The Rise of Craft Beer in America



Written by E.D. Cain for Forbes

I’ve spilled a good deal of ink on craft beer in the past, discussing how regulations have factored into the big beer monopolies, and questioning whether small brewers need to be unionized the way the big brew shops do. I’ve also written about craft beer as it applies to the “human economy” (more on the human economy here).

Suffice to say, the American beer industry fascinates me, not least of all because until quite recently it was dominated by a handful of very big corporations making a very limited, and subpar range of brews. The craft brew revolution has changed all that.

Craft beers are now brewed across the United States, and the number of small breweries has shot up exponentially in the past few decades.

As the above chart illustrates, since the deregulation of home brewing, small breweries and craft beers have been on the rise. Meanwhile, big beer is losing market share – albeit very slowly:

For the fourth year in a row, the beer industry has continued its declines and lost 1.9% to total 2.8 billion cases. According to the Beverage Information Group’s recently released 2011 Beer Handbook, continued declines in the Light segment continue to contribute to the overall losses in the industry. This segment has seen declines amongst its core brands and is only seeing pockets of growth from newly introduced line extensions.

Despite the struggling economy, growth was seen among the Craft segment as well as Imports. The higher-priced Craft segment continued to post solid gains due to consumers’ attraction to the interesting flavors craft brewers offer. Imports, which previously have been experiencing declines, gained 0.9% to 362-8 million cases last year, but that is still 11.1% lower than its pre-recessionary levels.

Nevertheless, craft beer faces a steep uphill battle. Distribution laws and other post-prohibition regulations make simply distributing craft beers difficult. The fact that the current big players have so much market share, capital, and the advantage of economies of scale and huge advertising budgets only makes matters worse.

Still, good beer is nothing to sniff at, and as more Americans realize they don’t have to drink watered down lagers, I expect growth in the wildly diverse craft sector to just keep growing – unless, that is, politicians like Scott Walker have their way.

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