Slower growth and increased competition are the “new normal.” Brewers Association (BA) leaders hammered home that point throughout the 2019 Craft Brewers Conference (CBC) in Denver last month.
BA chief economist Bart Watson cautioned that craft beer’s 4 percent volume growth – about 1 million barrels – in 2018 was “not a blip.”
“That’s not a lot of growth, and many companies built brands and business models that built in the idea that there would be more growth than this,” he told thousands of attendees that joined the conference’s second general session.
How should craft brewery owners grow their businesses as they fight the headwinds? Watson suggested looking beyond craft’s existing 13% market share to attract the 87% of drinkers that do not regularly consume craft beer, if at all.
“If we can get 1 million new craft drinkers to drink one pint a week, that’s 200,000 incremental barrels,” he said. “Five million new drinkers drinking just one pint a week of small and independent brewed beer is a million barrels.”
Nevertheless, future growth is likely to be sliced up even more thinly as an increasing number of breweries launch. Last year, 1,049 breweries opened and an estimated 2,500 breweries are currently in planning, Watson said.
Over the last three years, 3,194 new breweries have opened. Watson attributed much of craft’s growth is coming from those breweries. Last year, those companies grew by a combined 872,000 barrels.
In addition to adjusting for slower growth, two other themes emerged during the 2019 CBC: The category needs to become more politically active and more inclusive. BA leaders used their main stage sessions to stress the importance of both to 14,000 industry beer industry professionals that attended CBC.
BA president and CEO Bob Pease said the non-profit trade group’s “top priority” in 2019 is making permanent the excise tax cuts in the Craft Beverage Modernization and Tax Reform Act (CBMTRA) before they expire at the end of the year. If successful, he said small and independent craft breweries would save a combined $80 million annually.
In order to achieve that goal, BA executives said brewery owners need to donate to the organization’s new political action committee (PAC). BA executive committee vice chair and Maine Beer Company co-founder Dan Kleban urged brewers to “open up your wallets, be generous.”
“As a brewery owner, I look at contribution to the BA political action committee as an investment in my brewery and an investment in my employees,” he added.
In a reversal of course from previous years, both Pease and Left Hand Brewing Company co-founder and BA executive committee chairman Eric Wallace struck softer tones when discussing larger competitors such as Anheuser-Busch and MillerCoors.
“If big beer wants to go at it tooth and nail over such matters, that’s their prerogative,” Pease said, referring to the corn syrup debate between the two largest beer manufacturers in the U.S. “But that is not our fight. We will not join in. We will not gloat. We remain committed to growing the overall category of beer just like we have been for the last 30 years.”
After calling acquired craft brands “weapons in the arsenal of the big breweries” last year, Wallace advocated for unity among the 7,346 craft brewers despite an increasingly competitive marketplace.
“There’s no upside for us to act like the largest multinational brewers and take broadside shots at our competitors using misleading and even hypocritical statements,” he said. “Let’s continue to be better than that.”
Of course, Pease and Wallace implored brewers to display the BA’s “independence seal” on their packaging. Wallace said adopting the seal shows brewers are “a part of our multifaceted tribe.”
Diversifying that “multifaceted tribe” was also a hot topic throughout CBC week. During both general sessions, BA leaders encouraged brewers to be more welcoming to underserved populations. Wallace said “beer should be a great uniter.”
“All colors, creeds, genders and political leanings are welcome,” he said.
For her part, BA craft beer program director Julia Herz said breweries need to “deliberately welcome” a more diverse customer base, while senior vice president of the professional brewing division Paul Gatza asked brewers to ensure they’re creating “emotionally safe workplaces” free of harassment and discrimination.
During a panel discussion on diversity and inclusion at Brewbound’s first Brew Talks meetup of 2019, BA diversity ambassador Dr. J. Nikol Jackson-Beckham asked hundreds of attendees if it is “harder to talk to brown people than it is to put your entire financial livelihood on the line?”
The response: applause and laughter that acknowledged the irony.
During the discussion, Jackson-Beckham argued that reaching out to customers beyond “white dudes with beards” – as she famously said during the 2018 CBC – is no more risky than mortgaging financial futures and potentially jeopardizing marriages to start breweries.
Founders Brewing Company diversity and inclusion director Graci Harkema added that brewery owners need to “get over” those fears and stop being complacent.
“You don’t have anything to lose,” she said.
Jackson-Beckham added the industry needs to “shift postures” and reach out to new communities if it wants to grow. She added that brewery owners should attend neighborhood association meetings and educational forums to get to know the people in underserved communities in order to forge authentic relationships rather than leaping in head first.
“It’s about becoming more active and less passive,” she said.