Craft beer is more popular than it ever has been. As a result, approximately three times as many breweries are opening to replace any closed. Twenty to thirty additional breweries will open this year in Massachusetts alone.
Challenges In The Craft Beer Industry
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 face several ongoing challenges and opportunities during 2023. Consider some of the issues currently impacting numerous businesses in this field:
Persistent Environmental Challenges
Many craft breweries are concerned about the vital importance of maintaining adequate, clean local water supplies. By its very nature, this industry depends extensively upon regional environmental conditions. In addition, many fine craft beers require water containing specific mineral combinations. Reportedly, every gallon of craft beer produces up to seven gallons of water during production.
Therefore, the distinctive flavor of craft beer owes much to the quality of the water. Due to this aspect of the manufacturing process, small breweries specialize in regional beers. 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. In addition, many craft brewers have increasingly started marketing their products to local restaurants and retail outlets.
Various craft beer production schedules contribute to some enterprises’ daily operational challenges. In 2018, over 6,000 craft breweries produced some 20,000 brands in the United States alone. 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 toward specific products. Some analysts have commented on the pressure on 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 strongly prefer Budweiser, Miller, or Coors brands, most craft brewery customers reportedly prefer to sample products from a cross-section of breweries. This tendency requires 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 many 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 today’s most significant challenges. 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 as 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 regarding business operations and financial stability. Companies that address challenges during the coming year will likely survive and prosper. However, other firms in this saturated marketplace may find 2023 a trying period.
Craft Beer Trends
The sheer volume of breweries has solidified some emerging trends while others have fallen by the wayside. As such, let’s look at the trends defining the craft beer industry in 2023 as it continues to soar in popularity.
1. Sour Beers Gain a Mass Following
In the last few years, sour brews have become a steady niche product, but these unique, tart, fruit-influenced beers have recently exploded into the mainstream with seriously impressive sales. As of now, they have earned their place on the daily menus of many bars and taprooms.
Brewers say that sours are outperforming other beers regarding growth, but that is only on a percentage basis rather than in total volume.
Part of the increase in popularity is that the selection of sours is becoming more diverse as time goes on. Some styles are also low in calories and alcohol while compressing a robust flavor.
Because they can be smooth and light or bold and fruity, they tend to attract wine and cocktail lovers. While they can serve as bridges to craft beer consumption as starter brews, sours are enjoyed by beer experts and novices alike.
2. Lagers Get Respect in the Craft World
Lagers had a bad reputation for so long for not being considered “real” craft beers, even though they were still popular among micro-brewery beer connoisseurs. And while IPAs still reign supreme in the craft corner of the market, their near-monopoly has been dwindling since those new to craft brews want to enjoy a semi-familiar taste. After all, double dry-hopped IPAs are not for everyone’s taste buds.
Some micro-brewers are incredibly talented at conceiving popular lagers and have garnered large followings. As such, lagers have gained favor and fanfare and continue to increase sales and acquire admiration.
3. Beers Containing CBD Take Stage
Since the dawn of legal marijuana is upon us, and CBD oil is super popular, it only makes sense that CBD beer will soon follow.
CBD comes from the part of the cannabis plant that is non-psychotropic, which means it can’t get you high, but it certainly can help you relieve anxiety and fully relax.
These beers are brewed with both terpenes and oils derived from hemp. Remember, most forms of hemp were legalized on the federal level in 2018. Cannabidiol then infuses the brew with a slight kick.
Many craft breweries plan to launch CBD beers in a limited run and will continue the lines if they prove popular. That is if the legalities don’t get in the way. After all, some CBD-infused beers were permitted before the 2018 legislation; the DEA revoked its approval.
4. Rosé Beers Stay in Demand
It may have seemed like the “in” thing to make fun of last year since everyone was drinking it, but rosé beer will become an even more significant trend in 2023 and will become widely accepted.
Inspired by the sweet, pink wine, the beer is about to become a stalwart in the craft brewery community.
This is not just about turning macho beer pink. Instead, these wine-beer combos are fermented with grapes from the top vineyards in California. In other words, breweries are experimenting with notes of wine within an actual beer.
5. Craft Beer Competes with Macro-breweries
While craft beer ballooned to nearly twelve percent of the beer market in the United States, it plateaued in the last few years and has only made single-digit percentage gains.
However, analysts believe the niche could potentially expand its market share shortly.
They base this guess on the assumption that younger customers are the driving force behind craft beer’s popularity in the first place. As this generation takes over the market, they will likely stick with their preferences and buying habits. Meanwhile, older generations, which rely more on macro-brewed beer, buy less in bulk as they age.
Younger people don’t look at craft beer as anything special. To them, it simply is beer. And while larger breweries and their mass-marketed beers have stories and fascinating heritages, they are a part of the Millennials’ parents’ traditions, and most younger adults want to carve their paths.
6. More Beers are Made with Fresh Hops
Did you know that hop acreage in the United States increased by nearly 80 percent, and hop production increased by seventy-seven percent between 2012 and 2018? These statistics indicate greater access to hops directly for breweries, so brewers can knock out many fresh hop beers if they work hard and fast enough.
If you ever drank a fresh hop brew, you’d know how great they taste and crave more. Local breweries have released their editions in cans, and customers can’t stop raving about them. Any brewery lucky enough to be near a hop farm will jump on the bandwagon.
7. Hazy Brews isn’t Going Anywhere Soon
The New England haze craze has taken the country by storm, and there is no turning back.
Hazy beers are easy to drink, juice-forward, and for those not otherwise fond of beer’s typical bitter taste. They can be a starter brew for those just getting into drinking craft beer. The opaque “juice bombs,” as they’re often called, even resemble orange juice and, as such, photograph well.
Hazy beers are now bifurcated like traditional IPAs, with hazy pale ales, hazy session IPAs, and hazy imperial IPAs. However, the core gray IPA style is still gaining steam.
Experts believe there is no reason to think the hazy craze will end anytime soon. Over time, however, fruity brews may wear out their welcome with the masses. As a result, you will probably see breweries attempt to strike more of a balance between beer’s more typical hoppy flavor and the newer fruity tones.
But, for now, the trend shows few signs of slowing down. However, since almost every craft brewery is in the game, it is unlikely for the movement to blow up any more than it has further down the road. A subtler take on the flavor seems to be where hazy beers are destined to go. Since all trends end, breweries want to take the idea and build lanes in an overcrowded niche.
That said, good brews will always find their market. So, while customers may shy away from hazy beers over time, they will always exist somehow.
8. Craft Malt Steals the Spotlight
While hops bring spices to beers that can make them taste a bit exotic, these flavors can’t stand alone. That is why many brewers are beginning to understand that all raw ingredients matter, not just the green favorites. As the industry becomes more powerful, brewers use their resources, energy, and time to focus on other components, specifically barley.
American barley farmers have been predicted to increase their production in anticipation of new brewers needing the crop to perfect their craft.
9. Taprooms Take Over
The craft beer category has shown steady growth and owes much of that expansion to taprooms.
After all, retail shelves cannot possibly feature all the new craft brands crowding the market. Moreover, even store choices are so diverse that many confuse potential customers.
However, taprooms and breweries allow IPA shopping to become a more accessible, less intimidating experience. Focusing on bars and forgoing broader retail distribution is also something that many customers treasure. As such, most breweries report that the most significant portion of their sales occur onsite, though they may distribute to local stores.
Taprooms are what the neighborhood bars used to be to the previous generations. The only difference is that they serve nothing but the brewery’s products. That said, many Millennials spend lazy Saturday afternoons hanging out in taprooms and developing beer tastes they may never have had any other opportunities to taste.
Taprooms are fun for customers but crucial for any craft brewery getting its feet wet in the industry. They are critical for getting their names out there and drawing in customers for years.
These taprooms also allow breweries to try new brews through real-time trial and error. They can make up smaller batches and see how customers react to a new recipe without wasting ingredients if the beer is not notably a hit.
10. Craft Beer Becomes More Diverse
The industry doesn’t necessarily need a revamp, but the face of craft breweries is still changing. Brewers across the planet are clamoring to be a part of festivals like Beers without Beards and Fresh Fest, bringing their unique cultures.
This diversity is excellent, and the changes it brings allow the industry to grow accordingly. Craft brewing will continue to become more inclusive and diverse, as any space in 2023 should.
In conclusion, the craft beer industry is still growing and changing as it cruises into this new decade. As space continues to evolve, it should be around for many years.