There is no denying that craft beer is experiencing a boom. And this is a drastic change from even just ten years ago. At almost any bar or store across the country, one is likely to find craft beer as a possible choice, and those choices continue to multiply. This massive expansion has been so large that macro brewers have taken notice, viewing craft beer’s rapid growth as a threat that is slowly eating up their market share. Budweiser even went on the defensive earlier this year, releasing a commercial during the Super Bowl making fun of the craft beer movement, a clear sign that they are at least a bit concerned with its growing popularity.
And there is potentially good reason for this concern. At this point, craft beer in America represents only 10% (by volume) of the entire beer market. Talk to entrepreneurs and investors and they’ll tell you this fact alone has many of them clamoring to get involved. In their opinion, this small percentage of the total market share still means there is an immense amount of opportunities, with room for almost anyone who would want to enter, which people are doing in droves. The Brewers Association, the nation’s largest craft brew trade organization, has helped stoke these flames. They set a goal of 20% market share by 2020, which they tout in articles like this one from last year, titled BA Insider: Growth In The Craft Beer Segment: Sky Is The Limit:
This growth rate seems frothy by any standard and it begs the question: “Can it continue?” The Brewers Association (BA) has a stated goal of 20% share of volume for the craft segment by 2020. The mantra is “20 by 20.” Based on the trends cited above and the fact that markets like San Francisco, Portland, Seattle and Boston are already above the 20% share mark, it is easy to forget that the many markets across the country are still just beginning their craft journey. For the following reasons many believe 20 by 20 is not only achievable, but a predictable result of demographic, market and growth trends.
Reasonable or not — and based on shifting definitions of what constitutes craft beer in the first place — this sort of language is reminiscent of other overheated industries where future growth seemed “achievable” and “predictable.” Currently, 1.9 craft breweries are opening a day in the U.S. In the last two years alone we’ve seen craft breweries grow in numbers by 40%, to 3,418 at the end of 2014. 600 more breweries have already opened this year — nearly all presumably craft. It’s a boom similar to the tech bubble, with money flooding in and many of these new breweries convinced they too will strike it rich, or one day might even go public. And it’s these developments that cause one to ask: are we inside a craft beer bubble or does the industry simply need to readjust?...MORE