Big beer companies in the USA have carefully cultivated an image of how their products fit into a ‘true American’ lifestyle—no game, trip or party is complete without a cold can of Bud, Coors, or Milwaukee’s Best, right?
Well, not exactly.
Turns out, Americans are moving away from the lighter, generic beers offered by big breweries and developing a taste for craft beer. While the overall beer market in the US is barely eking out a CAGR of 1.46%, the craft beer segment—which accounts for just over 11% of the overall beer market—is booming, at an average growth rate of 18.07% from 2014-2019.
Craft Beer: Market Segmentation
Microbrewery: A brewery that produces less than 15,000 barrels of beer per year with 75% or more of its beer sold off-site. The beer is sold in three methods ‒ the traditional three-tire method, the two-tire method, and directly to consumers. Some examples of microbrewery companies in the US are String Brewing, Star Brewing, and Mile Brewing.
Brewpubs: Restaurant-breweries that sell at least 25% of their beer on site, with the beer being specifically brewed for sale in the restaurants, and directly dispensed from the beer storage tank. Some examples of brewpubs in the US are Barrel Brewing, Degree Brewing, and Amendment Brewery Café.
Contact brewing: This is when a beer manufacturer hires another beer manufacturer or brewery to produce beer. It can also apply to a beer manufacturer that hires another brewery for additional production. The brewery under contract is accountable for sales and distribution of its product.
Regional craft brewing: This applies to independent regional breweries with a majority of volume in traditional and innovative beers. Some examples of regional craft brewing in the US are Abita Brewing Co, Alltech’s Lexington Brewing & Distilling Co., and Ballast Point Brewing & Spirits.
More Flavor and Less Preservatives are Helping Craft Beer Edge-Out Traditional Brews
The craft beer market in the US is expected to be worth $45.40 billion by 2019, with the volume of beer produced more than doubling from 2.71 billion liters in 2014, to 5.86 billion liters in 2019.
And while non-craft beers are still flooding the market, with a volume of 21.39 billion liters being produced in 2014, this segment is heading for a sharp decline through the forecast period.
Craft beers often have a richer, more complex flavor than beers like Bud or Rolling Rock. And while more depth of flavor can turn some people off craft beer at first, an overwhelming number of Americans are now opting for more flavorful libations.
Additionally, the more bitter flavor of many craft beers generally points to a higher hops content. As hops are a natural preservative, some supporters of the craft beer revolution also argue that these offerings have more health benefits than traditional big breweries. Add this to the local production and interesting packaging, and it’s easy to see why craft beer is gaining steam, and will continue to do so over the forecast period.