Sales Stall StatesideBy Rob Symes
If your investments grew at the rate of craft beer sales, retirement wouldn’t seem such a distant prospect. Yet, in spite of phenomenal growth, have we reached an era of peak craft beer?
As recently as 2014 the US (which comprises the world’s biggest producer and market for craft beer) saw an 18% growth in sales and a 42% growth in production. Compare that to 2016, where craft beer sales have dropped to 6% year over year. Even a return of this kind is impressive, but when contrasted to earlier growth, it has to be viewed as a phenomenal slow down. So, is this simply a cooling of a trend that will continue to grow, or has craft beer reached it’s height?
While the vast majority of media pieces have fixated on the crazy proliferation of craft breweries and offerings, some have tied it to other developments, largely seen as passing phenomena. Let’s call ‘hipsterism’ for what it is – a remarkable social trend that has stoic adherents and opponents. In-between biking, acoustic guitar gigs and lattes, hipsters are amongst craft beers most passionate adherents. Beards, Brooklyn and brews epitomize the scene.
But what happens when the hipsters fade away, as the hippies did before them?
While there is an air of the moment to craft beer, it’s unlikely that the craft beer bubble is going to burst anytime soon. If anything, the rapid growth of the industry should be seen as catch-up to the existing zeitgeist, and the slow-down a natural deceleration as equilibrium is attained. What does this all mean? If we take a step back and look at how we view and interact with food, we can see radical changes in the past 150 years. The home cooked ‘from scratch’ meals of the 1800s gave way to convenience as canning, refrigeration and mass production led to a paradigm shift, culminating in the TV dinner. At the back end of the 1900s, the pendulum began to swing back – convenience no longer just meant microwave meals, it also meant easily accessible artisanal prosciutto, sushi on every corner and non-GMO. All the world’s food at our fingertips, the ability to buy quality, and the opportunity to customize as we like it.
Over the same time period, beer has undergone the same changes. Locally produced beer was dealt hammer blows by the temperance movement and the rise of large corporations, who could produce more for less and flood the market with affordable brews for the everyman. Mass production and a focus on cost over quality produced the beer equivalent of the microwave meal. It should come as no surprise, then, that the craft beer movement has mirrored the same reaction within food, albeit at a later date, which explains why the last few years have felt a little like catch-up. Organic beers, a focus on quality ingredients and a desire for variety (whether in style or in origin) has fuelled phenomenal growth.
At some point things had to slow down, because few industries can sustain this kind of terrific growth on an indefinite basis. We’re starting to see signs of that in the United States, though a visit south of the border reveals that this isn’t necessarily doom and gloom. Craft beer is more or less where it needs to be, with ready availability on main street and in stores across the country.
The good news for Canadians is we’re still not at this point. Demand is steadily increasing and microbreweries have proliferated, but by no means is our market anywhere near as mature as the one stateside. In fact, the signs are that explosive growth could continue here for some time before slowing down. Ontario’s LCBO reported local craft beer sales growth of 35% in their last fiscal year. Peak craft beer could potentially be here for the US, but it’s still a long way off in the Great White North, so sit back and relax, because we’ve never had it so good.