The craft brewing industry’s continual run of positive growth rates has come to a halt due to the pandemic. According to the recently released annual production report from the Brewers Association (BA) -the not-for-profit trade association representing small and independent American craft brewers- 2020 saw only 23.1 million barrels of beer produced a 9% decline from the year before. The first production decline in the modern craft era.
That news was only part of a report that showed that for the first time in decades, the craft industry fared worse than the overall American beer market. It finished the year down 3%, not counting FMBs and hard seltzers, something the BA did not include in its numbers. While these results were not entirely unexpected, the BA warned that their numbers would be down for the last few months. They still highlight the challenges the craft industry faced and is still coping with daily.
“2020 was obviously a challenging year for many small brewers, but also one that proved their resilient and entrepreneurial nature,” said Bart Watson, chief economist, Brewers Association. “In a year where US draught sales were down more than 40%, small brewers found new ways to connect with their customers and keep their businesses running.”
The numbers mean that the retail dollar value of craft beer ended at $22.2 billion, a 22% decline over 2019, and its dollar share of the market finished at 23.6%. In 2019 their retail dollar value was $29.3 billion, and its dollar share of the beer market was at 25%.
Even though production numbers were down, the year ended with an all-time high number of craft breweries operating at 8,764. That broke down into 1,854 microbreweries, 3,219 brewpubs, 3,471 taproom breweries, and 220 regional craft breweries. While those numbers were good, they mask a declining trend in the opening of new breweries over the last few years.
The blazing hot growth the industry experienced over the last decade, where it went from 1758 breweries in 2010 to 8391 breweries in 2019, has cooled. The 716 openings that occurred during 2020 were down 30% compared to the year before. Watson and the BA attribute the slowdown to increased market competitiveness and maturity, coupled with the pandemic. They have also seen a slower growth range from breweries in planning that the BA works with.
The year also saw the shuttering of 346 facilities, which Watson has said he thought might have been higher. Even though this was the highest number they have tracked he felt this number was a positive. “While many small breweries will remain under pressure until they can fully reopen and welcome their communities into their breweries, the 2020 closing rate has remained on par with 2019, suggesting that the vast majority of breweries will survive going forward,” he said.
One other note from the report was that the number of small brewing jobs decreased 14% from 2019 to 138,371. They attribute that to the loss of jobs in tap rooms and on premise positions.
What this means for the industry overall is still to be seen, but Watson said in his 2020 Points and 2021 Predictions article that he sees the growth trends returning to 6-7% positive in 2021, but he expects production trends to remain below 2019 until 2022 at least. Producing the 3-4% growth trend it had been on should take longer. The full data set will be released in mid-May.