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Craft brew industry booms as Americans drink less big name beer

Yahoo Finance
Yahoo Finance

Call it the Craft Beer Renaissance.

At a time when national beer sales are declining, small and independent breweries have provided a rare bright spot for the industry, growing by nearly 20% in the first half of this year alone.

Co-Owner of Ardent Craft Ales, Kevin O'Leary, takes a sample of Persimmon beer at the facility in Richmond, VA., Tuesday, Dec. 2, 2014. Ardent Craft Ales is tapping into the Virginia Historical Society’s collections to serve up a 300-year-old beer made with persimmons from a cookbook from the 1700s. The beer recipe is one of several in the society’s collection that provide a glimpse into what Virginians and others were drinking in the 18th century. (AP Photo/Steve Helber)

Regional breweries are opening up at a rate of 1.5 per day, according to the Brewers Association, the trade association representing craft brewers.

“We’re seeing growth all over the country,” said Bart Watson, the group's Chief Economist. “Almost 75% of Americans now live within ten miles of a brewery, so it’s not just one place. We’re seeing dynamic growth in a lot of different markets.”

By definition, craft brewers are small, independent, and local. Each produce fewer than six million barrels a year, and make up just 14% of the larger market share combined.

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Still, the micro-brews’ increasing popularity has made regional breweries an attractive buy for big conglomerates Anheuser-Busch InBev (BUD) and SABMiller, who continue to lose market share to wine and spirits.

In this Nov. 18, 2014 photo, 10 Barrel Brewing Co. partner Garrett Wales poses in the company's brewery, in Bend, Ore. As it grew from a struggling timber town to an outdoor recreation destination, Bend, Ore., has seen an explosion of breweries, making it one of the top beer towns in the country. When 10 Barrel announced it was being bought by the world's biggest brewer, Anheuser-Busch Inbev, many local beer lovers felt betrayed. (AP Photo/Jeff Barnard)

Last month, Oregon craft brewer 10 Barrel Brewing Co. announced it would be acquired by AB InBev, drawing criticism from loyal customers who said the Bend-based company was selling out. AB InBev has also snapped up Goose Island in Chicago, and Blue Point in Patchogue, New York.

“One of the things that’s exciting about craft is that it has its own growth logic now,” said Watson. “Much of the growth is coming both from increased consumption from craft beer lovers, as well as from other sources outside of beer. Craft is moving into new spaces, taking over on occasions, from wine and spirits.”

The growth has been fueled, in part, by young consumers. Nearly 45% of 21 to 27-year-olds say they have never tried Budweiser, according to AB InBev.

In recent years, craft beer’s popularity has extended to the skies. JetBlue (JBLU), Delta (DAL), and Alaska Air (ALK) are among a handful of airline carriers that now serve the crafty suds 35,000 feet above.

“We’re seeing growth come from so many different diverse sources that I think there’s still a lot of potential,” Watson said.

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