More Than Just a Drink: The Rise of Craft Beer

Posted by Anna Keagy on December 18, 2015

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Today’s beer consumers want more out of their beverage. It’s about the quality, the uniqueness and the experience. This mindset has led to the rise and popularity of the craft beer industry. This raises the question: is craft beer just a fad or is it here to stay?

About 12.2 million barrels of craft beer were produced and sold from January-June 2015, a 15% increase from 10.6 million barrels during the first half of 2014, according to the Brewers Association. Meanwhile, the production of domestic mainstream beer (such as Budweiser and Coors) fell in the second quarter of 2015.

Craft beer appears to be more than just a fad – beer consumers’ tastes are changing and drinkers are increasingly discerning about the quality and uniqueness of their beverages. Many see drinking as a form of social status and would like to be seen drinking beer that is more ‘exclusive.’ They are interested in finding new flavors and creative approaches to their beverages.

When you combine the desire for uniqueness and exclusivity with the general trend toward more consumers wanting to purchase local products, it’s no surprise that craft beers are surging in popularity. According to a statement on the Brewers Association website, “More and more Americans are discovering the joys of enjoying fresh beer produced by their neighborhood brewery. By supporting local, small and independent craft breweries, beer lovers are gradually returning the United States to the system of localized beer production that existed for much of our nation’s history.” craft_beer_by_barrels_produced.jpeg

For example, in Northwest Arkansas, craft beer production is up 778 percent since 2011, with many craft beer companies formed in just the last five years.

Walmart has recognized the craft beer trend and is seeking to pick up market share in the adult beverage category. In September, the retailer started carrying beer from Core Brewery & Distillery in some of its Arkansas and southern Missouri stores. Core Brewery & Distillery brews all its beer in Springdale, Arkansas.

As the craft beer industry continues to evolve, there is quite a bit of contention as to what is actually considered a craft beer. According to the Brewers Association, a craft brewer must be small, independent and traditional. According to this definition, the annual production of the brewery must be 6 million barrels of beer or less, and less than 25 percent of the craft brewery can be owned or controlled by an alcoholic beverage industry member that is not itself a craft brewer.

It is also worth noting that while the terms craft beer and microbrew are sometimes used interchangeably because they are similar, they are not necessarily synonymous. While a microbrewery has a cap on beers barrels, not all microbreweries produce craft beer. And many larger companies produce brews that they market as craft beers. Not everyone agrees on the definitions.

Top_5_States_craft_breweries.jpgShock Top and Blue Moon, owned by parent companies Anheuser-Busch InBev and MillerCoors, respectively, are high-profile examples of brews that are not made by independent companies or small breweries but that are marketed as craft beers. Although some craft beer drinkers reject these mainstream beverages, the popularity of these brands indicates that they have found a way to be major players in this space.

Another nuance to the craft beer market is the fact that large companies are buying out some craft brew brands. For example, Anheuser-Busch InBev recently bought out popular craft beer Dogfish Head. How such moves affect the craft beer industry in the long run remains to be seen. On the one hand it can be argued that this can allow high quality craft beer brands to grow and gain more recognition. On the other hand, some would argue that at some point these can no longer be considered true craft beers.

The increasing mainstream appeal of craft beer style beverages can also be seen in a recent announcement about a commercial spot that Anheuser-Busch InBev is planning to air in the next Super Bowl for Shock Top. This is the first time the company has purchased a Super Bowl spot for Shock Top. Another example is how Wheaties recently teamed up with Minneapolis craft brewer Fulton Beer to create HefeWheaties, a wheat-based beer in a retro-inspired can. While the beer was only available for a limited time in the Twin Cities, General Mills is interested in possibly creating a similar product in the future on a larger and more widely distributed scale.

Craft/artisan spirits are on the rise in popularity as well and expected to be big in the coming year, according to the National Restaurant Association’s What’s Hot 2016 Culinary Forecast. Craft beer/locally produced beer is still expected to be a hot commodity as well.

It appears that craft beer is more than just a fad and that it’s here to stay, but the definition and face of the industry will likely continue to evolve as small craft brewers and big brands compete for the loyalties of consumers.

Topics: Consumer Insights, trends