Beer industry report: cautious first steps on the road to recovery



Brewers Association releases its Annual Craft Brewing Industry Production Report.

Highlights:

  • Overall, good news. Growth, but don’t get too excited.
  • Now over 9,100 breweries in the USA.
  • New brewery openings still vastly outpaced brewery closings.
  • The road to recovery and discovery.

Volume and Dollar Growth

In 2021, small and independent brewers across the United States produced a total of 24.8 million barrels of beer, which represents an increase of 8% over the previous year. Craft beer’s overall beer market share increased to 13.1% in 2021, up from 12.2% in 2020. These preliminary numbers are based on production volume and were provided by the Brewers Association’s Annual Craft Brewing Industry Production Report.

The report on the craft beer industry fits into the larger picture. The overall beer market (all breweries and all beers) grew by 1% volume in 2021, but realized a greater increase by dollars. This is due to the shift back to on-premise sales as the pandemic calmed down. On-premise sales (taprooms, bars, restaurants) have a higher retail average value.


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For the overall beer market, the 2021 retail dollar value was up by 21% over 2020. In the world of craft beer, on-premise often refers to buying beer at the brewery’s taproom. For many craft brewers, the taproom accounts for the majority of sales. As people return to brewery taprooms to consume and/or purchase beer directly from breweries, it is good news for the craft brewing industry.

“Craft brewer sales rebounded in 2021, lifted by the return of draught and at-the-brewery traffic,” said Bart Watson, chief economist for the Brewers Association. “However, the mixed performance across business models and geographies as well as production levels that still lag 2019 suggest that many breweries remain in recovery mode. Add in continuing supply chain and pricing challenges, and 2022 will be a critical year for many brewers.”


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More Breweries Opening Than Closing

Craft brewers (small, independent breweries) provided more than 172,643 direct jobs, a 25% increase from 2020. Likely, that trend will continue, though labor shortages certainly present challenges, but as we’ve learned in the past couple years, craft brewers can deal with challenges.

Whenever a brewery closed because of the pandemic, there was a lot of bemoaning. However, we heard much less noise when a new brewery opened despite the pandemic. In 2021, nearly 4 new breweries opened for each brewery that closed. Yes, it is sad when a brewery closes, any brewery, but 4:1? That’s a pretty remarkable statistic.


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The overall growth of the industry continues to climb in terms of brewery count. Last year, 646 new breweries opened in the United States while 178 breweries closed. By the end of 2021, there were over 9,000 breweries operating across the nation (9,118).

Not surprisingly, the number of openings decreased for a second consecutive year. This is not only because of the challenges presented by the pandemic but may relate to rising interest rates. Also, it’s a sign that the craft beer industry is maturing, according to Watson’s report.

The closing rate declined in 2021, likely helped by a combination of better sales numbers and additional government relief through the Restaurant Revitalization Fund, which was available to some brewpubs and brewery taprooms.

“While the boom in breweries of a few years before has certainly slowed, the continued growth in small breweries shows the solid foundation of demand for their businesses and beers,” added Watson.

We expect to see a more detailed report and further analysis from Bart Watson and the Brewers Association in the coming weeks. If anything interesting or important is revealed, you’ll read about it here on the Washington Beer Blog.

The Future and Challenges Ahead

The past couple of years presented no shortage of obstacles. It is impressive the way so many breweries dealt with so much turbulence. Now that we have seemingly returned to something closer to normal, 2022 is all about recovery. How will breweries emerge from the fog? How will they charge forward into the light? Maybe we should be thinking about discovery instead of recovery.

The craft brewing industry witnessed substantial growth in the years immediately leading up to the pandemic. Many of these new breweries don’t really know what the old normal even looks like. Instead of a return to normal, perhaps this will look more like the birth of a new normal.

Supply chain issues. Historically low unemployment rates. A drastic decrease in the number of people willing to work in the service industry. The aluminum can shortage. The increasing cost of everything. It’s a lot to deal with, even without the burden of a global pandemic. Craft breweries are not supertankers, they’re better equipped to navigate rough water.

Things have changed. Period. And yes, a lot of those things have changed because of the pandemic. Now that we’ve taken off our masks, should we simply expect it all to change back to the way it was before? Probably not. What will the future look like? We will see. One thing is certain, there will be beer.



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