Dan Fox

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Craft beer slowdown is real and getting worse

15th January, 2016 by Dan Fox

Has the craft beer bubble burst? Contributor Dan Fox – also known as Hey Beer Dan – points to some statistics that could signal an irreversible decline.

Is the craft category being put on ice? (Photo: Pixabay)

No single market-research tool can accurately capture every possible market dynamic. And every such tool has its weak points. With that said, ignoring the declining craft-beer growth rate documented by as recognised and authoritative a resource as Nielsen, is unwise at best, catastrophic at worst.

Over the recent past, here’s what Nielsen data has said about the volume growth rate of the craft-beer segment. The raw measures may be imperfect, but chances are the trend they chronicle is quite real.

Nielsen Craft-Beer Growth Rates (Annualized*) (Data sources linked)

2014 12-month ……………………………………………………..+20%
2015 12-month as of June 20th……………………………….+10.2%
2015 year-to-date as of December…………………………..+8.7%
2015 4-week as of December 19th…………………………..+4.3%

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The gut response from many craft loyalists to what they see as threatening news of this kind is immature: Question the data, deride anyone who mentions it, and look for examples of fast-growing craft brands as if they weren’t included in the Nielsen data. In other words: disbelief, nastiness, or off-point argument. Pretty childish.

In its latest issue, Beer Marketers Insights identified a more rational, businesslike response: Attuned to market dynamics and with an eye to the future, four of 2015’s five fastest-growing craft brands – Lagunitas, Firestone Walker, Ballast Point, and Founders – all consummated deals with BigBeer. It amounts to a shared view by the strongest craft brewers that continuing their success in a slowing category means real change from the past.

For children, change can be a scary thing.

For adults, it can spell opportunity.

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8 Responses to “Craft beer slowdown is real and getting worse”

Peter Gasca says:

January 17, 2016 at 5:12 pm

A slow down is not necessarily bad, as it just may be a cooling of entrants who shouldn’t be there anyway. What will be more interesting and significant is the rate of closures and mergers.

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G. Thomas says:

January 18, 2016 at 2:49 pm

For those hard core craft believers it’s a case of the “Emperors’ new clothes”. What you see here is a natural progression of the business. There are Craft brands in the market right now that have no long term strategic plan and therefore are bound to drop out. It would seem (so far at least) that the brands that are willing to merge/JV with larger Brewers are the ones that will show significant progress moving into the future. It won’t make them “sell outs” just savvy businessmen who have a larger dream.

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Dan says:

January 18, 2016 at 4:19 pm

I agree completely. On one end there will be larger (and partnered) brands like Lagunitas and Founders; on the other will be truly local, single-market guys. It’s the ones in between who’ll get squeezed.

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Steve says:

January 19, 2016 at 2:34 am

Craft beers have gotten too numerous and too expensive, of course consumers will opt for other choices such as wine, mixed drinks, or a lower-priced common beers. I find the cost of these fermented cereals offensive- the ingredients are cheap commodities (often government-subsidized at that,) they can be made anywhere, and year-round. Further, the last time I checked out the craft beer section, I found most labels were either gimmicky or offensive. These desperate ploys to get a consumer to try their product is a sure sign of too many brands. Bringing my point full circle, I predicted BigBeer would get hurt by micros in 1993. With time, BigBeer decided to align with successful brands of “micros” or “craft beers.” Smart… adapt they did and the explosion of craft beers will freeze. In time, balance will be found. If BigBeer wants to maintain or grow market share, keep the price down.

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Xavier says:

January 19, 2016 at 10:18 pm

Although it seems disingenuous to claim there is a trend when looking at only two years of data, the number of taps are finite as is retail shelf space, Micros banking on distribution will eventually find their markets more competitive and growth is bound to slow, it’s inevitable but that dynamic varies by region. Brewpubs able to survive on walk in business (and not distribution alone) can still flourish in the years to come and weather the inevitable shake out. Markets are cyclical, always have been and always will be.

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Aaron says:

January 20, 2016 at 7:45 pm

I’m not sure these statistics say what you have concluded they say.
4.3% growth in a single 4-week period? Wouldn’t that equate to almost 73% annual growth, were it to continue?
Also, 10.2% growth for the first 6 months of 2015 is actually a higher growth rate than 20% for 2014
Finally, while the 11-month 2015 total does show that there was a slump, the rest of the stats contradict it as a trend.
In summary, these growth rates imply the following:
In 2014, craft beer volume sales went up 20%. In the first half of 2015, they were on pace to exceed that (by about 5.5%). Then there was a slump in the second half of the year until December, when sales had an uptick that would represent a dramatic increase if it continues.

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HeyBeerDan says:

January 21, 2016 at 10:18 am

All growth rates shown are annualized. (I have re-labeled the titles on the chart in the original article to clarify this, but the data is unchanged.)

Nielsen growth-rate data is always presented as an annualized percentage. As a result, while the time periods covered may vary (and therefore have more or less validity individually depending on the length of the time period), the growth rates are indeed comparable. And in this case, they show a clear downward trend over two year’s time.

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Basnet says:

March 12, 2016 at 12:48 pm

“The number of breweries in the U.S. hit 4,144 at the end of November, surpassing the 4,131 at the beer industry’s height in 1873.
Given that there are 270 million more Americans now than in 1873, craft beer still has plenty of room to grow, said Bart Watson, chief economist for the Brewers Association.” – The Columbus Dispatch

As much as the craft beer market is slowing down, sooner or later the industry will tap into the consumers of the giants (example: AB InBev, SABMiller). This is the beginning of the Craft Beer revolution. There is always an exponential growth in the start, which is now coming down, although it will still keep a mild growth. Craft beer market share consists of 20% of all beer consumed in the States. Consumers will find the right beer for their taste which will not be watered down products that advertisements have embedded into our minds.

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