Brewery Numbers Continue to Boom Even as Craft Beer Production Growth Slows

Today, the Brewers Association (BA), the trade group for independent craft breweries, released its annual growth report. The findings reinforced two trends that have become a common refrain in recent years: The number of breweries in Americacontinues to grow, seemingly unabated, while the volume of craft beer production is seeing growth slow.

The good news for the craft beer industry is that craft beer (and specifically beer — the BAchanged its definition of a “craft brewer”to allow in producers of other beverages this year, but the stats still only track the suds) is stillgrowing: up four percent in 2018. That’s the lowest level of growth in a long time — since 2003 — but it also bests the beer market overallwhich saw volumes declineone percent last year. As a result, craft beer claimed its largest percentage of overall American beer volume ever: 13.2 percent — a full percentage point increase from 2016.

At the same time, the number of breweries in the United States also set a record — 7,346 breweries in total — thanks to a net gain of 856 breweries from 2017. That’s another year of double-digit growth in the number of breweries. (The industry added 951 the year before.)

Of course, the question becomes how is the number of breweries continuing such a rapid ascent while production growth slows? The answer is in the math: The smallest craft breweries are driving the production increases while mid-size craft brewers are struggling with “static” production levels according to the BA’s Chief Economist Bart Watson.

“It’s a mixed story,” Watson said on a conference call, addressing the differing realities of differently sized brewers. “That growth level isn’t what it has been and that’s going to pose challenges for breweries that built their business model around large chunks of growth.”

That said, small brewers aren’t totally in the clear. Though the overall number of breweries increased by 856, that comes from 1,049 openings versus 219 closings. Last year, 997 new breweries opened while 165 breweries closed — meaning not only has the number of closings increased, but the rate of closure has inched up as well. Still, speculation continues about whether all these breweries are creating a “craft beer bubble.” This data would seem to show that the number of breweries isn’t in danger; rather it’s bloated breweries with unrealistic business models that are most likely to pop.