Crippled by the Pandemic, the Craft Beer Market Shrunk 9% by Volume in 2020

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Crippled by the Pandemic, the Craft Beer Market Shrunk 9% by Volume in 2020

By just about any estimation, 2020 was a terrible year for the beer industry, owing largely (but not entirely) to the COVID-19 pandemic. It was clear throughout the year that craft breweries were suffering from the lack of on-premise drinking opportunities and the ability to sell beer to their draft accounts, but it was largely unclear whether those craft brewers were suffering more than the average—whether the pandemic was truly hurting them more than the major brewers. And now, with the Brewers Association’s year-end statistics now available, one day after the organization announced it was canceling the in-person portion of the 2021 Great American Beer Festival, we can say it for sure: Yep. The pandemic was especially hard on small and independent breweries, particularly those without access to as many traditional retail outlets to sell their wares, and the data is pretty painful.

All in all, “small and independent brewers” by the BA definition produced 23.1 million barrels of beer in 2020, which was a decline of 9% from 2019. This decline was expected, but the subsequent decline in overall beer market share really illustrates what a terrible year it was: Beer from BA-defined craft brewers made up 12.3% of the market in 2020, down from 13.6% only a year earlier. That would effectively erase several years of gains in terms of market share, were it to repeat in 2021, while also suggesting that at least some consumers turned to cheaper domestic beer over pricier craft brews during the pandemic. The number of craft brewing jobs also declined sharply as brewers presumably had to let go of employees—the 138,371 jobs provided by the industry was a 14% decrease from 2019. Overall, the larger U.S. beer industry declined in volume by a total around 3% in 2020.

“2020 was obviously a challenging year for many small brewers, but also one that proved their resilient and entrepreneurial nature,” said Brewers Association chief economist Bart Watson. “In a year where U.S. draught sales were down more than 40%, small brewers found new ways to connect with their customers and keep their businesses running.”

Contrary to what one would likely expect, the overall number of breweries in the U.S. continued to grow substantially in 2020, reaching an all-time high of 8,764, “including 1,854 microbreweries, 3,219 brewpubs, 3,471 taproom breweries, and 220 regional craft breweries.” The 716 total new brewery openings was a decrease of only 30% from 2019, which is rather stunning when you consider both the pandemic and the slowing of growth that was already happening in the segment in recent years. It can be assumed that the vast majority of these new openings will have relatively low ceilings of potential growth, being aimed at providing beer to local communities. Meanwhile, there were 346 U.S. brewery closings in 2020.

“While many small breweries will remain under pressure until they can fully reopen and welcome their communities into their breweries, the 2020 closing rate has remained on par with 2019, suggesting that the vast majority of breweries will survive going forward,” said Watson.

Still, that rate of openings seems unsustainable to us, particularly with so many breweries still struggling. We would hope to see that number level out somewhat in 2021, and we hope that successful vaccinations for COVID-19 yield a rebound that allows craft brewers to regain some portion of their former share of the larger beer market.

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