Craft beer industry’s big buzz wearing off quickly

Has craft beer peaked? In one sign that the industry has grown less frothy, more craft breweries closed in 2017 than any time in the last decade.

And while the craft beer makers saw more growth in production than the overall market last year, their pace is slowing.

A new report by the Brewers Association — a trade association representing small and independent American craft brewers — showed that craft brewers saw a 5 percent rise in production volume in 2017.

Yet with that growth comes a crowded playing field, leading to more closures of small craft breweries. In 2017, there were nearly 1,000 new brewery openings nationwide and 165 closures — a closing rate of 2.6 percent. That’s a 42 percent jump from 2016, when 116 closed.

Experts say saturation is still some time away, and that pullback is inevitable for any booming industry that begins to mature.

“We have seen a little bit of deceleration,” said Bart Watson, chief economist of the Brewers Association. “When you’re talking about an industry that sells tens of billions of dollars a year, it’s hard to grow at doubledigit rates.”

Growth in the craft brewing industry began in the late 1970s and early 1980s, Watson said, and has seen a resurgence in the last decade.

With consumers who tend to skew male, younger, whiter and with higher incomes, the industry gained its foothold among adults willing to pay more for beer that tasted better than the mass-produced products that had long dominated the market.

Small craft breweries compete for taps at restaurants and shelf space at retailers.

Yet they are also up against massive industrial craft breweries brewers who wield heavy influence over the national distribution of beer, and often buy up smaller companies.

Matt Simpson, owner of the craft beer consultancy The Beer Sommelier, said that the slowdown is natural after “an initial explosion.” There are many reasons brewers won’t be able to keep up.

Some of that culling, he said, results from home brewers who don’t know how to run a business or market products.

At the same time, the industry has revived enthusiasm among craft beer aficionados who set out to found a company and sometimes make bad-tasting beer. Simpson recalled a recent craft brewers conference where a speaker said that if newcomers didn’t produce good products, they were “going to be the death of home brewing.”

“The majority of brewers entering the marketplace are making good beer,” Simpson said, “but a few bad apples can spoil the whole bunch.”