The craft beer industry contributes to beer variety. This niche market does not include large breweries producing popular brands for mass distribution and consumption. Instead, craft brewers generate unique regional ales, pilsners, stouts, lagers, wheat beers, and other specialized formulations. This developing industry will likely contend with several ongoing challenges and opportunities during 2021. Consider some of the issues currently impacting numerous businesses in this field:
Persistent Environmental Challenges
An issue of concern to many craft breweries relates to the vital importance of maintaining adequate, clean local water supplies. By its very nature, this industry depends extensively upon regional environmental conditions. Many fine craft beers require the use of water containing specific mineral combinations. Reportedly, every gallon of craft beer results in up to seven gallons of water during the production process.
The distinctive flavor of a craft beer, therefore, owes much to the quality of water. Small breweries specialize in regional beers due to this aspect of the manufacturing process. Environmental disasters that threaten the purity of drinking water in a particular locale potentially heavily impact nearby craft brewing businesses’ survival.
Addressing Production Concerns
The variety of craft breweries in the United States results in a diverse cross-section of small businesses in this field. Some companies serve the same selections of beers in conjunction with dining facilities or brewery showrooms. Other firms modify this model and produce different beers on a variable schedule. Increasingly, many craft brewers have started marketing their products to local restaurants and retail outlets, also.
The variety of craft beer production schedules contributes to daily operational challenges for some of these enterprises. During 2018, in the United States alone, more than 6,000 craft breweries produced some 20,000 brands. The limited production of some lines limits the ability of marketers to disseminate these products widely on a predictable schedule. This result, in turn, in some cases depresses potential sales.
The Importance of New Product Development
Yet even while the wide variety of craft beers poses operational challenges in terms of consistency of production, consumers in this market often enjoy casually sampling different beers. A percentage of customers do not display long-term loyalty towards specific products. Some analysts have commented on the pressure placed upon craft breweries to develop new, original beer flavors continuously.
In this respect, craft brewers appeal to a different market than larger beer producers marketing their well-known product lines to national audiences. While customers may express a strong preference for Budweiser, Miller, or Coors brands, reportedly, most craft brewery customers prefer to sample products from a cross-section of breweries. This tendency places a requirement upon these small businesses to introduce trendy new products to local markets.
Resolving Point-of-Sale Issues
Competition within the $26 billion craft beer marketplace in the United States prompts a growing number of small brewers to seek point-of-sale venues at retail outlets and restaurants. Yet this trend also creates new challenges. One of these issues relates to reduced profit margins on wholesale sales.
Additionally, craft brewers may need to invest in attractive packaging and sales displays when they market within a larger geographic area. These materials help introduce prospective buyers to their brands. This requirement increases the costs of production,
The Heavy Demands of a Saturated Marketplace
The proliferation of craft beer companies since the late 1980s poses one of the most significant challenges today. Brett Joyce serves as President of the thirty-fourth largest U. S. brewery. He recently noted heightened competition within the craft beer industry.
He observed one consequence that includes increased competition for talented employees. Additionally, competition increased even as the number of beer distribution firms declined from 4,595 in 1980 to 3000 in 2015. Today, steep competition makes it imperative for brewers to distinguish their brands.
Preparing For a Successful Year
Today, craft breweries in the United States vary widely in terms of business operations and financial stability. Companies capable of addressing challenges during the coming year will likely survive and prosper. Other firms in this currently saturated marketplace may find 2021 a trying period.