Is Craft Beer Finally Reaching Saturation?

Published On: March 1, 2024By Categories: Short Read

Well, it might finally be happening: after two decades of rapid growth, CRAFT BEER SEEMS TO HAVE PLATEAUED (link below). Some 385 breweries shuttered in 2023, according to the Brewers Association – the most ever in a single year – and overall sales volume actually declined. There are multiple factors, though perhaps the most worrisome (structural) one is the aging of the massive Millennial generation and the declining interest among today’s young adults in beer – specifically, higher-alcohol (and, importantly, higher-margin) IPA’s. Now this does not necessarily mean that Downtowns, neighborhoods or suburbs should give up on the subcategory. After all, branded taprooms represent the most profitable sales channel today (versus shelves in retail stores or taps in third-party bars). Also, 420 new breweries opened in 2023 – a net positive overall – and many individual metros can still support more. A useful rule-of-thumb is 1 per 36,000 people (given the 9,500 still open at the end of 2023, in a country of 340 million), which qualifies a number of states, including AZ, TX, FL and NJ, as underserved. Note also that higher ratios are possible in markets which have attained wider recognition and critical mass. I’ve been working in the Downtown of Grand Rapids, MI (“Beer City USA”), where there are 40+ craft breweries in an MSA of 606,000 (translating roughly to 1 per 16,000 people). Given current trends, though, operators would be wise to offer alternatives to beer (e.g. ciders, non-alcoholic beers, flavored malt beverages, canned cocktails, whiskeys), provisions for food (via vendors/pop-ups, food trucks or delivery), opportunities for competitive socializing, seating on (heated) outdoor patios as well as welcoming environments for young (Millennial) families and their dogs.

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