As the craft beer segment grows with each flip of the calendar, so does the voice foretelling of a “craft brewing bubble” that is certainly going to burst because, well, that’s all bubbles do. According to the researchers at Mintel, however, this bubble might just be filled with more delicious beer – and subsequent profits.
The latest research by Mintel on the craft beer market in the U.S. shows that sales of craft beer nearly doubled between 2007 and 2012—increasing from $5.7 billion in 2007 to $12 billion in 2012. Bubble? Hardly, said the Mintel report, as the group forecasts the craft beer “trend” to enjoy robust growth through 2017. The report estimates that $12 billion figure to move toward $18 billion by 2017, which, if somewhere near correct, would show triple growth for the craft beer industry in a 10-year period.
“The growth rates seen by craft beer are impressive, especially during a period when domestic and imported beers have shown a flat to declining performance,” said Jennifer Zegler, beverage analyst at Mintel. “Unlike its domestic and imported beer counterparts, craft beer has been able to defy overall beer market trends and continue expansion during the economic downturn and subsequent slow recovery.”
It is noted that while the craft beer category remains a small segment of the $78 billion U.S. beer industry, the category has actually helped stabilize the overall beer industry, which experienced volume declines in the domestic and imported beer categories since 2008.
Mintel’s research on craft beer demand seems to correlate with the rising revenue. Twenty-four percent of consumers who drink beer indicate that in 2012 they drank more craft beer sold at stores compared to 2011. Meanwhile, more than one in five (22 percent) report consuming more craft beer in bars or restaurants. Craft beer resonates the most in the 25 to 35 year-old consumers, and the report states that half of older Millennials drink craft beer compared to the 36 percent figure of all U.S. consumers.
And, to no one’s surprise, craft beer also wins on taste. Some 43 percent of both Millennials and Generation X say that craft beer tastes better than domestic beer, compared to 32 percent of Baby Boomers.
As the spirit of local consumerism continues in its rebirth, so too will the rise of craft beer. Mintel research found that 50 percent of overall craft beer drinkers express interest in locally made beer, and 25 percent are interested in purchasing craft beer where it was brewed. Another 39 percent say that they are influenced to purchase a craft beer if it has a personality to which they can relate.
“Buying local is not limited to supporting one’s home base; it also provides consumers with the ability to support towns that they do not currently call home. To bring that local feel to consumers regardless of location, craft breweries should consider partnering to create multibrewery variety packs that would offer consumers a taste of one city, state, or region. These taste-of-an-area packages would allow consumers to experience smaller breweries from their own or other geographies,” Zegler said.
With any statistical study, there are some concerns to mention:
Only 17 percent of Millennials and 18 percent of Generation X say that craft beer is a better value. Instead, a 56 percent of consumers of all ages feel that domestic beer is better value compared to craft beer. Furthermore, Mintel research found that nearly half of consumers would try more craft beers if they knew more about them.
“Despite the variety of beer releases created by craft breweries, craft beers are not yet everyday beer choices for most drinkers due to a lack of understanding about their taste profiles. To continue growing, craft beer must be its own best advocate and expand appeal beyond Millennials who are most likely to consume craft beer. An additional barrier is lack of knowledge. Craft brewers need to focus on education through tastings and classes that inform consumers about the differentiation in flavor between craft beer and other alcoholic drinks,” Zegler said.
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