US craft beer volumes in 2016 grew by 8% year-on-year to the end of the third quarter, and growth is expected to come in at approximately that figure for the full year. This represents a drop from the double-digit growth rates of previous years, and has led some in the media to suggest the US craft beer market is in decline: it isn’t. What has declined is the rapidity of growth, which, at +7-8%, still represents a rate that is the envy of probably any other alcoholic beverage sector. Beneath the headline figure are some interesting details that show that the craft beer industry is evolving in areas that are true to what the craft consumer wants: a local brew.

While the large, national craft beer brands have experienced slower growth, local and regional brands are doing extremely well. One of the core tenets of the craft brew offering is provenance: consumers possess loyalty to a beer that is unique to their locality. Thus, a local or regional brand can fall victim to the apparent success of going nationwide, as by definition the brand loses one of its main selling points. Moving forward it will be interesting to see how local and regional brewers – riding the crest of the craft wave – keep their investors happy while retaining a key attribute of their success. They may choose to buy or establish a brand located elsewhere in the US, and grow through building a portfolio of regional brands, rather than risk weakening the flagship label by going national with it.

Where and how craft beers are sold is also changing. The US Brewers Association has studied statistics for the year to October, and discovered that while craft beer sales in the US off-premise (such as supermarkets, food and drug outlets etc.) grew approximately 6% in that time, and sales in the on-premise (bars and restaurants) declined by 2%, ‘premise-use’ sales grew by over 60% and ‘other brewery sales’ grew 40%, together providing approximately 55% of the overall 7-8% volume growth in 2016.

In California, for example, standard brewing licenses enable the license holder to possess a number of taproom locations supplied by the one brewery. An increasing number of brewers are harnessing this privilege to open satellite taprooms and shops across the region in which their brewery is situated. This increases visibility, locks in local loyalty and builds a following (firming-up the foundations for roll-out into the local off-trade), and realizes the highest margin possible on retail sales. The taprooms and shops offer on-premise drinking (‘premise-use’) and allow takeaways (‘other brewery sales’), such as growlers and six- and 12-packs.

With the continued rapid growth in the number of US breweries – now well over 4,500, a record – the number of brewery taprooms and shops will rise, and help offset any slowdown in traditional (and hard to accurately track) on-premise sales, where beer must compete with wine, spirits and cocktails, particularly among millennials. It is estimated that ‘premise-use’ sales reached approximately 460,000 barrels in Q2 2016, up from 150,000 in Q2 2014. In addition to this highly local sales point, export to other countries is also growing – forecast to be up by over 10% in 2016.

John Fearless wishes all of its partners and customers a happy Christmas, and looks forward to another exciting year for the craft beer industry in 2017.


John Fearless can provide: aroma and bittering hops; fruit purées; fruit and wine grape juice concentrate; fresh wine grapes (during harvest); oak barrels formerly used for wine, brandy, bourbon and rum.