Back in January, Charlie Papazian, the founder of the American Homebrewers Association and a founder and past president of the BA, announced his intention to retire from the BA in 2019.
He was still an outsized presence at CBC, featured in the general session on the state of the industry, but when his upcoming retirement was mentioned, there was a sense of melancholy in the crowd. Everyone was happy for Charlie — he certainly deserves the chance to rest on his laurels — but his departure serves as a signal reminder that the craft beer market faces a moment of flux.
As a market, craft beer is still in fine form. In 2017, nearly 25 million barrels of craft beer was sold for over $26 billion, representing 12.7% and 23.4% of the total volume and value, respectively, of the entire American beer market. In a year when beer over all declined by 1.2% of volume sales, craft grew by 5%.
But this comes after years of double digit growth. This slowing down has lead to many fretful headlines predicting the end of craft beer. While merely attending CBC presented ample signs that such predictions are absurd on their face, it is apparent that the future brings challenges.
Growing Through Challenges
A major challenge that craft brewers face is the increasingly crowded market. With over 9,000 active Brewers Permits issued by the TTB, room for new brewers is increasingly dear — especially in mature markets like Oregon, Colorado, and Southern California. To really breakthrough, and become a larger regional brewery as many startups once dreamed of, is even more difficult.
In this regard, the future of craft beer is seemingly a victim of its past success. The early days of double-digit growth led to more entrants to the market. But now we’re seeing the results of this saturation as new breweries struggle to achieve the same growth that seemingly came so easy in decades past, particularly for those trying to sell at the regional level.
But such fears are easy to blow out of proportion. While it is true that brewery closings were up dramatically in 2017, there were still nearly 1,000 breweries that opened; there are still plenty of untapped markets to grow in; and, as Bart Watson, Chief Economist for the BA noted, focusing on the fact that 5% is a rather smaller number than 17% misses the larger point that that 5% growth happened in a much larger market than those past heady days (that is, the pie may be growing slower, but it’s a much bigger pie, so what growth there was was actually much greater volume than when the growth rate was higher).
Rather, the biggest concern that kept coming up through CBC was, how to combat the ever present challenge from Big Beer.
Following the principle that success breeds competition, large-sized, multinational brewers have been increasingly active in the last few years in approaching the craft market. This has manifested itself in several forms including acquisitions (such as Anheuser-Busch’s spree of purchases, like Breckenridge Brewery and Goose Island Brewery) and imitation (including brands like Blue Moon, which banks on a craft image while being owned by MillerCoors).
This has sparked consternation among craft brewers, who, having developed an image that sells, fear being crowded out by imitators. In response, the BA came out with an industry mark last year, which, when used on a bottle, can, other packaging or in the taproom, signals that the producer meets the BA’s definition of a craft brewer. The independent seal was nearly ubiquitous at CBC, with the BA encouraging its use as a means to stand apart to consumers in the ever-growing crowded beer market.
While these challenges signal that the “easy” days of craft beer may be going away, they also present a different picture: the craft beer market is facing a moment of maturity. It’s no longer a small collection of die hards, working from a devoted urge to make American beer great, but a proper industry now having to deal with the consequences of its own success.
Wither Craft Beer?
The crowds at this year’s CBC quickly disabuse any notion that the craft beer market is at any real risk of going away. It is abundantly clear that people want great beer, and that great beer can be made profitably. While the past days of rocketing growth may be gone, the craft market continues to grow at a clip that other industries would do terrible things for. The rise of acquisitions and imitations speaks to that success.
This is not to say that the craft market of the future will be much like what it was in years past — or even as it is today. As with everything, the only constant is change. Positively the craft market seems well aware that change is in the air, and is doing all it can to prepare for that change. This could mean thousands of small brewers focused only on local markets; or possibly, large, nationwide coalitions of brewers (think CANarchy) banding together to sell each others’ beers. Both models were discussed at length at CBC. But, then, of course, some third way could always develop in the next few years.
In the end, among all the consternation and speculating, perhaps the best advice from CBC is Charlie Papazian’s own catch phrase, “Relax. Don’t worry. Have a homebrew.”