Mid Year Marker - Growth and Challenges in the Craft Beer Industry 2024

As we hit the midway point of 2024, the Brewers Association (BA) has shared insightful data from its latest survey, shining a light on the current state of the craft beer industry. This year has been a mixed bag for small and independent American craft brewers, with some areas of growth and persistent challenges. Let's dive into the details and explore what lies ahead for the craft beer industry.

The number of active craft breweries has seen a slight increase, climbing from 9,339 in June 2023 to 9,358 in June 2024. This growth is echoed in the total number of breweries, which rose from 9,456 to 9,528 over the same period. Encouragingly, 54% of surveyed breweries reported growth in the first half of 2024 compared to the previous year. However, the overall market volume has experienced a small decline, down by 2% compared to 2023, indicating that beer dollar sales are likely holding steady.

Distribution remains a significant hurdle for many brewers. Independent craft packaged sales dipped by 2% year-over-year, reflecting broader market trends. The rise of ready-to-drink cocktails (RTDs) and other innovative beverages has intensified competition, making it harder for craft beers to maintain shelf space and consumer attention. The Beer Purchasers Index, a measure of wholesaler purchasing, continues to show a contraction in the craft segment.

Despite these challenges, there are areas of resilience. Onsite sales at breweries have shown slightly better performance than distributed sales, favoring businesses with a strong hospitality focus. However, these onsite sales are not driving volume growth, with the median growth reported in the survey showing static volume. High variation by brewery and region underscores the importance of local markets and individual business strategies. Aggregated point-of-sale (POS) data from Arryved supports this, showing static revenue per site and a slight decline in average tabs per site compared to the first half of 2023.

Keg production has also seen a continued small decline, as indicated by Alcohol and Tobacco Tax and Trade Bureau (TTB) data available through May. However, the survey results present a slightly more optimistic view, showing that distributed draught levels are holding steady year-over-year.

Economic conditions remain a critical factor for breweries. While the growth of input prices has moderated, inflation continues to impact both operations and consumer spending habits. Local factors such as weather, tourism, and economic changes also play a significant role in brewery performance, given that many brewers are heavily locally focused.

Reflecting on these findings, Bart Watson, vice president of strategy and chief economist at the Brewers Association, emphasizes the importance of resonating with consumers. “While the category continues to struggle to find collective growth, there are still plenty of success stories in the midyear data. The success of those brands illustrates that while beer lovers and drinkers have many options, they’re still willing to spend their money on beers and brands that resonate. With so much choice in beer and beverage, brewers need to consistently think about how their brands can meet what beer lovers and drinkers are looking for, both in terms of product offerings and business model.”

Looking ahead, it’s clear that the craft beer industry must adapt to a rapidly changing market. Brewers need to stay agile, focusing on what makes their brands unique and how they can best connect with their audience. Whether it's through innovative product offerings or refining their business models to better meet consumer needs, the path forward will require creativity and resilience.

The insights from this midyear survey provide a valuable roadmap. By understanding current trends and anticipating future challenges, brewers can position themselves for continued success in a competitive landscape. As we move into the latter half of the year, keeping an eye on local market conditions, consumer preferences, and economic factors will be crucial for sustaining growth and thriving in the craft beer sector. Craft Beer Industry 2024