Craft Beer Has Been Flat for Eight Years, and Other Notes
Ever since Covid and its aftermath struck the beer industry, sales figures have been wonky. That disruption had a profound effect on our lives, and trying to sort out how it affected beer sales hasn’t been straightforward. Issues like broken supply chains, tariffs, and inflation have confounded matters. Yesterday, the Beer Institute’s latest tax data came out, and I clicked through to see what was shaking. It led me down a bit of a rabbit hole as I looked at the different segments within beer. I was struck by how the three—domestic lagers, imports, and craft—were all in very different places, which further confounds matters.
It’s worth starting with the graph you see at the top of the post. It represents all the beer brewed and sold in America. That includes craft beer, but not imports—we’ll get to those in a moment—or exports, which are small and declining in any case. In the dozen years the Beer Institute has available on its website, volumes have fallen by 15%, or nearly 30 million barrels. That is a lot—more than the entire volume the Brewers Association designates as “craft” beer. The trend line is interesting, though. During Covid, matters actually improved by a few million barrels. Then they dropped like a stone, nearly 20 million barrels in two years.
So, that’s not good.
But it doesn’t give you the full picture either. Since around 1990, the United States has been a 200 million-barrel country. That’s roughly the total amount Americans have consumed, plus or minus 5%, for the past three plus decades. It has been remarkably stable throughout that period—though of course because the population increases, it represents a continual drop in per capita consumption. Adult beer consumption declined from 32.3 gallons a year in 1990 to 22.6 in 2023.
Something must be afoot. If domestic production has been dropping for a dozen years but the overall market is flat, what’s going on. Imports, clearly:
The first graph is not the greatest chart because it visually deemphasizes the swings. The second one does a better job of illustrating what’s going on. The volume of imports has increased around 13 million barrels in our time frame (now eleven years because the BI doesn’t have 2012 numbers for imports). At forty million barrels, imported beer now constitutes more than one in five beers sold in the U.S. Pull out the craft segment and it jumps to almost a quarter.
The really remarkable fact about imports is that it’s not really “imports”—it’s Mexican beer:
In one way I knew “imports” meant Mexican beer—I’ve been writing and talking about it for years. But somehow seeing the paltry volumes shipped here by important brewing countries really drove it home. Let’s look at 2023 (again, these are all Beer Institute numbers). The Netherlands—by which we mean Heineken—did okay. It shipped 3.6 million barrels. Canada, in third place, shipped an anemic 1.1 million barrels here. But check out these figures, and I’ll include the year-over-year change in parentheses:
Ireland: 970,250 barrels (-15%)
Germany: 519,095 (-4.8%)
Belgium: 136,231 (-30.5%)
UK: 58,703 (-28.3%)
Czechia: 56,429 (-13.8%)
Mexico, by contrast, shipped 32,741,328 barrels, an increase of 1.9% (611k)—or more than all the German beer sold in the US. Imported beer is actually in a terrible situation—only Mexico has figure out how to sell beer to Americans.
We’ll finish off this little exercise with an astonishing note on craft beer. Unlike regular domestic beer, craft took a big hit during Covid. Particularly when combined with the domestic lager numbers, that illustrates the large shift from draft to package that happened during the pandemic. Beyond Covid, however, what the following chart really illustrates is that the Great Flattening didn’t start at or just before 2020—it dates back to 2015. In that year, the US sold 24,523,015 barrels of craft beer—nearly identical to 2022 (the last year for which we have numbers): 24,273,285. Have a look:
I think one reason it didn’t feel like an existential crisis until Covid was that while the volumes increased only marginally, revenues were up nearly a third (31.4%). In 2015, craft beer generated $22.3 billion, a number that grew to $29.3b in 2019 (in 2022 it had receded to $28.4b).
This all looks like bad news, but if you’re a glass half-full kind of person, there may be a silver lining. May! I’ve been thinking the Great Flattening was just a couple years old once you discount for Covid. Instead, we’re approaching a decade of stagnation. The last time we saw a craft beer reset, it lasted a decade, starting in the late 1990s. Brewery numbers stalled out, and the market grew incredibly slowly; volumes barely moved for a decade and didn’t crack 4% of the market until 2008. They would triple in the next seven years.
Craft beer hasn’t grown since. It hasn’t been “hot” culturally in at least five. Meanwhile, some of the trends that hammered it along the way, seltzers and FMBs, are starting to look a little tired. Mexican beer is the one unalloyed winner in the beer market, but how long will it remain this successful? I’m certainly not going to guess, but small breweries have at least a puncher’s chance that things may change sooner rather than later. Mexican beer has been growing for a very long time. Is that the new normal, or a winning streak about to end?