What is Wrong with the Craft Beer Industry?

We asked a beer analyst who has worked in the industry for several years her thoughts on the current craft beer industry and what’s wrong with it. This is what she had to say:

here are many sides to this question as the industry is split in many ways. This is how I see it from a beer analyst of ten years.

You have the breweries who treat beer with passion and love and their customers are typically die hard fans of the art of craft, usually their beer is found just at the tap room and to go cans. But they’re living slim on margins and just being apart of the community and craft is what is driving them ❤️

Then you have the medium to big breweries that depend more on production and having distribution with beers in grocery. They still do experimentation, collaboration, focus on the craft but certainly are following trends to remain relevant all while having their little side loves.

There is probably an in between level between these two but I’m just generalizing of course. Those would be regional breweries that can get some beer in grocery but it’s local. Probably not leaving your home or border states.

Then you also have a step up from that that maybe a few breweries play in but we’re talking big players. Like $$$$$$ that very much depend on the marketing and branding of their products versus the liquid and craft. It’s about chasing the dollars so efficiency and scales of economy are a must. They track data and flavor preferences intensely.

Again, this is all my generalization. There are also breweries that depend more on the on premise / food restaurant side of things and just happen to make beer.

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The problem the industry is facing is in the hey day of craft beer, new breweries had a low barrier to entry and remained “successful” because everyone was drinking it! Instead of a Starbucks on every corner, it felt like there was a brewery on every corner! Speaking from a west coast person here…

You had Gen X and Millennials just drinking for the first time and discovering craft beer and god damn did we drink craft beer!

Now that this age group is growing older and Gen Z is entering drinking age, unfortunately they are not drinking as much as their “Predecessors” and the OG craft fans of Gen x and millennials can’t slam a 6pk of IPA every night anymore.

Shit, we are lucky if we can have one without a hangover the next day lol

There in ties the growth of nonalc beer, but I won’t go there for the sake of this post. But it’s just unfortunately not the same as it has been. Overall between the new generation and old, people are drinking less. Less drinkers = less $$

And so those smaller, regional and even medium breweries just can’t play. Retailers are cutting their beer shelves more than ever to make room for the sugary sweet alc beverages, wine, cocktails and nonalc.

And then even more so, those big breweries who can undercut price, follow trends, spend $$ on marketing will be the ones to survive.

It breaks my heart. I love beer and plan to be in it forever but it is tough. It’s not about the money for me and never has been and I feel so much for breweries that have been around forever that have to close doors.

-Amanda Plezz

What Others Think

We then threw out the question to several others, who gave us some of these quotes:

THC seltzers entering the market and people using wearables to track health data, noticing beers effects on their health, I think are some side aspects of this as well. Craft beer has been dicing for a while and only the big breweries that got a “horse” in the race early on are the ones that remain successful, while the smaller ones are seemingly doing it out of love for the craft.

 

All being said, we are still seeing new breweries open up more than those closing (at least as a 2023 stat) So some folks are figuring out their little niche. Then again, who knows how long those new breweries are open for? 🤷🏼‍♀️

All in all, it’s certainly not as easy as it was before.

 

We hadn’t really had any closures in my area. But they all started to hit at the same time. We went from zero to six in the past eight months. I suspect the industry will have more closures as five year leases start to end. Folks who started in 2018-2019, went through COVID, and deciding to get out once the lease is up.

 

This is quite similar to the distilling field as well. The owners and business execs are about the same in distilling as brewing. Passion is sucked dry for whatever profit can be eked out.

Pretty similar with the demographics as well, however I have seen some interest from Gen Z on whiskey & tequila. That said, I’m watching those spirits lose their soul, and be wrung dry like the beer world too.

I don’t know what the answer is here, but I think your assessment is spot on.

 

Locally speaking, there are some breweries that are their own space with or without food and that don’t do distro. They may sell to go stuff out of the taproom, but other than maybe the occasional self distro stuff you don’t find them in stores.

Those places seem to be busy regularly, and seem to be doing well.

Then you have the rest of them that for whatever reason went real heavy into distro. They brought in bigger vessels, canning lines, sales teams, etc. They no longer rotate their brands or put anything new and exciting, or hell, just different on tap anymore and instead only make the same shit over and over because distribution. They slow down in the taproom because in a world with tons of options people want the excitement of different beers, not the same shit that’s been there for years. And then those places eventually close.

It’s almost as if going head on into full distribution was a stupid financial decision and maybe it’s something that not every single brewery should do, especially if you’re only being sold in the stores local to you when someone could just go down the block to your brewery instead.

And as a side note, in addition to never having new releases a large majority of these local breweries that focus heavily on distribution also suffer serious drops in quality.

 

Agreed with everything! Except maybe Gen Z’ers being more health conscious…there are stories every generation of that generation drinking less than the previous. To some extent that is true, but I think the big thing with Gen Z is they have different outlooks on “fun” and how they obtain that dopamine hit.

They’re no where near as interested in going out with friends on a Friday night or hitting up the bar after work. To many of them, the internet and social media is all the networking they need/want.

It’s happening in other industries, too. Gen Z is less likely to buy cars, for instance, mainly because getting a license isn’t the milestone to them as it was for past generations. For millennials and others, a car represented freedom. Now it’s an iPhone.

 

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